PUTNAM VARIABLE TRUST, 497, 1998-10-02

PUTNAM VARIABLE TRUST
497, 1998-10-02

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PUTNAM VARIABLE TRUST CLASS IA SHARES
PROSPECTUS - APRIL 30, 1998

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: Putnam VT Asia Pacific Growth Fund, Putnam VT
Diversified Income Fund, Putnam VT The George Putnam Fund of Boston,
Putnam VT Global Asset Allocation Fund, Putnam VT Global Growth Fund,
Putnam VT Growth and Income Fund, Putnam VT Health Sciences Fund, Putnam
VT High Yield Fund, Putnam VT International Growth Fund, Putnam VT
International Growth and Income Fund, Putnam VT International New
Opportunities Fund, Putnam VT Investors Fund, Putnam VT Money Market
Fund, Putnam VT New Opportunities Fund, Putnam VT New Value Fund, Putnam
VT OTC & Emerging Growth Fund, Putnam VT U.S. Government and High
Quality Bond Fund, Putnam VT Utilities Growth and Income Fund, Putnam VT
Vista Fund and Putnam VT Voyager Fund. Shares of each fund are currently
divided into two classes:
class IA shares, offered hereby, and class IB shares, offered pursuant
to another prospectus.

AN INVESTMENT IN PUTNAM VT MONEY MARKET FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT
PUTNAM VT MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.

PUTNAM VT HIGH YIELD FUND INVESTS PRIMARILY IN, AND PUTNAM VT
DIVERSIFIED INCOME FUND MAY INVEST SIGNIFICANTLY IN, LOWER-RATED BONDS,
COMMONLY KNOWN AS "JUNK BONDS." THESE INVESTMENTS ARE SUBJECT TO A
GREATER RISK OF LOSS OF PRINCIPAL AND NON-PAYMENT OF INTEREST.
INVESTORS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN
INVESTMENT IN EITHER FUND.

This prospectus explains concisely what you should know before investing
in the Trust and should be read in conjunction with the prospectus for
the separate account of the variable annuity or variable life insurance
product that accompanies this prospectus. Please read it carefully and
keep it for future reference. Investors can find more detailed
information about the Trust in the April 30, 1998, statement of
additional information (the "SAI"), as amended from time to time. For a
free copy of the SAI, call Putnam Investor Services at 1-800-521-0538.
The SAI has been filed with the Securities and Exchange Commission (the
"Commission") and is incorporated into this prospectus by reference.
The Commission maintains a Web site (http://www.sec.gov) that contains
the SAI, material incorporated by reference into this prospectus and the
SAI, and other information regarding registrants that file
electronically with the Commission.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL
AMOUNT INVESTED.

SHARES OF THE FUNDS ARE PRESENTLY AVAILABLE AND ARE BEING MARKETED
EXCLUSIVELY AS A POOLED FUNDING VEHICLE FOR VARIABLE ANNUITY CONTRACT
AND VARIABLE LIFE INSURANCE POLICY SEPARATE ACCOUNTS OF VARIOUS
INSURANCE COMPANIES.

ABOUT THE TRUST

FINANCIAL HIGHLIGHTS
................................................................. Study
this table to see, among other things, how the funds have performed each
year since their inception.

THE TRUST
................................................................. This
section explains the Trust's relationship to various variable annuity
and variable life insurance products and advises prospective investors
to read the prospectus issued by the relevant insurance company for
information about the annuity or insurance product.

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
................................................................. Each
of the funds is managed according to its own specific investment
objective or objectives and identifies risks associated with a fund's
investment policies. Read this section to make sure a fund's objectives
are consistent with your own.

COMMON INVESTMENT POLICIES AND TECHNIQUES
.................................................................
Certain investment policies and techniques apply to two or more of the
funds. This section defines, describes, and explains these policies and
techniques.

HOW PERFORMANCE IS SHOWN
................................................................. This
section describes and defines the measures used to assess fund
performance. All data are based on past investment results and do not
predict future performance.

HOW THE TRUST IS MANAGED
.................................................................
Consult this section for information about the Trust's management,
allocation of its expenses, and how it purchases and sells securities.

ORGANIZATION AND HISTORY
................................................................. In
this section, you will learn when the Trust was introduced, how it is
organized, how it may offer shares, and who its Trustees are.

ABOUT YOUR INVESTMENT

SALES AND REDEMPTIONS
................................................................. This
section describes the terms under which shares may be purchased and
redeemed by insurance company separate accounts.

HOW A FUND VALUES ITS SHARES
................................................................. This
section explains how a fund determines the value of its shares.

HOW A FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION
................................................................. This
section describes how fund dividends are paid to various
insurance separate accounts. It also discusses the tax status of the
payments and counsels you to seek specific advice about your own
situation.
FINANCIAL INFORMATION
................................................................. This
section informs you that each year you will receive semiannual and
annual reports of the Trust.
ABOUT PUTNAM INVESTMENTS, INC.
................................................................. Read
this section to learn more about the companies that provide marketing,
investment management, and shareholder account services to Putnam funds
and their shareholders.
APPENDIX
Securities ratings

ABOUT THE TRUST

FINANCIAL HIGHLIGHTS

The following table present per share financial information for Class IA
Shares. This information has been audited and reported on by the
independent accountants. The "Report of independent accountants" and
financial statements included in the Trust's annual report to
shareholders for the 1997 fiscal year are incorporated by reference into
this prospectus. The Trust's annual report, which contains additional
unaudited performance information, is available without charge upon
request.

Financial information for Putnam VT The George Putnam Fund of Boston,
Putnam VT Health Sciences Fund, Putnam VT Investors Fund and Putnam VT
OTC & Emerging Growth Fund is not included because these funds had not
commenced operations as of December 31, 1997. <TABLE><CAPTION>
FINANCIAL HIGHLIGHTS

INVESTMENT OPERATIONS LESS
DISTRIBUTIONS:
NET FROM
NET ASSET REALIZED AND TOTAL FROM IN EXCESS NET
IN EXCESS OF VALUE, NET UNREALIZED FROM NET OF NET
REALIZED NET REALIZED
PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT INVESTMENT GAIN ON
GAIN ON
ENDED OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME INVESTMENTS
INVESTMENTS
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
PUTNAM VT ASIA

PACIFIC GROWTH FUND
December 31, 1997 $11.01 $.07 $(1.66) $(1.59)
$(.22)$-$-$-
December 31, 1996 10.23 .05 .88 .93
(.15) ---
December 31, 1995** 10.00 .06(a)(b) .17 .23 - -
- - -
PUTNAM VT DIVERSIFIED
INCOME FUND
December 31, 1997 $11.27 $.82(a) $(.05) $.77
$(.63)$-$(.10)$-
December 31, 1996 11.03 .80(a) .11 .91
(.67)---
December 31, 1995 9.74 .71 1.09 1.80
(.51)---
December 31, 1994 10.23 .61 (1.04) (.43)
(.06)---
December 31, 1993*** 10.00 .06 .17 .23 - -
- - -
PUTNAM VT GLOBAL ASSET
ALLOCATION FUND
December 31, 1997 $17.25 $.50 $2.63 $3.13
$(.60)$-$(1.02)-
December 31, 1996 16.15 .43 1.94 2.37
(.44)-(.83)-
December 31, 1995 13.19 .47 2.74 3.21
(.25)---
December 31, 1994 14.29 .35 (.71) (.36)
(.29)-(.43)$(.02)
December 31, 1993 12.92 .30 1.87 2.17
(.55)-(.25)-
December 31, 1992 12.77 .35 .41 .76
(.42)-(.19)-
December 31, 1991 11.28 .45 1.64 2.09
(.54)-(.06)-
December 31, 1990 11.26 .54 (.52) .02 - - -
- -
December 31, 1989 10.68 .56 1.10 1.66
(.88)-(.15)-
December 31, 1988**** 10.00 .53(a) .15 .68 - - -
- -
INVESTMENT OPERATIONS LESS
DISTRIBUTIONS:
NET FROM
NET ASSET REALIZED AND TOTAL FROM IN EXCESS NET
IN EXCESS OF
VALUE, NET UNREALIZED FROM NET OF NET REALIZED
NET REALIZED PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT INVESTMENT GAIN ON
GAIN ON
ENDED OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME INVESTMENTS
INVESTMENTS

PUTNAM VT GLOBAL
GROWTH FUND
December 31, 1997 $16.88 $.13 $2.18
$2.31
$(.41)$-$(.44)-
December 31, 1996 15.18 .17 2.35 2.52
(.25)- (.57)-
December 31, 1995 13.48 .20 1.85 2.05
(.11)-(.24)-
December 31, 1994 13.68 .13
(.26) (.13)
(.05)-(.02)-
December 31, 1993 10.48 .08 3.28 3.36
(.16)---
December 31, 1992 10.61 .10
(.14) (.04)
(.09)---
December 31, 1991 9.32 .11 1.28 1.39
(.10)---
December 31, 1990***** 10.00 .11
(.79) (.68) - -
- - -

PUTNAM VT GROWTH AND
INCOME FUND
December 31, 1997 $24.56 $.48 $5.07
$5.55
$(.52)$-$(1.27)-
December 31, 1996 21.47 .65(a) 3.84 4.49
(.51)-(.89)-
December 31, 1995 16.44 .53 5.31 5.84
(.51)-(.30)-
December 31, 1994 17.38 .50
(.48) .02
(.38)-(.58)-
December 31, 1993 15.93 .38 1.83 2.21
(.39)-(.37)-
December 31, 1992 15.33 .39 1.04 1.43
(.42)-(.41)-
December 31, 1991 13.51 .43 2.09 2.52
(.53)-(.17)-
December 31, 1990 13.41 .55
(.29) .26
(.05)-(.11)-
December 31, 1989 12.00 .45 2.04 2.49
(.60)-(.48)-
December 31, 1988**** 10.00 .42(a) 1.58 2.00 -
- - - -
INVESTMENT OPERATIONS LESS
DISTRIBUTIONS:
NET
FROM
NET ASSET REALIZED AND
TOTAL FROM IN EXCESS NET IN EXCESS OF
VALUE, NET UNREALIZED
FROM NET OF NET REALIZED NET REALIZED
PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON
INVESTMENT INVESTMENT INVESTMENT GAIN ON GAIN ON
ENDED OF PERIOD INCOME INVESTMENTS
OPERATIONS INCOME INCOME INVESTMENTS
INVESTMENTS

PUTNAM VT HIGH
YIELD FUND
December 31, 1997 $12.96 $1.06 $.65
$1.71
$(.94)$-$(.11)-
December 31, 1996 12.37 1.18(a) .32 1.50
(.91)---
December 31, 1995 11.46 .91 1.05 1.96
(1.05)---
December 31, 1994 12.53 1.05
(1.17) (.12)
(.79)-(.14)(.02)
December 31, 1993 11.17 .73 1.37 2.10
(.74)---
December 31, 1992 10.12 1.26 .59 1.85
(.80)---
December 31, 1991 7.91 .85 2.47 3.32
(1.11)---
December 31, 1990 9.15 1.30
(2.20) (.90)
(.34)---
December 31, 1989 10.76 1.12
(1.37) (.25)
(1.36)---
December 31, 1988**** 10.00 1.04(a)(b)
(.28) .76 - -
- - -

PUTNAM VT INTERNATIONAL
GROWTH FUND
December 31, 1997*******$10.00 $.05(b) $1.56
$1.61
$(.05)$(.02)$(.04)$(.06)

PUTNAM VT INTERNATIONAL
GROWTH AND INCOME
FUND
December 31,
1997******$10.00
$.07 $1.87
$1.94
$(.08)$(.05)$(.28)-

PUTNAM VT
INTERNATIONAL
NEW OPPORTUNITIES FUND
December 31, 1997*******$10.00 $.01(b) $(.02)
$(.01)
$(.01)$(.02)--
INVESTMENT OPERATIONS LESS
DISTRIBUTIONS:
NET
FROM
NET ASSET REALIZED AND
TOTAL FROM IN EXCESS NET IN EXCESS OF
VALUE, NET UNREALIZED
FROM NET OF NET REALIZED NET REALIZED
PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON
INVESTMENT INVESTMENT INVESTMENT GAIN ON GAIN ON
ENDED OF PERIOD INCOME INVESTMENTS
OPERATIONS INCOME INCOME INVESTMENTS
INVESTMENTS

PUTNAM VT MONEY
MARKET FUND
December 31, 1997
$1.00 $.0509
- - $.0509
$(.0509)--
December 31, 1996 1.00 .0497 -
.0497
(.0497)--
December 31, 1995 1.00 .0533 -
.0533
(.0533)--
December 31, 1994 1.00 .0377 -
.0377
(.0377)--
December 31, 1993 1.00 .0276 -
.0276
(.0276)--
December 31, 1992 1.00 .0352 -
.0352
(.0352)--
December 31, 1991 1.00 .0575 .0001
.0576
(.0575)(.0001)-
December 31, 1990 1.00 .0770 -
.0770
(.0770)--
December 31, 1989 1.00 .0859 -
.0859
(.0859)--
December 31, 1988**** 1.00 .0575 -
.0575
(.0575)--

PUTNAM VT NEW
OPPORTUNITIES FUND
December 31, 1997 $17.22 $-(f) $4.01 $4.01
- - - -
December 31, 1996 15.63 (.01) 1.60 1.59
- - - -
December 31, 1995 10.82 - 4.84 4.84
- - (.02) -
December 31, 1994******10.00 -(b) .82 .82
- - - -
INVESTMENT OPERATIONS
LESS
DISTRIBUTIONS:
NET
FROM
NET ASSET REALIZED AND
TOTAL FROM IN EXCESS NET IN EXCESS OF
VALUE, NET UNREALIZED
FROM NET OF NET REALIZED NET REALIZED
PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON
INVESTMENT INVESTMENT INVESTMENT GAIN ON GAIN ON
ENDED OF PERIOD INCOME INVESTMENTS
OPERATIONS INCOME INCOME INVESTMENTS
INVESTMENTS

PUTNAM VT NEW VALUE
FUND
December 31,
1997******* $10.00 $.18(a) $1.58
$1.76 $ - $- $ - $ -

PUTNAM VT U.S. GOVERNMENT
AND HIGH QUALITY BOND FUND
December 31, 1997 $13.24 $.88 $.19
$1.06
$(.85)$---
December 31, 1996 13.74 .81
(.52) .29
(.82)---
December 31, 1995 12.22 .81 1.56 2.37
(.85)---
December 31, 1994 13.53 .81
(1.24) (.43)
(.66)-(.22)-
December 31, 1993 12.85 .63 .78 1.41
(.61)-(.12)-
December 31, 1992 12.57 .60 .28 .88
(.54)-(.06)-
December 31, 1991 11.36 .56 1.31 1.87
(.66)---
December 31, 1990 10.82 .71 .08 .79
(.22)-(.03)-
December 31, 1989 10.28 .62 .78 1.40
(.79)-(.07)-
December 31, 1988**** 10.00 .66(a)
(.38) .28 - -
- - -

PUTNAM VT UTILITIES
GROWTH AND INCOME FUND

December 31, 1997 $14.80 $.53 $3.11
$3.64
$(.55)$-$(.75)-
December 31, 1996 13.28 .54 1.49 2.03
(.51)---
December 31, 1995 10.68 .53 2.65 3.18
(.58)---
December 31, 1994 12.00 .60
(1.44) (.84)
(.35)-(.12)-
December 31, 1993 10.71 .30 1.13 1.43
(.12)-(.02)-
December 31, 1992*******10.00 .15(b) .56 .71 -
- - - -
INVESTMENT OPERATIONS LESS
DISTRIBUTIONS:
NET
FROM
NET ASSET REALIZED AND
TOTAL FROM IN EXCESS NET IN EXCESS
OF
VALUE, NET UNREALIZED
FROM NET OF NET REALIZED NET REALIZED
PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON
INVESTMENT INVESTMENT INVESTMENT GAIN ON GAIN ON
ENDED OF PERIOD INCOME INVESTMENTS
OPERATIONS INCOME INCOME INVESTMENTS
INVESTMENTS

PUTNAM VT VISTA
FUND
December 31,
1997******** $10.00 $ - (f) $2.32
$2.32 $ - (f) $- $-- $--

PUTNAM VT VOYAGER FUND
December 31, 1997 $32.53 $.10 $8.01
$8.11
$(.07)$-$(1.49)-
December 31, 1996 30.50 .09 3.75 3.84
(.13)-(1.68)-
December 31, 1995 22.20 .10 8.76 8.86
(.07)-(.49)-
December 31, 1994 22.41 .07 .14 .21
(.05)-(.37)-
December 31, 1993 19.21 .04 3.50 3.54
(.07)-(.27)-
December 31, 1992 17.94 .07 1.72 1.79
(.08)-(.44)-
December 31, 1991 12.58 .11(a) 5.61 5.72
(.12)-(.24)-
December 31, 1990 13.00 .18 (.45) (.27)
(.06)-(.09)-
December 31, 1989 10.30 .12 3.20 3.32
(.16)-(.46)-
December 31, 1988**** 10.00 .13(a) .17 .30 -
- - - -
TOTAL RATIO OF
NET
INVESTMENT
RATIO OF INVESTMENT
NET
ASSET RETURN AT NET ASSETS EXPENSES
TO INCOME TO
RETURN OF TOTAL VALUE,
END NET ASSET END OF PERIOD AVERAGE NET AVERAGE NET
CAPITAL DISTRIBUTIONS OF
PERIOD VALUE(%)(C) (IN THOUSANDS) ASSETS(%)(D)
ASSETS(%)

PUTNAM VT ASIA
PACIFIC GROWTH FUND
December 31, 1997 $- $(.22)
$9.20 (14.66) $112,902 1.07 .70
December 31, 1996 - (.15) 11.01 9.10 130,548 1.23 .84
December 31, 1995** - - 10.23 2.30* 25,045
.81(b)* .72(b)*

PUTNAM VT DIVERSIFIED
INCOME FUND
December 31, 1997 $- $(.73)
$11.31 $7.38 $608,148
$.80 7.43
December 31, 1996 - (.67) 11.27 8.81 494,811 .83 7.45
December 31, 1995 - (.51) 11.03 19.13 303,721 .85 7.85
December 31, 1994 - (.06) 9.74 (4.23) 215,935 .80 7.60
December 31, 1993*** - - 10.23 2.30* 80,449
.28* 1.45*

PUTNAM VT GLOBAL ASSET
ALLOCATION FUND
December 31, 1997 $- $(1.62)
$18.76 $19.67 $956,532
$.77 3.01
December 31, 1996 - $(1.27) 17.25 15.62 747,734 .83 3.08
December 31, 1995 - (.25) 16.15 24.71 535,666 .84 3.31
December 31, 1994 - (.74) 13.19 (2.50) 414,223 .76 3.19
December 31, 1993 - (.80) 14.29 17.48 297,307 .72 3.28
December 31, 1992 - (.61) 12.92 6.29 134,667 .79 3.84
December 31, 1991 - (.60) 12.77 19.02 82,071 .87 4.55
December 31, 1990 - - 11.28 .18 51,792 .88 5.31
December 31, 1989 (.05) (1.08) 11.26 16.08 40,200 .88 6.16
December 31, 1988**** - - 10.68 6.76* 26,202
1.17*5.55*
TOTAL
RATIO OF NET
INVESTMENT RATIO
OF INVESTMENT
NET
ASSET RETURN AT NET ASSETS EXPENSES
TO INCOME TO
RETURN OF TOTAL
VALUE, END NET ASSET END OF PERIOD AVERAGE NET
AVERAGE NET
CAPITAL DISTRIBUTIONS OF
PERIOD VALUE(%)(C) (IN THOUSANDS) ASSETS(%)(D)
ASSETS(%)
PUTNAM VT GLOBAL GROWTH
FUND
December 31, 1997 $- $(.85)
$18.34 $14.33 $1,611,503 .75 .77
December 31, 1996 - (.82)
$16.88 17.20 1,344,887 .76 1.25
December 31, 1995 - (.35)
15.18 15.67831,593.751.49
December 31, 1994 - (.07)
13.48(.96)669,821.771.21
December 31, 1993 - (.16)
13.68 32.40352,786.751.38
December 31, 1992 - (.09)
10.48(.36)86,854.851.82
December 31, 1991 - (.10)
10.61 15.0140,183.992.01
December 31, 1990***** - -
9.32 (6.80)*13,203
.99* 2.35*

PUTNAM VT GROWTH AND
INCOME FUND
December 31, 1997 $- $(1.79)
$28.32 $24.15 $8,337,334
$.51 2.08
December 31, 1996 - (1.40)
24.56 21.925,679,100.542.90
December 31, 1995 - (.81)
21.47 36.713,312,306.573.34
December 31, 1994 - (.96)
16.44.35
1,907,380 .62 3.64
December 31, 1993 - (.76)
17.38 14.271,407,382.643.49
December 31, 1992 - (.83)
15.939.75641,508.693.79
December 31, 1991 - (.70)
15.33 19.05325,861.724.37
December 31, 1990 - (.16)
13.511.96155,942.755.02
December 31, 1989 - (1.08)
13.41 21.30100,335.745.73
December 31, 1988*** - -
12.00 19.89*26,205
.92* 4.08*
TOTAL RATIO
OF NET
INVESTMENT RATIO OF
INVESTMENT
NET
ASSET RETURN AT NET ASSETS
EXPENSES TO INCOME TO
RETURN OF TOTAL
VALUE, END NET ASSET END OF PERIOD AVERAGE NET
AVERAGE NET
CAPITAL DISTRIBUTIONS OF
PERIOD VALUE(%)(C) (IN THOUSANDS) ASSETS(%)(D)
ASSETS(%)

PUTNAM HIGH YIELD
FUND
December 31, 1997 $- $(1.05)
$13.62 $14.32 $1,025,298
$.72
December 31, 1996 - (.91)
12.96 12.81769,918.769.57
December 31, 1995 - (1.05)
12.37 18.32498,467.799.42
December 31, 1994 - (.95)
11.46(.94)327,119.749.79
December 31, 1993 - (.74)
12.53 19.57291,737.679.88
December 31, 1992 - (.80)
11.17 18.98118,804.71 11.53
December 31, 1991 - (1.11)
10.12 44.8342,823.92 12.64
December 31, 1990 - (.34)
7.91 (9.98)18,915.93 13.81
December 31, 1989 - (1.36)
9.15 (2.65)27,511.84 12.59
December 31, 1988**** - -
10.767.56*19,506
.94(b)* 10.99(b)*

PUTNAM VT INTERNATIONAL
GROWTH FUND
December 31, 1997******** $(.01) $(.18)
$11.43 $16.13 $150,884
1.20(b) .79(b)
PUTNAM VT INTERNATIONAL
GROWTH AND INCOME FUND
December 31, 1997******** $- $(.41)
$11.53 19.43 $206,598
1.12 1.11

PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
December 31, 1997******** $- $(.03)
$9.96 (.10) $107,000
1.60(b) .09(b)
TOTAL RATIO OF NET
INVESTMENT
RATIO OF INVESTMENT
NET
ASSET RETURN AT NET ASSETS
EXPENSES TO INCOME TO
RETURN OF TOTAL
VALUE, END NET ASSET END OF PERIOD AVERAGE NET
AVERAGE NET
CAPITAL DISTRIBUTIONS OF
PERIOD VALUE(%)(C) (IN THOUSANDS) ASSETS(%)(D)
ASSETS(%)

PUTNAM VT MONEY MARKET FUND
December 31, 1997 $- $(.0509)
$1.00 5.22 $405,577
.54 5.10
December 31, 1996 - (.0497)
1.00 5.08 $437,132
.53 4.93
December 31, 1995 - (.0533)
1.00 5.46 263,213
.57 5.43
December 31, 1994 - (.0377)
1.003.82244,064.553
.90
December 31, 1993 - (.0276)
1.002.79129,329.422
.77
December 31, 1992 - (.0352)
1.003.57105,694.483
.49
December 31, 1991 - (.0576)
1.005.9278,568.505
.74
December 31, 1990 - (.0770)
1.007.9877,892.537
.67
December 31, 1989 - (.0859)
1.008.88 24,975.638
.62
December 31, 1988**** - (.0575)
1.005.84* 14,001.71*6.70*
PUTNAM VT NEW OPPORTUNITIES FUND
December 31, 1997 $- $-
$21.23 23.29 $2,590,244 .63
(.01)
December 31, 1996 - -
17.2210.17$1,674,197.72
(.13)
December 31, 1995 (.01) (.03)
15.6344.87515,109.84
(.03)
December 31, 1994****** - -
10.828.20*68,592
.47(b)* .03(b)*

PUTNAM VT NEW VALUE FUND
December 31, 1997******** $- $(.85)
$13.42 8.64 $789,540 .696
.58
TOTAL RATIO OF
NET
INVESTMENT
RATIO OF INVESTMENT
NET
ASSET RETURN AT NET ASSETS
EXPENSES TO INCOME TO
RETURN OF TOTAL
VALUE, END NET ASSET END OF PERIOD AVERAGE NET
AVERAGE NET
CAPITAL DISTRIBUTIONS OF
PERIOD VALUE(%)(C) (IN THOUSANDS) ASSETS(%)(D)
ASSETS(%) PUTNAM VT U.S. GOVERNMENT AND
HIGH QUALITY BOND FUND
December 31, 1997 $- $(1.30)
$17.14 27.10 $822,257
.74 3.63
December 31, 1996 - (.82) 13.21 2.42 778,924
.69 6.48
December 31, 1995 - (.85) 13.74 20.44 747,024
.70 6.22
December 31, 1994 - (.88) 12.22 (3.23) 640,458
.67 6.24
December 31, 1993 - (.73) 13.53 11.28 735,386
.64 6.16
December 31, 1992 - (.60) 12.85 7.49 435,906
.70 6.98
December 31, 1991 - (.66) 12.57 17.28 229,306
.74 7.57
December 31, 1990 - (.25) 11.36 7.51 98,549
.76 8.24
December 31, 1989 - (.86) 10.82 14.06 61,765
.76 8.32
December 31, 1988**** - - 10.28 2.78* 28,406
.87* 7.04*

PUTNAM VT UTILITIES
GROWTH AND INCOME FUND
December 31, 1997 $- $(1.30)
$17.14 27.10 $822,257
.74
December 31, 1996 - (.51) 14.80 15.80 657,429
.73 4.22
December 31, 1995 - (.58) 13.28 31.08 530,461
.68 4.72
December 31, 1994 - (.48) 10.68 (7.02) 384,169
.68 5.23
December 31, 1993 - (.14) 12.00 13.42 443,281
.69 5.02
December 31, 1992******* - - 10.71 7.10* 83,522
.64(b)* 3.43(b)*

PUTNAM VISTA FUND******** $-(f) $-
$12.32 23.31 $170,660
.87

PUTNAM VT VOYAGER FUND
December 31, 1997 $- $(1.56)
$39.08 26.51 $4,538,535
.59 .30
December 31, 1996 - (1.81) 32.53 12.97 $3,281,490
.63 .36
December 31, 1995 - (.56) 30.50 40.67 2,000,232
.68 .49
December 31, 1994 - (.42) 22.20 1.04 1,026,972
.71 .40
December 31, 1993 - (.34) 22.41 18.70 675,198
.66 .33
December 31, 1992 - (.52) 19.21 10.36 317,225
.75 .56
December 31, 1991 - (.36) 17.94 46.09 156,741
.81 .78
December 31, 1990 - (.15) 12.58 (2.03) 48,414
.88 1.58
December 31, 1989 - (.62) 13.00 32.38 39,998
.82 1.93
December 31, 1988**** - - 10.30 2.98* 7,981
1.35*1.44*
</TABLE>
AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE PAID(E)

PUTNAM VT ASIA
PACIFIC GROWTH FUND
December 31, 1997 102.92 $.0144
December 31, 1996 66.10 .0197
December 31, 1995** 67.72*

PUTNAM VT DIVERSIFIED
INCOME FUND
December 31, 1997 282.56
December 31, 1996 235.53
December 31, 1995 297.17
December 31, 1994 165.17
December 31, 1993*** 40.83*

PUTNAM VT GLOBAL ASSET
ALLOCATION FUND
December 31, 1997 181.05 $.0295
December 31, 1996 165.03 .0475
December 31, 1995 150.88
December 31, 1994 150.21
December 31, 1993 192.48
December 31, 1992 141.87
December 31, 1991 77.31
December 31, 1990 52.97
December 31, 1989 95.97
December 31, 1988**** 183.11*

PUTNAM VT GLOBAL
GROWTH FUND
December 31, 1997 158.37 $.0245
December 31, 1996 79.18 .0318
December 31, 1995 82.53
December 31, 1994 41.55
December 31, 1993 47.00
December 31, 1992 59.68
December 31, 1991 48.67
December 31, 1990***** 18.07*

AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE
PAID(E)
PUTNAM VT GROWTH AND
INCOME FUND
December 31, 1997 64.96 $.0497
December 31, 1996 39.57 .0517
December 31, 1995 50.87
December 31, 1994 46.43
December 31, 1993 62.63
December 31, 1992 39.58
December 31, 1991 37.94
December 31, 1990 49.39
December 31, 1989 73.40
December 31, 1988*** 37.94*

PUTNAM HIGH YIELD
FUND
December 31, 1997 84.61
December 31, 1996 62.72
December 31, 1995 69.78
December 31, 1994 62.09
December 31, 1993 85.59
December 31, 1992 84.24
December 31, 1991 104.62
December 31, 1990 86.05
December 31, 1989 65.44
December 31, 1988**** 64.25*

PUTNAM VT
INTERNATIONAL
GROWTH FUND
December 31,
1997******** 75.18 $.0352

PUTNAM VT
INTERNATIONAL
GROWTH AND INCOME
FUND
December 31,
1997******** 53.20 $.0330

PUTNAM VT
INTERNATIONAL NEW
OPPORTUNITIES FUND
December 31,
1997******** 131.89 $.0207
AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE
PAID(E)
PUTNAM VT MONEY MARKET
FUND
December 31, 1997 --
December 31, 1996 --
December 31, 1995 --
December 31, 1994 --
December 31, 1993 --
December 31, 1992 --
December 31, 1991 --
December 31, 1990 --
December 31, 1989 --
December 31, 1988**** --

PUTNAM VT NEW
OPPORTUNITIES FUND
December 31, 1997 71.78 $.0472
December 31, 1996 57.94 .0488
December 31, 1995 30.87
December 31, 1994****** 32.77*

PUTNAM VT NEW VALUE
FUND
December 31,
1997******** 64.15

PUTNAM VT U.S.
GOVERNMENT AND
HIGH QUALITY BOND
FUND
December 31, 1997 194.29
December 31, 1996 142.49
December 31, 1995 149.18
December 31, 1994 118.34
December 31, 1993 94.01
December 31, 1992 45.82
December 31, 1991 59.29
December 31, 1990 37.70
December 31, 1989 27.81
December 31, 1988**** 41.41*

PUTNAM VT UTILITIES
GROWTH AND INCOME
FUND
December 31, 1997 42.46 $.0452
December 31, 1996 61.94 .0475
December 31, 1995 60.33
December 31, 1994 84.88
December 31, 1993 50.79
December 31, 1992******* 19.29*

AVERAGE PORTFOLIO COMMISSION
TURNOVER (%) RATE PAID(E)
PUTNAM VISTA FUND
December 31, 1997******** 74.43 $.0381
PUTNAM VT VOYAGER FUND
December 31, 1997 82.00 $.0524
December 31, 1996 63.87 .0544
December 31, 1995 57.51
December 31, 1994 62.44
December 31, 1993 55.85
December 31, 1992 48.17
December 31, 1991 55.04
December 31, 1990 93.65
December 31, 1989 91.82
December 31, 1988**** 103.99*
* Not annualized.
** For the period May 1, 1995 (commencement of
operations) to December 31, 1995.
*** For the period September 15, 1993 (commencement
of operations) to December 31, 1993.
**** For the period February 1, 1988 (commencement of
operations) to December 31, 1988.
***** For the period May 1, 1990 (commencement of
operations) to December 31, 1990.
****** For the period May 2, 1994 (commencement of
operations) to December 31, 1994.
******* For the period May 4, 1992 (commencement of
operations) to December 31, 1992.
******** For the period January 2, 1997 (commencement of
operations) to December 31, 1997.
(a) Per share net investment income has been
determined on the basis of the weighted average number of shares
outstanding during the period.
(b) Reflects an expense limitation in effect during
the period.
As a result of such limitation, expenses of
Putnam VT Asia Pacific Growth Fund for the period
ended December 31, 1995 reflect a reduction of
approximately $0.03 per share, expenses of Putnam
VT High Yield Fund for the period ended December
31, 1988 reflect a reduction of less than $0.01
per share, expenses of Putnam VT New
Opportunities Fund for the period ended December
31, 1994 reflect a reduction of approximately
$0.02 per share, and expenses of Putnam VT
Utilities Growth and Income Fund for the period
ended December 31, 1992 reflect a reduction of
approximately $0.01 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 December 31, 1995 includes
amounts paid through expense offset and brokerage
service arrangements. Prior period ratios exclude
these amounts.
(e) Certain funds are required to disclose the
average commission rate paid per share for fiscal periods beginning
on or after September 1, 1995.
(f) Net investment income distributions from net
investment income and returns of capital were less than
$0.01 per share.

THE TRUST

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

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

Each fund of the Trust has its own investment objective or
objectives which it pursues through its own investment
policies as described below. The particular objectives
and policies of the funds can be expected to affect the
return of each fund and the degree of market and financial
risk to which each fund is subject. For more information
about the investment strategies employed by the funds, see
"Common investment policies and techniques." The
investment objectives and policies of each fund may,
unless otherwise specifically stated, be changed by the
Trustees without a vote of the shareholders. As a matter
of policy, the Trustees would not materially change the
investment objective or objectives of a fund without
shareholder approval. None of the funds is intended to be
a complete investment program, and there is no assurance
that any fund will achieve its objective or objectives.

Additional portfolios with differing investment objectives
and policies may be created from time to time for use as
funding vehicles for insurance company separate accounts
or for other insurance products. In addition, the
Trustees may, subject to any necessary regulatory
approvals, eliminate any fund or divide any fund into two
or more classes of shares with such special or relative
rights and privileges as the Trustees may determine.

GLOSSARY

The following terms are frequently used in this
prospectus. Many of these terms are explained in greater
detail under "Common investment policies and techniques."

"PUTNAM MANAGEMENT" -- Putnam Investment Management,
Inc., the Trust's investment manager
"S&P" -- Standard & Poor's

"MOODY'S" -- Moody's Investors Service, Inc.

"U.S. GOVERNMENT SECURITIES" -- debt securities issued or
guaranteed by the U.S. government, by various of its
agencies, or by various instrumentalities established or
sponsored by the U.S. government. Certain U.S. government
securities, including U.S. Treasury bills, notes and
bonds, mortgage participation certificates guaranteed by
Ginnie Mae, and Federal Housing Administration debentures,
are supported by the full faith and credit of the United
States. Other U.S. government securities issued or
guaranteed by federal agencies or government-sponsored
enterprises are not supported by the full faith and credit
of the United States. These securities include
obligations supported by the right of the issuer to borrow
from the U.S. Treasury, such as obligations of Federal
Home Loan Banks, and obligations supported only by the
credit of the instrumentality, such as Fannie Mae bonds.

"CMOS" -- collateralized mortgage obligations

"GINNIE MAE" -- Government National Mortgage Association

"FANNIE MAE" -- Federal National Mortgage Association

"FREDDIE MAC" -- Federal Home Loan Mortgage Corporation

PUTNAM VT ASIA PACIFIC GROWTH FUND

Putnam VT Asia Pacific Growth Fund's investment objective
is to seek capital appreciation. In seeking capital
appreciation, the fund will invest primarily in securities
of companies located in Asia and in the Pacific Basin.
The fund's investments will normally include common
stocks, preferred stocks, securities convertible into
common stocks or preferred stocks, and warrants to
purchase common stocks or preferred stocks. The fund may
also invest to a lesser extent in debt securities and
other types of investments if Putnam Management believes
they would help achieve the fund's objective. The fund
may hold a portion of its assets in cash and high-quality
money market instruments.

THE FUND MAY INVEST IN SECURITIES OF ISSUERS LOCATED IN
ANY COUNTRY IN ASIA OR THE PACIFIC BASIN WHERE PUTNAM
MANAGEMENT BELIEVES THERE IS POTENTIAL FOR ABOVE-AVERAGE
CAPITAL APPRECIATION. Such 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.

IT IS ANTICIPATED THAT UNDER NORMAL MARKET CONDITIONS THE
FUND WILL INVEST AT LEAST 85% OF ITS ASSETS IN SECURITIES
OF COMPANIES LOCATED IN ASIA AND IN THE PACIFIC BASIN THAT
PUTNAM MANAGEMENT BELIEVES HAVE POTENTIAL FOR CAPITAL
APPRECIATION. The fund will consider an issuer of
securities to be located in Asia or in the Pacific Basin
if it is organized under the laws of a country in Asia or
the Pacific Basin and has a principal office in a country
in Asia or the Pacific Basin, if it derives 50% or more of
its total revenues from business in Asia or the Pacific
Basin, or if its equity securities are traded principally
on a securities exchange in Asia or the Pacific Basin. It
is anticipated that under normal circumstances the fund
will invest at least 65% of its assets in securities of
issuers meeting at least one of the first two criteria
described in the preceding sentence. For a discussion of
the risks associated with foreign investing, see "Common
investment policies and techniques -- Foreign
investments."

THE FUND WILL NOT LIMIT ITS INVESTMENTS TO ANY PARTICULAR
TYPE OF COMPANY. The fund may invest in companies, large
or small, whose earnings are believed to be in a
relatively strong growth trend, or in companies in which
significant further growth is not anticipated but whose
securities are thought to be undervalued. It may invest
in small and relatively less well-known companies. These
companies, which typically have equity market
capitalizations below $1 billion, may present greater
opportunities for capital appreciation, but may also
involve greater risk. They may have limited product
lines, markets or financial resources, or may depend on a
limited management group. Their securities may trade less
frequently and in limited volume, and only in the over-the-
counter market or on a regional securities exchange. As a
result, these securities may fluctuate in value more than
those of larger, more established companies. Debt
securities in which the fund may invest will generally be
rated at the time of purchase at least Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard &
Poor's ("S&P"), and in any event the fund will not invest
in debt securities rated at the time of purchase less than
Baa by Moody's and BBB by S&P, or unrated securities that
Putnam Management determines are of comparable quality, if
as a result more than 5% of the fund's assets would be
invested in such securities. Debt securities rated Baa or
BBB have speculative characteristics and adverse economic
conditions may lead to a weakened capacity to pay interest
and repay principal.

FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH INVESTING IN
LOWER-RATED DEBT SECURITIES, SEE "COMMON INVESTMENT
POLICIES AND TECHNIQUES LOWER-RATED AND OTHER FIXED INCOME
SECURITIES."

In addition to engaging in the options and futures
transactions described under "Common investment policies
and techniques --Futures and options," the fund may
purchase warrants, issued by banks and other financial
institutions, whose values are based on the values of one
or more stock indices.

The fund may engage in defensive strategies when Putnam
Management judges that conditions in the securities
markets make pursuing the fund's basic investment strategy
inconsistent with the best interests of its shareholders.
When pursuing such defensive strategies, the fund may
invest without limit in securities primarily traded in
U.S. markets or in other markets outside Asia or the
Pacific Basin. See "Common investment policies and
techniques" below for a discussion of these strategies.
The fund may also engage in foreign currency exchange
transactions and in transactions in futures and options,
enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery.
See "Common investment policies and techniques" below for
a discussion of these securities and types of transactions
and the risks associated with them.

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

PUTNAM VT DIVERSIFIED INCOME FUND

Putnam VT Diversified Income Fund seeks high current
income consistent with capital preservation. The fund
pursues its investment objective by allocating its
investments among the following three sectors of the fixed-
income securities markets:

* a U.S. GOVERNMENT AND INVESTMENT GRADE SECTOR,
consisting primarily of debt obligations of the U.S.
government, its agencies and instrumentalities;

* a HIGH YIELD SECTOR, consisting of primarily high-
yielding, lowerrated, higher-risk U.S. and foreign
corporate fixed-income securities; and

* an INTERNATIONAL SECTOR, consisting of obligations of
foreign governments, their agencies and instrumentalities,
and other fixedincome securities denominated in foreign
currencies.

PUTNAM MANAGEMENT BELIEVES THAT DIVERSIFYING THE FUND'S
INVESTMENTS AMONG THESE SECTORS, AS OPPOSED TO INVESTING
EXCLUSIVELY IN ANY ONE SECTOR, WILL BETTER ENABLE THE FUND
TO PRESERVE CAPITAL WHILE PURSUING ITS OBJECTIVE OF HIGH
CURRENT INCOME. Historically, the markets for U.S.
government securities, high yielding corporate fixed-
income securities, and debt securities of foreign issuers
have tended to behave independently and have at times
moved in opposite directions. For example, U.S. government
securities have generally been affected negatively by
inflationary concerns resulting from increased economic
activity. High-yield corporate fixed-income securities,
on the other hand, have generally benefitted from
increased economic activity due to improvements in the
credit quality of corporate issuers. The reverse has
generally been true during periods of economic decline.
Similarly, U.S. government securities have often been
negatively affected by a decline in the value of the
dollar against foreign currencies, while the bonds of
foreign issuers held by U.S. investors have generally
benefitted from such decline. Putnam Management believes
that, when financial markets exhibit such a lack of
correlation, a pooling of investments among these markets
may produce greater preservation of capital over the long
term than would be obtained by investing exclusively in
any one of the markets.

PUTNAM MANAGEMENT WILL DETERMINE THE AMOUNT OF ASSETS TO
BE ALLOCATED TO EACH OF THE THREE MARKET SECTORS IN WHICH
THE FUND WILL INVEST BASED ON ITS ASSESSMENT OF THE
RETURNS THAT CAN BE ACHIEVED FROM A PORTFOLIO WHICH IS
INVESTED IN ALL THREE SECTORS. In making this
determination, Putnam Management will rely in part on
quantitative analytical techniques that measure relative
risks and opportunities of each market sector based on
current and historical market data for each sector, as
well as on its own assessment of economic and market
conditions. Although there are no fixed limits on
allocations among sectors, including investments in the
High Yield Sector, Putnam Management will continuously
review this allocation of assets and make such adjustments
as it deems appropriate. Because of the importance of
sector diversification to the fund's investment policies,
Putnam Management expects that a substantial portion of
the fund's assets will normally be invested in each of the
three market sectors. The fund's assets allocated to each
of these market sectors will be managed in accordance with
particular investment policies, which are summarized
below.

The fund may invest in premium securities, engage in
foreign currency exchange transactions, transactions in
futures and options, enter into repurchase agreements,
loan its portfolio securities and purchase securities for
future delivery. See "Common investment policies and
techniques" below for a discussion of these securities and
types of transactions and the risks associated with them.
The fund may also hold a portion of its assets in cash and
money market instruments.

Putnam VT Diversified Income Fund will generally be
managed in a style similar to that of Putnam Diversified
Income Trust.

U.S. GOVERNMENT AND INVESTMENT GRADE SECTOR

THE FUND WILL INVEST ASSETS ALLOCATED TO THE U.S.
GOVERNMENT AND INVESTMENT GRADE SECTOR PRIMARILY IN U.S.
GOVERNMENT SECURITIES. The fund may also purchase other
fixed-income securities that are rated at least BBB or Baa
by a nationally recognized securities rating agency such
as S&P or Moody's, or, if unrated, are determined by
Putnam Management to be of comparable quality. In
purchasing securities for the U.S. Government and
Investment Grade Sector, Putnam Management may take full
advantage of the entire range of maturities of eligible
fixed-income securities and may adjust the average
maturity of the investments held in the portfolio from
time to time, depending on its assessment of relative
yields of securities of different maturities and its
expectations of future changes in interest rates. Under
normal market conditions, the fund will invest at least
20% of its net assets in U.S. government securities, and
at least 65% of the assets allocated to the U.S.
Government and Investment Grade Sector will be invested in
U.S. government securities.

The fund may invest assets allocated to the U.S.
Government and Investment Grade Sector in a variety of
debt securities, including asset-backed and mortgage-
backed securities, such as CMOs and certain stripped
mortgage-backed securities, that are issued by private
U.S. issuers. For a description of these securities, and
the risks associated with them, see "Common investment
policies and techniques - Mortgage-backed and asset-backed
securities."

As noted above, with respect to assets allocated to the
U.S. Government and Investment Grade Sector, the fund will
only invest in privately issued debt securities that are
rated at least BBB or Baa by a nationally recognized
securities rating agency such as S&P or Moody's, or in
unrated securities that Putnam Management determines are
of comparable quality. The fund will not necessarily
dispose of a security if its rating is reduced below its
rating at the time of purchase. However, Putnam
Management will consider such reduction in its
determination of whether the fund should continue to hold
the
security in its portfolio. The foregoing investment
limitations will be measured at the time of purchase and,
to the extent that a security is assigned a different
rating by one or more of the various rating agencies,
Putnam Management will use the highest rating assigned by
any agency.

RISK FACTORS. U.S. government securities are considered
among the safest of fixed-income investments, but their
values, like those of other debt securities, will
fluctuate with changes in interest rates. Changes in the
value of portfolio securities will not affect interest
income from those securities, but will be reflected in the
fund's net asset value. Thus, a decrease in interest
rates will generally result in an increase in the value of
fund shares. Conversely, during periods of rising interest
rates, the value of fund shares will generally decline.
The magnitude of these fluctuations will generally be
greater for securities with longer maturities, and the
fund expects that its portfolio will normally be weighted
towards longer maturities. Because of their added safety,
the yields available from U.S. government securities are
generally lower than the yields available from comparable
corporate debt securities.

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 of default. These
risk factors include the creditworthiness of the issuer
and, in the case of mortgage-backed and asset-backed
securities, the ability of the underlying mortgagors or
other borrowers to meet their obligations.

HIGH YIELD SECTOR

The 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 consider such
reduction in its determination of whether the fund should
continue to hold the security in its portfolio. The
foregoing investment limitations will be measured at the
time of purchase and, to the extent that a security is
assigned a different rating by one or more of the various
rating agencies, Putnam Management will use the highest
rating assigned by any agency. The rating services'
descriptions of these rating categories, including
the speculative characteristics of the lower categories,
are included in the Appendix to this prospectus.
The table below shows the percentages of fund assets
invested during fiscal 1997 in securities assigned to the
various rating categories by S&P, or, if unrated by S&P,
assigned to comparable rating categories by another rating
agency, and in unrated securities determined by Putnam
Management to be of comparable quality.
RATED SECURITIES, UNRATED SECURITIES
OF
AS PERCENTAGE OF COMPARABLE
QUALITY, AS RATING NET ASSETS
PERCENTAGE OF NET ASSETS
- ------ ------------- ------------
- ------------
"AAA" 0.04%
- -
"AA" -
- -
"A" 0.06%
- -
"BBB" 0.27% 0.27%
"BB"
6.09 % 0.25%
"B" 21.86%
4.86%
"CCC" 2.94%
0.06%
"CC" 0.34%
- -
"C" -
- -
"D" 0.13%
- -
-------
- ------Total 31.73%
5.17%
======= =======
For a description of the risks associated with investments
in fixedincome securities, including lower-rated fixed-
income securities, see "Common investment policies and
techniques --Lower-rated and other fixed-income
securities."

The fund may also invest assets allocated to the High Yield
Sector in lower-rated securities of foreign corporate and
governmental issuers denominated either in U.S. dollars or
in foreign currencies. For a discussion of the risks
associated with foreign investing, see "Common investment
policies and techniques -- Foreign investments."

The fund may invest in securities of issuers in emerging
markets, as well as more developed markets. Investing in
emerging markets generally involves more risk than
investing in developed markets.

INTERNATIONAL SECTOR

THE FUND WILL INVEST THE ASSETS ALLOCATED TO THE
INTERNATIONAL SECTOR IN DEBT OBLIGATIONS AND OTHER FIXED-
INCOME SECURITIES DENOMINATED IN NON-U.S. CURRENCIES.
THESE SECURITIES INCLUDE:

* 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 (described
below); and

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

When investing in the International Sector, the fund may
purchase securities in any rating category without limit,
provided that no more than 5% of the net assets of the
fund, regardless of whether they are allocated to the High
Yield Sector or the International Sector, may be invested
in securities rated below Caa or CCC by a nationally
recognized securities rating agency, or, if unrated,
determined by Putnam Management to be of comparable
quality. For discussion of the risks of investing in below
investment grade securities, see "High Yield Sector." The
foregoing investment limitations will be measured at the
time of purchase and, to the extent that a security is
assigned a different rating by one or more of the various
rating agencies, Putnam Management will use the highest
rating assigned by any agency. In the past, yields
available from securities denominated in foreign currencies
have often been higher than those of securities denominated
in U.S. dollars. Putnam Management will consider expected
changes in foreign currency exchange rates in determining
the anticipated returns of securities denominated in
foreign currencies.

The obligations of foreign governmental entities, including
supranational issuers, have various kinds of government
support. Obligations of foreign governmental entities
include obligations issued or guaranteed by national,
provincial, state or other governments with taxing power or
by their agencies. These obligations may or may not be
supported by the full faith and credit of a foreign
government.

Supranational entities include international organizations
designated or supported by governmental entities to promote
economic reconstruction or development and international
banking institutions and related government agencies.
Examples include the International Bank for Reconstruction
and Development (the World Bank), the European Steel and
Coal Community, the Asian Development Bank, and the Inter
American Development Bank. The governmental members or
"stockholders" usually make initial capital contributions
to the supranational entity and in many cases are committed
to make additional capital contributions if the
supranational entity is unable to repay its borrowing.
Each supranational entity's lending activities are limited
to a percentage of its total capital (including "callable
capital" contributed by members at the entity's call),
reserves, and net income.

For a discussion of the risks associated with foreign
investments, see "Common investment policies and techniques
- --Foreign investments."

PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON

Putnam VT The George Putnam Fund of Boston seeks to provide
a balanced investment composed of a well-diversified
portfolio of stocks and bonds which will produce both
capital growth and current income.

In seeking its objective, 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. The proportion
invested in each type of security is not fixed, although
ordinarily no more than 75% of the fund's assets consist of
common stocks and that portion of the value of convertible
securities attributable to conversion rights. The fund
may, however, at times invest more than 75% of its assets
in such securities if Putnam Management determines that
unusual market or economic conditions make it appropriate
to do so. The fund may invest in securities of foreign
issuers that are not actively traded in U.S. markets. The
fund expects that its investments in foreign securities
generally will not
exceed 20% of its total assets, although the fund's
investments in foreign securities may exceed this amount
from time to time.

For a discussion of the risks associated with foreign
investments, see "Common investment policies and techniques
- --Foreign investments."

The fund may invest in both higher-rated and lower-rated
fixed-income securities. See "Common investment policies
and techniques -- Lowerrated and other fixed-income
securities.

The fund may engage in defensive strategies when Putnam
Management judges that conditions in the securities markets
make pursuing the fund's basic investment strategy
inconsistent with the best interests of the fund's
shareholders. See "Common investment policies and
techniques" below for a discussion of these strategies.
The fund may hold a portion of its assets in cash and money
market instruments.
The fund may also engage in foreign currency exchange
transactions and transactions in futures and options, enter
into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them.

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

PUTNAM VT GLOBAL ASSET ALLOCATION FUND

The investment objective of Putnam VT Global Asset
Allocation Fund is to seek a high level of long-term total
return consistent with preservation of capital. By seeking
total return, the fund seeks to increase the value of the
shareholder's investment through both capital appreciation
and investment income. "Total return" includes interest
and dividend income, net of expenses, and realized and
unrealized capital gains and losses on securities. 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
International Equities
U.S. Fixed Income
International Fixed Income

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 engage in defensive strategies when Putnam
Management judges that conditions in the securities markets
make pursuing the fund's basic investment strategy
inconsistent with the best interests of its shareholders.
When pursuing such defensive strategies, the fund may
invest without limit in securities primarily traded in U.S.
markets. See "Common investment policies and techniques"
below for a discussion of these strategies. The fund may
invest in premium securities, engage in foreign currency
exchange transactions and transactions in futures and
options, enter into repurchase agreements, loan its
portfolio securities and purchase securities for future
delivery. See "Common investment policies and techniques"
below for a discussion of these securities and types of
transactions and the risks associated with them. The fund
may also hold a portion of its assets in cash and money
market instruments.

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
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. This category's
portfolio will include equity securities selected primarily
to provide one or more of the following factors: growth in
value, capital protection and dependable income.
Investments will be made in companies, large or small,
whose earnings are believed to be in a relatively strong
growth trend or whose securities are thought to be
undervalued. The fund may invest in small and relatively
less well-known companies. Investing in these companies
may present greater opportunities for capital appreciation,
but also may involve greater risk. They may have limited
product lines, markets or financial resources, or may
depend on a limited management group. Their securities may
trade less frequently and in limited volume, and only in
the over-the-counter market or on a regional securities
exchange. As a result, these securities may fluctuate in
value more than securities of larger, more established
companies.

INTERNATIONAL EQUITIES. The objective of the International
Equities category is to seek capital appreciation. This
category's portfolio will be invested in securities
principally traded in foreign securities markets. These
securities will primarily be common stocks or securities
convertible into common stocks. Investments will be made
in companies, large or small, whose earnings are believed
to be in a relatively strong growth trend or whose
securities are thought to
be undervalued. The fund may invest in small and
relatively less wellknown companies. Investing in these
companies may present greater opportunities for capital
appreciation, but also may involve greater risk. They may
have limited product lines, markets or financial resources,
or may depend on a limited management group. Their
securities may trade less frequently and in limited volume.
As a result, these securities may fluctuate in value more
than securities
of larger, more established companies. For a discussion
of the risks associated with foreign investments, see
"Common investment policies and techniques -- Foreign
investments."

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 which in the judgment
of Putnam Management does not involve undue risk to
principal or income. The U.S. Fixed Income category may
invest 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.

Whereas certain U.S. government securities in which the
fund may invest, such as U.S. Treasury obligations and
Ginnie Mae certificates, are supported by the full faith
and credit of the United States, other fixed-income
securities in which the fund may invest are subject to
varying degrees of risk of default depending upon, among
other factors, the creditworthiness of the issuer and the
ability of the borrower, or, in the case of mortgage-
backed securities, the mortgagor, to meet its obligations.
While the credit risks presented by differing types of
fixed-income securities vary, the values of all fixed-
income securities change as interest rates fluctuate.

For a description of the risks associated with investments
in mortgagebacked and asset-backed securities, see "Common
investment policies
and techniques -- Mortgage-backed and asset-backed
securities."

INTERNATIONAL FIXED INCOME. The investment objective of
the International Fixed Income category is to seek high
current income by investing principally in debt securities
denominated in foreign currencies which are issued by
foreign governments and governmental or supranational
agencies. This category may also invest in other
privately issued debt securities, convertible securities
and preferred stocks principally traded in foreign
securities markets. For a discussion of the risks
associated with foreign investments, see "Common
investment policies and techniques -- Foreign
investments."

GENERAL. Putnam Management will adjust the percentage of
the fund's assets in each investment category from time to
time based upon its market outlook and its analysis of
longer-term trends. 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 will not purchase fixed-income securities rated
below Caa or CCC by each nationally recognized securities
rating agency, such as S&P or Moody's, 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 Baa or 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.

For a description of the risks of investing in fixed-
income securities, including lower-rated fixed-income
securities (commonly known as "junk bonds"), see "Common
investment policies and techniques -- Lower-rated and
other fixed-income securities."

PUTNAM VT GLOBAL GROWTH FUND

Putnam VT Global Growth Fund seeks capital appreciation.
The fund is designed for investors seeking above-average
capital growth potential through a globally diversified
portfolio of common stocks. Dividend
and interest income is only an incidental consideration.
In seeking capital appreciation, the fund follows a global
investment strategy of investing primarily in common
stocks traded in securities markets located in a number of
foreign countries and in the United States.
The fund may at times invest up to 100% of its assets in
securities principally traded in securities markets
outside the United States, and will, under normal market
conditions, invest at least 65% of its assets in at least
three different countries, one of which may be the United
States. In unusual market circumstances where Putnam
Management believes that foreign investing may involve
undue risks, 100% of the fund's assets may be invested in
the United States. The fund may hold a portion of its
assets in cash and money market instruments.

The fund will not limit its investments to any particular
type of company. It may invest in companies, large or
small, whose earnings Putnam Management believes to be in
a relatively strong growth trend, or in companies in which
significant further growth is not anticipated but whose
securities Putnam Management believes to be undervalued.
It may invest in small and relatively less well-known
companies. Investing in securities of smaller, less well-
known companies may present greater opportunities for
capital appreciation, but may also involve greater risks.
These companies may have limited product lines, markets or
financial resources, or may depend on a limited management
group. Their securities may trade less frequently and in
limited volume. As a result, these securities may
fluctuate in value more than prices of securities of
larger, more established companies.

Putnam Management believes that the securities markets of
many nations move relatively independently of one another,
because business cycles and other economic or political
events that influence one country's securities markets may
have little effect on securities markets in other
countries. By investing in a globally diversified
portfolio, Putnam Management attempts to reduce the risks
associated with investing in the economy of only one
country. The countries which Putnam Management believes
offer attractive opportunities for investment may change
from time to time.

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

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

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

PUTNAM VT GROWTH AND INCOME FUND

Putnam VT Growth and Income Fund seeks capital growth and
current income as its investment objectives. The fund
invests primarily in common stocks that offer potential
for capital growth, current income, or both. The fund may
also purchase corporate bonds, notes and debentures,
preferred stocks, convertible securities (both debt
securities and preferred stocks) or U.S. government
securities, if Putnam Management determines that their
purchase would help further the fund's investment
objectives. The types of securities held by the fund may
vary from time to time in light of the fund's investment
objectives, changes in interest rates, and economic and
other factors. The fund may engage in defensive strategies
when Putnam Management judges that conditions in the
securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests
of the fund's shareholders. See "Common investment
policies and techniques" below for a discussion of these
strategies.

The fund may invest in securities principally traded in
foreign markets, and expects that such investments will
not ordinarily exceed 20% of its assets. For a discussion
of the risks associated with foreign investments, see
"Common investment policies and techniques -Foreign
investments." The fund may invest in both higher-rated
and lower-rated fixed-income securities. The risks
associated with fixedincome securities, including lower-
rated fixed-income securities (commonly known as "junk
bonds"), are discussed below under "Common investment
policies and techniques -- Lower-rated and other fixed
income securities."

The fund may hold a portion of its assets in cash and
money market instruments. The fund may also engage in
foreign currency exchange transactions and transactions in
futures and options, enter into repurchase agreements,
loan its portfolio securities and purchase securities for
future delivery. See "Common investment policies and
techniques" below for a discussion of these securities and
types of transactions and the risks associated with them.

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

PUTNAM VT HEALTH SCIENCES FUND

The fund concentrates its investments in a limited group
of industries. The fund is not intended to be a complete
investment program, and there is no assurance it will
achieve its objective.

The fund invests mainly in common stocks of companies in
the health sciences industries, but may also invest a
portion of its assets in other industries and may invest
in fixed-income securities. The fund seeks to purchase
securities that will rise in value; current income is only
a minor consideration. The fund invests primarily in
common stocks, but may also purchase convertible bonds,
convertible preferred stocks, warrants, preferred stocks
and debt securities if Putnam Management believes they
would help achieve the fund's objective of capital
appreciation. The fund may hold a portion of its assets
in cash and money market instruments.

THE HEALTH SCIENCES INDUSTRIES

The fund provides investors with a portfolio of companies
in the health sciences industries. The health sciences
industries include companies that Putnam Management
considers to be principally engaged in the development,
production or distribution of products or services related
to the treatment or prevention of diseases, disorders or
other medical conditions. The following examples
illustrate the wide range of products and services
provided by these industries:

* PHARMACEUTICALS, including ethical
(prescription) and
proprietary (nonprescription) drugs, drug
administration products, and chemical or
biological components used in diagnostic
testing.

* HEALTH CARE SERVICES, including hospitals,
clinical test laboratories, convalescent and mental health
care facilities, rehabilitation centers, and
products and services for home health care.

* APPLIED RESEARCH AND DEVELOPMENT, research and
development including scientific research toward developing
drugs, processes and technologies with possible
commercial applications.

* MEDICAL EQUIPMENT AND SUPPLIES, including
sophisticated electronic equipment used in chemical analysis
and diagnostic testing, surgical and medical
instruments, and other special products.

Putnam Management considers a particular 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 those 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 also considers a
company to be "principally engaged" in these industries if
it believes that the company has the potential for capital
appreciation primarily as a result of particular products,
technology, patents or other market advantages in the
health sciences industries. The fund does not anticipate
that companies in the latter category will represent more
than 15% of the fund's investments in the health sciences
industries.

While the fund's portfolio will normally include
securities of established suppliers of traditional
products and services, the fund may invest without limit
in smaller companies which may benefit from the
development of new products and services. While many
major U.S. corporations are involved in the health
sciences industries, smaller and less seasoned companies
represent a substantial portion of this field,
particularly in the area of emerging medical technologies.
These smaller companies may present greater opportunities
for capital appreciation, but may also involve greater
risks. They may have limited product lines, markets or
financial resources, or may depend
on a limited management group. Their securities may trade
less frequently and in more limited volume than the
securities of larger, more established companies, and only
in the over-the-counter market or on a regional securities
exchange. As a result, the prices of these securities may
fluctuate more erratically, and to a greater degree, than
the prices of securities of other issuers.

Because the fund's investments are concentrated in the
health sciences industries, the value of its shares is
especially affected by factors relating to those
industries and may fluctuate more widely than the value of
shares of a portfolio which invests in a broader range of
industries. For example, 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 reinvestment rates and methods, including
changes in governmental payment systems and the increased
use of managed care arrangements, may affect the revenues
and expenses of health care service providers.

The fund is a "non-diversified" investment company under
the Investment Company Act of 1940 (the "1940 Act"). This
means that, with respect to 50% of its total assets, the
fund may not invest more than 5% of its total assets in
the securities of any one issuer (except U.S. government
securities). With respect to the remaining 50% of the
fund's total assets, the fund may invest up to 25% of its
total assets in the securities of each of any two issuers
(and may invest without limit in U.S. government
securities). To the extent the fund invests a significant
portion of its assets in the securities of a particular
issuer, the fund will be subject to an increased risk of
loss if the market value of such issuer's securities
declines.

The fund may invest in securities; including, but not
limited to, those companies in the health sciences
industries, principally traded in foreign markets, and
expects that such investments will not ordinarily exceed
30% of its assets. For a discussion of the risks
associated with foreign investments, see "Common
investment policies and techniques -- Foreign
investments."

Putnam VT Health Sciences Fund will generally be managed
in a style similar to that of Putnam VT Health Sciences
Trust.

PUTNAM VT HIGH YIELD FUND

The primary investment objective of Putnam VT High Yield
Fund is to seek high current income. Capital growth is a
secondary objective when consistent with high current
income.

The fund seeks high current income by investing primarily
in high-yielding, lower-rated fixed-income securities
(commonly known as "junk bonds"), constituting a portfolio
which Putnam Management believes does not involve undue
risk to income or principal. Normally, at least 80% of the
fund's assets will be invested in debt securities,
convertible securities or preferred stocks that are
consistent with its primary investment objective of high
current income. The fund's remaining assets may be held
in cash or money market instruments, or invested in common
stocks and other equity securities when these types of
investments are consistent with the objective of high
current income. The fund may invest in securities
principally traded in foreign markets, and expects that
such investments will not ordinarily exceed 20% of its
assets. For a discussion of the risks associated with
foreign investments, see "Common investment policies and
techniques -- Foreign investments." The fund may also
invest in premium securities, engage in foreign
currency exchange transactions, enter into repurchase
agreements, loan its portfolio securities and purchase
securities for future delivery. See "Common investment
policies and techniques" below for a discussion of these
securities and types of transactions and the risks
associated with them. The fund may engage in defensive
strategies when Putnam Management judges that conditions
in the securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests
of the fund's shareholders. See "Common investment
policies and techniques" below for a discussion of these
strategies.

The fund seeks its secondary objective of capital growth,
when consistent with its primary objective of high current
income, by investing in securities which may be expected
to appreciate in value as a result of declines in long-
term interest rates or as a result of favorable
developments affecting the business or prospects of the
issuer which may improve the issuer's financial condition
and credit rating. Putnam Management believes that such
opportunities for capital appreciation often exist in the
securities of smaller capitalization companies which have
the potential for significant growth. These securities
may involve greater risks than the securities of larger,
more established issuers.

The fund may generally invest in any security which is
rated at least Caa or CCC by a nationally recognized
securities rating agency, such as S&P or Moody's, or in
any unrated security which Putnam Management determines is
of comparable quality. The fund will not necessarily
dispose of a security when its rating is reduced below its
rating at the time of purchase. However, Putnam Management
will consider such reduction in its determination of
whether the fund should continue to hold the security in
its portfolio. Securities rated below Baa or BBB are
considered to be of poor standing and predominantly
speculative. The fund may invest up to 15% of its assets
in securities rated below Caa or CCC by each rating agency
rating such security, including securities in the lowest
rating category of each rating agency, or in unrated
securities Putnam Management determines are of comparable
quality. Such securities may be in default and are
generally regarded by the rating agencies as having
extremely poor prospects of ever attaining any real
investment standing. For a discussion of the risks
associated with investments in fixed-income securities,
including lower-rated fixed-income securities, see "Common
investment policies and techniques --Lower-rated and other
fixed-income securities." The foregoing investment
limitations will be measured at the time of purchase and,
to the extent that a security is assigned a different
rating by one or more of the various rating agencies,
Putnam Management will use the highest rating assigned by
any agency.

The table below shows the percentages of fund assets
invested during fiscal 1997 in securities assigned to the
various rating categories by S&P, or, if unrated by S&P,
assigned to comparable rating categories by another rating
agency, and in unrated securities determined by
Putnam Management to be of comparable quality.
RATED SECURITIES, UNRATED
SECURITIES OF AS PERCENTAGE OF
COMPARABLE QUALITY, AS
RATING NET ASSETS PERCENTAGE
OF NET ASSETS
- ------ ----------------- ------------
- ------------

"AAA" 0.47% -
"AA" - -
"A" 0.18% -
"BBB" 0.70% -
"BB" 13.29%
0.21%
"B" 57.36%
13.40%
"CCC" 5.44%
0.11%
"CC" 0.81% -
"C" - -
"D" 0.33% -
------
- -----Total 78.58%
13.72%
======
======

The fund may invest in participations and assignments of
fixed and floating rate loans made by financial
institutions to governmental or corporate borrowers. In
addition to the more general investment considerations
applicable to fixed-income investments, participations and
assignments involve the risk that the institution's
insolvency could delay or prevent the flow of payments on
the underlying loan to the fund. The fund may have limited
rights to enforce the terms of the underlying loan, and the
liquidity of loan participations and assignments may be
limited.

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

PUTNAM VT INTERNATIONAL GROWTH FUND

Putnam VT International Growth Fund seeks capital
appreciation.

The fund seeks its objective by investing primarily in
equity securities of companies located in a country other
than the United States. The fund's investments will
normally include common stocks, preferred stocks,
securities convertible into common or preferred stocks, and
warrants to purchase common or preferred stocks. The fund
may also invest to a lesser extent in debt securities and
other types of investments if Putnam Management believes
purchasing them would help achieve the fund's objective.
The fund will, under normal circumstances, invest at least
65% of its total assets in securities of issuers located in
at least three different countries other than the United
States. The fund may hold a portion of its assets in cash
or money market instruments.

The fund will consider an issuer of securities to be
"located in a country other than the United States" if it
is organized under the laws of a country other than the
United States and has a principal office outside the United
States, or if it derives 50% or more of its total revenues
from business outside the United States.

The fund will not limit its investments to any particular
type of company. The fund may invest in companies, large
or small, whose earnings Putnam Management believes are to
be in a relatively strong growth trend, or in companies in
which significant further growth is not anticipated but
whose securities are, in the opinion of Putnam Management,
undervalued. It may invest in small and relatively less
well-known companies which meet these characteristics.

Smaller companies may present greater opportunities for
capital
appreciation, but may also involve greater risks. They may
have limited product lines, markets for financial
resources, or may depend on a limited management group.
Their securities may trade less frequently and in limited
volume. As a result, the prices of these securities may
fluctuate more than prices of securities of larger, more
established companies.

Putnam Management believes that the securities markets of
many nations move relatively independently of one another
because business cycles and other economic or political
events that influence one country's securities markets may
have little effect on securities markets in other
countries. By investing in a diversified portfolio of
foreign securities, Putnam Management attempts to reduce
the risks associated with being invested in the economy of
only one country. The countries which Putnam Management
believes offer attractive opportunities for investment may
change from time to time.

Foreign investments can involve risks that may not be
present in domestic securities. For a discussion of the
risks associated with foreign investments, see "Common
investment policies and techniques -Foreign investments."
The fund may invest in securities of issuers in emerging
markets, as well as more developed markets. Investing in
emerging markets generally involves more risk than
investing in developed markets. See "Common investment
policies and techniques -Foreign investments."

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

PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND

Putnam VT International Growth and Income Fund seeks
capital growth. Current income is a secondary objective.

The fund will invest primarily in common stocks that Putnam
Management believes offer potential for capital growth, and
may, consistent with its investment objectives, invest in
stocks that Putnam Management believes offer potential for
current income. Under normal market conditions, the fund
expects to invest substantially all of its assets in
securities principally traded on markets outside the United
States. The fund will normally diversify its investments
among a number of different countries and, except when
investing for defensive purposes, will invest at least 65%
of its total assets in at least three countries other than
the United States. The fund may invest in securities of
issuers in emerging market countries, as well as securities
of issuers in more developed countries. Investing in
emerging market countries involves special risks. For a
discussion of the risks of foreign investments, see "Common
investment policies and techniques -- Foreign investments."

The fund may also purchase corporate bonds, notes and
debentures, preferred stocks, securities convertible into
common stock or other
equity securities, or U.S. or foreign government securities
if Putnam Management determines that their purchase would
help further the fund's investment objectives.

The types of securities held by the fund may vary from time
to time in light of the fund's investment objectives,
changes in interest rates, and economic and other factors.
When selecting portfolio securities for the fund that have
the potential for capital growth, Putnam Management will
seek to identify securities that are significantly
undervalued in relation to underlying asset values or
earnings potential. The fund may also hold a portion of
its assets in cash or high-quality money market
instruments.

The fund may invest a portion of its assets in securities
of smallcapitalization companies (defined for these
purposes as companies with equity market capitalizations of
less than $1 billion). These securities may involve
certain special risks. Such companies may have limited
product lines, markets or financial resources, and may be
dependent on a limited management group. Such securities
may trade less frequently and in smaller volume than more
widely held securities. The values of these securities may
fluctuate more sharply than those of other securities, and
the fund may experience some difficultly in establishing or
closing out positions in these securities at prevailing
market prices. There may be less publicly available
information about the issuers of these securities or less
market interest in such securities than in the case of
larger companies, and it may take a longer period of time
for the prices of such securities to reflect the full value
of their issuers' underlying earnings potential or assets.

Common stocks of foreign issuers have historically offered
lower yields than common stocks of comparable U.S. issuers.
In addition, foreign withholding taxes may further reduce
the amount of income available for distribution to fund
shareholders. As a result, the fund's yield is expected to
be lower than that of funds with similar investment
objectives that invest primarily in U.S. issuers. See "How
the fund makes distributions to shareholders."

The fund may invest in fixed-income securities rated at
least C by a nationally recognized securities rating
agency, such as S&P or Moody's, and in unrated securities
which Putnam Management determines to be of comparable
quality. The risks associated with fixed-income
securities, including lower-rated fixed-income securities
(commonly known as "junk bonds"), are discussed below under
"Common investment policies and techniques -- Lower-rated
and other fixed-income securities." The 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 consider such reduction in its
determination of whether the fund should continue to hold
the security in its portfolio. The foregoing investment
limitations will be measured at the time of purchase and,
to the extent that a security is assigned a different
rating by one or more of the various rating agencies,
Putnam Management will use the highest rating assigned by
any agency.

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

PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND

Putnam VT International New Opportunities Fund seeks long-
term capital appreciation.

The fund seeks to invest in companies that have above-
average growth prospects due to the fundamental growth of
their market sector. Under normal market conditions, the
fund expects to invest substantially all of its total
assets, other than cash or short-term investments held
pending investment, in common stocks, preferred stocks,
convertible preferred stocks, convertible bonds and other
equity securities principally traded in securities markets
outside the United States. The fund will normally diversify
its investments among a number of different countries and,
except when investing for defensive purposes, will invest
at least 65% of its assets in at least three different
countries other than the United States.

Putnam Management believes that different market sectors in
different countries will experience different rates of
growth depending on the state of economic development of
each country. As a result, Putnam Management seeks to
identify those market sectors which will experience above-
average growth in three broad categories of economies:
less developed economies, developing economies that have
experienced sustained growth over the recent past, and
mature economies. Within the identified growth sectors of
each type of economy, Putnam Management seeks to invest in
particular companies that offer above-average growth
prospects. The sectors in which the fund will invest are
likely to change over time and may include a variety of
industries. Subject to the fund's investment restrictions,
the fund may invest up to one-half of its assets in any one
sector. The fund's emphasis on particular sectors may make
the value of the fund's shares more susceptible to any
single economic, political or regulatory development than
the shares of an investment company which is more widely
diversified. As a result, the value of the fund's shares
may fluctuate more than the value of the shares of such an
investment company. The fund may also invest a portion of
its assets in market sectors other than those that Putnam
Management believes will experience above-average growth if
Putnam Management believes that such investments are
consistent with the fund's investment objective of long-
term capital appreciation.

The securities markets of less developed economies and of
many developing economies are sometimes referred to as
"emerging markets." Although the amount of the fund's
assets invested in emerging securities markets will vary
over time, Putnam Management currently expects that a
substantial portion of the fund's assets will be invested
in emerging markets. These markets are generally
characterized by limited trading volume and greater
volatility and, as a result, the fund may be subject to
greater risks to the extent of its investments in such
markets.

Companies in the fund's portfolio may include small,
rapidly growing companies with equity market
capitalizations of less than $1 billion. These companies
may present greater opportunities for capital
appreciation, but may also involve greater risk. They may
have limited product lines, markets or financial resources,
or may depend on a limited management group. Their
securities may trade less frequently and in limited volume,
and only in the over-the-counter market or on a regional
securities exchange. As a result, these securities may
fluctuate in value more than those of larger, more
established companies.

Because Putnam Management evaluates securities for the fund
based on their long-term potential for capital
appreciation, the fund's investments may not appreciate or
yield significant income 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 invests primarily in common stocks and other
equity securities, but may also invest up to 10% of its
total assets in nonconvertible debt securities if Putnam
Management believes they would help achieve the fund's
objective of long-term capital appreciation. The fund may
invest in securities in the lower-rated categories.
Securities in the lower-rated categories are considered to
be predominantly speculative and may be in default. See
"Common investment policies and techniques -- Lower-rated
and other fixedincome securities." The fund may also hold
a portion of its assets in cash or high-quality money
market instruments.

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

PUTNAM VT INVESTORS FUND

Putnam VT Investors Fund seeks long-term growth of capital
and any increased income that results from this growth.
The fund is designed for investors seeking long-term growth
of capital from a portfolio primarily consisting of quality
common stocks.

Putnam VT Investors Fund invests primarily in common stocks
that Putnam Management believes afford the best opportunity
for capital growth over the long term. Though common
stocks are normally the fund's main investments, the fund
may also purchase convertible bonds, convertible preferred
stocks, preferred stocks and debt securities if Putnam
Management believes they would help achieve the fund's
objective. The fund may also hold a portion of its assets
in cash or money market instruments.

In seeking the fund's objective of long-term growth of
capital, Putnam Management considers three main factors:

1. The general outlook for the economy.
2. A study of various industries to determine those
with the best possibilities for long-term growth.

3. A detailed study of what appear to be the most
promising individual companies.

In the evaluation of a company, more consideration is given
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. Although the fund's investments are not limited to
any particular type of company, Putnam Management currently
expects that the fund will invest a substantial portion of
its assets in common stocks of companies with equity market
capitalizations of more than $1 billion. The fund may also
invest in common stocks of companies with equity market
capitalizations below this level. Such companies may
present greater opportunities for capital appreciation
because of high potential earnings growth, but may also
involve greater risk. They may have limited product lines,
markets or financial resources, or may depend on a limited
management group. Their securities may trade less
frequently and in limited volume, and only in the over-the-
counter market or on a regional securities exchange. As a
result, these securities may change in value more than
those of larger, more established companies.

The fund may engage in defensive strategies when Putnam
Management judges that conditions in the securities markets
make pursuing the fund's basic investment strategy
inconsistent with the best interests of the fund's
shareholders. See "Common investment policies and
techniques" below for a discussion of these strategies.
The fund may hold a portion of its assets in cash and money
market instruments.
The fund may also engage in foreign currency exchange
transactions and transactions in futures and options, enter
into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them.

Putnam VT Investors Fund will generally be managed in a
style similar to that of Putnam Investors Fund.

PUTNAM VT MONEY MARKET FUND

Putnam VT Money Market Fund seeks as high a rate of current
income as Putnam Management believes is consistent with
preservation of capital and maintenance of liquidity. It
is designed for investors seeking current income with
stability of principal.

THE FUND INVESTS IN A PORTFOLIO OF HIGH-QUALITY MONEY
MARKET INSTRUMENTS. EXAMPLES OF THESE INSTRUMENTS INCLUDE:

* BANK CERTIFICATES OF DEPOSIT (CDS): negotiable
certificates issued against funds deposited in a commercial bank for a
definite period of time and earning a specified return.
* BANKERS' ACCEPTANCES: negotiable drafts or bills of
exchange, which have been "accepted" by a bank, meaning, in effect,
that the bank has unconditionally agreed to pay the face value of
the instrument on maturity.

* PRIME COMMERCIAL PAPER: high-grade, short-term
obligations issued by banks, corporations and other issuers.

* CORPORATE OBLIGATIONS: high-grade, short-term corporate
obligations other than prime commercial paper.

* MUNICIPAL OBLIGATIONS: high-grade, short-term municipal
obligations.

* U.S. GOVERNMENT SECURITIES: marketable securities
issued or guaranteed as to principal and interest by the U.S.
government or by its agencies or instrumentalities.

* REPURCHASE AGREEMENTS: contracts under which the fund
acquires U.S. Treasury or U.S. government agency obligations for
a relatively short period subject to the agreement of
the seller to repurchase and the fund to resell such
obligations at a fixed time and price (representing the
fund's cost plus interest).

The fund will invest only in high-quality securities that
Putnam Management believes present minimal credit risk.
High-quality securities are securities rated at the time of
acquisition in one of the two highest categories by at
least two nationally recognized rating services (or, if
only one rating service has rated the security, by that
service) or if the security is unrated, judged to be of
equivalent quality by Putnam Management. The fund will
maintain a dollar-weighted average maturity of 90 days or
less and will not invest in securities with remaining
maturities of more than 397 days. The fund may invest in
variable or floating rate securities which bear interest at
rates subject to periodic adjustment or which provide for
periodic recovery of principal on demand. Under certain
conditions, these securities may be deemed to have
remaining maturities equal to the time remaining until the
next interest adjustment date or the date on which
principal can be recovered on demand.

The fund may invest in bank certificates of deposit and
bankers' acceptances issued by banks having deposits in
excess of $2 billion (or the foreign currency equivalent)
at the close of the last calendar year. Should the
Trustees decide to reduce this minimum deposit requirement,
shareholders will be notified and this prospectus
supplemented.

Considerations of liquidity and preservation of capital
mean that the fund may not necessarily invest in money
market instruments paying the highest available yield at a
particular time. Consistent with its investment objective,
the fund will attempt to maximize yields by portfolio
trading and by buying and selling portfolio investments in
anticipation of or in response to changing economic and
money market conditions and trends. The fund will also
invest to take advantage of what Putnam Management believes
to be temporary disparities in yields of different segments
of the high-grade money market or among particular
instruments within the same segment of the market. These
policies, as well as the relatively short maturity of
obligations purchased by the fund, may result in frequent
changes in the fund's portfolio. Portfolio turnover may
give rise to capital gains. The fund does not usually pay
brokerage commissions in connection with the purchase or
sale of portfolio securities. See "Management --
Portfolio Transactions -- Brokerage and research services"
in the SAI for a discussion of underwriters' commissions
and dealers' spreads involved in the purchase and sale of
portfolio securities.

The value of the securities in the fund's portfolio can be
expected to vary inversely to changes in prevailing
interest rates. Although the fund's investment policies
are designed to minimize these changes and maintain a net
asset value of $1.00 per share, there is no assurance that
these policies will be successful. Withdrawals by
shareholders could require the sale of portfolio
investments at a time when such a sale might not otherwise
be desirable.

The fund may invest without limit in U.S. dollar-
denominated commercial paper of foreign issuers and in bank
certificates of deposits and bankers' acceptances payable
in U.S. dollars and issued by foreign banks (including U.S.
branches of foreign banks) or by foreign branches of U.S.
banks. These investments subject the fund to investment
risks different from those associated with domestic
investments. For a discussion of the risks associated with
foreign investments, See "Common investment policies and
techniques -Foreign investments."

The fund may also lend its portfolio securities. For a
discussion of this strategy and the risks associated with
it, see "Common investment policies and techniques" below.

INSURANCE

The fund, along with four other Putnam money market funds,
has purchased insurance, which, among other things, will
insure the fund against a decrease in the value of a
security held by it due to the issuer's default or
bankruptcy. Most securities and instruments in which the
funds invest, other than U.S. Government securities, are
covered by this insurance. Although the insurance, which
is subject to certain conditions, may provide the fund with
some protection in the event of a decrease in value of
certain of its portfolio securities due to default or
bankruptcy, the policy does not insure or guarantee that
the fund will maintain a stable net asset value of $1.00
per share.

The maximum amount of total coverage under the policy is
$30 million, subject to a deductible in respect of each
loss equal to the lesser of $1 million or 0.30% of the
fund's net assets. As of March 31, 1998, the fund's net
assets totaled $387.78 million. Each of the money market
funds that has purchased the insurance has access to the
full amount of insurance under the policy, subject to the
deductible. Accordingly, depending upon the circumstances,
the fund may not be entitled to recover under the policy,
even though it has experienced a loss that would otherwise
be insurable.

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

PUTNAM VT NEW OPPORTUNITIES FUND
Putnam VT New Opportunities Fund seeks long-term capital
appreciation. The fund seeks its objective by investing
principally in common stocks of companies in sectors of the
economy which Putnam Management believes possess above-
average long-term growth potential.
The fund will generally invest in companies which Putnam
Management identifies as offering the best prospects for
long-term growth within a particular sector. Current
dividend income is only an incidental
consideration. The fund invests primarily in common
stocks, but may also purchase convertible bonds,
convertible preferred stocks, warrants, preferred stocks
and debt securities if Putnam Management believes they
would help achieve the fund's objective of capital
appreciation. The fund may invest in foreign securities,
and expects that investments in securities principally
traded on foreign markets will not ordinarily exceed 20% of
its assets. For a discussion of the risks associated with
foreign investing, see "Common investment policies and
techniques -- Foreign investments." The fund may also
engage in foreign currency exchange transactions and
transactions in futures and options, enter into repurchase
agreements, loan its portfolio securities and purchase
securities for future delivery. See "Common investment
policies and techniques" below for a discussion of these
securities and types of transactions and the risks
associated with them. The fund may also hold a portion of
its assets in cash and money market instruments. The fund
may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make
pursuing the fund's basic investment strategy inconsistent
with the best interests of the fund's shareholders. See
"Common investment policies and techniques" below for a
discussion of these strategies.

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, casino operators,
film entertainment providers, theme park operators, radio
and television stations, billboard advertising providers;

MEDICAL TECHNOLOGY/COST-CONTAINMENT - home and outpatient
care, medical device companies, biotechnology, health
care information services, physician practice management,
managed care providers;

ENVIRONMENTAL SERVICES - solid waste disposal, hazardous
waste disposal, remediation services, environmental
testing;

APPLIED/ADVANCED TECHNOLOGY - database software,
application software, entertainment software, networking
software, computer systems integrators, information
services companies, semiconductors;

PERSONAL FINANCIAL SERVICES - specialty insurance
companies, credit card issuers, and other consumer-
oriented financial services companies; and

VALUE-ORIENTED CONSUMING - consumer franchise companies,
retailers, restaurants, hotel chains, 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.

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, are expected to experience
above-average growth.

The sectors described above represent Putnam Management's
current judgment of the sectors of the economy which offer
the most attractive growth opportunities. The fund will
not necessarily be invested in each of the seven market
sectors at all times. Such sectors are likely to change
over time and may include a variety of industries. Subject
to the fund's investment restrictions, the fund may invest
up to one-half of its assets in any one sector.

The fund will invest in securities that Putnam Management
believes offer above-average long-term growth
opportunities. As a result of the fund's long-term
investment strategy, it is possible that the fund's total
return over certain periods may be less than that of other
equity investment vehicles.

The fund seeks to invest in companies that offer above-
average growth prospects in their particular sector of the
economy, without regard to a company's size. Companies in
the fund's portfolio will range from
small, rapidly growing companies to larger, well-
established firms.
It may invest in small and relatively less well-known
companies. Investing in these companies may present greater
opportunities for capital appreciation, but also may
involve greater risk. They may have limited product lines,
markets or financial resources, or may depend on a limited
management group. Their securities may trade less
frequently and in limited volume, and only in the over-the-
counter market or on a regional securities exchange. As a
result, these securities may fluctuate in value more than
securities of larger, more established companies.

The fund will normally emphasize investments in particular
economic sectors. Although the fund will not invest more
than 25% of its assets in any one industry, the fund's
emphasis on particular sectors of the economy may make the
value of the fund's shares more susceptible to any single
economic, political or regulatory development than the
shares of an investment company which is more widely
diversified. As a result, the value of the fund's shares
may fluctuate more than the
value of the shares of a more diversified investment
company.

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

PUTNAM VT NEW VALUE FUND

Putnam VT New Value Fund seeks long-term capital
appreciation.

The fund will invest primarily in common stocks that Putnam
Management believes are undervalued at the time of purchase
and have the potential for long-term capital appreciation.
The fund is unlike most equity mutual funds in that its
investments will be comprised of a relatively small number
of issuers (currently expected to be approximately 40 to
50). 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. Putnam Management's investment
decisions for the fund may be contrary to those of most
other investors.

In selecting common stocks for the fund, Putnam Management
will consider, among other things, an issuer's financial
strength, current and projected dividend rates, competitive
position and current and projected future earnings. Putnam
Management currently expects that a portion of the fund's
investments will include common stocks that offer the
potential for above-average current income.
The fund's investments may include widely-traded common
stocks of larger companies as well as common stocks of
small companies with equity market capitalizations below $1
billion. These companies may present greater opportunities
for capital appreciation, but may also involve greater
risk. They may have limited product lines, markets or
financial resources, or may depend on a limited management
group. Their securities may trade less frequently and in
limited volume, and only in the over-the-counter market or
on a regional securities exchange. As a result, these
securities may fluctuate in value more than those of
larger, more established companies.

Common stocks and other equity securities are normally the
fund's main investments. However, the fund may purchase
preferred stocks, debt securities and convertible
securities (both bonds and preferred stocks) if Putnam
Management believes they would help achieve the fund's
objective of long-term capital appreciation. The fund may
invest in securities principally traded in foreign markets,
and expects that such investments will not ordinarily
exceed 20% of its assets. For a discussion of the risks
associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments."

The fund may invest in both higher-rated and lower-rated
fixed-income securities, and is not subject to any
restrictions based on credit ratings. See "Common
investment policies and techniques -- Lowerrated and other
fixed-income securities."

The fund may also hold a portion of its assets in cash or
high-quality money market instruments. The fund may also
engage in foreign currency exchange transactions and
transactions in futures and options, enter into repurchase
agreements, loan its portfolio securities and purchase
securities for future delivery. See "Common investment
policies and techniques" below for a discussion of these
securities and types of transactions and the risks
associated with them. The fund may engage in defensive
strategies when Putnam Management judges that conditions in
the securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests of
its shareholders. When pursuing such defensive strategies,
the fund may invest without limit in securities primarily
traded in U.S. markets. See "Common investment policies
and techniques" below for a discussion of these strategies.

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

PUTNAM VT OTC & EMERGING GROWTH FUND

Putnam VT OTC & Emerging Growth Fund seeks capital
appreciation. The fund invests primarily in common stocks
traded in the over-the-counter ("OTC") market and common
stocks of "emerging growth" companies listed on securities
exchanges. The fund is designed for investors willing to
assume above-average risk in return for above-average
capital growth potential. The fund may trade securities
for short-term profits.

The fund invests primarily in common stocks of small- to
medium-sized companies with equity capitalizations of less
than $5 billion that Putnam Management, believes have
potential for capital appreciation significantly greater
than that of the market averages. Under normal market
conditions, the fund will invest at least 65% of its total
assets in common stocks that are traded in the OTC market
(that is,
stocks not listed on any national, regional or foreign
stock exchange) or are issued by "emerging growth"
companies. "Emerging growth" companies are companies
determined by Putnam Management to have a leading or
proprietary position in a growing industry or gaining
market share in an established industry, particularly
companies which have developed a new way to do business
within that industry. These companies may range from
startups, or recently organized companies, to mature
companies with long, established operating histories.

The companies in which the fund invests may offer greater
opportunities for capital appreciation than larger, more
established companies, but investments in such companies
may involve certain special risks. OTC listed and emerging
growth companies may have limited product lines, markets or
financial resources and may be dependent on a limited
management group. Many OTC and emerging growth stocks
trade less frequently and in smaller volume than exchange
listed stocks. The values of these stocks may fluctuate
more sharply than exchange-listed stocks, and the fund may
experience difficulty in establishing or closing out
positions in these stocks at prevailing market prices.

Though common stocks are normally the fund's main
investment, it may also purchase convertible bonds,
convertible preferred stocks, warrants, preferred stocks
and debt securities without being subject to any limitation
based on securities ratings if Putnam Management believes
they would help achieve the fund's objective. Securities
in the lower-rated categories are considered to be
primarily speculative and may be in default. See "Common
investment techniques -- Lowerrated and other fixed income
securities." Dividend and interest income is not a
consideration in the selection of portfolio investments.

The fund may engage in defensive strategies when Putnam
Management judges that conditions in the securities markets
make pursuing the fund's basic investment strategy
inconsistent with the best interests of the fund's
shareholders. See "Common investment policies and
techniques" below for a discussion of these strategies.
The fund may hold a portion of its assets in cash and money
market instruments.
The fund may also engage in foreign currency exchange
transactions and transactions in futures and options, enter
into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them.

The fund expects that its investments in foreign securities
generally will not exceed 20% of its total assets although
the fund's investments in foreign securities may exceed
this amount. For a discussion of the risks associated with
foreign investments, see "Common investment techniques --
Foreign investments." See "Common investment policies and
techniques" below for a discussion of these strategies.

Putnam VT OTC & Emerging Growth Fund will generally be
managed in a style similar to that of Putnam OTC & Emerging
Growth Fund.

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

Putnam VT U.S. Government and High Quality Bond Fund seeks
current income consistent with preservation of capital.
The fund invests primarily in U.S. government securities
and in other debt obligations rated at least A by a
nationally recognized securities rating agency, such as S&P
or Moody's, or, if not rated, determined by Putnam
Management to be of comparable quality. For a more
detailed description of security ratings, see the Appendix
to this prospectus. The 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 consider such reduction in its
determination of whether the fund should continue to hold
the security in its portfolio. The foregoing investment
limitations will be measured at the time of purchase and,
to the extent that a security is assigned a different
rating by one or more of the various rating agencies,
Putnam Management will use the highest rating assigned by
any agency.

Putnam Management will allocate the fund's assets between
U.S. government securities and other high quality bonds,
depending on its assessment of market conditions and the
relative investment returns available from such securities.
The fund will not, however, make any investment, if, as a
result, less than 25% of the value of its assets would be
invested in U.S. government securities. The fund may
invest in securities principally traded in foreign markets,
and expects that such investments will not ordinarily
exceed 20% of its assets. For a discussion of the risks
associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments." The fund
may also invest in premium securities, engage in foreign
currency exchange transactions and transactions in futures
and options, enter into repurchase agreements, loan its
portfolio securities and purchase securities for future
delivery. See "Common investment policies and techniques"
below for a discussion of these strategies and the risks
associated with them. The fund may also hold a portion of
its assets in cash and money market instruments. The fund
may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make
pursuing the fund's basic investment strategy inconsistent
with the best interests of its shareholders. See "Common
investment policies and techniques" below for a discussion
of these strategies.

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

The fund may also invest in high quality mortgage-backed
and assetbacked securities. For a description of these
securities, and the risks associated with them, see "Common
investment policies and techniques -- Mortgage-backed and
asset-backed securities."

U.S. government securities and other high quality bonds do
not involve the degree of credit risk associated with
investments in lower quality fixed-income securities,
although, as a result, the yields available from U.S.
government securities and other high quality bonds are
generally lower than the yields available from many other
fixed-income securities. Like other fixed-income
securities, however, the values of U.S. government
securities and other high quality bonds change as interest
rates fluctuate. Fluctuations in the value of the fund's
securities will not affect interest income on securities
already held by the fund, but will be reflected in the
fund's net asset value. Since the magnitude of these
fluctuations generally will be greater at times when the
fund's average maturity is longer, under certain market
conditions the fund may invest in short-term investments
yielding lower current income rather than investing in
higher yielding longerterm securities.

PUTNAM VT UTILITIES GROWTH AND INCOME FUND

The investment objective of Putnam VT Utilities Growth and
Income Fund is to seek capital growth and current income.
The fund concentrates
its investments in securities issued by companies in the
public utilities industries.

The fund will seek its objective by investing under normal
circumstances at least 65% of its total assets in equity
and debt securities of companies in the public utilities
industries. Equity securities in which the fund may invest
include common stocks, preferred stocks, securities
convertible into common stocks or preferred stocks, and
warrants to purchase common or preferred stocks. The fund
may invest up to 20% of its total assets in securities that
are rated below BBB or Baa by a nationally recognized
securities rating agency, such as S&P or Moody's, or , if
unrated, are determined by Putnam Management to be of
comparable quality. The fund is not subject to any other
restrictions based on securities ratings. Securities rated
below BBB and Baa (and comparable unrated securities) are
commonly known as "junk bonds." See "Common investment
policies and techniques" for a discussion of lower-rated
and other fixed-income securities and the risks associated
with them. The foregoing investment limitations will be
measured at the time of purchase and, to the extent that a
security is assigned a different rating by one or more of
the various rating agencies, Putnam Management will use the
highest rating assigned by any agency in determining
compliance with the foregoing investment limitations. The
fund may invest in debt and equity securities of issuers in
other industries if Putnam Management believes they will
help achieve the fund's objective.

Companies in 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 and companies
engaged in telecommunications, including telephone,
telegraph, satellite, microwave and other communications
media (but not companies engaged in public broadcasting or
cable television). Putnam Management deems a particular
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 one or more of those industries.

The portion of the fund's assets invested in equity
securities and in debt securities will vary from time to
time in light of the fund's investment objective, changes
in interest rates, and economic and other factors.
Although the fund expects that in the near term it will
invest substantial portions of its assets in both equity
securities and in debt securities, the fund may invest all
of its assets in either equity or debt securities. The
fund may hold a portion of its assets in cash and money
market instruments.

The fund may invest up to 25% of its assets in securities
principally traded in foreign markets. For a discussion of
the risks associated with foreign investments, see "Common
investment policies and techniques -- Foreign investments."
The fund may also engage in foreign currency exchange
transactions and transactions in futures and options, enter
into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them. The fund may engage in defensive
strategies when Putnam Management judges that conditions in
the securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests of
the fund's shareholders. See "Common investment policies
and techniques" below for a discussion of these strategies.

Since the fund's investments are concentrated in the
utilities industries, the value of its shares can be
expected to change in response to factors affecting those
industries, and may fluctuate more widely than the value of
shares of a portfolio that invests in a broader range of
industries. 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 in the United States and in foreign countries
with the intention of protecting the public while ensuring
that utility companies earn a return sufficient to allow
them to attract capital in order to grow and continue to
provide appropriate services. There can be no assurance
that such pricing policies or rates of return will continue
in the future.

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

Foreign utility companies may be more heavily regulated
than U.S. utility companies, which may result in increased
costs or otherwise adversely affect the operations of such
companies. The securities of foreign utility companies
also often have lower dividend yields than U.S. utility
companies. The fund's investments in foreign issuers may
include recently privatized enterprises, in which the
fund's participation may be limited or otherwise affected
by local law.
There can be no assurance that governments with
privatization programs will continue such programs or that
privatization will succeed in such countries. In addition,
the stock of certain of these enterprises may be held by a
small group of stockholders, whose sale of a portion or all
of the stock may adversely affect the value of the stock of
any such enterprise.

The fund is "non-diversified." This means that it may
invest its assets in a limited number of issuers. In order
to qualify as a "regulated investment company" under the
Internal Revenue Code (see "How a fund makes distributions
to shareholders; tax information" below), the fund
generally may not invest more than 25% of its total assets
in obligations of any one issuer other than U.S. government
securities and, with respect to 50% of its total assets,
the fund may not invest more than 5% of its total assets in
the securities of any one issuer (except U.S. government
securities). Thus the fund may invest up to 25% of its
total assets in the securities of each of any two issuers.
Because of the limited number of issuers in the public
utilities industries, the fund is more likely to invest a
higher percentage of its assets in the securities of a
single issuer than an investment company which invests in a
broad range of industries. This practice involves an
increased risk of loss to the fund if the issuer is unable
to make interest or principal payments or if the market
value of such securities were to decline.

Putnam VT Utilities Growth and Income Fund will generally
be managed in a style similar to that of Putnam Utilities
Growth and Income Fund. Because the latter fund is
"diversified," however, Putnam VT Utilities Growth and
Income Fund's portfolio may consist of securities of a
smaller number of issuers than the portfolio of that fund.

PUTNAM VT VISTA FUND

Putnam VT Vista Fund seeks capital appreciation. It is
designed for investors seeking above-average capital growth
potential, which involves certain risks.

The fund invests in a diversified portfolio of common
stocks which Putnam Management believes have the potential
for above-average capital appreciation. These may include
widely-traded common stocks of larger companies as well as
common stocks of smaller, less well known companies.
Putnam Management expects that, under normal market
conditions, the fund will generally invest principally in
the equity securities of medium-sized companies. While the
definition of "mediumsized" companies will change over time
in response to market conditions, Putnam Management
believes that such companies currently include those in the
Russell Midcap Growth Index, as well as other companies
with equity market capitalizations ranging from
approximately $450 million to $10 billion. Such securities
are often referred to as "midcap stocks."

In selecting common stocks for the fund, Putnam Management
will consider, among other things, an issuer's financial
strength, competitive position, projected future earnings
and dividends, and other investment criteria. Current
income will be only an incidental consideration in the
selection of investments.

Investment opportunities may be sought among securities of
large, widely traded companies as well as securities of
smaller, less wellknown companies. Smaller companies may
present greater opportunities for capital appreciation, but
may also involve greater risks. They may have limited
product lines, markets or financial resources, or may
depend on a limited management group. Their securities may
trade less frequently and in limited volume. As a result,
the prices of these securities may fluctuate more than
prices of securities of larger, more established companies.

The fund may at times invest a portion of its assets in
common stocks Putnam Management believes are significantly
undervalued. In selecting such common stocks, Putnam
Management will focus on industries and issuers it
considers to have particular possibilities for long-term
capital appreciation due to potential growth of earnings
which, in the judgment of Putnam Management, is not fully
reflected in current market prices. In selecting
undervalued securities, Putnam Management may make
investment judgments contrary to those of most investors.

Although common stocks are normally the fund's main
investments, the fund may purchase preferred stocks, debt
securities, convertible
securities (both bonds and preferred stocks) and warrants
if Putnam Management believes they would help achieve the
fund's objective of capital appreciation. The fund may
purchase debt securities rated at the time of purchase at
least C by a nationally recognized securities rating
agency, such as S&P or Moody's, and unrated securities
determined by Putnam Management to be of comparable
quality. Securities in the lower-rated categories are
considered to be primarily speculative and may be in
default. The risks associated with fixed-income
securities, including lower-rated fixed-income securities
(commonly known as "junk bonds"), are discussed below under
"Common investment policies and techniques -- Lower-rated
and other fixed-income securities." The foregoing
investment limitations will be measured at the time of
purchase and, to the extent that a security is assigned a
different rating by one or more of the various rating
agencies, Putnam Management will use the highest rating
assigned by any agency. The fund may also hold a portion
of its assets in cash or money market instruments and may
invest securities principally traded in foreign markets,
and expects that such investments will not ordinarily
exceed 20% of its assets. For a discussion of the risks
associated with foreign investments, see "Common investment
policies and techniques --Foreign investments."

Putnam VT Vista Fund will generally be managed in a style
similar to Putnam Vista Fund.

PUTNAM VT VOYAGER FUND

Putnam VT Voyager Fund seeks capital appreciation. It is
designed for investors willing to assume above-average risk
in return for aboveaverage capital growth potential.

The fund invests primarily in common stocks of companies
that Putnam Management believes have potential for capital
appreciation that is significantly greater than that of
market averages. The fund may also purchase convertible
bonds, convertible preferred stocks, warrants, preferred
stocks and debt securities if Putnam Management believes
they would help achieve the fund's objective. The fund may
also hold a portion of its assets in cash and money market
instruments and may invest up to 20% of its assets in
foreign securities.

For a discussion of the risks associated with foreign
investments, see "Common investment policies and techniques
- --Foreign investments."
The fund may also engage in foreign currency exchange
transactions and transactions in futures and options, enter
into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them. The fund may engage in defensive
strategies when Putnam Management judges that conditions in
the securities markets make pursuing the fund's basic
investment strategy inconsistent with the best interests of
the fund's shareholders. See "Common investment policies
and techniques" below for a discussion of
these strategies.

The fund's investments may include widely-traded common
stocks of larger companies as well as common stocks of
smaller, less well-known issuers. The fund generally
invests a portion of its assets in the securities of small-
to medium-sized companies with equity market
capitalizations of less than $3 billion. Investing in
these companies may present greater opportunities for
capital appreciation, but may also involve greater risk.
They may have limited product lines, markets or financial
resources, or may depend on a limited management group.
Their securities may trade less frequently and in limited
volume and only in the over-the-counter market or on a
regional securities exchange. As a result, these
securities may fluctuate in value more than securities of
larger, more established companies.

Putnam VT Voyager Fund will generally be managed in a style
similar to Putnam Voyager Fund.

GENERAL

As indicated above, certain of the funds 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.

COMMON INVESTMENT POLICIES AND TECHNIQUES

DIVERSIFICATION POLICIES

Each fund (other than Putnam Diversified Income Fund,
Putnam VT Health Sciences Fund and Putnam VT Utilities
Growth and Income Fund) is a "diversified" investment
company under the Investment Company Act of 1940 (the "1940
Act"). This means that with respect to 75% of its total
assets a fund may not invest more than 5% of its total
assets in the securities of any one issuer (except U.S.
government securities). The remaining 25% of its total
assets is not subject to this restriction. To the extent a
fund invests a significant portion of its assets in the
securities of a particular issuer, it will be subject to an
increased risk of loss if the market value of such issuer's
securities declines.

LIMITING INVESTMENT RISK

SPECIFIC INVESTMENT RESTRICTIONS HELP TO LIMIT INVESTMENT
RISKS FOR EACH FUND'S SHAREHOLDERS. These restrictions
prohibit a fund with respect to 75% of its total assets
(with respect to 50% of its total assets in the case of
Putnam VT Utilities Growth and Income Fund and Putnam VT
Health Sciences Fund,) from holding more than 10% of the
voting securities of any one issuer.* They also prohibit a
fund from investing more than:

(a) (with respect to 75% of total assets for all funds
other than Putnam VT Utilities Growth and Income Fund and
Putnam VT Health Sciences Fund and with respect to 50% of
its total assets for Putnam VT Utilities Growth and Income
Fund And Putnam VT Health Sciences Fund) 5% of its total
assets in securities of any one issuer other than the U.S.
government;*

(b) 25% of its total assets in any one industry (securities
of the U.S. government, its agencies or instrumentalities
are not considered to represent any 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 the health sciences
industries; and except that Putnam VT Money Market Fund may
invest more than 25% of its assets in (i) the banking
industry, (ii) the personal credit institution or business
credit institution industries or (iii) any combination of
the above, when, in the opinion of Putnam Management yield
differentials make such investments desirable.*

(c) 15% of its net assets in any combination of securities
that are not readily marketable, in securities restricted
as to resale (excluding securities determined by the
Trustees (or the person designated by the Trustees to make
such determinations) to be readily marketable), and in
repurchase agreements maturing in more than seven days.

The Money Market Fund has not invested more than 10% of its
net assets in the types of securities listed in item (c)
and has no current intention of doing so.

Restrictions marked with an asterisk (*) above are
summaries of fundamental policies. See the SAI for the
full text of these policies and other fundamental policies.
Except as otherwise noted in the SAI, all percentage
limitations described in this prospectus and the SAI will
apply at the time an investment is made, and will not be
considered violated unless an excess or deficiency occurs
or exists immediately after and as a result of such
investment. Except for investment policies designated as
fundamental in this prospectus or the SAI, the investment
policies described in this prospectus and in
the SAI are not fundamental policies. The Trustees may
change any nonfundamental investment policy without
shareholder approval. As a matter of policy, the Trustees
would not materially change the fund's investment objective
without shareholder approval.

DEFENSIVE STRATEGIES

At times, Putnam Management may judge that conditions in
the securities markets make pursuing a fund's basic investment
strategy inconsistent with the best interests of its
shareholders. At such times, Putnam Management may
temporarily use alternative strategies that are primarily
designed to reduce fluctuations in the value of fund
assets.

In implementing these defensive strategies, a fund may
invest without limit in cash or cash equivalents, money-
market instruments, short-term bank obligations, high-
rated fixed-income securities or preferred stocks or in
any other securities Putnam Management considers
consistent with such defensive strategies.

It is impossible to predict when, or for how long, these
alternative strategies would be used.

PORTFOLIO TURNOVER

Portfolio turnover generally involves some expense,
including brokerage commissions or dealer markups and
other transaction costs in connection with the sale of
securities and reinvestment in other securities. These
transactions may result in realization of taxable capital
gains. A high portfolio turnover for a fund may lead to
higher brokerage costs. Portfolio turnover rates for the
life of each fund (other than Putnam VT The George Putnam
Fund of Boston, Putnam VT
Health Sciences Fund, Putnam VT Investors Fund and Putnam
VT OTC & Emerging Growth Fund, each of which commenced
operations on April 30, 1998, and Putnam VT Money Market
Fund, for which portfolio turnover rates are not required
to be disclosed by the Securities and Exchange Commission)
are shown in the section "Financial highlights." While it
is impossible to predict a fund's portfolio turnover rate,
Putnam Management, based on its experience, believes that
such rate will not exceed 150% for Putnam VT The George
Putnam Fund of Boston, Putnam VT Health Sciences Fund, and
Putnam VT Investors Fund, and 300% for Putnam VT OTC &
Emerging Growth Fund.

INVESTMENTS IN PREMIUM SECURITIES

To the extent described above, certain of the funds may
invest in securities bearing coupon rates higher than
prevailing market rates. Such "premium" securities are
typically purchased at prices greater than the principal
amounts payable on maturity.

A fund does not amortize the premium paid for these
securities in calculating its net investment income. As a
result, the purchase of premium securities provides a
higher level of investment income distributable to
shareholders on a current basis than if the fund purchased
securities bearing current market rates of interest.
Because the value of premium securities tends to approach
the principal amount as they approach maturity (or call
price in the case of securities approaching their first
call date), the purchase of such securities may increase
the fund's risk of capital loss if such securities are
held to maturity (or first call date).

During a period of declining interest rates, many of a
fund's portfolio investments will likely bear coupon rates
that are higher than current market rates, regardless of
whether such securities were originally purchased at a
premium. These securities would generally carry premium
market values that would be reflected in the net asset
value of fund shares. As a result, an investor who
purchases fund shares during such periods would initially
receive higher taxable monthly distributions (derived from
the higher coupon rates payable on a fund's investments)
than might be available from alternative investments
bearing current market interest rates, but the investor
may face an increased risk of capital loss as these higher
coupon securities approach maturity (or first call date).
In evaluating the potential performance of an investment
in a fund, investors may find it useful to compare the
fund's current dividend rate with its "yield," which is
computed on a yield-to-maturity basis in accordance with
SEC regulations and which reflects amortization of market
premiums. See "How performance is shown."

FOREIGN INVESTMENTS

Each fund may invest in securities of foreign issuers
including securities that are not actively traded in U.S.
markets. These foreign investments involve certain
special risks described below.

Investments in foreign securities may subject a fund to
other risks as well. For example, 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 the 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 the 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 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 the fund's assets denominated in such
currencies. Many emerging market countries 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 values of the fund's
investments in these countries and the availability to the
fund of additional investments in these countries. The
small size, limited trading volume and relative
inexperience of the securities markets in these countries
may make the fund's investments in such countries illiquid
and more volatile than investments in more developed
countries, and the fund may be required to establish
special custodial or other arrangements before making
investments in these countries. There may be little
financial or accounting information available with respect
to issuers located in these countries, and it may be
difficult as a result to assess the value or prospects of
an investment in such issuers.

The fund's investments in securities of issuers located in
emerging market countries may include securities issued by
foreign governmental issuers through the exchange of
existing commercial bank loans to such countries for new
bonds in connection with debt restructurings, including
Brady Bonds, which are issued under a debt restructuring
plan introduced by former U.S. Secretary of the Treasury,
Nicholas F. Brady. These securities may have no (or only
limited) collateralization, and the payment of interest
and principal may be dependent on the willingness and the
ability of the foreign governmental issuer to make payment
in accordance with the terms of the security.

Each fund expects that its investments in foreign
securities generally will not exceed the percentage of its
total assets indicated above in its relevant section,
although its investments in foreign securities may exceed
this amount from time to time. 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.

FOR MORE INFORMATION ABOUT FOREIGN SECURITIES AND THE
RISKS ASSOCIATED WITH INVESTMENT IN SUCH SECURITIES, SEE
THE SAI.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS

TO THE EXTENT DESCRIBED ABOVE, CERTAIN OF THE FUNDS MAY
ENGAGE IN FOREIGN CURRENCY EXCHANGE TRANSACTIONS TO MANAGE
THEIR EXPOSURE TO FOREIGN CURRENCIES. Putnam Management
may engage in foreign currency exchange transactions in
connection with the purchase and sale of portfolio
securities ("transaction hedging") and to protect against
changes in the value of specific portfolio positions
("position hedging"). Each such fund may also engage in
foreign currency transactions for non-hedging purposes,
subject to applicable law.

A fund may engage in transaction hedging to protect
against a change in foreign currency exchange rates
between the date on which the fund contracts to purchase
or sell a security and the settlement date, or to "lock
in" the U.S. dollar equivalent of a dividend or interest
payment in a foreign currency. A fund may also 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.

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 securities the fund intends to buy are
denominated, when the fund holds cash or short-term
investments). For position hedging purposes, a 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 overthe-counter markets. In connection with
position hedging, a fund may also purchase or sell foreign
currency on a spot basis.

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.

Each 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 meeting its objective. In
that case the fund may, for example, purchase a currency forward contract
or option in order to increase its exposure to the currency.
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 a
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.
For a further discussion of the risks associated with purchasing and
selling futures contracts and options, see "Futures and options." The
SAI also contains additional information concerning a fund's use of
foreign currency exchange transactions.

FUTURES AND OPTIONS
FUTURES AND OPTIONS ON FUTURES. To the extent described above, each
fund may buy and sell stock index futures contracts ("index futures").
An "index future" is a contract to buy or sell units of a particular
stock index at an agreed price on a specified future date. Depending
on the change in value of the index between the time a fund enters into
and terminates an index futures transaction, the fund realizes a gain
or loss. A fund may also, to the extent consistent with its investment
objectives and policies, buy and sell call and put options on index
futures or stock indexes. A fund may engage in index futures and
options transactions for hedging purposes and for nonhedging purposes,
such as to adjust its exposure to relevant markets or as a substitute
for direct investment. In addition, if a
fund's investment policies permit it to invest in foreign securities,
such fund may invest in futures and options on foreign securities, for
hedging purposes and for nonhedging purposes. The use of index futures
and related options involves certain special risks. Futures and
options transactions involve costs and may result in losses.

To the extent described above, each fund may also buy and sell futures
contracts and related options with respect to U.S. government
securities and options directly on U.S. government securities. Putnam
Management believes that, under certain market conditions, price
movements in U.S. government securities futures and related options may
correlate closely with securities in which such funds may invest and
may, as a result, provide hedging opportunities for the funds. Such
funds may engage in U.S. government securities futures and related
options transactions for hedging purposes and for nonhedging purposes,
such as to substitute for direct investment or to manage their
effective duration. Duration is a commonly used measure of the
longevity of debt instruments.

OPTIONS. As described above, certain of the funds may, to the extent
consistent with their investment objectives and policies, seek to
increase current return by writing covered call and put options on
securities such funds own or in which they may invest. A fund receives
a premium from writing a call or put option, which increases the return
if the option expires unexercised or is closed out at a net profit.

When a fund writes a call option, it gives up the opportunity to profit
from any increase in the price of a security above the exercise price
of the option; when it writes a put option, it takes the risk that it
will be required to purchase a security from the option holder at a
price above the current market price of the security. 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
option having the same terms as the option written.

A fund may also, to the extent consistent with its investment
objectives and policies, buy and sell put and call options, including
combinations of put and call options on the same underlying security.
The use of these strategies may be limited by applicable law.

RISKS RELATED TO OPTIONS AND FUTURES STRATEGIES

OPTIONS AND FUTURES TRANSACTIONS INVOLVE COSTS AND MAY RESULT IN
LOSSES. The effective use of options and futures strategies depends on
a fund's ability to terminate its options and futures positions at
times when Putnam Management deems it desirable to do so. Although a
fund will enter into an option or futures contract position only if
Putnam Management believes that a liquid secondary market exists for
such option or futures contract, there is no assurance that the fund
will be able to effect closing transactions at any particular time or
at an acceptable price. Options on certain U.S. government securities
are traded in significant volume on securities exchanges. However,
other options which a fund may purchase or sell are traded in the "over-
the-counter" market rather than on an exchange. This means that a fund
will enter into such option contracts with particular securities
dealers who make markets in these options. A fund's ability to
terminate options positions established in the over-thecounter market
may be more limited than for exchange-traded options and may also
involve the risk that securities dealers participating in such
transactions would fail to meet their obligations to the fund. Certain
provisions of the Internal Revenue Code and certain regulatory
requirements may limit the use of index futures and options
transactions.

The use of options and futures strategies also involves the risk of
imperfect correlation among movements in the values of the securities,
currencies or indexes underlying the futures and options purchased and
sold by a fund, of the option or futures contract itself, and of the
securities or currencies 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.

A MORE DETAILED EXPLANATION OF FUTURES AND OPTIONS TRANSACTIONS,
INCLUDING THE RISKS ASSOCIATED WITH THEM, IS INCLUDED IN THE SAI.

LOWER-RATED AND OTHER FIXED-INCOME SECURITIES

As described above, certain of the funds may invest in lower-
rated fixed-income securities (commonly known as "junk bonds").
Differing yields on fixed-income securities of the same maturity
are a function of several factors, including the relative
financial strength of the issuers. Higher yields are generally
available from securities in the lower rating categories of a
nationally recognized rating agency (below Baa or BBB) or from
unrated securities of comparable quality. Securities rated below
Baa or BBB are considered to be of poor standing and predominantly
speculative. The rating services' descriptions of securities in
the lower rating categories, including their speculative
characteristics, are set forth in the Appendix to this prospectus.

Securities ratings are based largely on the issuer's historical
financial condition and the rating agencies' investment 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. Although Putnam Management
considers security ratings when making investment decisions, it
performs its own investment analysis and does not rely principally
on the ratings assigned by the rating services. Putnam
Management's analysis may include consideration of the issuer's
experience and managerial strength, changing financial condition,
borrowing requirements or debt maturity schedules, and its
responsiveness to changes in business conditions and interest
rates. It also considers relative values based on anticipated
cash flow, interest or dividend coverage, asset coverage and
earning prospects.

At times, a substantial portion of fund assets may be invested in
securities of which the fund, by itself or together with other
funds and accounts managed by Putnam Management and its
affiliates, holds all or a major portion. Under adverse market or
economic conditions or in the event of adverse changes in the
financial condition of the issuer, it may be more difficult to
sell these securities when Putnam Management believes it advisable
to do so, or a fund 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 of these
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 the securities. This could increase fund
operating expenses and adversely affect the fund's net asset
value.

THE VALUES OF FIXED-INCOME SECURITIES FLUCTUATE IN RESPONSE TO
CHANGES IN INTEREST RATES. A decrease in interest rates will
generally result in an increase in the value of fund assets.
Conversely, during periods of rising interest rates, the value of
fund assets will generally decline. The magnitude of these
fluctuations generally is greater for securities with longer
maturities. However, the yields on such securities are also
generally higher. In addition, the values of fixed-income
securities are affected by changes in general economic and
business conditions affecting the specific industries of their
issuers.

INVESTORS SHOULD CAREFULLY CONSIDER THEIR ABILITY TO ASSUME THE
RISKS OF OWNING SHARES OF A MUTUAL FUND WHICH INVESTS IN LOWER-
RATED SECURITIES BEFORE ALLOCATING A PORTION OF THEIR INSURANCE
INVESTMENT TO A FUND THAT INVESTS IN SUCH SECURITIES.

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
payments of interest and principal would likely make the values of
securities held by a fund more volatile and could limit the fund's
ability to sell its securities at prices approximating the values
placed on such securities. In the absence of a liquid trading
market for its portfolio securities, a fund at times may be unable
to establish the fair value of such securities.

The rating assigned to a security by a nationally recognized
securities rating agency, such as Moody's or S&P does not reflect
an assessment of the volatility of the security's market value or
of the liquidity of an investment in the security.

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
continued investment in the security will assist in meeting a
fund's investment objective.

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 at times may invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount and pay interest
only at maturity rather than at intervals during the life of the
security. 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. Both zero-coupon bonds 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 that pay interest in cash
currently. The values of zero-coupon bonds and payment-in-kind
bonds are subject to greater fluctuation in response to changes in
market interest rates than bonds which pay interest in cash
currently.
Even though such bonds do not pay current interest in cash, a fund
is nonetheless required to accrue interest income on these
investments and to distribute the interest income on a current
basis. Thus, a fund could be required at times to liquidate other
investments in order to satisfy its distribution requirements.
Certain investment grade securities in which a fund may invest
share some of the risk factors discussed above with respect to
lower-rated securities.
FOR ADDITIONAL INFORMATION REGARDING THE RISKS ASSOCIATED WITH
INVESTING IN SECURITIES IN THE LOWER RATING CATEGORIES, SEE THE
SAI.
ILLIQUID SECURITIES. EACH FUND (OTHER THAN PUTNAM VT MONEY MARKET
FUND) MAY INVEST UP TO 15% OF ITS ASSETS IN ILLIQUID SECURITIES.
Putnam Management believes that opportunities to earn high yields
may exist from time to time in securities which are illiquid and
which may be considered speculative. The sale of these securities
is usually restricted under federal securities laws. As a result
of illiquidity, the fund may not be able to sell these securities
when Putnam Management considers it desirable to do so or may have
to sell them at less than fair market value.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
As described above, certain of the funds may invest in assetbacked
and mortgage-backed securities, including 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 without a government guarantee but usually having
some form of private credit enhancement.

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.

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

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

Mortgage-backed and asset-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 and asset-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 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.

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. A
rapid rate of principal prepayments may have a measurably adverse
effect on a fund's yield to maturity to the extent it invests in
IOs. If the assets underlying the IOs experience greater than
anticipated prepayments of principal, a 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.

In either event, the secondary market for stripped mortgagebacked
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.

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

DERIVATIVES

Certain of the instruments in which each fund (except Putnam VT
Money Market Fund) may invest, such as futures contracts, options,
forward contracts and CMOs, 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 these instruments
and the risks involved in their use is included elsewhere in this
prospectus and in the SAI.

HOW PERFORMANCE IS SHOWN

FUND ADVERTISEMENTS MAY, FROM TIME TO TIME, INCLUDE PERFORMANCE
INFORMATION. For funds other than Putnam VT Money Market Fund,
"yield" for each class is calculated by dividing the annualized
net investment income per share during a recent 30-day period by
the maximum public offering price per of the class share on the
last day of that period.

For purposes of calculating yield, net investment income is
calculated in accordance with SEC regulations and may differ from
net investment income as determined for tax purposes. SEC
regulations require that net investment income be calculated on a
"yield-to-maturity" basis, which has the effect of amortizing any
premiums or discounts in the current market value of fixed-income
securities. The current dividend rate is based on net investment
income as determined for tax purposes, which may not reflect
amortization in the same manner. See "Common investment policies
and techniques -- Investments in premium securities." For Putnam
VT Money Market Fund, "yield" for each class represents an
annualization of the change in value of an investment (excluding
any capital changes) in the fund for a specific seven-day period;
"effective yield" for each class compounds that yield for a year
and is, for that reason, greater than the fund's yield.
"Total return" for the one-, five- and ten-year periods (or for
the life of a class if shorter) through the most recent calendar
quarter represents the average annual compounded rate of return on
an investment of $1,000 in a fund. Total return may also be
presented for other periods. To the extent that there is a
difference between the total return and yield quoted for Putnam VT
Money Market Fund, yield will more closely effect the current
earnings of the fund.
ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT
FUTURE PERFORMANCE. Investment performance, which will vary, is
based on many factors, including market conditions, portfolio
composition, fund operating expenses and the class of shares the
investor purchases. Investment performance also often reflects
the risks associated with a fund's investment objective or
objectives and policies. These factors should be considered when
comparing a fund's investment results with those of other mutual
funds and other investment vehicles.
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 with respect to these insurance products.
Insurance related charges and expenses are not reflected in the
funds' performance information. As a result of such insurance
related charges and expenses, an investor's return under the
insurance product would be lower.
For performance information through the funds' most recent fiscal
year, see "Investment Performance of the Trust" in the SAI.

HOW THE TRUST IS MANAGED

THE TRUSTEES ARE RESPONSIBLE FOR GENERALLY OVERSEEING THE CONDUCT
OF TRUST BUSINESS. Subject to such policies as the Trustees may
determine, Putnam Management furnishes a continuing investment
program for the Trust and makes investment decisions on its
behalf. Subject to the control of the Trustees, Putnam Management
also manages the Trust's other affairs and business.

The Trust pays Putnam Management a quarterly fee for these
services based on average net assets. See the SAI.

Putnam Management's Global Asset Allocation Committee has primary
responsibility for the day-to-day management of Putnam VT Global
Asset Allocation Fund.

The following officers of Putnam Management have had primary
responsibility for the day-to-day management of the indicated
funds' portfolios since the years stated below:

Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------
PUTNAM VT ASIA PACIFIC
GROWTH FUND

David K. Thomas 1995 Employed as an investment
Senior Vice President professional by Putnam
Management since 1987.

Paul Warren 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since 1997. Prior
to May, 1997, Mr. Warren was a
Director at IDS Fund
Management. Prior to August,
1994, was a Director at Pilgrim
Baxter Associates and prior to
March, 1994, Mr. Warren was a
Director at Prudential Asia.
PUTNAM VT DIVERSIFIED
INCOME FUND
William Kohli 1994 Employed as an investment
Managing Director professional by Putnam
Management since 1994. Prior
to September, 1994, Mr. Kohli
was Executive Vice President,
and Co-Director of Global Bond
Management and, prior to
October, 1993, Mr. Kohli was
Senior Portfolio Manager at
Franklin Advisors/Templeton
Investment Counsel.
Jennifer E. Leichter 1993 Employed as an investment
Managing Director professional by Putnam
Management since 1987.

Michael Martino 1994 Employed as an investment
Managing Director professional by Putnam
Management since 1994. Prior
to January, 1994, Mr. Martino
was employed by Back Bay
Advisors in the positions of
Executive Vice President and
Chief Investment Officer.

Gail S. Attridge 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since November, 1993.
Prior to November, 1993, Ms. Attridge
was an Analyst at Keystone
Custody International.

Robert M. Paine 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1987.

PUTNAM VT THE GEORGE
PUTNAM FUND OF BOSTON

Edward P. Bousa Employed as an investment
Senior Vice President 1998 professional by Putnam
Management since 1992.

PUTNAM VT GLOBAL
GROWTH FUND

Anthony W. Regan 1996 Employed as an investment
Senior Managing Director professional by Putnam
Management since 1987.

Michael K. Arends 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since November,
1997. Prior to 1997, Mr.
Arends was employed by Phoenix
Duff & Phelps as a Managing
Director, Equities. Prior to
August, 1994, Mr. Arends was
employed as a Portfolio Manager
with Kemper Financial Services.

Ami T. Kuan Danoff 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1993. Prior
to April, 1993, Ms. Danoff
attended the MIT Sloan School
of Management.

Kelly A. Morgan 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since 1996. Prior
to December, 1996, Ms. Morgan
was a Senior Vice President at
Alliance Capital Management
L.P.

Robert Swift 1996 Employed as an investment
Senior Vice President
professional by Putnam
Management since 1995. Prior
to August, 1995, Mr. Swift was
Director and Senior Portfolio
Manager at IAI
International/Hill Samuel
Investment Advisors.

PUTNAM VT GROWTH AND
INCOME FUND

Anthony I. Kreisel 1993 Employed as an investment
Managing Director professional by Putnam
Management since 1986.

David L. King 1993 Employed as an investment
Managing Director professional by Putnam
Management since 1983.

Sheldon N. Simon 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since 1984.

PUTNAM VT HEALTH SCIENCES
FUND

Roland W. Gillis 1998 Employed as an investment
Managing Director professional by
Putnam Management since 1995.
Prior to March, 1995, Mr.
Gillis was a Senior Vice
President of
Keystone Custodian Funds,
Inc.

Richard B. England 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1992.

David G. Carlson 1998 Employed as an
investment Senior Vice
President professional by
Putnam Management since
December 1992.

PUTNAM VT HIGH
YIELD FUND

Rosemary H. Thomsen 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since 1986.

PUTNAM VT INTERNATIONAL
GROWTH FUND

Justin M. Scott 1996 Employed as an investment
Managing Director professional by Putnam
Management since 1988.

Omid Kamshad 1996 Employed as an investment
Managing Director professional by Putnam
Management since 1996. Prior
to January, 1996, Mr. Kamshad
was Director of Investments at
Lombard Odier International and
prior to April, 1995, he was
Director at Baring Asset
Management Company.

PUTNAM VT INTERNATIONAL
GROWTH AND INCOME FUND

Justin M. Scott 1996 Employed as an investment
Managing Director professional by Putnam
Management since 1988.

PUTNAM VT INTERNATIONAL
NEW OPPORTUNITIES FUND

J. Peter Grant 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1973.

Ami T. Kuan Danoff 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1993. Prior
to April, 1993, Ms. Danoff
attended the MIT Sloan School
of Management.

PUTNAM VT INVESTORS
FUND
C. Beth Cotner 1998 Employed as an
Senior Vice President investment professional by
Putnam Management since 1995.
Prior to September, 1995, Ms.
Cotner was Executive Vice
President of Kemper Financial
Services.
Richard B. England 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1992. Prior
to December, 1992, Mr. England
was an investment Officer at
Aetna Equity Investors.

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

PUTNAM VT MONEY
MARKET FUND

Joanne Driscoll 1997 Employed as an investment
Vice President professional by Putnam
Management since 1995. 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 a Financial
Associate at
Bank of Boston. Prior to June 1993, Ms. Driscoll was an
Investment Associate at Bay Banks Investment Management.

PUTNAM VT NEW
OPPORTUNITIES FUND

Carol C. McMullen 1996 Employed as an
investment
Managing Director professional by Putnam
Management since 1995. Prior
to June, 1995, Ms. McMullen
was Senior Vice President of
Baring Asset Management.

Daniel L. Miller 1994 Employed as an investment
Managing Director professional by Putnam
Management since 1983.

PUTNAM VT NEW VALUE FUND

David L. King 1996 Employed as an investment
Managing Director professional by Putnam
Management since 1983.

PUTNAM VT OTC & EMERGING
GROWTH FUND

Steven L. Kirson 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1989.
Michael J. Mufson 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1993. Prior
to June, 1993, Mr. Mufson was
Senior Equity Analyst at Stein
Roe & Farnham.

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

Michael Martino 1998 Employed as an investment
Managing Director professional by Putnam
Management since 1994. Prior
to January, 1994, Mr. Martino
was employed by Back Bay
Advisors in the positions of
Executive Vice President and
Chief Investment Officer.
PUTNAM VT UTILITIES
GROWTH AND INCOME FUND

Sheldon N. Simon 1992 Employed as an investment
Senior Vice President professional by Putnam
Management since 1984.

Christopher A. Ray 1995 Employed as an investment
Senior Vice President professional by Putnam
Management since 1992. Prior
to December, 1992, Mr. Ray was
Vice President and Portfolio
Manager at Scudder, Stevens &
Clark, Inc.

PUTNAM VT VISTA FUND

Eric Wetlaufer 1997 Employed as an investment
Managing Director professional by
Putnam Management since 1997.
Prior to November, 1997, Mr.
Wetlaufer was employed as a
Managing Director and Portfolio
Manager at Cadence Capital
Management.

David J. Santos 1996 Employed as an investment
Vice President professional by Putnam
Management since 1986.

Anthony C. Santosus 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1985.

PUTNAM VT VOYAGER FUND

Robert R. Beck 1995 Employed as an investment
Managing Director professional by Putnam
Management since 1989.

Roland W. Gillis 1995 Employed as an investment
Managing Director professional by Putnam
Management since 1995. Prior
to March, 1995, Mr. Gillis was
Senior Vice President at
Keystone Custodian Funds, Inc.

Michael P. Stack 1997 Employed as an investment
Senior Vice President
professional by Putnam
Management since 1997. Prior
to November, 1997, Mr. Stack
was employed as a Senior Vice
President and Portfolio Manager
at Independence Investment
Associates, Inc.

Charles H. Swanberg 1994 Employed as an investment
Senior Vice President professional by Putnam
Management since 1984.

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

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

EXPENSE LIMITATIONS. In order to limit the expenses of Putnam VT
The George Putnam Fund of Boston, Putnam VT Health Sciences 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 New Value Fund, Putnam
VT OTC & Emerging Growth Fund and Putnam VT Vista Fund during
their start-up periods, Putnam Management has agreed to limit its
compensation (and, to the extent necessary, bear other expenses of
the funds) through December 31, 1998, to the extent that expenses
of the funds (exclusive of brokerage, interest, taxes, deferred
organizational and extraordinary expenses, and payments under the
funds' distribution plan with respect to class IB shares) would
exceed the annual rate of 0.85%, 0.90%, 1.20%, 1.20%, 1.60%,
0.85%, 1.10%, 0.90% and 1.05%, respectively, of the fund's average
net assets.

For the purpose of determining any such limitation on Putnam
Management's compensation, expenses of the funds will not reflect
the application of commissions or cash management credits that may
reduce designated fund expenses.

With Trustee approval, any expense limitation may be terminated
earlier, in which event shareholders would be notified and this
prospectus would be revised.

The following table summarizes total expenses, including
management fees but excluding any separate-account related charges
and expenses, based on the most recent fiscal year (or, for funds
that have been in operation for less than a full year, based on
estimated expenses for the first full fiscal year) as a percentage
of each fund's average net assets:
TOTAL MANAGEMENT OTHER
EXPENSES FEES EXPENSES
(after (after (after
expense expense expense
limitation limitation limitation)
Putnam VT Asia Pacific
Growth Fund 1.07% 0.80% 0.27%
Putnam VT Diversified
Income Fund 0.80% 0.69% 0.11%
Putnam VT The George Putnam
Fund of Boston* 0.85% 0.49% 0.36%
Putnam VT Global
Asset Allocation Fund 0.77% 0.66% 0.11%
Putnam VT Global
Growth Fund 0.75% 0.60% 0.15%
Putnam VT Growth and
Income Fund 0.51% 0.47% 0.04%
Putnam VT Health Sciences Trust* 0.90% 0.56% 0.34%
Putnam VT High Yield Fund 0.72% 0.66% 0.06%
Putnam VT International
Growth Fund* 1.20% 0.73% 0.47%
Putnam VT International
Growth and Income Fund 1.12% 0.80% 0.32%
Putnam VT International
New Opportunities Fund 1.60% 0.92% 0.68%
Putnam VT Investors Fund 0.85% 0.52% 0.33%
Putnam VT Money Market Fund 0.54% 0.45% 0.09%
Putnam VT New
Opportunities Fund* 0.63% 0.58% 0.05%
Putnam VT New Value Fund* 0.85% 0.70% 0.15%
Putnam VT OTC & Emerging Growth
Fund* 0.90% 0.56% 0.34%
Putnam VT U.S. Government
and High Quality Bond Fund 0.69% 0.61% 0.08%
Putnam VT Utilities Growth
and Income Fund 0.74% 0.67% 0.07%
Putnam VT Vista Fund 0.87% 0.65% 0.22%
Putnam VT Voyager Fund 0.59% 0.54% 0.05%

* After expense limitation. The management fees and "Other
expenses" shown in the table reflect an expense limitation. In
the absence of an expense limitation, management fees, "Other
expenses" and total expenses would have been:

Total Management Other
Expenses Fees Expenses

Putnam VT The George
Putnam Fund of Boston+ 1.01 0.65 0.36
Putnam VT Health Sciences
Fund+ 1.04 0.70 0.34
Putnam VT International
Growth Fund 1.27 0.80 0.47
Putnam VT International New
Opportunities Fund 1.88 1.20 0.68
Putnam VT Investors Fund+ 0.98 0.65 0.33
Putnam VT OTC & Emerging
Growth Fund+ 1.04 0.70 0.34

+ Estimated management fees, "Other expenses" and total fund
operating expenses.

In accordance with SEC policy, the expenses shown in the SE tables
do not reflect the application of credits related to brokerage
service and expense offset arrangements that reduce certain fund
expenses.

ORGANIZATION AND HISTORY

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 series of shares,
each representing a separate investment portfolio which is being
offered through 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, both of which are non
diversified investment companies.

Prior to January 1, 1997, Putnam VT Asia Pacific Growth Fund was
known as PCM Asia Pacific Growth Fund, Putnam VT Diversified Income
Fund was known as PCM Diversified Income Fund, Putnam VT Global
Asset Allocation Fund was known as PCM Global Asset Allocation
Fund, Putnam VT Global Growth Fund was known as PCM Global Growth
Fund, Putnam VT Growth and Income Fund was known as PCM Growth and
Income Fund, Putnam VT High Yield Fund was known
as PCM High Yield Fund, Putnam VT Money Market Fund was known as
PCM Money Market Fund, Putnam VT New Opportunities Fund was known
as PCM New Opportunities Fund, Putnam VT U.S. Government and High
Quality Growth Fund was known as PCM U.S. Government and High
Quality Growth Fund, Putnam VT Utilities Growth and Income Fund
was known as PCM Utilities Growth and Income Fund, and Putnam VT
Voyager Fund was known as PCM Voyager Fund.

Any series of shares of the Trust may be further divided without
shareholder approval into two or more classes of shares having
such preferences and special or relative rights and privileges as
the Trustees may determine. Shares of each series are currently
divided into two classes: class IA shares and class IB shares.
Class IB shares are subject to fees imposed pursuant to a
distribution plan. Only class IA shares are offered pursuant to
this prospectus. 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.

THE TRUST'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds. Director, Marsh & McLennan Companies, Inc.;
WILLIAM F. POUNDS, VICE CHAIRMAN. Professor of Management, Alfred
P. Sloan School of Management, Massachusetts Institute of
Technology; JAMESON ADKINS BAXTER, President, Baxter Associates,
Inc.; HANS H. ESTIN, Vice Chairman, North American Management
Corp.; JOHN A. HILL, Chairman and Managing Director, First Reserve
Corporation; RONALD J. JACKSON, Former Chairman, President and
Chief Executive Officer of Fisher-Price, Inc., Trustee of Salem
Hospital and the Peabody Essex Museum; PAUL L. JOSKOW,* Professor
of Economics and Management, Massachusetts Institute of
Technology, Director, New England Electric System, State Farm
Indemnity Company and Whitehead Institute for Biomedical Research;
ELIZABETH T. KENNAN, President Emeritus and Professor, Mount
Holyoke College; LAWRENCE J. LASSER,* Vice President of the Putnam
funds. President, Chief Executive Officer and Director of Putnam
Investments, Inc. and Putnam Management. Director, Marsh &
McLennan Companies, Inc.; JOHN H. MULLIN, III, Chairman and CEO of
Ridgeway Farm, Director of ACX Technologies, Inc., Alex Brown
Realty, Inc., and The Liberty Corporation; ROBERT E. PATTERSON,
President and Trustee of Cabot Industrial Trust and Trustee of the
SEA Education Association; DONALD S. PERKINS,* Director of various
corporations, including Cummins Engine Company, Inc., Lucent
Technologies Inc., Nanophase Technologies, Inc., Springs
Industries, Inc. and Time Warner Inc.; GEORGE PUTNAM, III,*
President, New Generation Research, Inc.; A.J.C. SMITH,* Chairman
and Chief Executive Officer, Marsh & McLennan Companies, Inc.; W.
THOMAS STEPHENS, President and Chief Executive Officer, MacMillan
Bloedel Ltd. Director of Qwest Communications, and New Century
Energies; and W. NICHOLAS THORNDIKE, Director of various
corporations and charitable organizations, including Data General
Corporation, Bradley Real Estate, Inc. and Providence Journal Co.
Also, Trustee of Cabot Industrial Trust, Massachusetts General
Hospital and Eastern Utilities Associates. The Trust's Trustees
are also Trustees of the other Putnam funds. Those marked with an
asterisk (*) are or may be deemed to be "interested persons" of
the Trust, Putnam Management or Putnam Mutual Funds.

ABOUT YOUR INVESTMENT

SALES AND REDEMPTIONS

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

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

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

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

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

HOW A FUND VALUES ITS SHARES

THE TRUST CALCULATES THE NET ASSET VALUE OF A SHARE OF EACH FUND
BY DIVIDING THE TOTAL VALUE OF ITS ASSETS, LESS LIABILITIES, BY
THE NUMBER OF ITS SHARES OUTSTANDING. SHARES ARE VALUED AS OF THE
CLOSE OF REGULAR TRADING ON THE NEW YORK STOCK EXCHANGE EACH DAY
THE EXCHANGE IS OPEN.

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

HOW EACH FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION

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

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

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.

Internal Revenue Service regulations applicable to variable
annuity and variable life insurance separate accounts generally
require that portfolios that serve as the funding vehicles solely
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 (see "Taxes" in the SAI) and no
more than 55% of the value of its total assets consists 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.

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.

Fund transactions in foreign currencies and hedging activities
will likely produce a difference between book income and taxable
income. This difference may cause a portion of a fund's income
distributions to constitute a return of capital for tax purposes
or require a fund to make distributions exceeding book income to
qualify as a regulated investment company for tax purposes.

Investment in an entity that qualifies as a "passive foreign
investment company" under the Internal Revenue Code could subject
a fund to a U.S. federal income tax or other charge on certain
"excess distributions" with respect to the investment, and on the
proceeds from disposition of the investment.

FINANCIAL INFORMATION

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

PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of the Trust and
of other Putnam funds. Putnam Fiduciary Trust Company is the
custodian of the Trust. Putnam Investor Services, a division of
Putnam Fiduciary Trust Company, is the investor servicing and
transfer agent for the Trust.

Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are located at One Post Office Square, Boston,
Massachusetts 02109 and are subsidiaries of Putnam Investments,
Inc., which is 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.
APPENDIX

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 earning any real investment standing.
NOTES
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
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

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

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.
PUTNAM VARIABLE TRUST PUTNAM VARIABLE TRUST

One Post Office Square
Boston, MA 02109

FUND INFORMATION:
INVESTMENT MANAGER

Putnam Investment Management, Inc.
One Post Office Square PROSPECTUS
Boston, MA 02109 APRIL 30, 1998
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109

INVESTOR SERVICING AGENT

Putnam Investor Services
Mailing address:
P.O. Box 41203 Providence,
RI 02940-1203

CUSTODIAN

Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109

LEGAL COUNSEL

Ropes & Gray
One International Place Boston,
MA 02110

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP
160 Federal Street
Boston, MA 02110

PUTNAMINVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800- 521-0538
www.putnaminv.com

PROSPECTUS SUPPLEMENT 43516 6/98
DATED JUNE 17, 1998 TO:

PUTNAM VARIABLE TRUST
PROSPECTUSES DATED APRIL 30, 1998

1. THE FOLLOWING REPLACES THE SECTION ENTITLED ?COMMON INVESTMENT
POLICIES AND TECHNIQUES ? DIVERSIFICATION POLICIES?:

Each fund (other than Putnam VT Health Sciences Fund and Putnam VT
Utilities Growth and Income Fund) is a ?diversified? investment
company under the Investment Company Act of 1940 (the ?1940 Act?).
This means that with respect to 75% of its total assets a fund may
not invest more than 5% of its total assets in the securities of
any one issuer (except U.S. government securities). The remaining
25% of its total assets is not subject to this restriction. To
the extent a fund invests a significant portion of its assets in
the securities of a particular issuer, it will be subject to an
increased risk of loss if the market value of such issuer?s
securities declines.

2. THE FOLLOWING REPLACES THE FIRST TWO SENTENCES OF THE SECTION
ENTITLED ?COMMON INVESTMENT POLICIES AND TECHNIQUES ? LIMITING
INVESTMENT RISK?:

SPECIFIC INVESTMENT RESTRICTIONS HELP TO LIMIT INVESTMENT RISKS
FOR EACH FUND?S SHAREHOLDERS. These restrictions prohibit a fund
with respect to 75% of its total assets (with respect to 50% of
its total assets in the case of Putnam VT Health Sciences Fund and
Putnam VT Utilities Growth and Income Fund) from holding more than
10% of the voting securities of any one issuer.*
3. IN THE SECTION ENTITLED ?HOW THE TRUST IS MANAGED,? THE CHART
INDICATING THE OFFICERS OF PUTNAM INVESTMENT MANAGEMENT, INC.
(?PUTNAM MANAGEMENT?) THAT HAVE PRIMARY RESPONSIBILITY FOR THE DAY-
TO-DAY MANAGEMENT OF THE PORTFOLIO OF PUTNAM VT HEALTH SCIENCES
FUND AND PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND IS
REPLACED WITH THE FOLLOWING:
Business experience
Officer Year (at least 5 years)
- ------- ---- -------------------------
- -

Putnam VT Health Sciences Fund

Richard B. England 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1992.

David G. Carlson 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1992.

Putnam VT International New Opportunities Fund

Robert Swift 1996 Employed as an investment
Managing Director professional by Putnam
Management since 1995. Prior
August, 1995, Mr. Swift was
Director and Senior Portfolio
Manager at IAI International/
Hill Samuel Investment
Advisors.

J. Peter Grant 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1973.

Ami T. Kuan Danoff 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1993. Prior
to April, 1993, Ms. Danoff
attended the MIT Sloan
School of Management.

Stephen Oler 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1997. Prior
to June, 1997, Mr. Oler
was a Vice President at
Templeton Investments, and
prior to March, 1996 was a
Senior Vice President at
Barring Asset Management Co.

Deborah S. Farrell 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1997. Prior
to May, 1997, Ms. Farrell
was a Portfolio Manager at
Emerging Markets Investors
Corporation, and prior to
May, 1994, Ms. Farrell was
Division Manager, Asian
Capital Markets, at
International Finance
Corporation.

THE FOLLOWING REPLACES THE FIRST TWO PARAGRAPHS UNDER THE SECTION
ENTITLED ?PUTNAM VT DIVERSIFIED INCOME FUND ? INTERNATIONAL
SECTOR?:

THE FUND WILL INVEST THE ASSETS ALLOCATED TO THE INTERNATIONAL
SECTOR PRIMARILY IN DEBT OBLIGATIONS AND OTHER FIXED-INCOME
SECURITIES OF NON-U.S. ISSUERS. These securities include:

* 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 (described below);
and

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

Investments in the International Sector are not subject to any
limitation based on securities ratings (other than the limitation
set forth below) and may be denominated in any currency, including
the U.S. dollar. To the extent a security is assigned a different
rating by one or more rating agencies, Putnam Management will use
the highest rating assigned by any agency.
No more than 5% of the net assets of the fund, regardless of
whether they are allocated to the High Yield Sector or the
International Sector, may be invested in securities that are rated
below Caa or CCC by a nationally recognized securities rating
agency, or, if unrated, are determined by Putnam Management to be
of comparable quality. Investments in fixed income securities of
foreign governments and supranational entities will be allocated
to the International Sector. The High Yield Sector and the
International Sector may make investments in foreign corporate
fixed income securities.

HV-2247
PEG-0135-03/98 A
40009-10

47226
PROSPECTUS SUPPLEMENT 44679 7/98
DATED JULY 13, 1998 TO:

PUTNAM VARIABLE TRUST
PROSPECTUSES DATED APRIL 30, 1998

IN THE SECTION ENTITLED "HOW THE TRUST IS MANAGED," THE CHART
INDICATING THE OFFICERS OF PUTNAM INVESTMENT MANAGEMENT, INC.
("PUTNAM MANAGEMENT") THAT HAVE PRIMARY RESPONSIBILITY FOR THE DAY-
TO-DAY MANAGEMENT OF THE PORTFOLIO OF PUTNAM VT UTILITIES GROWTH
AND INCOME FUND IS REPLACED WITH THE FOLLOWING:

Business experience
Officer Year (at least 5 years)
- ------- ---- -------------------------
- -

Putnam VT Utilities Growth and Income Fund

Jeanne Mockard 1998 Employed as an investment
Senior Vice President professional by
Putnam Management since 1990.

Christopher A. Ray 1995 Employed as an investment
Senior Vice President professional by Putnam
Management since 1992

S:\funds\pvt\suppleme\

46096 9/98

PROSPECTUS SUPPLEMENT DATED SEPTEMBER 1, 1998 TO:
PUTNAM VARIABLE TRUST (the "Trust")
Prospectuses dated April 30, 1998

In the section entitled "How the Trust is managed," the chart
indicating the officers of Putnam Investment Management, Inc.
("Putnam Management") that have primary responsibility for the day-
to-day management of the portfolio of Putnam VT Growth and Income
Fund is replaced with the following:

Business Experience
Year (at least 5 years)

PUTNAM VT GROWTH AND
INCOME FUND

Hugh Mullin 1998 Employed as an investment
Managing Director professional by Putam Management since 1986.

David L. King 1993 Employed as an investment
Managing Director professional by Putnam Management since 1983.

Sheldon N. Simon 1997 Employed as an investment
Senior Vice President professional by Putnam Management since 1984.

46096
HV-2266
NS 20626
47402

Prospectus Supplement 46731 9/98
dated September 30, 1998 to: -------------------------------------
- ----------------------------

PUTNAM VARIABLE TRUST
Prospectuses dated April 30, 1998

1. THE FOLLOWING TABLES ARE ADDED TO THE SECTION ENTITLED
"FINANCIAL HIGHLIGHTS"

The following tables present per share financial information for
Class IA Shares. The "Report of independent accountants" and
financial statements included in the Trust's annual report to
shareholders for the 1997 fiscal year are incorporated by
reference into this prospectus. The Financial information for
the six months ended June 30, 1998 is unaudited. The unaudited
financial statements included in the Trust's semi-annual report
are incorporated by reference into this prospectus. The Trust's
annual report and semi-annual report, which contain additional
unaudited performance information, are available without charge
upon request.

<TABLE><CAPTION>
CLASS IA SHARES
FINANCIAL HIGHLIGHTS (UNAUDITED)

INVESTMENT OPERATIONS LESS
DISTRIBUTIONS:
NET FROM
NET ASSET REALIZED AND TOTAL FROM IN EXCESS NET
IN EXCESS OF
VALUE, NET UNREALIZED FROM NET OF NET REALIZED
NET REALIZED
PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT INVESTMENT GAIN ON
GAIN ON
ENDED OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME INVESTMENTS
INVESTMENTS
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
PUTNAM VT ASIA PACIFIC GROWTH FUND
June 30, 1998* $ 9.20 $0.06(a) $(1.12) $(1.06)
$(.39)$-$-$-

PUTNAM VT DIVERSIFIED INCOME FUND
June 30, 1998* $11.31 $.48 $(.16) $.32
$(.48)$-$(.21)$-

PUTNAM VT THE GEORGE PUTNAM
FUND OF BOSTON
June 30, 1998*++ $10.00 $.05(a)(b) $(.08)(f) $(.03) $- $- $-
$-

PUTNAM VT GLOBAL ASSET ALLOCATION FUND
June 30, 1998* $18.76 $.25 $1.71 $1.96
$(.43)$-$(1.85)$-

PUTNAM VT GLOBAL GROWTH FUND
June 30, 1998* $18.34 $.08 $3.58 $3.66
$(.52)$-$(2.60)$-

PUTNAM VT GROWTH AND INCOME FUND
June 30, 1998* $28.32 $.22(a) $2.62 $2.84
$(.50)$-$(3.26)$-

PUTNAM HEALTH SCIENCES
FUND
June 30, 1998*++ $10.00 $.01(a)(b) $.06(f) $.07 $- $- $- $-
PUTNAM VT HIGH
YIELD FUND
June 30, 1998* $13.62 $.67(a) $(.08) $.59
$(1.08)$-$(.17)$-

PUTNAM VT INTERNATIONAL
GROWTH FUND
June 30, 1998* $11.43 $.13(a) $2.13 $2.26 $ - $- $- $-

PUTNAM VT INTERNATIONAL
GROWTH AND INCOME FUND
June 30, 1998* $11.53 $.22(b) $1.57 $1.79 $- $-
$(.04) $-

PUTNAM VT INTERNATIONAL
NEW OPPORTUNITIES FUND
June 30, 1998* $9.96 $.02 $1.60 $1.62 $1.62 $-
$(.02) $-

PUTNAM VT INVESTORS FUND
June 30, 1998*++ $10.00 $.01(a) $.58 $.59 $- $- $- $-

PUTNAM VT MONEY
MARKET FUND
June 30, 1998* 1.00 $.0256 $- $.0256 $(.0256) $- $- $-

PUTNAM VT NEW
OPPORTUNITIES FUND
June 30, 1998* $21.23 $(.01) $3.93 $3.92 $- $-
$(.32) $-

PUTNAM VT NEW VALUE
FUND
June 30, 1998* $11.76 $.08(a) $.37 $.45 $(.09) $-
$(.21) $-

PUTNAM VT OTC & EMERGING GROWTH
FUND
June 30, 1998*++ $10.00 $.01(a)(b) $.22(f) $.23 $- $- $-
$-
PUTNAM VT U.S. GOVERNMENT
AND HIGH QUALITY BOND FUND
June 30, 1998* $13.42 $.40(a) $.15 $.55 $(.73) $-
$(.02) $-
PUTNAM VT UTILITIES
GROWTH AND INCOME FUND
June 30, 1998* $17.14 $.25 $.46 $.71 $(.51) $- $(.88)
$-
PUTNAM VT VISTA
FUND
June 30, 1998* $12.32 $(.01)(a) $2.09 $2.08 $- $- $-
$-

PUTNAM VT VOYAGER FUND
June 30, 1998* $39.08 $.03(a) $6.59 $6.62
$(.10)$-$(2.44)$-
CLASS IA SHARES
FINANCIAL HIGHLIGHTS (UNAUDITED)
TOTAL
RATIO OF NET INVESTMENT
RATIO OF INVESTMENT
NET ASSET RETURN AT NET ASSETS EXPENSES TO
INCOME TO
RETURN OF TOTAL VALUE, END NET ASSET END OF PERIOD AVERAGE NET
AVERAGE NET
CAPITAL DISTRIBUTIONS OF PERIOD VALUE(%)(C) (IN THOUSANDS) ASSETS(%)(D)
ASSETS(%)

PUTNAM VT ASIA
PACIFIC GROWTH FUND
June 30, 1998* $- $(.39) $7.75 (12.07)+ $92,401 .54+
.65+
PUTNAM VT DIVERSIFIED
INCOME FUND
June 30, 1998* $- $(.69) $10.94 $2.86+ $665,951 $.40+
4.28+

PUTNAM VT THE GEORGE PUTNAM
FUND OF BOSTON
June 30, 1998* $- $- $9.97 (.30)+ $17,419 .14(b)+
.52(b)+

PUTNAM VT GLOBAL ASSET
ALLOCATION FUND
June 30, 1998* $- $(2.28) $18.44 10.47+ $1,047,741 $.39+
1.35+
PUTNAM VT GLOBAL GROWTH
FUND
June 30, 1998* $- $(3.12) $18.88 20.76+ $1,906,814 .36+
.34+

PUTNAM VT GROWTH AND
INCOME FUND
June 30, 1998* $- $(3.76) $27.40 $9.92+ $9,495,359 .26+
.79+

PUTNAM VT HEALTH SCIENCES
FUND
June 30, 1998*++ $- $- $10.07 0.70+ $30,645
0.15(b)+ .12(b)+

PUTNAM HIGH YIELD
FUND
June 30, 1998* $- $(1.25) $12.96 $4.28+ $1,145,519 $.35+
5.01+
PUTNAM VT INTERNATIONAL
GROWTH FUND
June 30, 1998* $- $ - $13.69 19.77+ $262,528 .53+
1.02+

PUTNAM VT INTERNATIONAL
GROWTH AND INCOME FUND
June 30, 1998* $- $(.04) $13.28 15.48+ $297,119 0.51(b)+
1.74(b)+

PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
June 30, 1998* $- $(.02) $11.56 $16.28+ $131,411 .76+
.21+
PUTNAM VT INVESTORS FUND
June 30, 1998*++ $- $- $10.59 $5.90+ $35,006 .14+
.14+

PUTNAM VT MONEY MARKET FUND
June 30, 1998* $- $(.0256) $1.00 2.56+ $445,634 .28+
2.54+
PUTNAM VT NEW OPPORTUNITIES FUND
June 30, 1998* $- $(.32) $24.83 $18.51+ $3,288,780 .30+
(.06)+

PUTNAM VT NEW VALUE FUND
June 30, 1998* $- $(.30) $11.91 3.80+ $246,942 .40+
.65+

PUTNAM VT OTC & EMERGING
GROWTH FUND
June 30, 1998* $- $- $10.23 2.30+ $9,037 $.15(b)+
$.08(b)+

PUTNAM VT U.S. GOVERNMENT AND
HIGH QUALITY BOND FUND
June 30, 1998* $- $(.75) $13.22 4.23+ $830,067 .34+
3.04+

PUTNAM VT UTILITIES
GROWTH AND INCOME FUND
June 30, 1998* $- $(1.39) $16.46 3.99+ $884,974 .36+
1.61+

PUTNAM VISTA FUND
June 30, 1998* $- $- $14.40 16.88+ $257,336 .39+
(.07)+

PUTNAM VT VOYAGER FUND
June 30, 1998* $- $(2.54) $43.16 $17.07+ $5,459,943 .29+
.08+

</TABLE>

CLASS IA SHARES
FINANCIAL HIGHLIGHTS (UNAUDITED)
AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE PAID(E)

PUTNAM VT ASIA
PACIFIC GROWTH FUND
June 30, 1998* 68.26+ $.0107

PUTNAM VT DIVERSIFIED
INCOME FUND
June 30, 1998* 103.30+

PUTNAM VT THE GEORGE PUTNAM
FUND OF BOSTON
June 30, 1998*++ 24.33+ $.0237

PUTNAM VT GLOBAL ASSET
ALLOCATION FUND
June 30, 1998* 68.19+ $.0203

PUTNAM VT GLOBAL GROWTH
FUND
June 30, 1998* 81.04+ $.0262

CLASS IA SHARES
FINANCIAL HIGHLIGHTS (UNAUDITED)

AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE PAID(E)
PUTNAM VT GROWTH AND
INCOME FUND
June 30, 1998* 36.12+ $.0503
PUTNAM VT HEALTH SCIENCES
FUND
June 30, 1998*++ 1.93+ $.0289

PUTNAM HIGH YIELD
FUND
June 30, 1998* 31.54+ $0.500

PUTNAM VT INTERNATIONAL
GROWTH FUND
June 30, 1998* 53.10+ $.0281

PUTNAM VT INTERNATIONAL
GROWTH AND INCOME FUND
June 30, 1998* 28.49+ $.0207

PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
June 30, 1998* 65.70+ $.0208

CLASS IA SHARES
FINANCIAL HIGHLIGHTS (UNAUDITED)
AVERAGE
PORTFOLIO COMMISSION
TURNOVER (%) RATE PAID(E)

PUTNAM VT INVESTORS
FUND
June 30, 1998++ 3.63+ $.0263
PUTNAM VT MONEY MARKET FUND
June 30, 1998* --

PUTNAM VT NEW OPPORTUNITIES FUND
June 30, 1998* 27.81+ $.0452

PUTNAM VT NEW VALUE FUND
June 30, 1998* 85.19+ $.0479

PUTNAM VT OTC & EMERGING
GROWTH FUND
June 30, 1998*++ 83.12+ $.0249

PUTNAM VT U.S. GOVERNMENT AND
HIGH QUALITY BOND FUND
June 30, 1998* 93.09+

PUTNAM UTILITIES GROWTH
AND INCOME FUND
June 30, 1998* 13.19+ $.0445
PUTNAM VISTA FUND
June 30, 1998* 51.06+ $.0452

PUTNAM VT VOYAGER FUND
June 30, 1998* 28.12+ $.0494
* Unaudited.
+ Not annualized.
++ For the period April 30, 1998 (commencement of operations) to
June 30, 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 following periods:
<TABLE>
<CAPTION>
6/30/98 12/31/97
12/31/95 12/31/94 <S>
<C> <C> <C> <C>
Putnam VT Asia Pacific Growth Fund Class IA $0.03
Putnam VT The George Putnam Fund of Boston Class IA $0.01
Putnam VT Health Sciences Fund Class IA less than
0.01
Putnam VT International Growth Fund Class IA $0.01
Putnam VT International New Opportunities Fund Class IA $0.02
Putnam VT International Growth and Income Fund Class IA less than
0.01
Putnam VT New Opportunities Fund Class IA
0.02
Putnam VT OTC & Emerging Markets Fund Class IA $0.05

(c) Total investment return assumes dividend reinvestment.
(d) The ratio of expenses to average net assets for the periods
ended December 31, 1995, and thereafter, includes amounts
paid through expense offset and brokerage service
arrangements. Prior period ratios exclude these amounts.
(e) Certain funds are required to disclose the average
commission rate paid per share for fiscal periods beginning
on or after September 1, 1995.
(f) The amount shown for a share outstanding does not
correspond with the aggregate net gain/loss on investments
for the period due to timing of sales and repurchases of
fund share in relation to fluctuating market values of the
investments of the fund.

Prospectus Supplement 46451 9/98 dated September 30, 1998 to:
- -----------------------------------------------------------------

PUTNAM VARIABLE TRUST
Prospectuses dated April 30, 1998

1. THE FOLLOWING SECTION IS ADDED TO THE PROSPECTUS UNDER THE
SECTION "INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS."

PUTNAM VT RESEARCH FUND

Putnam VT Research Fund seeks capital appreciation. The fund is
not intended to be a complete investment program, and there is no
assurance it will achieve its objective.

The fund invests primarily in common stocks recommended by Putnam
Management Investment Management, Inc. ("Putnam Management") as
having the greatest potential for capital appreciation. Because
Putnam Management's style for the fund emphasizes fundamental
analysis, Putnam Management, when selecting securities for the
fund, will focus primarily on individual securities rather than
sector or industry weightings. Notwithstanding this focus on
individual securities, Putnam Management currently expects that
the fund's portfolio will consist of 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.

Common stocks are normally the fund's main investments. However,
the fund may purchase preferred stocks, debt securities and
convertible securities (both bonds and preferred stocks) if Putnam
Management believes they would help achieve the fund's objective
of capital appreciation. These securities may include securities
in the lower-rated categories. Securities in the lower-rated
categories are considered to be primarily speculative and may be
in default. The fund may also invest in securities principally
traded in foreign markets, engage in foreign currency exchange
transactions and transactions in futures contracts and options,
enter into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. The fund may also
hold a portion of its assets in cash or high-quality money market
instruments.

Putnam VT Research Fund will generally be managed in a style
similar to that of Putnam Research Fund.

2. ADD THE FOLLOWING SENTENCE TO THE LAST PARAGRAPH UNDER THE
SECTION "COMMON INVESTMENT POLICIES AND TECHNIQUES - PORTFOLIO
TURNOVER"
While it is impossible to predict a fund's portfolio turnover
rate, Putnam Management, based on its experience, believes that
such rate will not exceed 200% for Putnam VT Research Fund.
3. IN THE SECTION ENTITLED "HOW THE TRUST IS MANAGED," THE CHART
INDICATING THE OFFICERS OF PUTNAM MANAGEMENT THAT HAVE PRIMARY
RESPONSIBILITY FOR THE DAY-TO-DAY MANAGEMENT OF EACH FUND'S
PORTFOLIO IS REVISED WITH RESPECT TO PUTNAM VT RESEARCH FUND AS
FOLLOWS:
PUTNAM VT RESEARCH FUND
Thomas R. Bogan 1998 Employed as an investment
Managing Director professional by Putnam
Management since 1994. Prior to
1994, Mr. Bogan was Senior Analyst
of Lord, Abbett & Co.

EXPENSE LIMITATIONS. In order to limit the expenses of Putnam VT
Research Fund during its start-up period, Putnam Management has
agreed to limit its compensation (and, to the extent necessary,
bear other expenses of the funds) through December 31, 1998, to
the extent that expenses of the fund (exclusive of brokerage,
interest, taxes, deferred organizational and extraordinary
expenses, and payments under the fund's distribution plan with
respect to class IB shares) would exceed the annual rate of 0.85%
of the fund's average net assets.

</TABLE>
<TABLE>
<CAPTION>

TOTAL MANAGEMENT 12B-1 OTHER
EXPENSES FEES+ FEES EXPENSES+
(after (after (after (after
expense expense expense expense
limitation) limitation) limitation) limitation)
<S> <C> <C> <C> <C>

Class IA 0.85% 0.37% N/A 0.48%
Class IB 1.00% 0.37% 0.15% 0.48%

+ The management fees and "Other expenses" shown in the table reflect an
expense limitation. In the absence of an expense limitation, management fees,
"Other expenses" and total fund operating expenses would have been:

TOTAL MANAGEMENT 12B-1 OTHER
EXPENSES FEES FEES EXPENSES

Class IA 1.13% 0.65% N/A 0.48%
Class IB 1.28% 0.65% 0.15% 0.48%

+ Estimated management fees, "Other expenses" and total fund operating
expenses.

</TABLE>
4. THE FIRST PARAGRAPH UNDER THE HEADING "ORGANIZATION AND
HISTORY," IS REPLACED WITH THE FOLLOWING:

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 prospectus, Putnam Investments
owend more than 25% of the shares of the Putnam VT Research Fund
and therefore may be deemed to "control" the fund.
5. THE SECOND PARAGRAPH UNDER THE HEADING "PUTNAM VT MONEY MARKET
FUND - INSURANCE," IS REPLACED WITH THE FOLLOWING:
The maximum amount of total coverage under the policy is $30
million, subject to a deductible in respect of each loss equal to
the lesser of $1 million or 0.30% of the fund's net assets. As
of August 31, 1998, the fund's net assets totaled $609.46 million.
Each of the money market funds that has purchased the insurance
has access to the full amount of insurance under the policy,
subject to the deductible. Accordingly, depending upon the
circumstances, the fund may not be entitled to recover under the
policy, even though it has experienced a loss that would otherwise
be insurable.

6. THE EXPENSE TABLE FOR THE CLASS IA SHARES OF PUTNAM VT HEALTH
SCIENCES FUND, PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND AND
PUTNAM VT INVESTORS FUND UNDER THE HEADING "COMMON INVESTMENT
POLICIES AND TECHNIQUES - HOW THE TRUST IS MANAGED" IS REPLACED
WITH THE FOLLOWING:

TOTAL MANAGEMENT OTHER
EXPENSES FEES EXPENSES
(after (after (after
expense expense expense
limitation) limitation) limitation)
Putnam VT Health Sciences
Fund* 0.90% 0.56% 0.34%
Putnam VT International
Growth Fund* 1.20% 0.73% 0.47%
Putnam VT Investors Fund* 0.85% 0.52% 0.33%
PUTNAM VARIABLE TRUST
CLASS IB SHARES
PROSPECTUS - APRIL 30, 1998, AS REVISED JULY 2, 1998

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: Putnam VT Asia
Pacific Growth Fund, Putnam VT Diversified Income Fund, Putnam VT
The George Putnam Fund of Boston, Putnam VT Global Asset
Allocation Fund, Putnam VT Global Growth Fund, Putnam VT Growth
and Income Fund, Putnam VT Health Sciences Fund, Putnam VT High
Yield Fund, Putnam VT International Growth Fund, Putnam VT
International Growth and Income Fund, Putnam VT International New
Opportunities Fund, Putnam VT Investors Fund, Putnam VT Money
Market Fund, Putnam VT New Opportunities Fund, Putnam VT New Value
Fund, Putnam VT OTC & Emerging Growth Fund, Putnam VT U.S.
Government and High Quality Bond Fund, Putnam VT Utilities Growth
and Income Fund, Putnam VT Vista Fund and Putnam VT Voyager Fund.
Shares of each fund are currently divided into two classes:
class IA shares, offered pursuant to another prospectus, and class
IB shares, offered hereby. The offering of class IB shares
commenced as of the date of this prospectus.

AN INVESTMENT IN PUTNAM VT MONEY MARKET FUND IS NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE
THAT PUTNAM VT MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE.

PUTNAM VT HIGH YIELD FUND INVESTS PRIMARILY IN, AND PUTNAM VT
DIVERSIFIED INCOME FUND MAY INVEST SIGNIFICANTLY IN, LOWER-RATED
BONDS, COMMONLY KNOWN AS "JUNK BONDS." THESE INVESTMENTS ARE
SUBJECT TO A GREATER RISK OF LOSS OF PRINCIPAL AND NON-PAYMENT OF
INTEREST. INVESTORS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN EITHER FUND.

This prospectus explains concisely what you should know before
investing in the Trust and should be read in conjunction with the
prospectus for the separate account of the variable annuity or
variable life insurance product that accompanies this prospectus.
Please read it carefully and keep it for future reference.
Investors can find more detailed information about the Trust in
the April 30, 1998, statement of additional information (the
"SAI"), as amended from time to time. For a free copy of the SAI,
call Putnam Investor Services at 1-800-521-0538. The SAI has been
filed with the Securities and Exchange Commission (the
"Commission") and is incorporated into this prospectus by
reference. The Commission maintains a Web site
(http://www.sec.gov) that contains the SAI, material incorporated
by reference into this prospectus and the SAI, and other
information regarding registrants that file electronically with
the Commission.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.

SHARES OF THE FUNDS ARE PRESENTLY AVAILABLE AND ARE BEING MARKETED
EXCLUSIVELY AS A POOLED FUNDING VEHICLE FOR VARIABLE ANNUITY
CONTRACT AND VARIABLE LIFE INSURANCE POLICY SEPARATE ACCOUNTS OF
VARIOUS INSURANCE COMPANIES.

ABOUT THE TRUST

THE TRUST
.................................................................
This section explains the Trust's relationship to various variable
annuity and variable life insurance products and advises
prospective investors to read the prospectus issued by the
relevant insurance company for information about the annuity or
insurance product.

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
.................................................................
Each of the funds is managed according to its own specific
investment objective or objectives and identifies risks associated
with a fund's investment policies. Read this section to make sure
a fund's objectives are consistent with your own.

COMMON INVESTMENT POLICIES AND TECHNIQUES
.................................................................
Certain investment policies and techniques apply to two or more
of the funds. This section defines, describes, and explains these
policies and techniques.

HOW PERFORMANCE IS SHOWN
.................................................................
This section describes and defines the measures used to assess
fund performance. All data are based on past investment results
and do not predict future performance.

ORGANIZATION AND HISTORY
.................................................................
In this section, you will learn when the Trust was introduced, how
it is organized, how it may offer shares, and who its Trustees
are.

ABOUT YOUR INVESTMENT

SALES AND REDEMPTIONS
.................................................................
This section describes the terms under which shares may be
purchased and redeemed by insurance company separate accounts.

DISTRIBUTION PLAN
................................................................
This section tells you what distribution fees are charged against
the class IB shares.

HOW A FUND VALUES ITS SHARES
.................................................................
This section explains how a fund determines the value of its
shares.

FINANCIAL INFORMATION
.................................................................
This section informs you that each year you will receive
semiannual and annual reports of the Trust.

ABOUT PUTNAM INVESTMENTS, INC.
.................................................................
Read this section to learn more about the companies that provide
marketing, investment management, and shareholder account services
to Putnam funds and their shareholders.

APPENDIX
Securities ratings
ABOUT THE TRUST

THE TRUST

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

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

Each fund of the Trust has its own investment objective or
objectives which it pursues through its own investment policies as
described below. The particular objectives and policies of the
funds can be expected to affect the return of each fund and the
degree of market and financial risk to which each fund is subject.
For more information about the investment strategies employed by
the funds, see "Common investment policies and techniques." The
investment objectives and policies of each fund may, unless
otherwise specifically stated, be changed by the Trustees without
a vote of the shareholders. As a matter of policy, the Trustees
would not materially change the investment objective or objectives
of a fund without shareholder approval. None of the funds is
intended to be a complete investment program, and there is no
assurance that any fund will achieve its objective or objectives.

Additional portfolios with differing investment objectives and
policies may be created from time to time for use as funding
vehicles for insurance company separate accounts or for other
insurance products. In addition, the Trustees may, subject to any
necessary regulatory approvals, eliminate any fund or divide any
fund into two or more classes of shares with such special or
relative rights and privileges as the Trustees may determine.

GLOSSARY

The following terms are frequently used in this prospectus. Many
of these terms are explained in greater detail under "Common
investment policies and techniques."

"PUTNAM MANAGEMENT" -- Putnam Investment Management, Inc., the
Trust's investment manager

"S&P" -- Standard & Poor's

"MOODY'S" -- Moody's Investors Service, Inc.

"U.S. GOVERNMENT SECURITIES" -- debt securities issued or
guaranteed by the U.S. government, by various of its agencies, or
by various instrumentalities established or sponsored by the U.S.
government. Certain U.S. government securities, including U.S.
Treasury bills, notes and bonds, mortgage participation
certificates guaranteed by Ginnie Mae, and Federal Housing
Administration debentures, are supported by the full faith and
credit of the United States. Other U.S. government securities
issued or guaranteed by federal agencies or government-sponsored
enterprises are not supported by the full faith and credit of the
United States. These securities include obligations supported by
the right of the issuer to borrow from the U.S. Treasury, such as
obligations of Federal Home Loan Banks, and obligations supported
only by the credit of the instrumentality, such as Fannie Mae
bonds.

"CMOS" -- collateralized mortgage obligations

"GINNIE MAE" -- Government National Mortgage Association

"FANNIE MAE" -- Federal National Mortgage Association

"FREDDIE MAC" -- Federal Home Loan Mortgage Corporation

PUTNAM VT ASIA PACIFIC GROWTH FUND

Putnam VT Asia Pacific Growth Fund's investment objective is to
seek capital appreciation. In seeking capital appreciation, the
fund will invest primarily in securities of companies located in
Asia and in the Pacific Basin. The fund's investments will
normally include common stocks, preferred stocks, securities
convertible into common stocks or preferred stocks, and warrants
to purchase common stocks or preferred stocks. The fund may also
invest to a lesser extent in debt securities and other types of
investments if Putnam Management believes they would help achieve
the fund's objective. The fund may hold a portion of its assets
in cash and high-quality money market instruments.

THE FUND MAY INVEST IN SECURITIES OF ISSUERS LOCATED IN ANY
COUNTRY IN ASIA OR THE PACIFIC BASIN WHERE PUTNAM MANAGEMENT
BELIEVES THERE IS POTENTIAL FOR ABOVE-AVERAGE CAPITAL
APPRECIATION. Such 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.

IT IS ANTICIPATED THAT UNDER NORMAL MARKET CONDITIONS THE FUND
WILL INVEST AT LEAST 85% OF ITS ASSETS IN SECURITIES OF COMPANIES
LOCATED IN ASIA AND IN THE PACIFIC BASIN THAT PUTNAM MANAGEMENT
BELIEVES HAVE POTENTIAL FOR CAPITAL APPRECIATION. The fund will
consider an issuer of securities to be located in Asia or in the
Pacific Basin if it is organized under the laws of a country in
Asia or the Pacific Basin and has a principal office in a country
in Asia or the Pacific Basin, if it derives 50% or more of its
total revenues from business in Asia or the Pacific Basin, or if
its equity securities are traded principally on a securities
exchange in Asia or the Pacific Basin. It is anticipated that
under normal circumstances the fund will invest at least 65% of
its assets in securities of issuers meeting at least one of the
first two criteria described in the preceding sentence. For a
discussion of the risks associated with foreign investing, see
"Common investment policies and techniques -- Foreign
investments."

Debt securities in which the fund may invest will generally be
rated at the time of purchase at least Baa by Moody's Investors
Service, Inc. ("Moody's") or BBB by Standard & Poor's ("S&P"), and
in any event the fund will not invest in debt securities rated at
the time of purchase less than Baa by Moody's and BBB by S&P, or
unrated securities that Putnam Management determines are
of comparable quality, if as a result more than 5% of the fund's
assets would be invested in such securities. Debt securities
rated Baa or BBB have speculative characteristics and adverse
economic conditions may lead to a weakened capacity to pay
interest and repay principal.

FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH INVESTING IN LOWER
RATED DEBT SECURITIES, SEE "COMMON INVESTMENT POLICIES AND
TECHNIQUES - LOWER-RATED AND OTHER FIXED INCOME SECURITIES."

In addition to engaging in the options and futures transactions
described under "Common investment policies and techniques -
Futures and options," the fund may purchase warrants, issued by
banks and other financial institutions, whose values are based on
the values of one or more stock indices.

The fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of its shareholders. When pursuing such defensive
strategies, the fund may invest without limit in securities
primarily traded in U.S. markets or in other markets outside Asia
or the Pacific Basin. See "Common investment policies and
techniques" below for a discussion of these strategies. The fund
may also engage in foreign currency exchange transactions and in
transactions in futures and options, enter into repurchase
agreements, loan its portfolio securities and purchase securities
for future delivery. See "Common investment policies and
techniques" below for a discussion of these securities and types
of transactions and the risks associated with them.

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

PUTNAM VT DIVERSIFIED INCOME FUND

Putnam VT Diversified Income Fund seeks high current income
consistent with capital preservation. The fund pursues its
investment objective by allocating its investments among the
following three sectors of the fixed-income securities markets:

* a U.S. GOVERNMENT AND INVESTMENT GRADE SECTOR, consisting
primarily of debt obligations of the U.S. government, its agencies
and instrumentalities;

* a HIGH YIELD SECTOR, consisting of primarily high-yielding,
lower-rated, higher-risk U.S. and foreign corporate fixed-income
securities; and

* an INTERNATIONAL SECTOR, consisting of obligations of foreign
governments, their agencies and instrumentalities, and other fixed-
income securities denominated in foreign currencies.

PUTNAM MANAGEMENT BELIEVES THAT DIVERSIFYING THE FUND'S
INVESTMENTS AMONG THESE SECTORS, AS OPPOSED TO INVESTING
EXCLUSIVELY IN ANY ONE SECTOR, WILL BETTER ENABLE THE FUND TO
PRESERVE CAPITAL WHILE PURSUING ITS OBJECTIVE OF HIGH CURRENT
INCOME. Historically, the markets for U.S. government securities,
high yielding corporate fixed-income securities, and debt
securities of foreign issuers have tended to behave independently
and have at times moved in opposite directions.
For example, U.S. government securities have generally been
affected negatively by inflationary concerns resulting from
increased economic activity. High-yield corporate fixed-income
securities, on the other hand, have generally benefitted from
increased economic activity due to improvements in the credit
quality of corporate issuers. The reverse has generally been true
during periods of economic decline. Similarly, U.S. government
securities have often been negatively affected by a decline in the
value of the dollar against foreign currencies, while the bonds of
foreign issuers held by U.S. investors have generally benefitted
from such decline. Putnam Management believes that, when
financial markets exhibit such a lack of correlation, a pooling of
investments among these markets may produce greater preservation
of capital over the long term than would be obtained by investing
exclusively in any one of the markets.

PUTNAM MANAGEMENT WILL DETERMINE THE AMOUNT OF ASSETS TO BE
ALLOCATED TO EACH OF THE THREE MARKET SECTORS IN WHICH THE FUND
WILL INVEST BASED ON ITS ASSESSMENT OF THE RETURNS THAT CAN BE
ACHIEVED FROM A PORTFOLIO WHICH IS INVESTED IN ALL THREE SECTORS.
In making this determination, Putnam Management will rely in part
on quantitative analytical techniques that measure relative risks
and opportunities of each market sector based on current and
historical market data for each sector, as well as on its own
assessment of economic and market conditions. Although there are
no fixed limits on allocations among sectors, including
investments in the High Yield Sector, Putnam Management will
continuously review this allocation of assets and make such
adjustments as it deems appropriate. Because of the importance of
sector diversification to the fund's investment policies, Putnam
Management expects that a substantial portion of the fund's assets
will normally be invested in each of the three market sectors.
The fund's assets allocated to each of these market sectors will
be managed in accordance with particular investment policies,
which are summarized below.

The fund may invest in premium securities, engage in foreign
currency exchange transactions, transactions in futures and
options, enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery. See
"Common investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them. The fund may also hold a portion of its
assets in cash and money market instruments.

Putnam VT Diversified Income Fund will generally be managed in a
style similar to that of Putnam Diversified Income Trust.

U.S. GOVERNMENT AND INVESTMENT GRADE SECTOR

THE FUND WILL INVEST ASSETS ALLOCATED TO THE U.S. GOVERNMENT AND
INVESTMENT GRADE SECTOR PRIMARILY IN U.S. GOVERNMENT SECURITIES.
The fund may also purchase other fixed-income securities that are
rated at least BBB or Baa by a nationally recognized securities
rating agency such as S&P or Moody's, or, if unrated, are
determined by Putnam Management to be of comparable quality. In
purchasing securities for the U.S. Government and Investment Grade
Sector, Putnam Management may take full advantage of the entire
range of maturities of eligible fixed-income securities and may
adjust the average maturity of the investments held in
the portfolio from time to time, depending on its assessment of
relative yields of securities of different maturities and its
expectations of future changes in interest rates. Under normal
market conditions, the fund will invest at least 20% of its net
assets in U.S. government securities, and at least 65% of the
assets allocated to the U.S. Government and Investment Grade
Sector will be invested in U.S. government securities.

The fund may invest assets allocated to the U.S. Government and
Investment Grade Sector in a variety of debt securities, including
asset-backed and mortgage-backed securities, such as CMOs and
certain stripped mortgage-backed securities, that are issued by
private U.S. issuers. For a description of these securities, and
the risks associated with them, see "Common investment policies
and techniques -- Mortgage-backed and assetbacked securities."

As noted above, with respect to assets allocated to the U.S.
Government and Investment Grade Sector, the fund will only invest
in privately issued debt securities that are rated at least BBB or
Baa by a nationally recognized securities rating agency such as
S&P or Moody's, or in unrated securities that Putnam Management
determines are of comparable quality. The fund will not
necessarily dispose of a security if its rating is reduced below
its rating at the time of purchase. However, Putnam Management
will consider such reduction in its determination of whether the
fund should continue to hold the security in its portfolio. The
foregoing investment limitations will be measured at the time of
purchase and, to the extent that a security is assigned a
different rating by one or more of the various rating agencies,
Putnam Management will use the highest rating assigned by any
agency.

RISK FACTORS. U.S. government securities are considered among the
safest of fixed-income investments, but their values, like those
of other debt securities, will fluctuate with changes in interest
rates. Changes in the value of portfolio securities will not
affect interest income from those securities, but will be
reflected in the fund's net asset value. Thus, a decrease in
interest rates will generally result in an increase in the value
of fund shares. Conversely, during periods of rising interest
rates, the value of fund shares will generally decline. The
magnitude of these fluctuations will generally be greater for
securities with longer maturities, and the fund expects that its
portfolio will normally be weighted towards longer maturities.
Because of their added safety, the yields available from U.S.
government securities are generally lower than the yields
available from comparable corporate debt securities.

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 of
default. These risk factors include the creditworthiness of the
issuer and, in the case of mortgage-backed and asset-backed
securities, the ability of the underlying mortgagors or other
borrowers to meet their obligations.

HIGH YIELD SECTOR

THE FUND WILL INVEST ASSETS ALLOCATED TO THE HIGH YIELD SECTOR
PRIMARILY IN HIGH YIELDING, LOWER-RATED, HIGHER RISK U.S. AND
FOREIGN CORPORATE FIXED-INCOME SECURITIES, INCLUDING DEBT
SECURITIES, CONVERTIBLE SECURITIES AND PREFERRED STOCKS. As
discussed below, however, under certain circumstances the fund may
invest all or any part of the High Yield Sector portfolio in
higher-rated and unrated fixed-income securities. The fund will
not necessarily invest in the highest yielding securities
available if in Putnam Management's opinion the differences in
yield are not sufficient to justify the higher risks involved.
The High Yield Sector may invest in any security which is rated at
least Caa or CCC by a nationally recognized securities rating
agency, such as Moody's or S&P or in any unrated security that
Putnam Management determines is of comparable quality. In
addition, the High Yield Sector may invest up to 5% of its net
assets in securities rated below Caa or CCC by each rating agency
rating such security, or in unrated securities that Putnam
Management determines are of comparable quality. No more than 5%
of the net assets of the fund, regardless of whether they are
allocated to the High Yield Sector or the International Sector,
may be invested in securities rated below Caa or CCC by a
nationally recognized securities rating agency, or, if unrated,
determined by Putnam Management to be of comparable quality.
Securities rated below Caa or CCC are of poor standing and may be
in default.
The 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 consider such reduction in its
determination of whether the fund should continue to hold the
security in its portfolio. The foregoing investment limitations
will be measured at the time of purchase and, to the extent that a
security is assigned a different rating by one or more of the
various rating agencies, Putnam Management will use the highest
rating assigned by any agency. The rating services' descriptions
of these rating categories, including the speculative
characteristics of the lower categories, are included in the
Appendix to this prospectus.
The table below shows the percentages of fund assets invested
during fiscal 1997 in securities assigned to the various rating
categories by S&P, or, if unrated by S&P, assigned to comparable
rating categories by another rating agency, and in unrated
securities determined by Putnam Management to be of comparable
quality.

RATED SECURITIES, UNRATED SECURITIES OF
AS PERCENTAGE OF COMPARABLE QUALITY, AS
RATING NET ASSETS PERCENTAGE OF NET ASSETS
- ------ ------------- ------------------------
"AAA" 0.04% --
"AA" -- --
"A" 0.06% --
"BBB" 0.27% --
"BB" 6.09% 0.25%
"B" 21.86% 4.86%
"CCC" 2.94% 0.06%
"CC" 0.34% --
"C" -- --
"D" 0.13% --
------ ----
Total 31.73% 5.17%
====== =====

For a description of the risks associated with investments in
fixed-income securities, including lower-rated fixed-income
securities, see "Common investment policies and techniques -Lower-
rated and other fixed-income securities."

The fund may invest assets allocated to the High Yield Sector in
participations and assignments of fixed and floating rate loans
made by financial institutions to governmental or corporate
borrowers. In addition to the more general investment
considerations applicable to fixed-income investments,
participations and assignments involve the risk that the
institution's insolvency could delay or prevent the flow of
payments on the underlying loan to the fund. The fund may have
limited rights to enforce the terms of the underlying loan, and
the liquidity of loan participations and assignments may be
limited.
The fund may also invest assets allocated to the High Yield Sector
in lower-rated securities of foreign corporate and governmental
issuers denominated either in U.S. dollars or in foreign
currencies. For a discussion of the risks associated with foreign
investing, see "Common investment policies and techniques --
Foreign investments."
The fund may invest in securities of issuers in emerging markets,
as well as more developed markets. Investing in emerging markets
generally involves more risk than investing in developed markets.
INTERNATIONAL SECTOR
THE FUND WILL INVEST THE ASSETS ALLOCATED TO THE INTERNATIONAL
SECTOR IN DEBT OBLIGATIONS AND OTHER FIXED-INCOME SECURITIES,
PRIMARILY THOSE OF NON-U.S. ISSUERS. THESE SECURITIES INCLUDE:
* 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 (described below);
and

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

In the past, yields available from securities denominated in
foreign currencies have often been higher than those of securities
denominated in U.S. dollars. Putnam Management will consider
expected changes in foreign currency exchange rates in determining
the anticipated returns of securities denominated in foreign
currencies.

The obligations of foreign governmental entities, including
supranational issuers, have various kinds of government support.
Obligations of foreign governmental entities include obligations
issued or guaranteed by national, provincial, state or other
governments with taxing power or by their agencies. These
obligations may or may not be supported by the full faith and
credit of a foreign government.

Supranational entities include international organizations
designated or supported by governmental entities to promote
economic reconstruction or development and international banking
institutions and related government agencies. Examples include
the International Bank for Reconstruction and Development (the
World Bank), the European Steel and Coal Community, the Asian
Development Bank, and the Inter-American Development Bank. The
governmental members or "stockholders" usually make initial
capital contributions to the supranational entity and in many
cases are committed to make additional capital contributions if
the supranational entity is unable to repay its borrowing. Each
supranational entity's lending activities are limited to a
percentage of its total capital (including "callable capital"
contributed by members at the entity's call), reserves, and net
income.

For a discussion of the risks associated with foreign investments,
see "Common investment policies and techniques -Foreign
investments."
PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON

Putnam VT The George Putnam Fund of Boston seeks to provide a
balanced investment composed of a well-diversified portfolio of
stocks and bonds which will produce both capital growth and
current income.

In seeking its objective, 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. The proportion invested in each type of security is not
fixed, although ordinarily no more than 75% of the fund's assets
consist of common stocks and that portion of the value of
convertible securities attributable to conversion rights. The
fund may, however, at times invest more than 75% of its assets in
such securities if Putnam Management determines that unusual
market or economic conditions make it appropriate to do so. The
fund may invest in securities of foreign issuers that are not
actively traded in U.S. markets. The fund expects that its
investments in foreign securities generally will not exceed 20% of
its total assets, although the fund's investments in foreign
securities may exceed this amount from time to time.

For a discussion of the risks associated with foreign investments,
see "Common investment policies and techniques -Foreign
investments."

The fund may invest in both higher-rated and lower-rated fixed
income securities. See "Common investment policies and techniques
- -- Lower-rated and other fixed-income securities.

The fund will invest in securities rated at least B by a
nationally recognized securities rating agency, such as S&P or
Moody's, or unrated securities that Putnam Management determines
are of comparable quality. The foregoing investment limitation
will be measured at the time of purchase and, to the extent that a
security is assigned a different rating by one or more of the
various rating agencies, Putnam Management will use the highest
rating assigned by any agency. Securities rated B (and comparable
unrated securities) are predominantly speculative and
have large uncertainties or major exposures to adverse conditions.
Securities rated lower than Baa or BBB (and comparable unrated
securities) are sometimes referred to as "junk bonds." The rating
services' descriptions of securities in the various rating
categories, including the speculative characteristics of
securities in the lower rating categories, are included in the
appendix to this prospectus.
The fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of the fund's shareholders. See "Common investment
policies and techniques" below for a discussion of these
strategies. The fund may hold a portion of its assets in cash and
money market instruments. The fund may also engage in foreign
currency exchange transactions and transactions in futures and
options, enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery. See
"Common investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them.
Putnam VT The George Putnam Fund of Boston will generally be
managed in a style similar to that of The George Putnam Fund of
Boston.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND
The investment objective of Putnam VT Global Asset Allocation Fund
is to seek a high level of long-term total return consistent with
preservation of capital. By seeking total return, the fund seeks
to increase the value of the shareholder's investment through both
capital appreciation and investment income. "Total return"
includes interest and dividend income, net of expenses, and
realized and unrealized capital gains and losses on securities.
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
International Equities
U.S. Fixed Income
International Fixed Income

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 engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of its shareholders. When pursuing such defensive
strategies, the fund may invest without limit in securities
primarily traded in U.S. markets. See "Common investment policies
and techniques" below for a discussion of these strategies. The
fund may invest in premium securities, engage in foreign currency
exchange transactions and transactions in futures and options,
enter into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion of
these securities and types of transactions
and the risks associated with them. The fund may also hold a
portion of its assets in cash and money market instruments.

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
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. This category's portfolio will include
equity securities selected primarily to provide one or more of the
following factors: growth in value, capital protection and
dependable income. Investments will be made in companies, large
or small, whose earnings are believed to be in a relatively strong
growth trend or whose securities are thought to be undervalued.
The fund may invest in small and relatively less well-known
companies. Investing in these companies may present greater
opportunities for capital appreciation, but also may involve
greater risk. They may have limited product lines, markets or
financial resources, or may depend on a limited management group.
Their securities may trade less frequently and in limited volume,
and only in the over-the-counter market or on a regional
securities exchange. As a result, these securities may fluctuate
in value more than securities of larger, more established
companies.

INTERNATIONAL EQUITIES. The objective of the International
Equities category is to seek capital appreciation. This
category's portfolio will be invested in securities principally
traded in foreign securities markets. These securities will
primarily be common stocks or securities convertible into common
stocks. Investments will be made in companies, large or small,
whose earnings are believed to be in a relatively strong growth
trend or whose securities are thought to be undervalued. The fund
may invest in small and relatively less well-known companies.
Investing in these companies may present greater opportunities for
capital appreciation, but also may involve greater risk. They may
have limited product lines, markets or financial resources, or may
depend on a limited management group. Their securities may trade
less frequently and in limited volume. As a result, these
securities may fluctuate in value more than securities of larger,
more established companies. For a discussion of the risks
associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments."

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 which in the judgment of Putnam Management
does not involve undue risk to principal or income. The U.S. Fixed
Income category may invest 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.

Whereas certain U.S. government securities in which the fund may
invest, such as U.S. Treasury obligations and Ginnie Mae
certificates, are supported by the full faith and credit of the
United States, other fixed-income securities in which the fund may
invest are subject to varying degrees of risk of default depending
upon, among other factors, the creditworthiness of the issuer and
the ability of the borrower, or, in the case of
mortgage-backed securities, the mortgagor, to meet its
obligations. While the credit risks presented by differing types
of fixed-income securities vary, the values of all fixed-income
securities change as interest rates fluctuate.

For a description of the risks associated with investments in
mortgage-backed and asset-backed securities, see "Common
investment policies and techniques -- Mortgage-backed and asset
backed securities."

INTERNATIONAL FIXED INCOME. The investment objective of the
International Fixed Income category is to seek high current income
by investing principally in debt securities denominated in foreign
currencies which are issued by foreign governments and
governmental or supranational agencies. This category may also
invest in other privately issued debt securities, convertible
securities and preferred stocks principally traded in foreign
securities markets. For a discussion of the risks associated with
foreign investments, see "Common investment policies and
techniques -- Foreign investments."

GENERAL. Putnam Management will adjust the percentage of the
fund's assets in each investment category from time to time based
upon its market outlook and its analysis of longer-term trends.
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 will not purchase fixed-income securities rated below Caa
or CCC by each nationally recognized securities rating agency,
such as S&P or Moody's, 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 Baa or 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.

For a description of the risks of investing in fixed-income
securities, including lower-rated fixed-income securities
(commonly known as "junk bonds"), see "Common investment policies
and techniques -- Lower-rated and other fixed-income securities."

PUTNAM VT GLOBAL GROWTH FUND

Putnam VT Global Growth Fund seeks capital appreciation. The fund
is designed for investors seeking above-average capital growth
potential through a globally diversified portfolio of common
stocks. Dividend and interest income is only an incidental
consideration. In seeking capital appreciation, the fund follows
a global investment strategy of investing primarily
in common stocks traded in securities markets located in a number
of foreign countries and in the United States. The fund may at
times invest up to 100% of its assets in securities principally
traded in securities markets outside the United States, and will,
under normal market conditions, invest at least 65% of its assets
in at least three different countries, one of which may be the
United States. In unusual market circumstances where Putnam
Management, believes that foreign investing may involve undue
risks, 100% of the fund's assets may be invested in the United
States. The fund may hold a portion of its assets in cash and
money market instruments.

The fund will not limit its investments to any particular type of
company. It may invest in companies, large or small, whose
earnings Putnam Management believes to be in a relatively strong
growth trend, or in companies in which significant further growth
is not anticipated but whose securities Putnam Management believes
to be undervalued. It may invest in small and relatively less
well-known companies. Investing in securities of smaller, less
well-known companies may present greater opportunities for capital
appreciation, but may also involve greater risks. These companies
may have limited product lines, markets or financial resources, or
may depend on a limited management group. Their securities may
trade less frequently and in limited volume. As a result, these
securities may fluctuate in value more than prices of securities
of larger, more established companies.

Putnam Management believes that the securities markets of many
nations move relatively independently of one another, because
business cycles and other economic or political events that
influence one country's securities markets may have little effect
on securities markets in other countries. By investing in a
globally diversified portfolio, Putnam Management attempts to
reduce the risks associated with investing in the economy of only
one country. The countries which Putnam Management believes offer
attractive opportunities for investment may change from time to
time.

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

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

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

PUTNAM VT GROWTH AND INCOME FUND

Putnam VT Growth and Income Fund seeks capital growth and current
income as its investment objectives. The fund invests primarily
in common stocks that offer potential for capital growth, current
income, or both. The fund may also purchase corporate bonds,
notes and debentures, preferred stocks, convertible securities
(both debt securities and preferred stocks) or U.S. government
securities, if Putnam Management determines that their purchase
would help further the fund's investment objectives. The types of
securities held by the fund may vary from time to time in light of
the fund's investment objectives, changes in interest rates, and
economic and other factors. The fund may engage in defensive
strategies when Putnam Management judges that conditions in the
securities markets make pursuing the fund's basic investment
strategy inconsistent with the best interests of the fund's
shareholders. See "Common investment policies and techniques"
below for a discussion of these strategies.

The fund may invest in securities principally traded in foreign
markets, and expects that such investments will not ordinarily
exceed 20% of its assets. For a discussion of the risks
associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments." The fund may
invest in both higher-rated and lower-rated fixed-income
securities. The risks associated with fixed-income securities,
including lower-rated fixed-income securities (commonly known as
"junk bonds"), are discussed below under "Common investment
policies and techniques -- Lower-rated and other fixed-income
securities."

The fund may hold a portion of its assets in cash and money market
instruments. The fund may also engage in foreign currency
exchange transactions and transactions in futures and options,
enter into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion of
these securities and types of transactions and the risks
associated with them.

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

PUTNAM VT HEALTH SCIENCES FUND

Putnam VT Health Sciences Fund seeks capital appreciation by
investing 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 concentrates its investments in a limited group of
industries. The fund is not intended to be a complete investment
program, and there is no assurance it will achieve its objective.
The fund invests mainly in common stocks of companies in the
health sciences industries, but may also invest a portion of its
assets in other industries and may invest in fixed-income
securities. The fund seeks to purchase securities that will rise
in value; current income is only a minor consideration. The fund
invests primarily in common stocks, but may also purchase
convertible bonds, convertible preferred stocks, warrants,
preferred stocks and debt securities if Putnam Management believes
they would help achieve the fund's objective of capital
appreciation. The fund may hold a portion of its assets in cash
and money market instruments.
THE HEALTH SCIENCES INDUSTRIES
The fund provides investors with a portfolio of companies in the
health sciences industries. The health sciences industries
include companies that Putnam Management considers to be
principally engaged in the development, production or distribution
of products or services related to the treatment or prevention of
diseases, disorders or other medical conditions. The following
examples illustrate the wide range of products and services
provided by these industries:
* PHARMACEUTICALS, including ethical (prescription) and
proprietary (nonprescription) drugs, drug administration
products, and chemical or biological components used in
diagnostic testing.

* HEALTH CARE SERVICES, including hospitals, clinical
test laboratories, convalescent and mental health care
facilities, rehabilitation centers, and products and
services for home health care.

* APPLIED RESEARCH AND DEVELOPMENT, including scientific
research toward developing drugs, processes and
technologies with possible commercial applications.

* MEDICAL EQUIPMENT AND SUPPLIES, including sophisticated
electronic equipment used in chemical analysis and
diagnostic testing, surgical and medical instruments,
and other special products.

Putnam Management considers a particular 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
those 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 also considers
a company to be "principally engaged" in these industries if it
believes that the company has the potential for capital
appreciation primarily as a result of particular products,
technology, patents or other market advantages in the health
sciences industries. The fund does not anticipate that companies
in the latter category will represent more than 15% of the fund's
investments in the health sciences industries.

While the fund's portfolio will normally include securities of
established suppliers of traditional products and services, the
fund may invest without limit in smaller companies which may
benefit from the development of new products and services. While
many major U.S. corporations are involved in the health sciences
industries, smaller and less seasoned companies represent a
substantial portion of this field, particularly in the area of
emerging medical technologies. These smaller companies may
present greater opportunities for capital appreciation, but may
also involve greater risks. They may have limited product lines,
markets or financial resources, or may depend on a limited
management group. Their securities may trade less frequently and
in more limited volume than the securities of larger, more
established companies, and only in the over-the-counter market or
on a regional securities exchange. As a result, the prices of
these securities may fluctuate more erratically, and to a greater
degree, than the prices of securities of other issuers.

Because the fund's investments are concentrated in the health
sciences industries, the value of its shares is especially
affected by factors relating to those industries and may fluctuate
more widely than the value of shares of a portfolio which invests
in a broader range of industries. For example, 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 reinvestment rates and methods, including changes in
governmental payment systems and the increased use of managed care
arrangements, may affect the revenues and expenses of health care
service providers.

The fund is a "non-diversified" investment company under the
Investment Company Act of 1940 (the "1940 Act"). This means that,
with respect to 50% of its total assets, the fund may not invest
more than 5% of its total assets in the securities of any one
issuer (except U.S. government securities). With respect to the
remaining 50% of the fund's total assets, the fund may invest up
to 25% of its total assets in the securities of each of any two
issuers (and may invest without limit in U.S. government
securities). To the extent the fund invests a significant portion
of its assets in the securities of a particular issuer, the fund
will be subject to an increased risk of loss if the market value
of such issuer's securities declines.

The fund may invest in securities, including but not limited to,
those companies in the health sciences industries, principally
traded in foreign markets, and expects that such investments will
not ordinarily exceed 30% of its assets. For a discussion of the
risks associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments."

Putnam VT Health Sciences Fund will generally be managed in a
style similar to that of Putnam Health Sciences Trust.

PUTNAM VT HIGH YIELD FUND

The primary investment objective of Putnam VT High Yield Fund is
to seek high current income. Capital growth is a secondary
objective when consistent with high current income.

The fund seeks high current income by investing primarily in high-
yielding, lower-rated fixed-income securities (commonly known as
"junk bonds"), constituting a portfolio which Putnam Management
believes does not involve undue risk to income or principal.
Normally, at least 80% of the fund's assets will be invested in
debt securities, convertible securities or preferred stocks that
are consistent with its primary investment objective of high
current income. The fund's remaining assets may be held in cash
or money market instruments, or invested in common stocks and
other equity securities when these types of investments are
consistent with the objective of high current income. The fund
may invest in securities principally traded in foreign markets,
and expects that such investments will not ordinarily exceed 20%
of its assets. For a discussion of the risks associated with
foreign investments, see "Common investment policies and
techniques -- Foreign investments." The fund may also invest in
premium securities, engage in foreign currency exchange
transactions, enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery. See
"Common investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them. The fund may engage in defensive strategies
when Putnam Management judges that conditions in the securities
markets make pursuing the fund's basic investment strategy
inconsistent with the best interests of the fund's shareholders.
See "Common investment policies and techniques" below for a
discussion of these strategies.

The fund seeks its secondary objective of capital growth, when
consistent with its primary objective of high current income, by
investing in securities which may be expected to appreciate in
value as a result of declines in long-term interest rates or as a
result of favorable developments affecting the business or
prospects of the issuer which may improve the issuer's financial
condition and credit rating. Putnam Management believes that such
opportunities for capital appreciation often exist in the
securities of smaller capitalization companies which have the
potential for significant growth. These securities may involve
greater risks than the securities of larger, more established
issuers.

The fund may generally invest in any security which is rated at
least Caa or CCC by a nationally recognized securities rating
agency, such as S&P or Moody's, or in any unrated security which
Putnam Management determines is of comparable quality. The fund
will not necessarily dispose of a security when its rating is
reduced below its rating at the time of purchase. However, Putnam
Management will consider such reduction in its determination of
whether the fund should continue to hold the security in its
portfolio. Securities rated below Baa or BBB are considered to be
of poor standing and predominantly speculative. The fund may
invest up to 15% of its assets in securities rated
below Caa or CCC by each rating agency rating such security,
including securities in the lowest rating category of each rating
agency, or in unrated securities Putnam Management determines are
of comparable quality. Such securities may be in default and are
generally regarded by the rating agencies as having extremely poor
prospects of ever attaining any real investment standing. For a
discussion of the risks associated with investments in fixed-
income securities, including lower-rated fixed-income securities,
see "Common investment policies and techniques -Lower-rated and
other fixed-income securities." The foregoing investment
limitations will be measured at the time of purchase and, to the
extent that a security is assigned a different rating by one or
more of the various rating agencies, Putnam Management will use
the highest rating assigned by any agency.
The table below shows the percentages of fund assets invested
during fiscal 1997 in securities assigned to the various rating
categories by S&P, or, if unrated by S&P, assigned to comparable
rating categories by another rating agency, and in unrated
securities determined by Putnam Management to be of comparable
quality.

RATED SECURITIES, UNRATED SECURITIES OF
AS PERCENTAGE OF COMPARABLE QUALITY, AS
RATING NET ASSETS PERCENTAGE OF NET ASSETS
- ------ ----------------- ------------------------
"AAA" 0.47% --
"AA" -- -- "A" 0.18%
- --
"BBB" 0.70% --
"BB" 13.29% 0.21%
"B" 57.36% 13.40%
"CCC" 5.44% 0.11%
"CC" 0.81% --
"C" -- --
"D" 0.33% --
------ -----
Total 78.58% 13.72%
====== ======

The fund may invest in participations and assignments of fixed and
floating rate loans made by financial institutions to governmental
or corporate borrowers. In addition to the more general investment
considerations applicable to fixed-income investments,
participations and assignments involve the risk that the
institution's insolvency could delay or prevent the flow of
payments on the underlying loan to the fund. The fund may have
limited rights to enforce the terms of the underlying loan, and the
liquidity of loan participations and assignments may be limited.

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

PUTNAM VT INTERNATIONAL GROWTH FUND

Putnam VT International Growth Fund seeks capital appreciation.

The fund seeks its objective by investing primarily in equity
securities of companies located in a country other than the United
States. The fund's investments will normally include common
stocks, preferred stocks, securities convertible into common or
preferred stocks, and warrants to purchase common or preferred
stocks. The fund may also invest to a lesser extent in debt
securities and other types of investments if Putnam
Management believes purchasing them would help achieve the fund's
objective. The fund will, under normal circumstances, invest at
least 65% of its total assets in securities of issuers located in
at least three different countries other than the United States.
The fund may hold a portion of its assets in cash or money market
instruments.

The fund will consider an issuer of securities to be "located in a
country other than the United States" if it is organized under the
laws of a country other than the United States and has a principal
office outside the United States, or if it derives 50% or more of
its total revenues from business outside the United States.

The fund will not limit its investments to any particular type of
company. The fund may invest in companies, large or small, whose
earnings Putnam Management believes are to be in a relatively
strong growth trend, or in companies in which significant further
growth is not anticipated but whose securities are, in the opinion
of Putnam Management, undervalued. It may invest in small and
relatively less well-known companies which meet these
characteristics.

Smaller companies may present greater opportunities for capital
appreciation, but may also involve greater risks. They may have
limited product lines, markets for financial resources, or may
depend on a limited management group. Their securities may trade
less frequently and in limited volume. As a result, the prices of
these securities may fluctuate more than prices of securities of
larger, more established companies.

Putnam Management believes that the securities markets of many
nations move relatively independently of one another because
business cycles and other economic or political events that
influence one country's securities markets may have little effect
on securities markets in other countries. By investing in a
diversified portfolio of foreign securities, Putnam Management
attempts to reduce the risks associated with being invested in the
economy of only one country. The countries which Putnam Management
believes offer attractive opportunities for investment may change
from time to time.

Foreign investments can involve risks that may not be present in
domestic securities. For a discussion of the risks associated with
foreign investments, see "Common investment policies and techniques
- -- Foreign investments." The fund may invest in securities of
issuers in emerging markets, as well as more developed markets.
Investing in emerging markets generally involves more risk than
investing in developed markets. See "Common investment policies and
techniques -- Foreign investments."

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

PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND

Putnam VT International Growth and Income Fund seeks capital
growth. Current income is a secondary objective.

The fund will invest primarily in common stocks that Putnam
Management believes offer potential for capital growth, and may,
consistent with its investment objectives, invest in stocks that
Putnam Management believes offer potential for current income.
Under normal market conditions, the fund expects to invest
substantially all of its assets in securities principally traded on
markets outside the United States. The fund will normally
diversify its investments among a number of different countries
and, except when investing for defensive purposes, will invest at
least 65% of its total assets in at least three countries other
than the United States. The fund may invest in securities of
issuers in emerging market countries, as well as securities of
issuers in more developed countries. Investing in emerging market
countries involves special risks. For a discussion of the risks of
foreign investments, see "Common investment policies and techniques
- -- Foreign investments."

The fund may also purchase corporate bonds, notes and debentures,
preferred stocks, securities convertible into common stock or other
equity securities, or U.S. or foreign government securities if
Putnam Management determines that their purchase would help further
the fund's investment objectives.

The types of securities held by the fund may vary from time to time
in light of the fund's investment objectives, changes in interest
rates, and economic and other factors. When selecting portfolio
securities for the fund that have the potential for capital growth,
Putnam Management will seek to identify securities that are
significantly undervalued in relation to underlying asset values or
earnings potential. The fund may also hold a portion of its assets
in cash or high-quality money market instruments.

The fund may invest a portion of its assets in securities of small-
capitalization companies (defined for these purposes as companies
with equity market capitalizations of less than $1 billion). These
securities may involve certain special risks. Such companies may
have limited product lines, markets or financial resources, and may
be dependent on a limited management group. Such securities may
trade less frequently and in smaller volume than more widely held
securities. The values of these securities may fluctuate more
sharply than those of other securities, and the fund may experience
some difficultly in establishing or closing out positions in these
securities at prevailing market prices. There may be less publicly
available information about the issuers of these securities or less
market interest in such securities than in the case of larger
companies, and it may take a longer period of time for the prices
of such securities to reflect the full value of their issuers'
underlying earnings potential or assets.

Common stocks of foreign issuers have historically offered lower
yields than common stocks of comparable U.S. issuers. In addition,
foreign withholding taxes may further reduce the amount of income
available for distribution to fund shareholders. As a result, the
fund's yield is expected to be lower than that of funds with
similar investment objectives that invest primarily in
U.S. issuers. See "How the fund makes distributions to
shareholders."

The fund may invest in fixed-income securities rated at least C by
a nationally recognized securities rating agency, such as S&P or
Moody's, and in unrated securities which Putnam Management
determines to be of comparable quality. The risks associated with
fixed-income securities, including lower-rated fixed-income
securities (commonly known as "junk bonds"), are discussed below
under "Common investment policies and techniques -- Lower-rated and
other fixed-income securities." The 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 consider
such reduction in its determination of whether the fund should
continue to hold the security in its portfolio. The foregoing
investment limitations will be measured at the time of purchase
and, to the extent that a security is assigned a different rating
by one or more of the various rating agencies, Putnam Management
will use the highest rating assigned by any agency.

Putnam VT International Growth and Income Fund will generally be
managed in a style similar to that of Putnam International Growth
and Income Fund.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND

Putnam VT International New Opportunities Fund seeks long-term
capital appreciation.

The fund seeks to invest in companies that have above-average
growth prospects due to the fundamental growth of their market
sector. Under normal market conditions, the fund expects to invest
substantially all of its total assets, other than cash or short-
term investments held pending investment, in common stocks,
preferred stocks, convertible preferred stocks, convertible bonds
and other equity securities principally traded in securities
markets outside the United States. The fund will normally
diversify its investments among a number of different countries
and, except when investing for defensive purposes, will invest at
least 65% of its assets in at least three different countries other
than the United States.

Putnam Management believes that different market sectors in
different countries will experience different rates of growth
depending on the state of economic development of each country. As
a result, Putnam Management seeks to identify those market
sectors which will experience above-average growth in three broad
categories of economies: less developed economies, developing
economies that have experienced sustained growth over the recent
past, and mature economies. Within the identified growth sectors
of each type of economy, Putnam Management seeks to invest in
particular companies that offer above-average growth prospects. The
sectors in which the fund will invest are likely to change over
time and may include a variety of industries. Subject to
the fund's investment restrictions, the fund may invest up to one
half of its assets in any one sector. The fund's emphasis on
particular sectors may make the value of the fund's shares more
susceptible to any single economic, political or regulatory
development than the shares of an investment company which is
more widely diversified. As a result, the value of the fund's
shares may fluctuate more than the value of the shares of such an
investment company. The fund may also invest a portion of its
assets in market sectors other than those that Putnam Management
believes will experience above-average growth if Putnam Management
believes that such investments are consistent with the fund's
investment objective of long-term capital appreciation.

The securities markets of less developed economies and of many
developing economies are sometimes referred to as "emerging
markets." Although the amount of the fund's assets invested in
emerging securities markets will vary over time, Putnam Management
currently expects that a substantial portion of the fund's assets
will be invested in emerging markets. These markets are generally
characterized by limited trading volume and greater volatility
and, as a result, the fund may be subject to greater risks to the
extent of its investments in such markets.

Companies in the fund's portfolio may include small, rapidly
growing companies with equity market capitalizations of less than
$1 billion. These companies may present greater opportunities for
capital appreciation, but may also involve greater risk.
They may have limited product lines, markets or financial
resources, or may depend on a limited management group. Their
securities may trade less frequently and in limited volume, and
only in the over-the-counter market or on a regional securities
exchange. As a result, these securities may fluctuate in value
more than those of larger, more established companies.

Because Putnam Management evaluates securities for the fund based
on their long-term potential for capital appreciation, the fund's
investments may not appreciate or yield significant income 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 invests primarily in common stocks and other equity
securities, but may also invest up to 10% of its total assets in
non-convertible debt securities if Putnam Management believes they
would help achieve the fund's objective of long-term capital
appreciation. The fund may invest in securities in the lowerrated
categories. Securities in the lower-rated categories are
considered to be predominantly speculative and may be in default.
See "Common investment policies and techniques -- Lower-rated and
other fixed-income securities." The fund may also hold a portion
of its assets in cash or high-quality money market instruments.

The fund may also engage in foreign currency exchange
transactions and transactions in futures and options, enter into
repurchase agreements, loan its portfolio securities and purchase
securities for future delivery. See "Common investment policies
and techniques" below for a discussion of these securities and
types of transactions and the risks associated with them. The
fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of its shareholders. When pursuing such defensive
strategies, the fund may invest without limit in securities
primarily traded in U.S. markets. See "Common investment policies
and techniques" below for a discussion of these strategies.
Putnam VT International New Opportunities Fund will generally be
managed in a style similar to that of Putnam International New
Opportunities Fund.
PUTNAM VT INVESTORS FUND
Putnam VT Investors Fund seeks long-term growth of capital and any
increased income that results from this growth. The fund is
designed for investors seeking long-term growth of capital from a
portfolio primarily consisting of quality common stocks.
Putnam VT Investors Fund invests primarily in common stocks that
Putnam Management believes afford the best opportunity for capital
growth over the long term. Though common stocks are normally the
fund's main investments, the fund may also purchase convertible
bonds, convertible preferred stocks, preferred stocks and debt
securities if Putnam Management believes they would help achieve
the fund's objective. The fund may also hold a portion of its
assets in cash or money market instruments.
In seeking the fund's objective of long-term growth of capital,
Putnam Management considers three main factors:
1. The general outlook for the economy.
2. A study of various industries to determine those with
the best possibilities for long-term growth.

3. A detailed study of what appear to be the most
promising individual companies.

In the evaluation of a company, more consideration is given 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. Although the fund's investments
are not limited to any particular type of company, Putnam
Management currently expects that the fund will invest a
substantial portion of its assets in common stocks of companies
with equity market capitalizations of more than $1 billion. The
fund may also invest in common stocks of companies with equity
market capitalizations below this level. Such companies may
present greater opportunities for capital appreciation because of
high potential earnings growth, but may also involve greater risk.
They may have limited product lines, markets or financial
resources, or may depend on a limited management group. Their
securities may trade less frequently and in limited volume, and
only in the over-the-counter market or on a regional securities
exchange. As a result, these securities may change in value more
than those of larger, more established companies.

The fund expects that its investments in foreign securities
generally will not exceed 20% of its total assets, although the
fund's investments in foreign securities may exceed this amount
from time to time. For a discussion of risks associated with
foreign investments, see "Common investment policies and
techniques -- Foreign investments. The fund may engage in a
variety of foreign currency exchange transactions in connection
with it foreign investment, including transactions involving
futures contracts, forward contracts and options.
The fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of the fund's shareholders. See "Common investment
policies and techniques" below for a discussion of these
strategies. The fund may hold a portion of its assets in cash and
money market instruments. The fund may also engage in foreign
currency exchange transactions and transactions in futures and
options, enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery. See
"Common investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them.
Putnam VT Investors Fund will generally be managed in a style
similar to that of Putnam Investors Fund.
PUTNAM VT MONEY MARKET FUND
Putnam VT Money Market Fund seeks as high a rate of current income
as Putnam Management believes is consistent with preservation of
capital and maintenance of liquidity. It is designed for
investors seeking current income with stability of principal.
THE FUND INVESTS IN A PORTFOLIO OF HIGH-QUALITY MONEY MARKET
INSTRUMENTS. EXAMPLES OF THESE INSTRUMENTS INCLUDE:
* BANK CERTIFICATES OF DEPOSIT (CDS): negotiable certificates
issued against funds deposited in a commercial bank for a
definite period of time and earning a specified return.

* BANKERS' ACCEPTANCES: negotiable drafts or bills of
exchange, which have been "accepted" by a bank, meaning, in
effect, that the bank has unconditionally agreed to pay the
face value of the instrument on maturity.

* PRIME COMMERCIAL PAPER: high-grade, short-term obligations
issued by banks, corporations and other issuers.

* CORPORATE OBLIGATIONS: high-grade, short-term corporate
obligations other than prime commercial paper.

* MUNICIPAL OBLIGATIONS: high-grade, short-term municipal
obligations.

* U.S. GOVERNMENT SECURITIES: marketable securities issued or
guaranteed as to principal and interest by the U.S.
government or by its agencies or instrumentalities.

* REPURCHASE AGREEMENTS: contracts under which the fund
acquires U.S. Treasury or U.S. government agency obligations
for a relatively short period subject to the agreement of the
seller to repurchase and the fund to resell such obligations
at a fixed time and price (representing the fund's cost plus
interest).

The fund will invest only in high-quality securities that Putnam
Management believes present minimal credit risk. High-quality
securities are securities rated at the time of acquisition in one
of the two highest categories by at least two nationally
recognized rating services (or, if only one rating service has
rated the security, by that service) or if the security is
unrated, judged to be of equivalent quality by Putnam Management.
The fund will maintain a dollar-weighted average maturity of 90
days or less and will not invest in securities with remaining
maturities of more than 397 days. The fund may invest in variable
or floating rate securities which bear interest at rates subject
to periodic adjustment or which provide for periodic recovery of
principal on demand. Under certain conditions, these securities
may be deemed to have remaining maturities equal to the time
remaining until the next interest adjustment date or the date on
which principal can be recovered on demand.

The fund may invest in bank certificates of deposit and bankers'
acceptances issued by banks having deposits in excess of $2
billion (or the foreign currency equivalent) at the close of the
last calendar year. Should the Trustees decide to reduce this
minimum deposit requirement, shareholders will be notified and
this prospectus supplemented.

Considerations of liquidity and preservation of capital mean that
the fund may not necessarily invest in money market instruments
paying the highest available yield at a particular time.
Consistent with its investment objective, the fund will attempt to
maximize yields by portfolio trading and by buying and selling
portfolio investments in anticipation of or in response to
changing economic and money market conditions and trends. The
fund will also invest to take advantage of what Putnam Management
believes to be temporary disparities in yields of different
segments of the high-grade money market or among particular
instruments within the same segment of the market. These
policies, as well as the relatively short maturity of obligations
purchased by the fund, may result in frequent changes in the
fund's portfolio. Portfolio turnover may give rise to capital
gains. The fund does not usually pay brokerage commissions in
connection with the purchase or sale of portfolio securities.
See "Management -- Portfolio Transactions -- Brokerage and
research services" in the SAI for a discussion of underwriters'
commissions and dealers' spreads involved in the purchase and sale
of portfolio securities.

The value of the securities in the fund's portfolio can be
expected to vary inversely to changes in prevailing interest
rates. Although the fund's investment policies are designed to
minimize these changes and maintain a net asset value of $1.00 per
share, there is no assurance that these policies will be
successful. Withdrawals by shareholders could require the sale of
portfolio investments at a time when such a sale might not
otherwise be desirable.

The fund may invest without limit in the banking industry and in
commercial paper and short-term corporate obligations of issuers
in the personal credit institution and business credit institution
industries when, in the opinion of Putnam Management, the yield,
marketability and availability of investments meeting the fund's
quality standards in those industries justify any additional risks
associated with the concentration of the fund's assets in those
industries. The fund, however, will invest more than 25% of its
assets in the personal credit institution or business credit
institution industries only when, to Putnam Management's
knowledge, the yields then available on securities
issued by companies in such industries and otherwise suitable for
investment by the fund exceed the yields then available on
securities issued by companies in the banking industry and
otherwise suitable for investment by the fund.
The fund may invest without limit in U.S. dollar-denominated
commercial paper of foreign issuers and in bank certificates of
deposits and bankers' acceptances payable in U.S. dollars and
issued by foreign banks (including U.S. branches of foreign banks)
or by foreign branches of U.S. banks. These investments subject
the fund to investment risks different from those associated with
domestic investments. For a discussion of the risks associated
with foreign investments, See "Common investment policies and
techniques -- Foreign investments."

The fund may also lend its portfolio securities. For a discussion
of this strategy and the risks associated with it, see "Common
investment policies and techniques" below.

INSURANCE

The fund, along with four other Putnam money market funds, has
purchased insurance, which, among other things, will insure the
fund against a decrease in the value of a security held by it due
to the issuer's default or bankruptcy. Most securities and
instruments in which the funds invest, other than U.S. Government
securities, are covered by this insurance. Although the
insurance, which is subject to certain conditions, may provide the
fund with some protection in the event of a decrease in value of
certain of its portfolio securities due to default or bankruptcy,
the policy does not insure or guarantee that the fund will
maintain a stable net asset value of $1.00 per share.

The maximum amount of total coverage under the policy is $30
million, subject to a deductible in respect of each loss equal to
the lesser of $1 million or 0.30% of the fund's net assets. As of
March 31, 1998, the fund's net assets totaled $387.78 million.
Each of the money market funds that has purchased the insurance
has access to the full amount of insurance under the policy,
subject to the deductible. Accordingly, depending upon the
circumstances, the fund may not be entitled to recover under the
policy, even though it has experienced a loss that would otherwise
be insurable.

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

PUTNAM VT NEW OPPORTUNITIES FUND

Putnam VT New Opportunities Fund seeks long-term capital
appreciation. The fund seeks its objective by investing
principally in common stocks of companies in sectors of the
economy which Putnam Management believes possess above-average
long-term growth potential.

The fund will generally invest in companies which Putnam
Management identifies as offering the best prospects for longterm
growth within a particular sector. Current dividend income is
only an incidental consideration. The fund invests primarily in
common stocks, but may also purchase convertible bonds,
convertible preferred stocks, warrants, preferred stocks and debt
securities if Putnam Management believes they would help achieve
the fund's objective of capital appreciation. The fund may invest
in foreign securities, and expects that such investments will not
ordinarily exceed 20% of its assets. For a discussion of the
risks associated with foreign investing, see "Common investment
policies and techniques -- Foreign investments." The
fund may also engage in foreign currency exchange transactions and
transactions in futures and options, enter into repurchase
agreements, loan its portfolio securities and purchase securities
for future delivery. See "Common investment policies and
techniques" below for a discussion of these securities and types
of transactions and the risks associated with them. The fund may
also hold a portion of its assets in cash and money market
instruments. The fund may engage in defensive strategies when
Putnam Management judges that conditions in the securities markets
make pursuing the fund's basic investment strategy inconsistent
with the best interests of the fund's shareholders. See "Common
investment policies and techniques" below for a discussion of
these strategies.
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, casino operators, film
entertainment providers, theme park operators, radio and
television stations, billboard advertising providers;
MEDICAL TECHNOLOGY/COST-CONTAINMENT - home and outpatient care,
medical device companies, biotechnology, health care information
services, physician practice management, managed care providers;

ENVIRONMENTAL SERVICES - solid waste disposal, hazardous waste
disposal, remediation services, environmental testing;

APPLIED/ADVANCED TECHNOLOGY - database software, application
software, entertainment software, networking software, computer
systems integrators, information services companies,
semiconductors, manufacturing technology;

PERSONAL FINANCIAL SERVICES - specialty insurance companies,
credit card issuers, and other consumer-oriented financial
services companies; and

VALUE-ORIENTED CONSUMING - retailers, restaurants, hotel chains,
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.

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, are expected to experience above-average growth.

The sectors described above represent Putnam Management's current
judgment of the sectors of the economy which offer the most
attractive growth opportunities. The fund will not necessarily be
invested in each of the seven market sectors at all times. Such
sectors are likely to change over time and may include a variety
of industries. Subject to the fund's investment restrictions, the
fund may invest up to one-half of its assets in any one sector.

The fund will invest in securities that Putnam Management
believes offer above-average long-term growth opportunities. As a
result of the fund's long-term investment strategy, it is possible
that the fund's total return over certain periods may be less than
that of other equity investment vehicles.

The fund seeks to invest in companies that offer above-average
growth prospects in their particular sector of the economy,
without regard to a company's size. Companies in the fund's
portfolio will range from small, rapidly growing companies to
larger, well-established firms. It may invest in small and
relatively less well-known companies. Investing in these
companies may present greater opportunities for capital
appreciation, but also may involve greater risk. They may have
limited product lines, markets or financial resources, or may
depend on a limited management group. Their securities may trade
less frequently and in limited volume, and only in the over-the
counter market or on a regional securities exchange. As a result,
these securities may fluctuate in value more than securities of
larger, more established companies.

The fund will normally emphasize investments in particular
economic sectors. Although the fund will not invest more than 25%
of its assets in any one industry, the fund's emphasis on
particular sectors of the economy may make the value of the fund's
shares more susceptible to any single economic, political or
regulatory development than the shares of an investment company
which is more widely diversified. As a result, the value of the
fund's shares may fluctuate more than the value of the shares of a
more diversified investment company.

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

PUTNAM VT NEW VALUE FUND

Putnam VT New Value Fund seeks long-term capital appreciation.

The fund will invest primarily in common stocks that Putnam
Management believes are undervalued at the time of purchase and
have the potential for long-term capital appreciation. The fund
is unlike most equity mutual funds in that its investments will be
comprised of a relatively small number of issuers (currently
expected to be approximately 40 to 50). Because Putnam Management
evaluates securities for the fund based on their longterm
potential for capital appreciation, the fund's investments may not
appreciate over the shorter term, and as a result the fund's total
return over certain periods may be less than that of other equity
mutual funds. Putnam Management's investment decisions for the
fund may be contrary to those of most other investors.

The fund's investments may include widely-traded common stocks of
larger companies as well as common stocks of small companies with
equity market capitalizations below $1 billion. These companies
may present greater opportunities for capital appreciation, but
may also involve greater risk. They may have limited product
lines, markets or financial resources, or may depend on a limited
management group. Their securities may trade less frequently and
in limited volume, and only in the over-the-counter market or on a
regional securities exchange. As a result, these securities may
fluctuate in value more than those of larger, more established
companies.

Common stocks and other equity securities are normally the fund's
main investments. However, the fund may purchase preferred
stocks, debt securities and convertible securities (both bonds and
preferred stocks) if Putnam Management believes they would help
achieve the fund's objective of long-term capital appreciation.
The fund may invest in securities principally traded in foreign
markets, and expects that such investments will not ordinarily
exceed 20% of its assets. For a discussion of the risks
associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments.

The fund may invest in both higher-rated and lower-rated fixed
income securities, and is not subject to any restrictions based on
credit ratings. See "Common investment policies and techniques --
Lower-rated and other fixed-income securities."

The fund may also hold a portion of its assets in cash or high
quality money market instruments. The fund may also engage in
foreign currency exchange transactions and transactions in futures
and options, enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery. See
"Common investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them. The fund may engage in defensive strategies
when Putnam Management judges that conditions in the securities
markets make pursuing the fund's basic investment strategy
inconsistent with the best interests of its shareholders. When
pursuing such defensive strategies, the fund may invest without
limit in securities primarily traded in U.S. markets. See "Common
investment policies and techniques" below for a discussion of
these strategies.

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

PUTNAM VT OTC & EMERGING GROWTH FUND

Putnam VT OTC & Emerging Growth Fund seeks capital appreciation.
The fund invests primarily in common stocks traded in the overthe-
counter ("OTC") market and common stocks of "emerging growth"
companies listed on securities exchanges. The fund is designed
for investors willing to assume above-average risk in return for
above-average capital growth potential. The fund may trade
securities for short-term profits.

The fund invests primarily in common stocks of small- to medium
sized companies with equity capitalizations of less than $5
billion that Putnam Management, believes have potential for
capital appreciation significantly greater than that of the market
averages. Under normal market conditions, the fund will invest at
least 65% of its total assets in common stocks that are traded in
the OTC market (that is, stocks not listed on any national,
regional or foreign stock exchange) or are issued by "emerging
growth" companies. "Emerging growth" companies are companies
determined by Putnam Management to have a leading or proprietary
position in a growing industry or gaining market share in an
established industry, particularly companies which have developed
a new way to do business within that industry. These companies may
range from startups, or recently organized companies, to mature
companies with long, established operating histories.

The companies in which the fund invests may offer greater
opportunities for capital appreciation than larger, more
established companies, but investments in such companies may
involve certain special risks. OTC listed and emerging growth
companies may have limited product lines, markets or financial
resources and may be dependent on a limited management group. Many
OTC and emerging growth stocks trade less frequently and in
smaller volume than exchange-listed stocks. The values of these
stocks may fluctuate more sharply than exchange-listed stocks, and
the fund may experience difficulty in establishing or closing out
positions in these stocks at prevailing market prices.

Though common stocks are normally the fund's main investment, it
may also purchase convertible bonds, convertible preferred stocks,
warrants, preferred stocks and debt securities without being
subject to any limitation based on securities ratings if Putnam
Management believes they would help achieve the fund's objective.
Securities in the lower-rated categories are considered to be
primarily speculative and may be in default.
See "Common investment techniques -- Lower-rated and other fixed
income securities." Dividend and interest income is not a
consideration in the selection of portfolio investments.

The fund may engage in defensive strategies when Putnam Management
judges that conditions in the securities markets make pursuing the
fund's basic investment strategy inconsistent with the best
interests of the fund's shareholders. See "Common investment
policies and techniques" below for a discussion of these
strategies. The fund may hold a portion of its assets in cash and
money market instruments. The fund may also engage in foreign
currency exchange transactions and transactions in futures and
options, enter into repurchase agreements, loan its portfolio
securities and purchase securities for future delivery. See
"Common investment policies and techniques" below for a discussion
of these securities and types of transactions and the risks
associated with them.

The fund expects that its investments in foreign securities
generally will not exceed 20% of its total assets although the
fund's investments in foreign securities may exceed this amount.
For a discussion of the risks associated with foreign investments,
see "Common investment techniques -- Foreign investments."

Putnam VT OTC & Emerging Growth Fund will generally be managed in
a style similar to that of Putnam OTC & Emerging Growth Fund.

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

Putnam VT U.S. Government and High Quality Bond Fund seeks current
income consistent with preservation of capital. The fund invests
primarily in U.S. government securities and in other debt
obligations rated at least A by a nationally recognized securities
rating agency, such as S&P or Moody's, or, if not rated,
determined by Putnam Management to be of comparable quality. For
a more detailed description of security ratings, see the Appendix
to this prospectus. The 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 consider such
reduction in its determination of whether the fund should continue
to hold the security in its portfolio. The foregoing investment
limitations will be measured at the time of purchase and, to the
extent that a security is assigned a different rating by one or
more of the various rating agencies, Putnam Management will use
the highest rating assigned
by any agency.

Putnam Management will allocate the fund's assets between U.S.
government securities and other high quality bonds, depending on
its assessment of market conditions and the relative investment
returns available from such securities. The fund will not,
however, make any investment, if, as a result, less than 25% of
the value of its assets would be invested in U.S. government
securities. The fund may invest in securities principally traded
in foreign markets, and expects that such investments will not
ordinarily exceed 20% of its assets. For a discussion of the
risks associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments." The fund may
also invest in premium securities, engage in foreign currency
exchange transactions and transactions in futures and options,
enter into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. See "Common
investment policies and techniques" below for a discussion of
these strategies and the risks associated with them. The fund may
also hold a portion of its assets in cash and money market
instruments. The fund may engage in defensive strategies when
Putnam Management judges that conditions in the securities markets
make pursuing the fund's basic investment strategy inconsistent
with the best interests of its shareholders. See "Common
investment policies and techniques" below for a discussion of
these strategies.

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

The fund may also invest in high quality mortgage-backed and asset-
backed securities. For a description of these securities, and the
risks associated with them, see "Common investment policies and
techniques -- Mortgage-backed and asset-backed securities."

U.S. government securities and other high quality bonds do not
involve the degree of credit risk associated with investments in
lower quality fixed-income securities, although, as a result, the
yields available from U.S. government securities and other high
quality bonds are generally lower than the yields available from
many other fixed-income securities. Like other fixed-income
securities, however, the values of U.S. government securities and
other high quality bonds change as interest rates fluctuate.
Fluctuations in the value of the fund's securities will not affect
interest income on securities already held by the fund, but will
be reflected in the fund's net asset value. Since the magnitude
of these fluctuations generally will be greater at times when the
fund's average maturity is longer, under certain market conditions
the fund may invest in short-term investments yielding lower
current income rather than investing in higher yielding longer-
term securities.

PUTNAM VT UTILITIES GROWTH AND INCOME FUND

The investment objective of Putnam VT Utilities Growth and Income
Fund is to seek capital growth and current income. The fund
concentrates its investments in securities issued by companies in
the public utilities industries.

The fund will seek its objective by investing under normal
circumstances at least 65% of its total assets in equity and debt
securities of companies in the public utilities industries. Equity
securities in which the fund may invest include common stocks,
preferred stocks, securities convertible into common stocks or
preferred stocks, and warrants to purchase common or preferred
stocks. The fund may invest up to 20% of its total assets in
securities that are rated below BBB or Baa by a nationally
recognized securities rating agency, such as S&P or Moody's, or,
if unrated, are determined by Putnam Management to be of
comparable quality. The fund is not subject to any other
restrictions based on securities ratings. Securities rated below
BBB and Baa (and comparable unrated securities) are commonly known
as "junk bonds." See "Common investment policies and techniques"
for a discussion of lower-rated and other fixedincome securities
and the risks associated with them. The foregoing investment
limitations will be measured at the time of purchase and, to the
extent that a security is assigned a different rating by one or
more of the various rating agencies, Putnam Management will use
the highest rating assigned by any agency. The fund may invest in
debt and equity securities of issuers in other industries if
Putnam Management believes they will help achieve the fund's
objective.

Companies in 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 and companies engaged in telecommunications, including
telephone, telegraph, satellite, microwave and other
communications media (but not companies engaged in public
broadcasting or cable television). Putnam Management deems a
particular 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
one or more of those industries.

The portion of the fund's assets invested in equity securities and
in debt securities will vary from time to time in light of the
fund's investment objective, changes in interest rates, and
economic and other factors. Although the fund expects that in the
near term it will invest substantial portions of its assets in
both equity securities and in debt securities, the fund may invest
all of its assets in either equity or debt securities.
The fund may hold a portion of its assets in cash and money market
instruments.

The fund may invest up to 25% of its assets in securities
principally traded in foreign markets. For a discussion of the
risks associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments." The fund may
also engage in foreign currency exchange transactions and
transactions in futures and options, enter into repurchase
agreements, loan its portfolio securities and purchase securities
for future delivery. See "Common investment policies and
techniques" below for a discussion of these securities and types
of transactions and the risks associated with them. The fund may
engage in defensive strategies when Putnam Management judges that
conditions in the securities markets make pursuing the fund's
basic investment strategy inconsistent with the best interests of
the fund's shareholders. See "Common investment policies and
techniques" below for a discussion of these strategies.

Since the fund's investments are concentrated in the utilities
industries, the value of its shares can be expected to change in
response to factors affecting those industries, and may fluctuate
more widely than the value of shares of a portfolio that invests
in a broader range of industries. 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 in
the United States and in foreign countries with the intention of
protecting the public while ensuring that utility companies earn a
return sufficient to allow them to attract capital in order to
grow and continue to provide appropriate services. There can be
no assurance that such pricing policies or rates of return will
continue in the future.

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

Foreign utility companies may be more heavily regulated than U.S.
utility companies, which may result in increased costs or
otherwise adversely affect the operations of such companies. The
securities of foreign utility companies also often have lower
dividend yields than U.S. utility companies. The fund's
investments in foreign issuers may include recently privatized
enterprises, in which the fund's participation may be limited or
otherwise affected by local law. There can be no assurance that
governments with privatization programs will continue such
programs or that privatization will succeed in such countries.
In addition, the stock of certain of these enterprises may be held
by a small group of stockholders, whose sale of a portion or all
of the stock may adversely affect the value of the stock of any
such enterprise.

Investments in securities rated BBB or Baa have speculative
characteristics, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity of
the issuer to make principal and interest payments than would
likely be the case with investments in securities with higher
credit ratings. The fund will not necessarily dispose of a
security when its rating is reduced below its rating at the time
of purchase, although Putnam Management will monitor the
investment to determine whether continued investment in the
security would serve the fund's investment objective.
The fund is "non-diversified." This means that it may invest its
assets in a limited number of issuers. In order to qualify as a
"regulated investment company" under the Internal Revenue Code
(see "How a fund makes distributions to shareholders; tax
information" below), the fund generally may not invest more than
25% of its total assets in obligations of any one issuer other
than U.S. government securities and, with respect to 50% of its
total assets, the fund may not invest more than 5% of its total
assets in the securities of any one issuer (except U.S. government
securities). Thus the fund may invest up to 25% of its total
assets in the securities of each of any two issuers. Because of
the limited number of issuers in the public utilities industries,
the fund is more likely to invest a higher percentage of its
assets in the securities of a single issuer than an investment
company which invests in a broad range of industries. This
practice involves an increased risk of loss to the fund if the
issuer is unable to make interest or principal payments or if the
market value of such securities were to decline.

Putnam VT Utilities Growth and Income Fund will generally be
managed in a style similar to that of Putnam Utilities Growth and
Income Fund. Because the latter fund is "diversified," however,
Putnam VT Utilities Growth and Income Fund's portfolio may consist
of securities of a smaller number of issuers than the portfolio of
that fund.

PUTNAM VT VISTA FUND

Putnam VT Vista Fund seeks capital appreciation. It is designed
for investors seeking above-average capital growth potential,
which involves certain risks.

The fund invests in a diversified portfolio of common stocks which
Putnam Management believes have the potential for aboveaverage
capital appreciation. These may include widely-traded common
stocks of larger companies as well as common stocks of smaller,
less well known companies. Putnam Management expects that, under
normal market conditions, the fund will generally invest
principally in the equity securities of medium-sized companies.
While the definition of "medium-sized" companies will change over
time in response to market conditions, Putnam Management believes
that such companies currently include those in the Russell Midcap
Growth Index, as well as other companies with equity market
capitalizations ranging from approximately $450 million to $10
billion. Such securities are often referred to as "midcap
stocks."

In selecting common stocks for the fund, Putnam Management will
consider, among other things, an issuer's financial strength,
competitive position, projected future earnings and dividends, and
other investment criteria. Current income will be only an
incidental consideration in the selection of investments.

Investment opportunities may be sought among securities of large,
widely traded companies as well as securities of smaller, less
well-known companies. Smaller companies may present greater
opportunities for capital appreciation, but may also involve
greater risks. They may have limited product lines, markets or
financial resources, or may depend on a limited management group.
Their securities may trade less frequently and in limited volume.
As a result, the prices of these securities may fluctuate more
than prices of securities of larger, more established companies.

The fund may at times invest a portion of its assets in common
stocks Putnam Management believes are significantly undervalued.
In selecting such common stocks, Putnam Management will focus on
industries and issuers it considers to have particular
possibilities for long-term capital appreciation due to potential
growth of earnings which, in the judgment of Putnam Management, is
not fully reflected in current market prices. In selecting
undervalued securities, Putnam Management may make investment
judgments contrary to those of most investors.

Although common stocks are normally the fund's main investments,
the fund may purchase preferred stocks, debt securities,
convertible securities (both bonds and preferred stocks) and
warrants if Putnam Management believes they would help achieve the
fund's objective of capital appreciation. The fund may purchase
debt securities rated at the time of purchase at least C by a
nationally recognized securities rating agency, such as S&P or
Moody's, and unrated securities determined by Putnam Management to
be of comparable quality. Securities in the lowerrated categories
are considered to be primarily speculative and may be in default.
The risks associated with fixed-income securities, including lower-
rated fixed-income securities (commonly known as "junk bonds"),
are discussed below under "Common investment policies and
techniques -- Lower-rated and other fixed-income securities." The
foregoing investment limitations will be measured at the time of
purchase and, to the extent that a security is assigned a
different rating by one or more of the various rating agencies,
Putnam Management will use the highest rating assigned by any
agency. The fund may also hold a portion of its assets in cash or
money market instruments and may invest in securities principally
traded in foreign markets, and expects that such investments will
not ordinarily exceed 20% of its assets. For a discussion of the
risks associated with foreign investments, see "Common investment
policies and techniques -- Foreign investments."

Putnam VT Vista Fund will generally be managed in a style similar
to Putnam Vista Fund.
PUTNAM VT VOYAGER FUND

Putnam VT Voyager Fund seeks capital appreciation. It is designed
for investors willing to assume above-average risk in return for
above-average capital growth potential. The fund invests
primarily in common stocks of companies that Putnam Management
believes have potential for capital appreciation that is
significantly greater than that of market averages. The fund may
also purchase convertible bonds, convertible preferred stocks,
warrants, preferred stocks and debt securities if Putnam
Management believes they would help achieve the fund's objective.
The fund may also hold a portion of its assets in cash and money
market instruments and may invest up to 20% of its assets in
foreign securities. For a discussion of the risks associated with
foreign investments, see "Common investment policies and
techniques -- Foreign investments." The fund may also engage in
foreign currency exchange transactions and transactions in futures
and options, enter into repurchase agreements, loan its
portfolio securities and purchase securities for future delivery.
See "Common investment policies and techniques" below for a
discussion of these securities and types of transactions and the
risks associated with them. The fund may engage in defensive
strategies when Putnam Management judges that conditions in the
securities markets make pursuing the fund's basic investment
strategy inconsistent with the best interests of the fund's
shareholders. See "Common investment policies and techniques"
below for a discussion of these strategies.

The fund's investments may include widely-traded common stocks of
larger companies as well as common stocks of smaller, less well
known issuers. The fund generally invests a portion of its assets
in the securities of small- to medium-sized companies with equity
market capitalizations of less than $3 billion. Investing in
these companies may present greater opportunities for capital
appreciation, but may also involve greater risk. They may have
limited product lines, markets or financial resources, or may
depend on a limited management group. Their securities may trade
less frequently and in limited volume and only in the over-the
counter market or on a regional securities exchange. As a result,
these securities may fluctuate in value more than securities of
larger, more established companies.

Putnam VT Voyager Fund will generally be managed in a style
similar to Putnam Voyager Fund.

GENERAL

As indicated above, certain of the funds 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.

COMMON INVESTMENT POLICIES AND TECHNIQUES

DIVERSIFICATION POLICIES

Each fund (other than Putnam VT Health Sciences Fund and Putnam VT
Utilities Growth and Income Fund) is a "diversified" investment
company under the Investment Company Act of 1940 (the "1940 Act").
This means that with respect to 75% of its total assets a fund may
not invest more than 5% of its total assets in the securities of
any one issuer (except U.S. government securities). The remaining
25% of its total assets is not subject to this restriction. To
the extent a fund invests a significant portion of its assets in
the securities of a particular issuer, it will be subject to an
increased risk of loss if the market value of such issuer's
securities declines.

LIMITING INVESTMENT RISK

SPECIFIC INVESTMENT RESTRICTIONS HELP TO LIMIT INVESTMENT RISKS
FOR EACH FUND'S SHAREHOLDERS. These restrictions prohibit a fund
with respect to 75% of its total assets (with respect to 50% of
its total assets in the case of Putnam VT Health Sciences Fund and
Putnam VT Utilities Growth and Income Fund) from holding more than
10% of the voting securities of any one issuer.* They also
prohibit a fund from investing more than:

(a) (with respect to 75% of total assets for all funds other than
Putnam VT Health Sciences Fund and Putnam VT Utilities Growth and
Income Fund with respect to 50% of its total assets for Putnam VT
Health Sciences Fund and Putnam VT Utilities Growth and Income
Fund) 5% of its total assets in securities of any one issuer other
than the U.S. government;*

(b) 25% of its total assets in any one industry (securities of the
U.S. government, its agencies or instrumentalities are not
considered to represent any 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 the
health sciences industries; and except that Putnam VT Money Market
Fund may invest more than 25% of its assets in (i) the banking
industry, (ii) the personal credit institution or business credit
institution industries or (iii) any combination of the above,
when, in the opinion of Putnam Management yield differentials make
such investments desirable.*

(c) 15% of its net assets in any combination of securities that
are not readily marketable, in securities restricted as to resale
(excluding securities determined by the Trustees (or the person
designated by the Trustees to make such determinations) to be
readily marketable), and in repurchase agreements maturing in more
than seven days.

The Money Market Fund has not invested more than 10% of its net
assets in the types of securities listed in item (c) and has no
current intention of doing so.

Restrictions marked with an asterisk (*) above are summaries of
fundamental policies. See the SAI for the full text of these
policies and other fundamental policies. Except as otherwise
noted in the SAI, all percentage limitations described in this
prospectus and the SAI will apply at the time an investment is
made, and will not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of
such investment. Except for investment policies designated as
fundamental in this prospectus or the SAI, the investment policies
described in this prospectus and in the SAI are not fundamental
policies. The Trustees may change any nonfundamental investment
policy without shareholder approval. As a matter of policy, the
Trustees would not materially change the fund's investment
objective without shareholder approval.

DEFENSIVE STRATEGIES

At times, Putnam Management may judge that conditions in the
securities markets make pursuing a fund's basic investment
strategy inconsistent with the best interests of its shareholders.
At such times, Putnam Management may temporarily use alternative
strategies that are primarily designed to reduce fluctuations in
the value of fund assets.

In implementing these defensive strategies, a fund may invest
without limit in cash or cash equivalents, money-market
instruments, short-term bank obligations, high-rated fixed-income
securities or preferred stocks or in any other securities Putnam
Management considers consistent with such defensive strategies.

It is impossible to predict when, or for how long, these
alternative strategies would be used.

PORTFOLIO TURNOVER

The length of time a fund has held a particular security is not
generally a consideration in investment decisions. A change in
the securities held by a fund is known as "portfolio turnover." As
a result of a fund's investment policies, under certain market
conditions its portfolio turnover rate may be higher than that of
other mutual funds.
Portfolio turnover generally involves some expense, including
brokerage commissions or dealer markups and other transaction
costs in connection with the sale of securities and reinvestment
in other securities. These transactions may result in realization
of taxable capital gains. A high portfolio turnover for a fund
may lead to higher brokerage costs. Portfolio turnover rates for
the most recent fiscal year of each fund (other than Putnam VT The
George Putnam Fund of Boston, Putnam VT Health Sciences Fund,
Putnam VT Investors Fund and Putnam VT OTC & Emerging Growth
Fund, each of which commenced operations on
April 30, 1998, and Putnam VT Money Market Fund, for which
portfolio turnover rates are not required to be disclosed by the
Securities and Exchange Commission) were as follows:

Putnam VT Asia Pacific Growth Fund 102.92%
Putnam VT Diversified Income Fund 282.56%
Putnam VT Global Asset Allocation Fund 181.05%
Putnam VT Global Growth Fund 158.37%
Putnam VT Growth and Income Fund 64.96%
Putnam VT High Yield Fund 84.61%
Putnam International Growth Fund 75.18%
Putnam International Growth and Income Fund 53.20%
Putnam International New Opportunities Fund 131.89%
Putnam VT New Opportunities Fund 71.78%
Putnam VT New Value Fund 64.15%
Putnam VT U.S. Government and High 194.29%
Quality Bond Fund
Putnam VT Utilities Growth and Income Fund 42.46%
Putnam VT Vista Fund 75.43%
Putnam VT Voyager Fund 82.00%

While it is impossible to predict a fund's portfolio turnover
rate, Putnam Management, based on its experience, believes that
such rate will not exceed 150% for Putnam VT The George Putnam
Fund of Boston, Putnam VT Health Sciences Fund and Putnam VT
Investors Fund, and 300% for Putnam VT OTC & Emerging Growth Fund.

INVESTMENTS IN PREMIUM SECURITIES

To the extent described above, certain of the funds may invest in
securities bearing coupon rates higher than prevailing market
rates. Such "premium" securities are typically purchased at prices
greater than the principal amounts payable on maturity.

A fund does not amortize the premium paid for these securities in
calculating its net investment income. As a result, the purchase
of premium securities provides a higher level of investment income
distributable to shareholders on a current basis than if the fund
purchased securities bearing current market rates of interest.
Because the value of premium securities tends to approach the
principal amount as they approach maturity (or call price in the
case of securities approaching their first call date), the
purchase of such securities may increase the fund's risk of
capital loss if such securities are held to maturity (or first
call date).

During a period of declining interest rates, many of a fund's
portfolio investments will likely bear coupon rates that are
higher than current market rates, regardless of whether such
securities were originally purchased at a premium. These
securities would generally carry premium market values that would
be reflected in the net asset value of fund shares. As a result,
an investor who purchases fund shares during such periods would
initially receive higher taxable monthly distributions (derived
from the higher coupon rates payable on a fund's investments) than
might be available from alternative investments bearing current
market interest rates, but the investor may face an increased risk
of capital loss as these higher coupon securities approach
maturity (or first call date). In evaluating the potential
performance of an investment in a fund, investors may find it
useful to compare the fund's current dividend rate with its
"yield," which is computed on a yield-to-maturity basis in
accordance with SEC regulations and which reflects amortization of
market premiums. See "How performance is shown."

FOREIGN INVESTMENTS
Each fund may invest in securities of foreign issuers including
securities that are not actively traded in U.S. markets. These
foreign investments involve certain special risks described below.

Investments in foreign securities may subject a fund to other
risks as well. For example, 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 the 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 the 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 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 the
fund's assets denominated in such currencies. Many emerging
market countries 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 values of the fund's investments in these countries and
the availability to the fund of additional investments in these
countries. The small size, limited trading volume and relative
inexperience of the securities markets in these countries may make
the fund's investments in such countries illiquid and more
volatile than investments in more developed countries, and the
fund may be required to establish special custodial or other
arrangements before making investments in these countries. There
may be little financial or accounting information available with
respect to issuers located in these countries, and it may be
difficult as a result to assess the value or prospects of an
investment in such issuers.

The fund's investments in securities of issuers located in
emerging market countries may include securities issued by foreign
governmental issuers through the exchange of existing commercial
bank loans to such countries for new bonds in connection with debt
restructurings, including Brady Bonds, which are issued under a
debt restructuring plan introduced by former U.S. Secretary of the
Treasury, Nicholas F. Brady. These securities may have no (or
only limited) collateralization, and the payment of interest and
principal may be dependent on the willingness and the ability of
the foreign governmental issuer to make payment in accordance with
the terms of the security.

Each fund expects that its investments in foreign securities
generally will not exceed the percentage of its total assets
indicated above in its relevant section, although its investments
in foreign securities may exceed this amount from time to time.
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.

FOR MORE INFORMATION ABOUT FOREIGN SECURITIES AND THE RISKS
ASSOCIATED WITH INVESTMENT IN SUCH SECURITIES, SEE THE SAI.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS

TO THE EXTENT DESCRIBED ABOVE, CERTAIN OF THE FUNDS MAY ENGAGE IN
FOREIGN CURRENCY EXCHANGE TRANSACTIONS TO MANAGE THEIR EXPOSURE TO
FOREIGN CURRENCIES. Putnam Management may engage in foreign
currency exchange transactions in connection with the purchase and
sale of portfolio securities ("transaction hedging") and to
protect against changes in the value of specific portfolio
positions ("position hedging"). Each such fund may also engage in
foreign currency transactions for non-hedging purposes, subject to
applicable law.

A fund may engage in transaction hedging to protect against a
change in foreign currency exchange rates between the date on
which the fund contracts to purchase or sell a security and the
settlement date, or to "lock in" the U.S. dollar equivalent of a
dividend or interest payment in a foreign currency. A fund may
also 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 may 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-thecounter
call and put options on foreign currency futures contracts and on
foreign currencies.
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 securities the fund
intends to buy are denominated, when the fund holds cash or short-
term investments). For position hedging purposes, a fund may
purchase or sell, on exchanges or in overthe-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.
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.
Each 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, for example,
purchase a currency forward
contract or option in order to
increase its exposure to the
currency.
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 a 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.

For a further discussion of the risks associated with purchasing
and selling futures contracts and options, see "Futures and
options." The SAI also contains additional information concerning
a fund's use of foreign currency exchange transactions.

FUTURES AND OPTIONS

FUTURES AND OPTIONS ON FUTURES. To the extent described above,
each fund may buy and sell stock index futures contracts ("index
futures"). An "index future" is a contract to buy or sell units
of a particular stock index at an agreed price on a specified
future date. Depending on the change in value of the index
between the time a fund enters into and terminates an index
futures transaction, the fund realizes a gain or loss. A fund may
also, to the extent consistent with its investment objectives and
policies, buy and sell call and put options on index futures or
stock indexes. A fund may engage in index futures and options
transactions for hedging purposes and for nonhedging purposes,
such as to adjust its exposure to relevant markets or as a
substitute for direct investment. In addition, if a fund's
investment policies permit it to invest in foreign securities,
such fund may invest in futures and options on foreign securities,
for hedging purposes and for nonhedging purposes.
The use of index futures and related options involves certain
special risks. Futures and options transactions involve costs and
may result in losses.

To the extent described above, each fund may also buy and sell
futures contracts and related options with respect to U.S.
government securities and options directly on U.S. government
securities. Putnam Management believes that, under certain market
conditions, price movements in U.S. government securities futures
and related options may correlate closely with securities in which
such funds may invest and may, as a result, provide hedging
opportunities for the funds. Such funds may engage in U.S.
government securities futures and related options transactions for
hedging purposes and for nonhedging purposes, such as to
substitute for direct investment or to manage their effective
duration. Duration is a commonly used measure of the longevity of
debt instruments.

OPTIONS. As described above, certain of the funds may, to the
extent consistent with their investment objectives and policies,
seek to increase current return by writing covered call and put
options on securities such funds own or in which they may invest.
A fund receives a premium from writing a call or put option, which
increases the return if the option expires unexercised or is
closed out at a net profit.

When a fund writes a call option, it gives up the opportunity to
profit from any increase in the price of a security above the
exercise price of the option; when it writes a put option, it
takes the risk that it will be required to purchase a security
from the option holder at a price above the current market price
of the security. 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 option having the
same terms as the option written.

A fund may also, to the extent consistent with its investment
objectives and policies, buy and sell put and call options,
including combinations of put and call options on the same
underlying security. The use of these strategies may be limited
by applicable law.

RISKS RELATED TO OPTIONS AND FUTURES STRATEGIES

OPTIONS AND FUTURES TRANSACTIONS INVOLVE COSTS AND MAY RESULT IN
LOSSES. The effective use of options and futures strategies
depends on a fund's ability to terminate its options and futures
positions at times when Putnam Management deems it desirable to
do so. Although a fund will enter into an option or futures
contract position only if Putnam Management believes that a liquid
secondary market exists for such option or futures contract, there
is no assurance that the fund will be able to effect closing
transactions at any particular time or at an acceptable price.
Options on certain U.S. government securities are traded in
significant volume on securities exchanges. However, other options
which a fund may purchase or sell are traded in the "over-the-
counter" market rather than on an exchange. This means that a
fund will enter into such option contracts with particular
securities dealers who make markets in these options. A fund's
ability to terminate options positions established in the over-the-
counter market may be more limited than for exchange-traded
options and may also involve the risk that securities dealers
participating in such transactions would fail to meet their
obligations to the fund. Certain provisions of the Internal
Revenue Code and certain regulatory requirements may limit the use
of index futures and options transactions.

The use of options and futures strategies also involves the risk
of imperfect correlation among movements in the values of the
securities, currencies or indexes underlying the futures and
options purchased and sold by a fund, of the option or futures
contract itself, and of the securities or currencies 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.

A MORE DETAILED EXPLANATION OF FUTURES AND OPTIONS TRANSACTIONS,
INCLUDING THE RISKS ASSOCIATED WITH THEM, IS INCLUDED IN THE SAI.

LOWER-RATED AND OTHER FIXED-INCOME SECURITIES

As described above, certain of the funds may invest in lowerrated
fixed-income securities (commonly known as "junk bonds").
Differing yields on fixed-income securities of the same maturity
are a function of several factors, including the relative
financial strength of the issuers. Higher yields are generally
available from securities in the lower rating categories of a
nationally recognized rating agency (below Baa or BBB) or from
unrated securities of comparable quality. Securities rated below
Baa or BBB are considered to be of poor standing and predominantly
speculative. The rating services' descriptions of securities in
the lower rating categories, including their speculative
characteristics, are set forth in the Appendix to this prospectus.

Changes by nationally recognized securities rating agencies in
their ratings of a 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.
INVESTORS SHOULD CAREFULLY CONSIDER THEIR ABILITY TO ASSUME THE
RISKS OF OWNING SHARES OF A MUTUAL FUND WHICH INVESTS IN LOWER-
RATED SECURITIES BEFORE ALLOCATING A PORTION OF THEIR INSURANCE
INVESTMENT TO A FUND THAT INVESTS IN SUCH SECURITIES.

Putnam Management seeks to minimize the risks of investing in
lower-rated securities through careful investment analysis. When
a fund invests in securities in the lower rating categories, the
achievement of the fund's goals is more dependent on Putnam
Management's ability than would be the case if the fund were
investing in securities in the higher rating categories.
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
continued investment in the security will assist in meeting a
fund's investment objective.
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 at times may invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount and pay interest
only at maturity rather than at intervals during the life of the
security. 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. Both zero-coupon bonds 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 that pay interest in cash
currently. The values of zero-coupon bonds and payment-in-kind
bonds are subject to greater fluctuation in response to changes in
market interest rates than bonds which pay interest in cash
currently.
Even though such bonds do not pay current interest in cash, a fund
is nonetheless required to accrue interest income on these
investments and to distribute the interest income on a current
basis. Thus, a fund could be required at times to liquidate other
investments in order to satisfy its distribution requirements.
Certain investment grade securities in which a fund may invest
share some of the risk factors discussed above with respect to
lower-rated securities.
FOR ADDITIONAL INFORMATION REGARDING THE RISKS ASSOCIATED WITH
INVESTING IN SECURITIES IN THE LOWER RATING CATEGORIES, SEE THE
SAI.
EACH FUND (OTHER THAN PUTNAM VT MONEY MARKET FUND) MAY INVEST UP
TO 15% OF ITS ASSETS IN ILLIQUID SECURITIES. Putnam Management
believes that opportunities to earn high yields may exist from
time to time in securities which are illiquid and which may be
considered speculative. The sale of these securities is usually
restricted under federal securities laws. As a result of
illiquidity, the fund may not be able to sell these securities
when Putnam Management considers it desirable to do so or may have
to sell them at less than fair market value.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
As described above, certain of the funds may invest in assetbacked
and mortgage-backed securities, including 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 without a government guarantee but usually
having some form of private credit enhancement.

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

DERIVATIVES

HOW PERFORMANCE IS SHOWN

"Total return" for the one-, five- and ten-year periods (or for
the life of a class, if shorter) through the most recent calendar
quarter represents the average annual compounded rate of return on
an investment of $1,000 in a fund. Total return may also be
presented for other periods. To the extent that there is a
difference between the total return and yield quoted for Putnam VT
Money Market Fund, yield will more closely effect the current
earnings of the fund.

ALL DATA ARE BASED ON PAST INVESTMENT RESULTS AND DO NOT PREDICT
FUTURE PERFORMANCE. Investment performance, which will vary, is
based on many factors, including market conditions, portfolio
composition, fund operating expenses and the class of shares the
investor purchases. Investment performance also often reflects
the risks associated with a fund's investment objective or
objectives and policies. These factors should be considered when
comparing a fund's investment results with those of other mutual
funds and other investment vehicles.

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 with respect to these insurance products.
Insurance related charges and expenses are not reflected in the
funds' performance information. As a result of such insurance
related charges and expenses, an investor's return under the
insurance product would be lower.

For performance information through the funds' most recent fiscal
year, see "Investment Performance of the Trust" in the SAI.

HOW THE TRUST IS MANAGED

The Trust pays Putnam Management a quarterly fee for these
services based on average net assets. See the SAI.

Putnam Management's Global Asset Allocation Committee has primary
responsibility for the day-to-day management of Putnam VT Global
Asset Allocation Fund.
The following officers of Putnam Management have had primary
responsibility for the day-to-day management of the indicated
funds' portfolios since the years stated below:
Business experience
Fund name Year (at least 5 years)
- --------------------- ------- -------------------------
PUTNAM VT ASIA PACIFIC
GROWTH FUND

David K. Thomas 1995 Employed as an investment
Senior Vice President
professional by Putnam
Management since 1987.

PUTNAM VT DIVERSIFIED
INCOME FUND

William Kohli 1994 Employed as an investment
Managing Director professional by Putnam
Management since 1994. Prior
to September, 1994, Mr. Kohli
was Executive Vice President,
and Co-Director of Global Bond
Management and, prior to
October, 1993, Mr. Kohli was
Senior Portfolio Manager at
Franklin Advisors/Templeton
Investment Counsel.

Jennifer E. Leichter 1993 Employed as an investment
Managing Director professional by Putnam
Management since 1987.

Robert M. Paine 1998 Employed as an investment
Senior Vice President professional by Putnam Management
since 1987.
PUTNAM VT THE GEORGE
PUTNAM FUND OF BOSTON
Edward P. Bousa Employed as an investment
Senior Vice President 1998 professional by Putnam
Management since
1992.

PUTNAM VT GLOBAL
GROWTH FUND

Anthony W. Regan 1996 Employed as an investment
Senior Managing Director professional by Putnam
Management since 1987.
Michael K. Arends 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since November,
1997. Prior to 1997, Mr.
Arends was employed by Phoenix
Duff & Phelps as a Managing
Director, Equities. Prior to
August, 1994, Mr. Arends was
employed as a Portfolio Manager
with Kemper Financial Services.

Ami T. Kuan Danoff 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1993. Prior
to April, 1993, Ms. Danoff
attended the MIT Sloan School
of Management.

PUTNAM VT GROWTH AND
INCOME FUND

Anthony I. Kreisel 1993 Employed as an investment
Managing Director professional by Putnam
Management since 1986.

David L. King 1993 Employed as an investment
Managing Director professional by Putnam
Management since 1983.

Sheldon N. Simon 1997 Employed as an investment
Senior Vice President
professional by Putnam
Management since 1984.

PUTNAM VT HEALTH SCIENCES
FUND

Richard B. England 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1992.

David G. Carlson 1998 Employed as an
Senior Vice President investment professional by
Putnam Management since
December 1992.

PUTNAM VT HIGH
YIELD FUND

Rosemary H. Thomsen 1997 Employed as an investment
Senior Vice President professional by Putnam
Management since 1986.

PUTNAM VT INTERNATIONAL
GROWTH FUND

Justin M. Scott 1996 Employed as an investment
Managing Director professional by Putnam
Management since 1988.

PUTNAM VT INTERNATIONAL
GROWTH AND INCOME FUND

Justin M. Scott 1996 Employed as an investment
Managing Director professional by Putnam
Management since 1988.

PUTNAM VT INTERNATIONAL
NEW OPPORTUNITIES FUND

J. Peter Grant 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1973.
Ami T. Kuan Danoff 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1993. Prior
to April, 1993, Ms. Danoff
attended the MIT Sloan School
of Management.

Stephen Oler 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1997. Prior
to June, 1997, Mr. Oler was a
Vice President at Templeton
Investments, and prior to
March, 1996 was a Senior Vice
President at Baring Asset
Management Co.

Deborah S. Farrell 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1997. Prior
to May, 1997, Ms. Farrell was a
Portfolio Manager at Emerging
Markets Investors
Corporation, and prior to May, 1994, Ms. Farrell was
Division Manager, Asian Capital
Markets, at International Finance Corporation.

PUTNAM VT INVESTORS
FUND

C. Beth Cotner 1998 Employed as an
investment Senior Vice
President professional by
Putnam Management since 1995.
Prior to September, 1995, Ms.
Cotner was Executive Vice
President of Kemper Financial
Services.

Richard England 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1992. Prior
to December, 1992, Mr. England
was an investment Officer at
Aetna Equity Investors.

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

PUTNAM VT MONEY
MARKET FUND

Joanne Driscoll 1997 Employed as an investment
Vice President professional by Putnam
Management since 1995. 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 a Financial Associate at
Bank of Boston. Prior to June,
1993, Ms. Driscoll was an
Investment Associate at Bay
Banks Investment Management.

PUTNAM VT NEW
OPPORTUNITIES FUND

Carol C. McMullen 1996 Employed as an
investment
Managing Director professional by Putnam
Management since 1995. Prior
to June, 1995, Ms. McMullen was
Senior Vice President of Baring
Asset Management.

Daniel L. Miller 1994 Employed as an investment
Managing Director professional by Putnam
Management since 1983.

PUTNAM VT NEW VALUE FUND

David L. King 1996 Employed as an investment
Managing Director professional by Putnam
Management since 1983.

PUTNAM VT OTC & EMERGING
GROWTH FUND

Steven L. Kirson 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1989.

Michael J. Mufson 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1993. Prior
to June, 1993, Mr. Mufson was
Senior Equity Analyst at Stein
Roe & Farnham.

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

PUTNAM VT UTILITIES
GROWTH AND INCOME FUND

Jeanne L. Mockard 1998 Employed as an investment
Senior Vice President professional by Putnam
Management since 1990.

PUTNAM VT VISTA FUND

David J. Santos 1996 Employed as an investment
Vice President professional by Putnam
Management since 1986.

Anthony C. Santosus 1996 Employed as an investment
Senior Vice President professional by Putnam
Management since 1985.

PUTNAM VT VOYAGER FUND

Robert R. Beck 1995 Employed as an investment
Senior Vice President professional by Putnam
Management since 1989.

Charles H. Swanberg 1994 Employed as an investment
Senior Vice President professional by Putnam
Management since 1984.

With Trustee approval, any expense limitation may be terminated
earlier, in which event shareholders would be notified and this
prospectus would be revised.

The following table summarizes total expenses for class IB shares,
including management fees but excluding any separateaccount
related charges and expenses of the funds. The table is based on
information for class IA shares for the year ended December 31,
1997, and has been restated to reflect the 12b-1 fees assessed on
class IB shares. For funds that have been in operation for less
than a full year, total expenses and management fees are based on
estimated expenses for the first full fiscal year as a percentage
of each fund's average net assets:

TOTAL MANAGEMENT 12B-1 OTHER
EXPENSES FEES FEES EXPENSES

Putnam VT Asia
Pacific Growth Fund 1.22% 0.80% 0.15% 0.27%
Putnam VT Diversified
Income Fund 0.95% 0.69% 0.15% 0.11%
Putnam VT The George Putnam
Fund of Boston* 1.00% 0.49% 0.15% 0.36%
Putnam VT Global
Asset Allocation Fund 0.92% 0.66% 0.15% 0.11%
Putnam VT Global
Growth Fund 0.90% 0.60% 0.15% 0.15%
Putnam VT Growth and
Income Fund 0.66% 0.47% 0.15% 0.04%
Putnam VT Health Sciences
Fund* 1.05% 0.56% 0.15% 0.34%
Putnam VT High Yield Fund 0.87% 0.66% 0.15% 0.06%
Putnam VT International
Growth Fund* 1.35% 0.73% 0.15% 0.47%
Putnam VT International
Growth and Income Fund 1.27% 0.80% 0.15% 0.32%
Putnam VT International
New Opportunities Fund* 1.75% 0.92% 0.15% 0.68%
Putnam VT Investors Fund* 1.00% 0.52% 0.15% 0.33%
Putnam VT Money Market Fund 0.69% 0.45% 0.15% 0.09%
Putnam VT New
Opportunities Fund 0.78% 0.58% 0.15% 0.05%
Putnam VT New Value Fund 1.00% 0.70% 0.15% 0.15%
Putnam VT OTC & Emerging
Growth Fund* 1.05% 0.56% 0.15% 0.34%
Putnam VT U.S. Government
and High Quality Bond Fund 0.84% 0.61% 0.15% 0.08%
Putnam VT Utilities Growth
and Income Fund 0.89% 0.67% 0.15% 0.07%
Putnam VT Vista Fund 1.02% 0.65% 0.15% 0.22%
Putnam VT Voyager Fund 0.74% 0.54% 0.15% 0.05%
* The management fees and "Other expenses" shown in the table
reflect an expense limitation. In the absence of an expense
limitation, management fees, "Other expenses" and total fund
operating expenses would have been:

Total Management 12b-1 Other
Expenses Fees Fees Expenses
Putnam VT The George
Putnam Fund of Boston+ 1.16% 0.65% 0.15% 0.36%
Putnam VT Health Sciences
Fund+ 1.19% 0.70% 0.15% 0.34%
Putnam VT International
Growth Fund 1.42% 0.80% 0.15% 0.47%
Putnam VT International New
Opportunities Fund 2.03% 1.20% 0.15% 0.68%
Putnam VT Investors Fund+ 1.13% 0.65% 0.15% 0.33%
Putnam VT OTC & Emerging
Growth Fund+ 1.19% 0.70% 0.15% 0.34%

+ Estimated management fees, "Other expenses" and total fund operating
expenses.

In accordance with SEC policy, the expenses shown in these tables do not reflect
the application of credits related to brokerage service and expense offset
arrangements that reduce certain fund expenses.

ORGANIZATION AND HISTORY

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. Until September 1,
1993, Putnam VT Global Asset Allocation Fund was known as PCM
Multi-Strategy 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 are offered pursuant to
another prospectus at net asset value and are not subject to fees
imposed pursuant to a distribution plan. Class IB shares are
offered pursuant to this prospectus at net asset value and are
subject to fees imposed pursuant to a distribution plan (the
"Distribution Plan") adopted under Rule 12b-1 under the 1940 Act.
Only class IB shares are offered by this prospectus. 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 TRUST'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds. Director, Marsh & McLennan Companies, Inc.;
WILLIAM F. POUNDS, VICE CHAIRMAN. Professor of Management, Alfred
P. Sloan School of Management, Massachusetts Institute of
Technology; JAMESON ADKINS BAXTER, President, Baxter Associates,
Inc.; HANS H. ESTIN, Vice Chairman, North American Management
Corp.; JOHN A. HILL, Chairman and Managing Director, First Reserve
Corporation; RONALD J. JACKSON, Former Chairman, President and
Chief Executive Officer of Fisher-Price, Inc., Trustee of Salem
Hospital and the Peabody Essex Museum; PAUL L. JOSKOW,* Professor
of Economics and Management, Massachusetts Institute of
Technology, Director, New England Electric System, State Farm
Indemnity Company and Whitehead Institute for Biomedical Research;
ELIZABETH T. KENNAN, President Emeritus and Professor, Mount
Holyoke College; LAWRENCE J. LASSER,* Vice President of the Putnam
funds. President, Chief Executive Officer and Director of Putnam
Investments, Inc. and Putnam Management. Director, Marsh &
McLennan Companies, Inc.; JOHN H. MULLIN, III, Chairman and CEO of
Ridgeway Farm, Director of ACX Technologies, Inc., Alex. Brown
Realty, Inc., and The Liberty Corporation; ROBERT E. PATTERSON,
President and Trustee of Cabot Industrial Trust and Trustee of the
SEA Education Association; DONALD S. PERKINS,* Director of various
corporations, including Cummins Engine Company, Inc., Lucent
Technologies Inc., Nanophase Technologies, Inc., and Springs
Industries, Inc.; GEORGE PUTNAM, III,* President, New Generation
Research, Inc.; A.J.C. SMITH,* Chairman and Chief Executive
Officer, Marsh & McLennan Companies, Inc.; W. THOMAS STEPHENS,
President and Chief Executive Officer, MacMillan Bloedel Ltd.
Director of Qwest Communications and New Century Energies; and W.
NICHOLAS THORNDIKE, Director of various corporations and
charitable organizations, including Data General Corporation,
Bradley Real Estate, Inc. and Providence Journal Co. Also, Trustee
of Cabot Industrial Trust, Massachusetts General Hospital and
Eastern Utilities Associates. The Trust's Trustees are also
Trustees of the other Putnam funds. Those marked with an asterisk
(*) are or may be deemed to be "interested persons" of the Trust,
Putnam Management or Putnam Mutual Funds.

ABOUT YOUR INVESTMENT

SALES AND REDEMPTIONS

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

DISTRIBUTION PLAN

The Trust has adopted a Distribution Plan with respect to class IB
shares to compensate Putnam Mutual Funds for services provided and
expenses incurred by it as principal underwriter of the class IB
shares, including the payments to insurance companies and their
affiliated dealers mentioned below. The plans provide for
payments by each fund to Putnam Mutual Funds at the annual rate
(expressed as a percentage of average net assets) of up to 0.35%
on class IB shares. The Trustees currently limit payments on
class IB shares to 0.15% of average net assets.

Putnam Mutual Funds compensates insurance companies (or affiliated
broker-dealers) whose separate accounts invest in the Trust
through class IB shares for providing services to their contract
holders investing in the Trust.

Putnam Mutual Funds makes quarterly payments to dealers at the
annual rate of up to 0.15% of the average net asset value of class
IB shares.

Putnam Mutual Funds may suspend or modify its payments to dealers.
The payments are also subject to the continuation of the
Distribution Plan, the terms of service agreements between dealers
and Putnam Mutual Funds, and any applicable limits imposed by the
National Association of Securities Dealers, Inc.

HOW A FUND VALUES ITS SHARES

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

HOW A FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION

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

FINANCIAL INFORMATION

ABOUT PUTNAM INVESTMENTS, INC.

APPENDIX

SECURITIES RATINGS

THE FOLLOWING RATING SERVICES DESCRIBE RATED SECURITIES AS
FOLLOWS:

MOODY'S INVESTORS SERVICE, INC.

BONDS

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 earning any real investment standing.
NOTES
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
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.

CCC -- An obligation rated CCC is currently vulnerable to
nonpayment, and is dependent upon favorable business, financial,
and economic conditions for the obligor to met 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.

NOTES

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

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'.

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.

DD -- Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.

FITCH INVESTORS SERVICE, INC.

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.

One Post Office Square
Boston, MA 02109

FUND INFORMATION:
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square PROSPECTUS
Boston, MA 02109 APRIL 30, 1998, AS
REVISED JULY 2, 1998
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109

INVESTOR SERVICING AGENT

Putnam Investor Services
Mailing address:
P.O. Box 41203 Providence,
RI 02940-1203

CUSTODIAN

Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109

LEGAL COUNSEL

Ropes & Gray
One International Place Boston,
MA 02110

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP
160 Federal Street
Boston, MA 02110

PUTNAMINVESTMENTS
P.O. Box 989
Boston, Massachusetts 02103
Toll-free 1-800-225-1581
www.putnaminv.com

PROSPECTUS SUPPLEMENT 44679 7/98
DATED JULY 13, 1998 TO:

PUTNAM VARIABLE TRUST
PROSPECTUSES DATED APRIL 30, 1998
IN THE SECTION ENTITLED "HOW THE TRUST IS MANAGED," THE CHART
INDICATING THE OFFICERS OF PUTNAM INVESTMENT MANAGEMENT, INC.
("PUTNAM MANAGEMENT") THAT HAVE PRIMARY RESPONSIBILITY FOR THE DAY-
TO-DAY MANAGEMENT OF THE PORTFOLIO OF PUTNAM VT UTILITIES GROWTH
AND INCOME FUND IS REPLACED WITH THE FOLLOWING:
Business experience
Officer Year (at least 5 years)
- ------- ---- -------------------------
- -

Putnam VT Utilities Growth and Income Fund

Jeanne Mockard 1998 Employed as an investment
Senior Vice President professional by
Putnam
Management since 1990.

Christopher A. Ray 1995 Employed as an
investment
Senior Vice President professional by
Putnam
Management since 1992

S:\funds\pvt\suppleme\supp2.doc

46096 9/98

PROSPECTUS SUPPLEMENT DATED SEPTEMBER 1, 1998 TO:

PUTNAM VARIABLE TRUST (the "Trust")
Prospectuses dated April 30, 1998

In the section entitled "How the Trust is managed," the chart
indicating the officers of Putnam Investment Management, Inc.
("Putnam Management") that have primary responsibility for the
day-to-day management of the portfolio of Putnam VT Growth and
Income Fund is replaced with the following:

Business Experience
Year (at least 5 years)

PUTNAM VT GROWTH AND
INCOME FUND

Hugh Mullin 1998 Employed as an investment
professional by
Managing Director Putnam Management since 1986.

David L. King 1993 Employed as an investment
professional by
Managing Director Putnam Management since 1983.

Sheldon N. Simon 1997 Employed as an investment
professional by
Senior Vice President Putnam Management since 1984.

46096
HV-2266
NS 20626
47402

Prospectus Supplement 46432 9/98
dated September 30, 1998 to: -------------------------------------
- ----------------------------

PUTNAM VARIABLE TRUST
Prospectuses dated April 30, 1998 and prospectus dated April 30,
1998, as revised July 2, 1998

1. THE FOLLOWING TABLES ARE ADDED TO THE SECTION ENTITLED
"FINANCIAL HIGHLIGHTS"

The following tables present per share financial information for
Class IB Shares. The "Report of independent accountants" and
financial statements included in the Trust's annual report to
shareholders for the 1997 fiscal year are incorporated by
reference into this prospectus. The Financial information for the
six months ended June 30, 1998 is unaudited. The unaudited
financial statements included in the Trust's semi-annual report
are incorporated by reference into this prospectus. The Trust's
annual report and semi-annual report, which contain additional
unaudited performance information, are available without charge
upon request.
<TABLE><CAPTION>
CLASS IB SHARES
FINANCIAL HIGHLIGHTS (UNAUDITED)

INVESTMENT OPERATIONS LESS
DISTRIBUTIONS:
NET FROM NET
NET ASSET REALIZED AND TOTAL FROM NET ASSET
VALUE, NET UNREALIZED FROM NET REALIZED VALUE
PERIOD BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT GAIN ON TOTAL END OF
ENDED OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INVESTMENTS
DISTRIBUTIONS PERIOD
<S> <C> <C> <C> <C> <C> <C>

PUTNAM VT ASIA PACIFIC GROWTH FUND
June 30, 1998*++ $8.57 $.01 $(0.83) $(0.82) $- $- $- $7.75
PUTNAM VT DIVERSIFIED INCOME FUND
June 30, 1998*++ $10.95 $.13 $(.14) $(.01) $- $- $- $10.94

PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON
June 30, 1998*++ $10.00 $.05(a)(b) $(.08)(g) $(.03) $- $- $- $9.97

PUTNAM VT GLOBAL ASSET ALLOCATION FUND
June 30, 1998*++ $18.16 $.10 $.18 $.28 $- $- $- $18.44

PUTNAM VT GLOBAL GROWTH FUND
June 30, 1998*++ $18.03 $.04 $.81 $.85 $- $- $- $18.88

PUTNAM VT GROWTH AND INCOME FUND
June 30, 1998*++ $28.02 $.08(a) $(.70) $(.62) $- $- $-
$27.40

PUTNAM HEALTH SCIENCES
FUND
June 30, 1998*++ $10.00 $.01(a)(b) $.06(g) $.07 $- $- $-
$10.07

PUTNAM VT HIGH
YIELD FUND
June 30, 1998*++ $12.99 $.15(a) $(.18) $(.03) $- $- $-
$12.96

PUTNAM VT INTERNATIONAL
GROWTH FUND
June 30, 1998*++ $13.44 $.12(a) $.13 $.25 $- $- $- $13.69
PUTNAM VT INTERNATIONAL
GROWTH AND INCOME FUND
June 30, 1998*++ $13.36 $.15(b) $(.23) $(.08) $- $- $- $13.28

PUTNAM VT INTERNATIONAL
NEW OPPORTUNITIES FUND
June 30, 1998*++ $11.39 $.02(b) $.15 $.17 $- $- $- $11.56

PUTNAM VT INVESTORS FUND
June 30, 1998*++ $10.00 $.01(a) $.58 $.59 $- $- $- $10.59

PUTNAM VT MONEY
MARKET FUND
June 30, 1998*++ $1.00 $.0090 $- $.0090
$(.0090)$-$(.0090)$1.00

PUTNAM VT NEW
OPPORTUNITIES FUND
June 30, 1998*++ $23.94 $(.02) $.91 $.89 $- $- $- $24.83
PUTNAM VT NEW VALUE
FUND
June 30, 1998*++ $11.91 $.04(a) $(.04) $- $- $- $- $11.91
PUTNAM VT OTC & EMERGING
GROWTH FUND
June 30, 1998*++ $10.00 $.01(a)(b) $.22(g) $.23 $- $- $- $10.23

PUTNAM VT U.S. GOVERNMENT
AND HIGH QUALITY BOND FUND
June 30, 1998*++ $12.88 $.11 $.23 $.34 $- $- $- $13.22

PUTNAM VT UTILITIES
GROWTH AND INCOME FUND
June 30, 1998*++ $16.19 $.09 $.18 $.27 $- $- $- $16.46

PUTNAM VT VISTA
FUND
June 30, 1998*++ $13.76 $(.01)(a) $.65 $.64 $- $- $- $14.40

PUTNAM VT VOYAGER FUND
June 30, 1998*++ $41.55 $(.01)(a) $1.62 $1.61 $- $- $- $43.16

CLASS IB SHARES
FINANCIAL HIGHLIGHTS (UNAUDITED)

TOTAL RATIO OF NET
INVESTMENT RATIO OF INVESTMENT AVERAGE
RETURN AT NET ASSETS EXPENSES TO INCOME TO
COMMISSION
NET ASSET END OF PERIOD AVERAGE NET AVERAGE NET PORTFOLIO
RATE VALUE(%)(C) (IN THOUSANDS)ASSETS(%)(D) ASSETS(%)
TURNOVER PAID(E)
<S> <C> <C> <C> <C>
<C>
PUTNAM VT ASIA
PACIFIC GROWTH FUND
June 30, 1998*++ (9.57)+ $1 .21+ .12+ 68.26+
$.0107

PUTNAM VT DIVERSIFIED
INCOME FUND
June 30, 1998*++ (0.09)+ $16 .23+ 1.29+ 103.30+

PUTNAM VT THE GEORGE PUTNAM
FUND OF BOSTON
June 30, 1998*++ (.30)+ $1 .17(b)+ .50(b)+ 24.33+ $.0237
PUTNAM VT GLOBAL ASSET
ALLOCATION FUND
June 30, 1998*++ 1.54+ $3 .16+ .70+ 68.19+ $.0203
PUTNAM VT GLOBAL GROWTH
FUND
June 30, 1998*++ 4.71+ $1 .15+ .15+ 81.04+ $.0262

PUTNAM VT GROWTH AND INCOME
FUND
June 30, 1998*++ (2.21)+ $7 .16+ .37+ 36.12+ $.0503

PUTNAM VT HEALTH SCIENCES FUND
June 30, 1998*++ .70+ $1 .18(b)+ .10(b)+ 1.93+ $.0289

PUTNAM HIGH YIELD
FUND
June 30, 1998*++ (0.23)+ $1 .15+ 1.39+ 31.54+ $.0500
PUTNAM VT INTERNATIONAL
GROWTH FUND
June 30, 1998*++ 1.86+ $11 .21+ .61+ 53.10+ $.0281

PUTNAM VT INTERNATIONAL
GROWTH AND INCOME FUND
June 30, 1998*++ (0.60)+ $5 .20(b)+ 1.15(b)+ 28.49+ $.0207

PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
June 30, 1998*++ 1.49+ $1 .29+(b) .01+ 65.70+ $.0208

PUTNAM VT INVESTORS FUND
June 30, 1998*++ 5.90+ $1 .17+(b) .12+ 3.63+ $.0263

PUTNAM VT MONEY MARKET FUND
June 30, 1998*++ 0.90+ $1 .12+ .94+ -
PUTNAM VT NEW OPPORTUNITIES FUND
June 30, 1998*++ 3.72+ $1 .13+ (.03)+ 27.81+ $.0452
PUTNAM VT NEW VALUE FUND
June 30, 1998*++ -+ $1 .16+ .24+ 85.19+ $.0479
PUTNAM VT OTC & EMERGING
GROWTH FUND
June 30, 1998*++ 2.30+ $1 .18(b)+ .05(b)+ 83.12+ $.0249
PUTNAM VT U.S. GOVERNMENT AND
HIGH QUALITY BOND FUND
June 30, 1998*++ 2.64+ $1 .14+ 1.06+ 93.09+

PUTNAM VT UTILITIES
GROWTH AND INCOME FUND
June 30, 1998*++ 1.67+ $1 .15+ .44+ 13.19+ $.0445
PUTNAM VISTA FUND
June 30, 1998*++ 4.65+ $13 .16+ (.04)+ 51.06+ $.0452

PUTNAM VT VOYAGER FUND
June 30, 1998*++ 3.87+ $63 .12+ .02+ 28.12+ $.0494

</TABLE>[/R]
* Unaudited.
+ Not annualized.
++ For the period April 30, 1998 (commencement of
operations) to June 30, 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 following periods:
6/30/98
Putnam VT The George Putnam Fund of Boston Class IB $0.01
Putnam VT Health Sciences Fund Class IB less than 0.01
Putnam VT International Growth and Income
Fund Class IB less than 0.01
Putnam VT OTC & Emerging Markets Fund Class IB $0.05

(c) Total investment return assumes dividend reinvestment.
(d) The ratio of expenses to average net assets for the periods
ended December 31, 1995, and thereafter, includes amounts
paid through expense offset and brokerage service
arrangements. Prior period ratios exclude these amounts.
(e) Certain funds are required to disclose the average
commission rate paid per share for fiscal periods beginning
on or after September 1, 1995.
(f) The amount shown for a share outstanding does not
correspond with the aggregate net gain/loss on investments
for the period due to timing of sales and repurchases of fund
share in relation to fluctuating market values of the
investments of the fund.

Prospectus Supplement 46451 9/98
dated September 30, 1998 to: -------------------------------------
- ----------------------------

PUTNAM VARIABLE TRUST
Prospectuses dated April 30, 1998

1. THE FOLLOWING SECTION IS ADDED TO THE PROSPECTUS UNDER THE
SECTION "INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS."

PUTNAM VT RESEARCH FUND

Putnam VT Research Fund seeks capital appreciation. The fund is
not intended to be a complete investment program, and there is no
assurance it will achieve its objective.

Putnam Management expects that under normal market conditions the
fund will invest primarily in securities of issuers with market
capitalizations above $500 million. From time to time, however,
the fund may invest a portion of its assets in securities of
companies with equity market capitalizations below this level.
These companies may present greater opportunities for capital
appreciation, but may also involve greater risk. They may have
limited product lines, markets or financial resources, or may
depend on a limited management group. Their securities may trade
less frequently and in limited volume, and only in the over-the
counter market or on a regional securities exchange. As a result,
these securities may fluctuate in value more than those of larger,
more established companies.
Common stocks are normally the fund's main investments. However,
the fund may purchase preferred stocks, debt securities and
convertible securities (both bonds and preferred stocks) if Putnam
Management believes they would help achieve the fund's objective
of capital appreciation. These securities may include securities
in the lower-rated categories. Securities in the lower-rated
categories are considered to be primarily speculative and may be
in default. The fund may also invest in securities principally
traded in foreign markets, engage in foreign currency exchange
transactions and transactions in futures contracts and options,
enter into repurchase agreements, loan its portfolio securities
and purchase securities for future delivery. The fund may also
hold a portion of its assets in cash or high-quality money market
instruments.
Putnam VT Research Fund will generally be managed in a style
similar to that of Putnam Research Fund.
2. ADD THE FOLLOWING SENTENCE TO THE LAST PARAGRAPH UNDER THE
SECTION "COMMON INVESTMENT POLICIES AND TECHNIQUES - PORTFOLIO
TURNOVER"
While it is impossible to predict a fund's portfolio turnover
rate, Putnam Management, based on its experience, believes that
such rate will not exceed 200% for Putnam VT Research Fund.
3. IN THE SECTION ENTITLED "HOW THE TRUST IS MANAGED," THE CHART
INDICATING THE OFFICERS OF PUTNAM MANAGEMENT THAT HAVE PRIMARY
RESPONSIBILITY FOR THE DAY-TO-DAY MANAGEMENT OF EACH FUND'S
PORTFOLIO IS REVISED WITH RESPECT TO PUTNAM VT RESEARCH FUND AS
FOLLOWS:
PUTNAM VT RESEARCH FUND
Thomas R. Bogan 1998 Employed as an investment
Managing Director professional by Putnam
Management since 1994. Prior to
1994, Mr. Bogan was Senior Analyst
of Lord, Abbett & Co.

The following table summarizes total expenses for Class IB shares,
including management fees but excluding any separate-account related
charges and expenses, based on estimated expenses for the first full
fiscal year as a percentage of
each fund's average net assets:
TOTAL MANAGEMENT 12B-1 OTHER
EXPENSES FEES+ FEES EXPENSES+
(after (after (after (after
expense expense expense expense
limitation) limitation) limitation) limitation)
<S> <C> <C> <C> <C>
Class IA 0.85% 0.37% N/A 0.48%
Class IB 1.00% 0.37% 0.15% 0.48%

TOTAL MANAGEMENT 12B-1 OTHER
EXPENSES FEES FEES EXPENSES

Class IA 1.13% 0.65% N/A 0.48%
Class IB 1.28% 0.65% 0.15% 0.48%

+ Estimated management fees, "Other expenses" and total fund operating
expenses.

</TABLE>

4. THE FIRST PARAGRAPH UNDER THE HEADING "ORGANIZATION AND
HISTORY," IS REPLACED WITH THE FOLLOWING:

5. THE SECOND PARAGRAPH UNDER THE HEADING "PUTNAM VT MONEY MARKET
FUND - INSURANCE," IS REPLACED WITH THE FOLLOWING:

The maximum amount of total coverage under the policy is $30
million, subject to a deductible in respect of each loss equal to
the lesser of $1 million or 0.30% of the fund's net assets. As
of August 31, 1998, the fund's net assets totaled $609.46 million.
Each of the money market funds that has purchased the insurance
has access to the full amount of insurance under the policy,
subject to the deductible. Accordingly, depending upon the
circumstances, the fund may not be entitled to recover under the
policy, even though it has experienced a loss that would otherwise
be insurable.

7. THE EXPENSE TABLE CAPTIONS FOR THE CLASS IB SHARES UNDER THE
HEADING "COMMON INVESTMENT POLICIES AND TECHNIQUES - HOW THE TRUST
IS MANAGED" IS REPLACED WITH THE FOLLOWING:

<S> <C> <C> <C>
<C>
TOTAL MANAGEMENT 12B-1
OTHER
EXPENSES FEES FEES
EXPENSES
(after (after (after
(after
expense expense expense
expense
limitation) limitation) limitation)

limitation)

</TABLE>

PUTNAM VARIABLE TRUST

FORM N-1A

PART B

STATEMENT OF ADDITIONAL INFORMATION ("SAI")
APRIL 30, 1998, AS REVISED SEPTEMBER 30, 1998

This SAI is not a prospectus and is only authorized for
distribution when accompanied or preceded by the prospectuses of
the Trust dated April 30, 1998, as revised from time to time.
This SAI contains information which may be useful to investors
but which is not included in the prospectus. If the Trust has
more than one form of current prospectus, each reference to the
prospectus in this SAI shall include all of the Trust's
prospectuses, unless otherwise noted. The SAI should be read
together with the applicable prospectus. Investors may obtain a
free copy of the applicable prospectus from Putnam Investor
Services, Mailing address: P.O. Box 41203, Providence, RI
02940-1203.

The Report of the Trust's independent accountants and the audited
financial statements of the Trust are incorporated by reference
into this SAI.

TABLE OF CONTENTS

DEFINITIONS B-3

INVESTMENT OBJECTIVES AND POLICIES B-3

TAXES B-33

INVESTMENT RESTRICTIONS B-36

MANAGEMENT B-38

INVESTMENT PERFORMANCE OF THE TRUST B-78

DETERMINATION OF NET ASSET VALUE B-81

DISTRIBUTION PLAN B-84

SUSPENSION OF REDEMPTIONS B-85

SHAREHOLDER LIABILITY B-85

CUSTODIAN B-86

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS B-86

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.
INVESTMENT OBJECTIVES AND POLICIES
The Trust consists of twenty-one separate investment portfolios
(the "funds") with differing investment objectives and policies:
Putnam VT Asia Pacific Growth Fund, Putnam VT Diversified Income
Fund, Putnam VT The George Putnam Fund of Boston, Putnam VT
Global Asset Allocation Fund, Putnam VT Global Growth Fund,
Putnam VT Growth and Income Fund, Putnam VT Health Sciences Fund,
Putnam VT High Yield Fund, Putnam VT International Growth Fund,
Putnam VT International Growth and Income Fund, Putnam VT International New
Opportunities Fund, Putnam VT Investors Fund, Putnam VT Money Market Fund,
Putnam VT New Opportunities Fund, Putnam VT New Value Fund, Putnam VT OTC &
Emerging Growth Fund, Putnam VT Research Fund, Putnam VT U.S. Government and
High Quality Bond Fund, Putnam VT Utilities Growth and Income Fund,
Putnam VT Vista Fund and Putnam VT Voyager Fund. The investment
objectives and policies of the funds are described in the
prospectus offering such funds. This SAI contains, among other
things, the investment restrictions of the funds. It also
contains information concerning certain investment practices in
which some or all of the funds may engage. The prospectus
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. If
sales of
portfolio securities cause the fund to realize net
short-term
capital gains, such gains will be taxable as ordinary income.
As
a result of a fund's investment policies, under
certain market
conditions the fund's portfolio turnover rate may be higher
than
that of other mutual funds. Portfolio turnover rate for
a fiscal
year is the ratio of the lesser of purchases or sales
of
portfolio securities to the monthly average of the value
of
portfolio securities -- excluding securities whose maturities
at
acquisition were one year or less. A fund's portfolio
turnover
rate is not a limiting factor when Putnam Management considers a
change in a fund's portfolio.

Convertible Securities. Convertible securities include
bonds,
debentures, notes, preferred stocks and other securities
that may
be converted into or exchanged for, at a specific price
or
formula within a particular period of time, a prescribed
amount
of common stock or other equity securities of the same or
a
different issuer. Convertible securities entitle the holder
to
receive interest paid or accrued on debt or dividends paid
or
accrued on preferred stock until the security matures or
is
redeemed, converted or exchanged.

The market value of a convertible security is a function of
its
"investment value" and its "conversion value." A
security's
"investment value" represents the value of the security without
its conversion feature (i.e., a nonconvertible fixed
income
security). The investment value may be determined by
reference
to its credit quality and the current value of its
yield to
maturity or probable call date. At any given time,
investment
value is dependent upon such factors as the general
level of
interest rates, the yield of similar nonconvertible
securities,
the financial strength of the issuer and the seniority of
the
security in the issuer's capital structure.
A security's
"conversion value" is determined by multiplying the number
of
shares the holder is entitled to receive upon conversion
or
exchange by the current price of the underlying security.

If the conversion value of a convertible
security is
significantly below its investment value, the
convertible
security will trade like nonconvertible debt or preferred
stock
and its market value will not be influenced
greatly by
fluctuations in the market price of the underlying
security.
Conversely, if the conversion value of a convertible
security is
near or above its investment value, the market value of
the
convertible security will be more heavily
influenced by
fluctuations in the market price of the underlying security.

The fund's investments in convertible securities may at
times
include securities that have a mandatory conversion
feature,
pursuant to which the securities convert automatically into
common stock or other equity securities at a specified date and a
specified conversion ratio, or that are convertible at the
option
of the issuer. Because conversion of the security is not at the
option of the holder, the fund may be required to convert
the
security into the underlying common stock even at times
when the
value of the underlying common stock or other equity security has
declined substantially.

The fund's investments in convertible securities,
particularly
securities that are convertible into securities of an
issuer
other than the issuer of the convertible security,
may be
illiquid. The fund may not be able to dispose of such
securities
in a timely fashion or for a fair price, which could result
in
losses to the fund.
LOWER-RATED SECURITIES
A fund may invest in lower-rated fixed-income
securities
(commonly known as "junk bonds") to the extent described in the
prospectus. The lower ratings of certain securities held by
a
fund reflect a greater possibility that adverse changes in the
financial condition of the issuer or in general
economic
conditions, or both, or an unanticipated rise in interest
rates,
may impair the ability of the issuer to make payments of interest
and principal. The inability (or perceived inability) of issuers
to make timely payment of interest and principal would likely
make the values of securities held by a fund more volatile
and
could limit a fund's ability to sell its securities at prices
approximating the values the fund had placed on such
securities.
In the absence of a liquid trading market for securities held
by
it, a fund at times may be unable to establish the fair value
of
such securities.

Securities ratings are based largely on the issuer's
historical
financial condition and the rating agencies' analysis at the
time
of rating. Consequently, the rating assigned to any
particular
security is not necessarily a reflection of the issuer's current
financial condition, which may be better or worse than the rating
would indicate. In addition, the rating assigned to a
security
by Moody's Investors Service, Inc. or Standard &
Poor's (or by
any other nationally recognized securities rating
organization)
does not reflect an assessment of the volatility
of the
security's market value or the liquidity of an investment in
the
security. See the prospectus for a description of
security
ratings.

Like those of other fixed-income securities, the values
of
lower-rated securities fluctuate in response to changes
in
interest rates. A decrease in interest rates will
generally
result in an increase in the value of a
fund's assets.
Conversely, during periods of rising interest rates, the value
of
a fund's assets will generally decline. The
values of
lower-rated securities may often be affected to a greater extent
by changes in general economic conditions and business
conditions
affecting the issuers of such securities and their
industries.
Negative publicity or investor perceptions may also
adversely
affect the values of lower-rated securities.
Changes by
recognized rating services in their ratings of any fixed-
income
security and changes in the ability of an issuer to make payments
of interest and principal may also affect the value of these
investments. Changes in the value of portfolio
securities
generally will not affect income derived from these
securities,
but 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.

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.

MORTGAGE RELATED SECURITIES

To the extent described in the prospectus, each fund may invest
in mortgage-backed securities, including collateralized
mortgage
obligations ("CMOs") and certain stripped mortgage-
backed
securities. CMOs and other mortgage-backed securities
represent
a participation in, or are secured by, mortgage loans.

Mortgage-backed securities have yield and
maturity
characteristics corresponding to the underlying assets.
Unlike
traditional debt securities, which may pay a fixed rate
of
interest until maturity, when the entire principal amount
comes
due, payments on certain mortgage-backed securities include
both
interest and a partial repayment of principal.
Besides the
scheduled repayment of principal, repayments of
principal may
result from the voluntary prepayment, refinancing, or
foreclosure
of the underlying mortgage loans. If property owners
make
unscheduled prepayments of their mortgage loans,
these
prepayments will result in early payment of the
applicable
mortgage-related securities. In that event a fund may be
unable
to invest the proceeds from the early payment
of the
mortgage-related securities in an investment that
provides as
high a yield as the mortgage-related securities. Consequently,
early payment associated with mortgage-related securities may
cause these 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.
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 up to the
limit
specified in the prospectus. A repurchase
agreement is a
contract under which a fund acquires a security for a
relatively
short period (usually not more than one week)
subject to the
obligation of the seller to repurchase and the fund to
resell
such security at a fixed time and price (representing the
fund's
cost plus interest). It is the Trust's present
intention to
enter into repurchase agreements only with commercial banks
and
registered broker-dealers approved by the Trustees and
only with
respect to obligations of the U.S. government or its agencies
or
instrumentalities. Repurchase agreements may also be
viewed as
loans made by a fund which are collateralized by the
securities
subject to repurchase. Putnam Management will
monitor such
transactions to ensure that the value of
the underlying
securities will be at least equal at all times to
the total
amount of the repurchase obligation, including the
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, and unless otherwise specified in
the
prospectus, a fund may invest without limit in the
types of
futures contracts and related options identified
in the
prospectus 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.

Cross hedging transactions by a fund involve the risk
of
imperfect correlation between changes in the
values of the
currencies to which such transactions relate and changes
in the
value of the currency or other asset or liability which
is the
subject of the hedge.

For transaction hedging purposes, a fund may
also purchase
exchange-listed and over-the-counter call and put options
on
foreign currency futures contracts and on
foreign currencies. A
put option on a futures contract gives the fund the
right to
assume a short position in the futures contract until expiration
of the option. A put option on a currency gives the
fund the
right to sell the currency at an exercise price
until the
expiration of the option. A call option on a futures
contract
gives the fund the right to assume a long position in the
futures
contract until the expiration of the option. A call
option on a
currency gives the fund the right to purchase the currency
at the
exercise price until the expiration of the option.

A fund may engage in position hedging to protect
against a
decline in the value relative to the U.S. dollar
of the
currencies in which its portfolio securities are
denominated or
quoted (or an increase in the value of the currency
in which the
securities the fund intends to buy are denominated, when the
fund
holds cash or short-term investments). For position
hedging
purposes, the fund may purchase or sell, on
exchanges or in
over-the-counter markets, foreign currency futures
contracts,
foreign currency forward contracts and
options on foreign
currency futures contracts and on foreign currencies on
exchanges
or in over-the-counter markets. In connection
with position
hedging, a fund may also purchase or sell foreign currency
on a
spot basis.

It is impossible to forecast with precision the market value
of
portfolio securities at the expiration or maturity
of a forward
or futures contract. Accordingly, it may be necessary for
a fund
to purchase additional foreign currency on the
spot market (and
bear the expense of such purchase) if the market
value of the
security or securities being hedged is less than
the amount of
foreign currency the fund is obligated to deliver and a
decision
is made to sell the security or securities and make delivery
of
the foreign currency. Conversely, it may be necessary to
sell on
the spot market some of the foreign currency received upon the
sale of the portfolio security or securities if the market
value
of such security or securities exceeds the amount of
foreign
currency the fund is obligated to deliver.

Transaction and position hedging do not eliminate
fluctuations in
the underlying prices of the securities which the
fund owns or
intends to purchase or sell. They simply establish a
rate of
exchange which one can achieve at some future point
in time.
Additionally, although these techniques tend to minimize
the risk
of loss due to a decline in the value of the hedged
currency,
they tend to limit any potential gain which might result from
the
increase in value of such currency. See "Risk factors in
options
transactions" above.

A fund may seek to increase its current return or to offset some
of the costs of hedging against fluctuations in current
exchange
rates by writing covered call options and covered put options
on
foreign currencies. The fund receives a premium
from writing a
call or put option, which increases the fund's current return
if
the option expires unexercised or is closed out at a
net profit.
The fund may terminate an option that it has written prior to
its
expiration by entering into a closing purchase
transaction in
which it purchases an option having the same terms as
the option
written.

The fund's currency hedging transactions may call for
the
delivery of one foreign currency in exchange for
another foreign
currency and may at times not involve currencies in
which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it
believes
that such transactions provide significant hedging
opportunities
for the fund. Cross hedging transactions by the fund involve the
risk of imperfect correlation between changes in
the values of
the currencies to which such transactions relate and changes
in
the value of the currency or other asset or liability which
is
the subject of the hedge.

The fund may also engage in non-hedging currency transactions.
For example, Putnam Management may believe that exposure to
a
currency is in the fund's best interest but that
securities
denominated in that currency will not assist the fund in
meeting
its objective. In that case the fund may purchase a currency
forward contract or option in order to increase its exposure
to
the currency. In accordance with SEC regulations,
the fund will
segregate liquid assets in its portfolio to
cover forward
contracts used for non-hedging purposes.

The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and
economic
factors applicable to the issuing country. In
addition, the
exchange rates of foreign currencies (and therefore the
values of
foreign currency options, forward contracts
and futures
contracts) may be affected significantly, fixed, or
supported
directly or indirectly by U.S. and foreign government
actions.
Government intervention may increase risks involved in
purchasing
or selling foreign currency options, forward
contracts and
futures contracts, since exchange rates may not be
free to
fluctuate in response to other market forces.

The value of a foreign currency option, forward contract
or
futures contract reflects the value of an exchange rate,
which in
turn reflects relative values of two currencies, the U.S.
dollar
and the foreign currency in question. Because foreign
currency
transactions occurring in the interbank market
involve
substantially larger amounts than those that may be
involved in
the exercise of foreign currency options, forward contracts
and
futures contracts, investors may be disadvantaged
by having to
deal in an odd-lot market for the underlying foreign
currencies
in connection with options at prices that are less
favorable than
for round lots. Foreign governmental restrictions or
taxes could
result in adverse changes in the cost of acquiring or disposing
of foreign currencies.

There is no systematic reporting of last sale
information for
foreign currencies and there is no regulatory
requirement that
quotations available through dealers or other market sources
be
firm or revised on a timely basis. Available
quotation
information is generally representative of very large
round-lot
transactions in the interbank market and thus may not
reflect
exchange rates for smaller odd-lot transactions (less
than $1
million) where rates may be less favorable. The interbank
market
in foreign currencies is a global, around-the-clock
market. To
the extent that options markets are closed while the markets for
the underlying currencies remain open, significant price
and rate
movements may take place in the underlying markets that
cannot be
reflected in the options markets.

The decision as to whether and to what extent a fund will
engage
in foreign currency exchange transactions will depend on a
number
of factors, including prevailing market conditions,
the
composition of the fund's portfolio and the
availability of
suitable transactions. Accordingly, there can be no
assurance
that a fund will engage in foreign currency exchange transactions
at any given time or from time to time.

CURRENCY FORWARD AND FUTURES CONTRACTS. A forward
foreign
currency contract involves an obligation to purchase or
sell a
specific currency at a future date, which may be any fixed
number
of days from the date of the contract as agreed by the
parties,
at a price set at the time of the contract. In the case
of a
cancelable forward contract, the holder has the
unilateral right
to cancel the contract at maturity by paying a
specified fee.
The contracts are traded in the interbank market
conducted
directly between currency traders (usually large
commercial
banks) and their customers. A forward contract generally
has no
deposit requirement, and no commissions are charged at any
stage
for trades. A foreign currency futures contract
is a
standardized contract for the future delivery of a
specified
amount of a foreign currency at a price set at the time
of the
contract. Foreign currency futures contracts traded
in the
United States are designed by and traded on exchanges
regulated
by the CFTC, such as the New York Mercantile Exchange.

Forward foreign currency exchange contracts differ from
foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed
number of
days from the date of the contract agreed upon by the
parties,
rather than a predetermined date in a given month.
Forward
contracts may be in any amount agreed upon by the parties
rather
than predetermined amounts. Also, forward foreign
exchange
contracts are traded directly between currency traders so
that no
intermediary is required. A forward contract generally
requires
no margin or other deposit.

At the maturity of a forward or futures contract, the fund
may
either accept or make delivery of the currency specified
in the
contract, or at or prior to maturity enter into a
closing
transaction involving the purchase or sale of an
offsetting
contract. Closing transactions with respect to forward
contracts
are usually effected with the currency trader who is a party
to
the original forward contract. Closing transactions with
respect
to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange
assumes
responsibility for closing out such contracts.

Positions in the foreign currency futures contracts may be
closed
out only on an exchange or board of trade which
provides a
secondary market in such contracts. Although a fund intends
to
purchase or sell foreign currency futures contracts only
on
exchanges or boards of trade where there appears to be an
active
secondary market, there is no assurance that a
secondary market
on an exchange or board of trade will exist for any
particular
contract or at any particular time. In such event, it may
not be
possible to close a futures position and, in the event of
adverse
price movements, the fund would continue to be required to
make
daily cash payments of variation margin.

FOREIGN CURRENCY OPTIONS. In general, options on
foreign
currencies operate similarly to options on securities
and are
subject to many of the risks described above. Foreign
currency
options are traded primarily in the over-the-counter market,
although options on foreign currencies are also listed on
several
exchanges. Options are traded not only on the currencies
of
individual nations, but also on the European Currency
Unit
("ECU"). The ECU is composed of amounts of a
number of
currencies, and is the official medium of exchange
of the
European Community's European Monetary System.

A fund will only purchase or write foreign currency options when
Putnam Management believes that a liquid secondary market exists
for such options. There can be no assurance that a
liquid
secondary market will exist for a particular
option at any
specific time. Options on foreign currencies are affected
by all
of those factors which influence foreign exchange rates
and
investments generally.

SETTLEMENT PROCEDURES. Settlement procedures relating
to a
fund's investments in foreign securities and to
the fund's
foreign currency exchange transactions may be more complex
than
settlements with respect to investments in debt or
equity
securities of U.S. issuers, and may involve certain risks
not
present in the fund's domestic investments. For
example,
settlement of transactions involving foreign
securities or
foreign currencies may occur within a foreign country,
and the
fund may be required to accept or make delivery of the
underlying
securities or currency in conformity with any applicable
U.S. or
foreign restrictions or regulations, and may be
required to pay
any fees, taxes or charges associated with such delivery.
Such
investments may also involve the risk that an entity
involved in
the settlement may not meet its obligations.

FOREIGN CURRENCY CONVERSION. Although foreign
exchange dealers
do not charge a fee for currency conversion, they do realize
a
profit based on the difference (the "spread") between
prices at
which they are buying and selling various currencies. Thus,
a
dealer may offer to sell a foreign currency to a
fund at one
rate, while offering a lesser rate of exchange should
the fund
desire to resell that currency to the dealer.

RESTRICTED SECURITIES

The SEC Staff currently takes the view that any delegation by
the
Trustees of the authority to determine that a restricted
security
is readily marketable (as described in the
investment
restrictions of the funds) must be pursuant to written
procedures
established by the Trustees. It is the present intention
of the
Trustees that, if the Trustees decide to
delegate such
determinations to Putnam Management or another person, they
would
do so pursuant to written procedures, consistent with the
Staff's
position. Should the Staff modify its position in the
future,
the Trustees would consider what action would be
appropriate in
light of the Staff's position at that time.

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 so
to
qualify and 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.

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."

HEDGING TRANSACTIONS. If a fund engages in hedging
transactions,
including hedging transactions in options, futures contracts,
and
straddles, or other similar transactions, it will be
subject to
special tax rules (including constructive sale, mark-
to-market,
straddle, wash sale, and short sale rules), the effect
of which
may be to accelerate income to the fund, defer
losses to the
fund, cause adjustments in the holding periods of the
fund's
securities, or convert short-term capital losses into
long-term
capital losses. These rules could therefore affect
the amount,
timing and character of the fund's distributions. The fund
will
endeavor to make any available elections pertaining
to such
transactions in a manner believed to be in the best interests
of
the fund.

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
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 CURRENCY-DENOMINATED SECURITIES AND RELATED
HEDGING
TRANSACTIONS. The fund's transactions in foreign
currencies,
foreign currency-denominated debt securities and certain
foreign
currency options, futures contracts and forward
contracts (and
similar instruments) may give rise to ordinary income
or loss to
the extent such income or loss results from fluctuations
in the
value of the foreign currency concerned.

If more than 50% of the fund's assets at year end consists
of the
stock or securities of foreign corporations, the fund may
elect
to permit shareholders to claim a credit or deduction
on their
income tax returns for their pro rata portion of
qualified taxes
paid by the fund to foreign countries in respect
of foreign
securities the fund has held for at least the
minimum period
specified in the Code. In such a case, shareholders will include
in gross income from foreign sources their pro rata
shares of
such taxes. A shareholder's ability to claim a
foreign tax
credit or deduction in respect of foreign taxes paid by
the fund
may be subject to certain limitations imposed by the Code,
as a
result of which a shareholder may not get
a full credit or
deduction for the amount of such taxes. In
particular,
shareholders must hold their fund shares (without protection
from
risk of loss) on the ex-dividend date and for
at least 15
additional days during the 30-day period surrounding
the
ex-dividend date to be eligible to claim a
foreign tax credit
with respect to a given dividend. Shareholders who
do not
itemize on their federal income tax returns may claim
a credit
(but no deduction) for such foreign taxes.

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."

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 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 and Putnam VT Research 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
and Putnam VT OTC & Emerging Growth 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 and Putnam VT Research 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 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.
+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.,
Management Sciences for Health, Inc., and Sun Company, Inc.

JAMESON A. BAXTER (55), Trustee. President, Baxter Associates,
Inc. (a management and financial consulting firm). Director of
Avondale Federal Savings Bank, ASHTA Chemicals, Inc. and Banta
Corporation (printing and digital imaging). Chairman Emeritus of
the Board of Trustees, Mount Holyoke College.

+HANS H. ESTIN (70), Trustee. Chartered Financial Analyst and
Vice Chairman, North American Management Corp. (a registered
investment adviser).

JOHN A. HILL (56), Vice Chairman. Chairman and Managing
Director, First Reserve Corporation (a registered investment
adviser investing in companies in the world-wide energy industry
on behalf of institutional investors). Director of Snyder Oil
Corporation, TransMontaigne Oil Company, Weatherford Enterra,
Inc. (an oil field service company) and various private companies
owned by First Reserve Corporation, such as James River Coal and
Anker Coal Corporation, and various First Reserve Funds, such as
American Gas & Oil Investors, Ltd., AmGO II, L.P., First Reserve
Secured Energy Assets Fund, L.P., First Reserve Fund V., L.P.,
First Reserve Fund VI, L.P., and First Reserve Fund VII, L.P.

RONALD J. JACKSON (54), Trustee. Former Chairman, President and
Chief Executive Officer of Fisher-Price, Inc.
*PAUL L. JOSKOW (51), Trustee. Elizabeth and James Killian
Professor of Economics and Management and former Chairman of the
Department of Economics at the Massachusetts Institute of
Technology. Director, New England Electric System, State Farm
Indemnity Company and Whitehead Institute for Biomedical
Research.

ELIZABETH T. KENNAN (60), Trustee. President Emeritus and
Professor, Mount Holyoke College. Director, Bell Atlantic (a
telecommunications company), the Kentucky Home Life Insurance
Companies, NYNEX Corporation, Northeast Utilities and Talbots.

*LAWRENCE J. LASSER (55), Trustee and Vice President. President,
Chief Executive Officer and Director of Putnam Investments, Inc.
and Putnam Investment Management, Inc. Director of Marsh &
McLennan Companies, Inc. and the United Way of Massachusetts Bay.

JOHN H. MULLIN, III (57), Trustee. Chairman and CEO of Ridgeway
Farm, Director of ACX Technologies, Inc. (a company engaged in
the manufacture of industrial ceramics and packaging products),
Alex. Brown Realty, Inc. and The Liberty Corporation (a company
engaged in the life insurance and broadcasting industries).
+ROBERT E. PATTERSON (53), Trustee. President and Trustee of
Cabot Industrial Trust (a publicly traded real estate investment
trust). Director of Brandywine Trust Company. Trustee of SEA
Education Association.

*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), Current Assets L.L.C. (a corporation providing
financial staffing services), LaSalle Street Fund, Inc. and
LaSalle U.S. Realty Income and Growth Fund, Inc. (real estate
investment trusts), Lucent Technologies Inc., Nanophase
Technologies Inc. (a producer of nano crystalline materials),
Ryerson Tull, Inc. (America's largest steel service corporation),
and Springs Industries, Inc. (a textile manufacturer.)

*#GEORGE PUTNAM III (47), Trustee. President, New Generation
Research, Inc. (a publisher of financial advisory and other
research services relating to bankrupt and distressed companies)
and New Generation Advisers, Inc. (a registered investment
adviser). Director, Massachusetts Audubon Society and The Boston
Family Office, L.L.C. (a registered investment advisor).

*A.J.C. SMITH (64), Trustee. Chairman and Chief Executive
Officer, Marsh & McLennan Companies, Inc. Director, Trident
Corp.

W. THOMAS STEPHENS (56), Trustee. President and Chief Executive
Officer of MacMillan Bloedel Ltd. 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, Data General Corporation, Bradley Real Estate, Inc.,
and Providence Journal Co.

*Trustees who are or may be deemed to be "interested persons" (as
defined in the Investment Company Act of 1940) of the fund,
Putnam Management or Putnam Mutual Funds.

+Members of the Executive Committee of the Trustees. The
Executive Committee meets between regular meetings of the
Trustees as may be required to review investment matters and
other affairs of the fund and may exercise all of the powers of
the Trustees.
#George Putnam, III is the son of George Putnam.
OFFICERS NAME (AGE)
CHARLES E. PORTER (60), Executive Vice President. Managing
Director of Putnam Investments, Inc. and Putnam Management.

PATRICIA C. FLAHERTY (51), Vice President. Senior Vice President
of Putnam Investments, Inc. and Putnam Management.

WILLIAM N. SHIEBLER (56), Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. President and
Director of Putnam Mutual Funds.

GORDON H. SILVER (50), Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. and Putnam
Management.

JOHN R. VERANI (59), Vice President. Senior Vice President of
Putnam Investments, Inc. and Putnam Management.

JOHN D. HUGHES (63), Senior Vice President and Treasurer.

BEVERLY MARCUS (54), Clerk and Assistant Treasurer.

-----------------

Each of the following persons is also a Vice President of the
Trust and certain of the other Putnam funds, the total of which
is noted parenthetically. Officers of Putnam Management hold the
same offices in Putnam Management's parent company, Putnam
Investments, Inc.

IAN C. FERGUSON (41) (101 FUNDS), Senior Managing Director of
Putnam Management.

ANTHONY W. REGAN (59) (2 FUNDS), Senior Managing Director of
Putnam Management.

THOMAS R. BOGAN (57) (2 FUNDS), Managing Director of Putnam
Management.

ROBERT R. BECK (58) (2 FUNDS), Managing Director of Putnam
Management.

BRETT C. BROWCHUK (35) (52 FUNDS), Managing Director of Putnam
Management.

WILLIAM J. CURTIN (38) (60 FUNDS), Managing Director of Putnam
Management.

OMID KAMSHAD (36) (4 FUNDS), Managing Director of Putnam
Management.

D. WILLIAM KOHLI (37) (8 FUNDS), Managing Director of Putnam
Management.

WILLIAM J. LANDES (45) (19 FUNDS), Managing Director of Putnam
Management.

JENNIFER E. LEICHTER (37) (11 FUNDS), Managing Director of Putnam
Management.

MICHAEL MARTINO (45) (8 FUNDS), Managing Director of Putnam
Management.

CAROL C. MCMULLEN (43) (14 FUNDS), Managing Director of Putnam
Management.

DANIEL L. MILLER (41) (6 FUNDS), Managing Director of Putnam
Management.

STEVEN ORISTAGLIO (43) (59 FUNDS), Managing Director of Putnam
Management.

JUSTIN M. SCOTT (41) (9 FUNDS), Managing Director of Putnam
Management.

ERIC M. WETLAUFER (36) (2 FUNDS), Managing Director of Putnam
Management.

WILLIAM E. ZIEFF (38) (19 FUNDS), Managing Director of Putnam
Management.

MICHAEL K. ARENDS (44) (2 FUNDS), Senior Vice President of Putnam
Management.

EDWARD P. BOUSA (39) (3 FUNDS), Senior Vice President of Putnam
Management.

DAVID G. CARLSON (36) (1 FUND), Senior Vice President of Putnam
Management.

C. BETH COTNER (45) (4 FUND), Senior Vice President of Putnam
Management.

RICHARD ENGLAND (40) (2 FUNDS), Senior Vice President of Putnam
Management.

RICHARD M. FRUCCI (53) (1 FUND), Senior Vice President of Putnam
Management.

ROLAND W. GILLIS (49) (4 FUNDS), Senior Vice President of Putnam
Management.

J. PETER GRANT (55) (5 FUNDS), Senior Vice President of Putnam
Management.

STEVEN L. KIRSON (37) (1 FUND), Senior Vice President of Putnam
Management.

DAVID L. KING (41) (5 FUNDS), Senior Vice President of Putnam
Management.

JEANNE L. MOCKARD (35) (5 FUNDS), Senior Vice President of Putnam
Management.

KELLY A. MORGAN (35) (2 FUNDS), Senior Vice President of Putnam
Management.

MICHAEL J. MUFSON (35) (1 FUND), Senior Vice President of Putnam
Management.

HUGH H. MULLIN (36) (3 FUNDS), Senior Vice President of Putnam
Management.

STEPHEN OLER (37) (7 FUNDS), Senior Vice President of Putnam
Management.

ROBERT M. PAINE (34) (6 FUNDS), Senior Vice President of
Putnam Management.

CHRISTOPHER A.RAY (35) (2 FUNDS), Senior Vice President of
Putnam Management.

ANTHONY C. SANTOSUS (40) (1 FUND), Senior Vice President of
Putnam Management.

SHELDON N. SIMON (41) (4 FUNDS), Senior Vice President of Putnam
Management.

MICHAEL P. STACK (39) (2 FUNDS), Senior Vice President of Putnam
Management.

LISA SVENSSON (37) (1 FUND), Senior Vice President of Putnam
Management.

CHARLES H. SWANBERG (50) (4 FUNDS), Senior Vice President of
Putnam Management.

ROBERT SWIFT (38) (5 FUNDS), Senior Vice President of Putnam
Management.

DAVID K. THOMAS (56) (3 FUNDS), Senior Vice President of Putnam
Management.

PAUL WARREN (38) (3 FUNDS), Senior Vice President of Putnam
Management.

MANUEL WEISS (49) (1 FUND), Senior Vice President of Putnam
Management.

GAIL S. ATTRIDGE (36) (8 FUNDS), Vice President of Putnam
Management.

JOANNE M. DRISCOLL (28) (2 FUNDS), Vice President of Putnam
Management.

OLIVIER M. RUDIGOZ (34) (2 FUNDS), Vice President of Putnam
Management.

DAVID J. SANTOS (40) (3 FUNDS), Vice President of Putnam
Management.

ROSEMARY H. THOMSEN (37) (3 FUNDS), Vice President of Putnam
Management.

Except as stated below, the principal occupations of the officers
and Trustees for the last five years have been with the employers
as shown above, although in some cases they have held different
positions with such employers. Prior to 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
February, 1998, Mr. Patterson was Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership.
Prior to April, 1996, Mr. Ferguson was CEO at Hong Kong Shanghai
Banking Corporation. Prior to January, 1994, Mr. Martino was
employed by Back Bay Advisors in the positions of Executive Vice
President and Chief Investment Officer from 1992 to 1994. Prior
to June, 1995, Ms. McMullen was Senior Vice President of Baring
Asset Management. Prior to March, 1995, Mr. Gillis
was Vice
President at Keystone Custodian Funds, Inc. Prior to
January,
1996, Mr. Kamshad was Director of Investments at
Lombard Odier
International and prior to April, 1995 he was Director
at Baring
Asset Management Company. Prior to September, 1994, Mr.
Kohli
was Executive Vice President and Co-Director of
Global Bond
Management. Prior to August, 1995, Mr. Swift was
Director and
Senior Portfolio Manager at IAI International/Hill
Samuel
Investment Advisors. Prior to December, 1996 Ms.
Morgan was
Senior Vice President at Alliance Capital Management L.P.
Prior
to May, 1997, Mr. Warren was a Director at IDS Fund
Management,
and prior to August, 1994 was a Director at
Pilgrim Baxter
Associates. Prior to March, 1994 Mr. Warren was a
Director at
Prudential Asia. Prior to December, 1996, Mr. Zieff
was Manager
of the Global Asset Allocation Group at Grantham, Mayo,
Van
Otterloo & Co. Prior to November 1997, Mr. Arends was employed
by Phoenix Duff & Phelps as a Managing Director, Equities.
Prior
to August 1994, Mr. Arends was employed as a Portfolio
Manager
with Kemper Financial Services. Prior to November 1997,
Mr.
Wetlaufer was employed as a Managing Director and
Portfolio
Manager at Cadence Capital Management. Prior to November,
1997,
Mr. Stack was employed as a Senior Vice President and
Portfolio
Manager at Independence Investment Associates, Inc. Prior
to
April, 1995, Ms. Driscoll was a Graduate Teaching
Assistant in
the Finance Department at Northeaster University and prior
to
September, 1994, Ms. Driscoll was a Financial Associate
at Bank
Boston. Prior to September, 1995, Ms. Cotner was Executive
Vice
President of Kemper Financial Services. Prior to November,
1994,
Mr. Bogan was Senior Analyst at Lord, Abbett & Co.
Prior to
June, 1997 Mr. Oler was a Vice President at
Templeton
Investments, and prior to March 1996 was a Senior Vice
President
at Baring Asset Management Co. Prior to July, 1994,
Ms. Svensson
was a Securities analyst at Lord Abbett. Prior to
April, 1998,
Mr. Rudigoz was a Portfolio Manager at Paribas Asset
Management.
Prior to July 1998, Mr. Oristaglio was a Managing Director
at
Swiss Bank Corporation.

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 1997 (except for Putnam VT
The George
Putnam Fund of Boston, Putnam VT Health Sciences Fund,
Putnam VT
Investors Fund and Putnam VT OTC & Emerging Growth 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, 1997:
<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 TRUSTEE/YEAR GROWTH INCOME
ALLOCATION GROWTH INCOME YIELD
- -------------------------------------------------------------------------------------------------------
- -------------
<S> <C> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (5) $932 $1,121 $1,242 $2,287 $5,776 $1,386
Hans H. Estin/1972 927 1,115 1,234 2,273 5,743 1,386
John A. Hill/1985 (5) 927 1,115 1,234 2,273 5,743 1,386
Ronald J. Jackson/1996 (5) 932 1,121 1,242 2,287 5,776 1,386
Paul L. Joskow/1997 (8) 128 157 177 325 855 195
Elizabeth T. Kennan/1992 922 1,108 1,228 2,261 5,709 1,370
Lawrence J. Lasser/1992 912 1,096 1,214 2,235 5,642 1,355
John H. Mullin/1997 (8) 128 157 177 325 855 195
Robert E. Patterson/1984 932 1,121 1,242 2,286 5,776 1,386
Donald S. Perkins/1982 932 1,121 1,242 2,286 5,776 1,386
William F. Pounds/1971 (6) 952 1,210 1,380 2,528 6,896 1,528
George Putnam/1957 927 1,115 1,235 2,274 5,742 1,382
George Putnam, III/1984 922 1,109 1,228 2,261 5,709 1,370
A.J.C. Smith/1986 901 1,083 1,200 2,209 5,577 1,338
W. Thomas Stephens (5) (7) 281 337 287 528 1,369 320
W. Nicholas Thorndike/1992 932 1,121 1,242 2,287 5,776 1,386

</TABLE>

<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

AGGREGATE COMPENSATION (1) FROM:

PUTNAM VT PUTNAM VT PUTNAM VT PUTNAM VT PUTNAM
VT PUTNAM VT
INTERNATIONAL INTERNATIONAL INTERNATIONAL
NEW MONEY NEW NEW
TRUSTEE/YEAR GROWTH GROWTH AND INCOME OPPORTUNITIES MARKET VALUE
OPPORTUNITIES
- -----------------------------------------------------------------------------------------------------------
- -----------
<S> <C> <C> <C> <C> <C>
<C>
Jameson A. Baxter/1994 (5) $389 $401 $395 $522 $264
$2,435
Hans H. Estin/1972 389 401 395 519 264 2,421
John A. Hill/1985 (5) 389 401 395 519 264 2,421
Ronald J. Jackson/1996 (5) 389 401 395 522 263 2,435
Paul L. Joskow/1997 (8) 113 117 115 75 77 350
Elizabeth T. Kennan/1992 384 397 390 516 261 2,407
Lawrence J. Lasser/1992 376 387 390 510 261 2,380
John H. Mullin/1997 (8) 113 117 115 75 77 350
Robert E. Patterson/1984 389 401 395 522 264 2,435
Donald S. Perkins/1982 389 401 395 522 264 2,435
William F. Pounds/1971 (6) 401 418 407 602 281 2,759
George Putnam/1957 384 396 390 519 261 2,422
George Putnam, III/1984 380 392 386 516 258 2,408
A.J.C. Smith/1986 376 388 381 504 255 2,352
W. Thomas Stephens (5) (7) 248 257 253 159 167 567
W. Nicholas Thorndike/1992 389 401 395 522 263 2,435

</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)

ESTIMATED AGGREGATE COMPENSATION (1) FROM:

PUTNAM VT PUTNAM VT
PUTNAM VT THE GEORGE
PUTNAM VT OTC & EMERGING HEALTH PUTNAM FUND
PUTNAM VT
TRUSTEE/YEAR INVESTORS+ GROWTH+ SCIENCES+ OF
BOSTON+
RESEARCH+
- -----------------------------------------------------------------------------------------
- --------------------
<S> <C> <C> <C> <C>
<C>
Jameson A. Baxter/1994 (5) $401 $401 $401 $401 $401
Hans H. Estin/1972 401 401 401 401 401
John A. Hill/1985 (5) 401 401 401 401 401
Ronald J. Jackson/1996 (5) 401 401 401 401 401
Paul L. Joskow/1997 (8) 401 401 401 401 401
Elizabeth T. Kennan/1992 401 401 401 401 401
Lawrence J. Lasser/1992 401 401 401 401 401
John H. Mullin/1997 (8) 401 401 401 401 401
Robert E. Patterson/1984 401 401 401 401 401
Donald S. Perkins/1982 401 401 401 401 401
William F. Pounds/1971 (6) 418 418 418 418 418
George Putnam/1957 401 401 401 401 401
George Putnam, III/1984 401 401 401 401 401
A.J.C. Smith/1986 401 401 401 401 401
W. Thomas Stephens (5) (7) 401 401 401 401 401
W. Nicholas Thorndike/1992 401 401 401 401 401
</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)
AGGREGATE COMPENSATION (1) FROM:

ESTIMATED
A
N
N
U
A
L
B
E
N
E
F
I
T
S
PUTNAM VT FROM ALL
PUTNAM VT U.S. GOVERNMENT PUTNAM
FUNDS
UTILITIES GROWTH AND HIGH PUTNAM VT PUTNAM VT ALL
PUTNAM UPON
TRUSTEE/YEAR AND INCOME QUALITY BOND VISTA VOYAGER FUNDS
(2)
RETIREMENT (4)
- -----------------------------------------------------------------------------------------
- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (5) $1,292 $1,022 $263 $3,929 $176,000
$87,500 Hans H. Estin/1972 1,285 1,016 264 3,907 175,000 87,500
John A. Hill/1985 (5) 1,285 1,016 264 3,907 175,000 87,500
Ronald J. Jackson/1996 (5) 1,292 1,022 264 3,929 176,000 87,500
Paul L. Joskow/1997 (8) 178 138 77 560 25,500 87,500
Elizabeth T. Kennan/1992 1,278 1,011 260 3,885 174,000 87,500
Lawrence J. Lasser/1992 1,264 1,000 260 3,841 172,000 87,500
John H. Mullin/1997 (8) 178 138 77 560 25,000 87,500
Robert E. Patterson/1984 1,292 1,022 263 3,929 176,000 87,500
Donald S. Perkins/1982 1,292 1,022 263 3,929 176,000 87,500
William F. Pounds/1971 (6) 1,404 1,147 277 4,528 201,000 98,000
George Putnam/1957 1,286 1,017 260 3,907 175,000 87,500
George Putnam, III/1984 1,279 1,011 257 3,885 174,000 87,500
A.J.C. Smith/1986 1,249 988 254 3,796 170,000 87,500
W. Thomas Stephens (5) (7) 293 225 167 900
53,000 87,500
W. Nicholas Thorndike/1992 1,292 1,022 263 3,929
176,000 87,500
</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 TRUSTEE/YEAR GROWTH INCOME
ALLOCATION GROWTH INCOME YIELD
- -------------------------------------------------------------------------------------------------------
- -------------
<S> <C> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (5) $189 $225 $245 $452 $1091 $276
Hans H. Estin/1972 470 558 608 1122 2708 685
John A. Hill/1985 (5) 177 210 229 422 1019 258
Ronald J. Jackson/1996 (5) 79 94 103 190 458 116
Paul L. Joskow/1997 (8) N/A N/A N/A N/A N/A N/A
Elizabeth T. Kennan/1992 244 289 315 582 1404 355
Lawrence J. Lasser/1992 183 217 236 436 1053 266
John H. Mullin/1997 (8) N/A N/A N/A N/A N/A N/A
Robert E. Patterson/1984 141 168 183 338 815 206
Donald S. Perkins/1982 510 605 659 1217 2937 743
William F. Pounds/1971 (6) 528 627 683 1261 3043 769
George Putnam/1957 537 637 694 1282 3093 782
George Putnam, III/1984 93 110 120 222 536 136
A.J.C. Smith/1986 317 377 410 757 1827 462
W. Thomas Stephens (5) (7) N/A N/A N/A N/A N/A N/A
W. Nicholas Thorndike/1992 350 416 453 836 2018 510

</TABLE>

<TABLE>
<CAPTION>
COMPENSATION TABLE (continued)

PENSION OR RETIREMENT BENEFITS ACCRUED AS PART OF FUND EXPENSES (3) FROM:

PUTNAM VT PUTNAM VT PUTNAM VT PUTNAM VT PUTNAM
VT PUTNAM VT
INTERNATIONAL INTERNATIONAL INTERNATIONAL
NEW MONEY NEW NEW
TRUSTEE/YEAR GROWTH++ GROWTH AND INCOME++ OPPORTUNITIES++ MARKET VALUE++
OPPORTUNITIES
- -----------------------------------------------------------------------------------------------------------
- -----------
<S> <C> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (5) $0 $0 $0 $103 $0 $474
Hans H. Estin/1972 0 0 0 255 0 1177
John A. Hill/1985 (5) 0 0 0 96 0 443
Ronald J. Jackson/1996 (5) 0 0 0 43 0 199
Paul L. Joskow/1997 (8) 0 0 0 N/A 0 N/A
Elizabeth T. Kennan/1992 0 0 0 132 0 610
Lawrence J. Lasser/1992 0 0 0 99 0 458
John H. Mullin/1997 (8) 0 0 0 N/A 0 N/A
Robert E. Patterson/1984 0 0 0 77 0 354
Donald S. Perkins/1982 0 0 0 276 0 1276
William F. Pounds/1971 (6) 0 0 0 286 0 1323
George Putnam/1957 0 0 0 291 0 1344
George Putnam, III/1984 0 0 0 50 0 233
A.J.C. Smith/1986 0 0 0 172 0 794
W. Thomas Stephens (5) (7) 0 0 0 N/A 0 N/A
W. Nicholas Thorndike/1992 0 0 0 190 0 877

</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)

PENSION OR RETIREMENT BENEFITS ACCRUED AS PART OF FUND EXPENSES (3) FROM:

PUTNAM VT
PUTNAM VT U.S. GOVERNMENT
UTILITIES GROWTH AND HIGH PUTNAM VT PUTNAM VT
TRUSTEE/YEAR AND INCOME QUALITY BOND VISTA++ VOYAGER
- -----------------------------------------------------------------------------<S>
<C> <C> <C> <C>
Jameson A. Baxter/1994 (5) $263 $212 $0 $775
Hans H. Estin/1972 652 525 0 1923
John A. Hill/1985 (5) 245 198 0 724
Ronald J. Jackson/1996 (5) 110 89 0 325
Paul L. Joskow/1997 (8) N/A N/A 0 N/A
Elizabeth T. Kennan/1992 338 272 0 997
Lawrence J. Lasser/1992 253 204 0 748
John H. Mullin/1997 (8) N/A N/A 0 N/A
Robert E. Patterson/1984 196 158 0 579
Donald S. Perkins/1982 707 569 0 2086
William F. Pounds/1971 (6) 733 590 0 2162
George Putnam/1957 745 600 0 2197
George Putnam, III/1984 129 104 0 381
A.J.C. Smith/1986 440 354 0 1298
W. Thomas Stephens (5) (7) N/A N/A 0 N/A
W. Nicholas Thorndike/1992 486 391 0 1434
</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)

PENSION OR RETIREMENT BENEFITS ACCRUED AS PART OF FUND EXPENSES (3) FROM:

PUTNAM
VT
PUTNAM VT PUTNAM VT THE
GEORGE
PUTNAM VT OTC & EMERGING HEALTH PUTNAM
FUND PUTNAM VT
TRUSTEE/YEAR INVESTORS++ GROWTH++ SCIENCES++ OF
BOSTON++ RESEARCH++ ---------------------------------------------------------
- ---------------------------------------------
<S> <C> <C> <C> <C> <C>
Jameson A. Baxter/1994 (5) $0 $0 $0 $0
$0
Hans H. Estin/1972 0 0 0 0 0
John A. Hill/1985 (5) 0 0 0 0 0
Ronald J. Jackson/1996 (5) 0 0 0 0 0
Paul L. Joskow/1997 (8) 0 0 0 0 0
Elizabeth T. Kennan/1992 0 0 0 0 0
Lawrence J. Lasser/1992 0 0 0 0 0
John H. Mullin/1997 (8) 0 0 0 0 0
Robert E. Patterson/1984 0 0 0 0 0
Donald S. Perkins/1982 0 0 0 0 0
William F. Pounds/1971 (6) 0 0 0 0 0
George Putnam/1957 0 0 0 0 0
George Putnam, III/1984 0 0 0 0 0
A.J.C. Smith/1986 0 0 0 0 0
W. Thomas Stephens (5) (7) 0 0 0 0 0
W. Nicholas Thorndike/1992 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) As of December 31, 1997, there were 101 funds in the Putnam family.
(3) The Trustees approved a Retirement Plan for Trustees of the Putnam funds
on
October 1, 1996.
(4) 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 1997.
(5) Includes compensation deferred pursuant to a Trustee Compensation Deferral
Plan. The total amounts of deferred compensation payable to Ms. Baxter as
of December 31, 1997 by Putnam VT Growth and Income Fund and Putnam VT
Voyager Fund, were $5,728 and $4,156, respectively, including income earned
on such amounts. The total amounts of deferred compensation payable to Mr.
Hill as of December 31, 1997 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 U.S.
Government and High Quality Bond Fund, Putnam VT Utilities Growth and
Income Fund, and Putnam VT Voyager Fund, were $4,079, $6,837, $14,706,
$4,096, $5,013, $4,097, $4,305, and $11,998 respectively, including income
earned on such amounts. The total amounts of deferred compensation payable
to Mr. Jackson as of December 31, 1997 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 U.S.
Government and High Quality Bond Fund, Putnam VT Utilities Growth and
Income Fund, and Putnam VT Voyager Fund, were $2,225, $4,020, $9,197,
$2,371, $4,037, $1,990, $2,328, and $6,858 respectively, including income
earned on such amounts. The total amounts of deferred compensation payable
to Mr. Stephens as of December 31, 1997 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 U.S. Government and High Quality Bond Fund, Putnam VT Utilities Growth
and Income Fund, and Putnam VT Voyager Fund, were $285, $523, $1,358, $317,
$562, $223, $291, and $893 respectively, including income earned on such
amounts.
(6) Includes additional compensation for service as Vice Chairman of the Putnam
funds.
(7) Elected as a Trustee in September 1997.
(8) Elected as a Trustee in November 1997.
</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
August 31, 1998, 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 and Putnam VT Vista Fund.
Except to the extent set forth below, to the knowledge of the Trust no
person owned of record or beneficially 5% or more of the shares of any
fund as of August 31, 1998.
CLASS IA SHARES
PERCENTAGE OF ISSUER
NAME SHARES OWNED
SEPARATE ACCOUNT FUND OF RECORD
- -----------------------------------------------------------------
(1) HARTFORD LIFE INSURANCE COMPANY

(a) Putnam Capital Manager Trust Separate Account

Putnam VT Asia Pacific Growth Fund 33.36%
Putnam VT Diversified Income Fund 51.19%
Putnam VT Global Asset Allocation Fund 48.90%
Putnam VT Global Growth Fund 43.60%
Putnam VT The George Putnam Fund of Boston 49.93%
Putnam VT Growth and Income Fund 50.42%
Putnam VT Health Sciences Fund 41.87%
Putnam VT High Yield Fund 42.79%
Putnam VT International Growth Fund 36.71%
Putnam VT International Growth and Income Fund 40.47%
Putnam VT International New Opportunities Fund 38.40%
Putnam VT Money Market Fund 52.81%
Putnam VT New Opportunities Fund 31.37%
Putnam VT New Value Fund 38.83%
Putnam VT OTC & Emerging Growth Fund 38.54%
Putnam VT U.S. Government and High Quality
Bond Fund 69.40%
Putnam VT Utilities Growth and Income Fund 53.38%
Putnam VT Vista Fund 39.10%
Putnam VT Voyager Fund 45.75%

(b) Putnam Capital Manager Trust Separate Account VLI

Putnam VT Diversified Income Fund 0.21%
Putnam VT The George Putnam Fund of Boston *
Putnam VT Global Asset Allocation Fund 1.19%
Putnam VT Global Growth Fund 1.42%
Putnam VT Growth and Income Fund 0.44%
Putnam VT Health Sciences Fund *
Putnam VT High Yield Fund 0.79%
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 0.17%
Putnam VT New Opportunities Fund 0.80%
Putnam VT OTC & Emerging Growth Fund 0.01%
Putnam VT U.S. Government and High Quality
Bond Fund 0.77%
Putnam VT Utilities Growth and Income Fund 0.47%
Putnam Vista Fund *
Putnam VT Voyager Fund 1.05%
(c) Putnam Capital Manager Trust Separate Account VLII
Putnam VT Asia Pacific Growth Fund *
Putnam VT Diversified Income Fund 0.04%
Putnam VT Global Asset Allocation Fund 0.32%
Putnam VT Global Growth Fund 0.33%
Putnam VT The George Putnam Fund of Boston *
Putnam VT Growth and Income Fund 0.10%
Putnam VT Health Sciences Fund *
Putnam VT High Yield Fund 0.19%
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 0.05%
Putnam VT New Opportunities Fund 0.24%
Putnam VT New Value Fund *
Putnam VT U.S. Government and High Quality
Bond Fund 0.32%
Putnam VT Utilities Growth and Income Fund 0.09%
Putnam Vista Fund 3.60%
Putnam VT Voyager Fund 0.23%

(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 0.47%
Putnam VT The George Putnam Fund of Boston 0.01%
Putnam VT Growth and Income Fund 0.24%
Putnam VT Health Sciences Fund *
Putnam VT High Yield Fund 0.48%
Putnam VT International Growth Fund 0.12%
Putnam VT International Growth and Income Fund 0.09%
Putnam VT International New Opportunities Fund 0.22%
Putnam VT Investors Fund 0.02%
Putnam VT Money Market Fund 0.57%
Putnam VT New Opportunities Fund 0.38%
Putnam VT New Value Fund 0.11%
Putnam VT OTC & Emerging Growth Fund 0.01%
Putnam VT U.S. Government and High Quality
Bond Fund 0.22%
Putnam VT Utilities Growth and Income Fund 0.25%
Putnam VT Vista Fund 0.09%
Putnam VT Voyager Fund 0.28%

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

Putnam VT Diversified Income Fund *
Putnam VT Global Asset Allocation Fund *
Putnam VT Global Growth Fund *
Putnam VT Growth and Income Fund *
Putnam VT High Yield Fund *
Putnam VT Money Market Fund *
Putnam VT New Opportunities Fund *
Putnam VT U.S. Government and High Quality
Bond Fund *
Putnam VT Utilities Growth and Income Fund *
Putnam VT Voyager Fund *

(2) HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

(a) Putnam Capital Manager Trust Separate Account Two

Putnam VT Asia Pacific Growth Fund 59.81%
Putnam VT Diversified Income Fund 44.34%
Putnam VT Global Asset Allocation Fund 48.73%
Putnam VT Global Growth Fund 53.30%
Putnam VT The George Putnam Fund of Boston 53.05%
Putnam VT Growth and Income Fund 46.65%
Putnam VT Health Sciences Fund 57.93%
Putnam VT High Yield Fund 54.60%
Putnam VT International Growth Fund 54.63%
Putnam VT International Growth and Income Fund 59.35%
Putnam VT International New Opportunities Fund 60.44%
Putnam VT Investors Fund 54.62%
Putnam VT Money Market Fund 44.55%
Putnam VT New Opportunities Fund 44.65%
Putnam VT New Value Fund 60.61%
Putnam VT OTC & Emerging Growth Fund 61.23%
Putnam VT U.S. Government and High Quality
Bond Fund 27.40%
Putnam VT Utilities Growth and Income Fund 43.74%
Putnam Vista Fund 56.61%
Putnam VT Voyager Fund 49.12%

(b) Putnam Capital Manager Trust Separate Account VLI

Putnam VT Asia Pacific Growth Fund *
Putnam VT Diversified Income Fund 0.05%
Putnam VT Global Asset Allocation Fund 0.08%
Putnam VT Global Growth Fund 0.27%
Putnam VT The George Putnam Fund of Boston *
Putnam VT Growth and Income Fund 0.05%
Putnam VT Health Sciences Fund *
Putnam VT High Yield Fund 0.15%
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 0.02%
Putnam VT New Opportunities Fund 0.11%
Putnam VT New Value Fund *
Putnam VT OTC & Emerging Growth Fund 0.06%
Putnam VT U.S. Government and High Quality
Bond Fund 0.09%
Putnam VT Utilities Growth and Income Fund 0.08%
Putnam Vista Fund *
Putnam VT Voyager Fund 0.10%
(c) Putnam Capital Manager Trust Separate Account VLII
Putnam VT Asia Pacific Growth Fund *
Putnam VT Diversified Income Fund 0.02%
Putnam VT Global Asset Allocation Fund 0.02%
Putnam VT Global Growth Fund 0.05%
Putnam VT The George Putnam Fund of Boston *
Putnam VT Growth and Income Fund 0.01%
Putnam VT Health Sciences Fund *
Putnam VT High Yield Fund *
Putnam VT International Growth Fund *
Putnam VT International Growth and Income Fund *
Putnam VT International New Opportunities Fund *
Putnam VT Investors Fund *
Putnam VT Money Market Fund *
Putnam VT New Opportunities Fund 0.02%
Putnam VT New Value Fund *
Putnam VT OTC & Emerging Growth Fund 0.01%
Putnam VT U.S. Government and High Quality
Bond Fund 0.04%
Putnam VT Utilities Growth and Income Fund 0.02%
Putnam Vista Fund *
Putnam VT Voyager Fund 0.03%
(d) Putnam Capital Manager Trust Variable Life
Separate Account Five

Putnam VT Asia Pacific Growth Fund 0.38%
Putnam VT Diversified Income Fund 0.43%
Putnam VT Global Asset Allocation Fund 0.36%
Putnam VT Global Growth Fund 0.45%
Putnam VT The George Putnam Fund of Boston 0.18%
Putnam VT Growth and Income Fund 0.32%
Putnam VT Health Sciences Fund *
Putnam VT High Yield Fund 0.38%
Putnam VT International Growth Fund 0.19%
Putnam VT International Growth and Income Fund 0.08%
Putnam VT International New Opportunities Fund 0.55%
Putnam VT Investors Fund 0.03%
Putnam VT Money Market Fund 0.46%
Putnam VT New Opportunities Fund 0.49%
Putnam VT New Value Fund 0.32%
Putnam VT OTC & Emerging Growth Fund *
Putnam VT U.S. Government and High Quality
Bond Fund 0.22%
Putnam VT Utilities Growth and Income Fund 0.32%
Putnam Vista Fund 0.21%
Putnam VT Voyager Fund 0.33%

(e) Putnam Capital Manager Trust Separate Account Six

Putnam VT Diversified Income Fund 0.15%
Putnam VT Global Asset Allocation Fund 0.19%
Putnam VT Global Growth Fund 0.05%
Putnam VT Growth and Income Fund 0.02%
Putnam VT International Growth Fund 6.77%
Putnam VT Money Market Fund 0.17%
Putnam VT New Opportunities Fund 0.22%
Putnam VT U.S. Government and High Quality
Bond Fund 0.11%

(f) Putnam Capital Manager Trust Separate Account VLUL

(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 1.41%
Putnam VT Diversified Income Fund 0.17%
Putnam VT Growth and Income Fund 0.15%
Putnam VT New Opportunities Fund 0.47%
Putnam VT Utilities Growth and Income Fund 0.17%
Putnam VT Voyager Fund 0.60%

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

Putnam VT Asia Pacific Growth Fund 0.02%
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 0.11%
Putnam VT Growth and Income Fund 0.08%
Putnam VT Utilities Growth and Income Fund 0.14%
Putnam VT Voyager Fund 0.24%

(f) Select Annuity III

Putnam VT Asia Pacific Growth Fund 2.84%
Putnam VT Diversified Income Fund 1.64%
Putnam VT Growth and Income Fund 0.63%
Putnam VT New Opportunities Fund 1.38%
Putnam VT Utilities Growth and Income Fund 1.13%
Putnam VT Voyager Fund 1.41%

(4) RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK

(a) Select Annuity New York

Putnam VT Diversified Income Fund *
Putnam VT Growth and Income Fund *

(5) AMERICAN ENTERPRISE LIFE INSURANCE COMPANY

(a) Variable Annuity Account

Putnam VT Diversified Income Fund 1.07%
Putnam VT Growth and Income Fund 0.19%
Putnam VT Global Growth Fund 0.15%
Putnam VT High Yield Fund 0.48%
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 Global Growth and Income Fund 0.02%
Putnam VT High Yield Fund 0.10%
Putnam VT New Opportunities Fund 0.01%
Putnam VT Voyager Fund *
(6) INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
CIGNA Separate Account I
Putnam VT Growth and Income Fund 0.40%
Putnam VT Money Market Fund 5.92%
Putnam VT U.S. Government and High Quality
Bond Fund 1.38%
Putnam VT Voyager Fund 0.09%

(7) PARAGON LIFE INSURANCE COMPANY

(a) Paragon Variable Life

Putnam VT Asia Pacific Growth Fund 0.11%
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 0.01%
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 0.01%
Putnam VT U.S. Government and High Quality
Bond 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 0.03%
Putnam VT New Opportunities Fund 0.03%
Putnam VT U.S. Government and High Quality
Bond Fund 0.06%
Putnam VT Voyager Fund 0.01%

Putnam VT High Yield Fund *
Putnam VT New Opportunities Fund *
Putnam VT U.S. Government and High Quality
Bond Fund *
Putnam VT Voyager Fund *

(8) IDS LIFE INSURANCE COMPANY

(a) IDS Life Variable Account 10
Putnam VT New Opportunities Fund 14.88%
(b) IDS Life of New York Flexible Portfolio
Annuity Account

Putnam VT New Opportunities Fund 0.78%

Putnam VT New Opportunities Fund 3.16%

(d) IDS Life of New York Account 8

Putnam VT New Opportunities Fund 0.19%

(9) COVA FINANCIAL LIFE INSURANCE COMPANY

(a) Variable Annuity Account One

Putnam VT Growth and Income Fund 0.08%
Putnam VT International Growth Fund 1.37%
Putnam VT International New Opportunities Fund 0.03%
Putnam VT New Value Fund 0.13%
Putnam VT Vista Fund 0.38%

(b) Variable Annuity Account Five

Putnam VT Growth and Income Fund 0.01%
Putnam VT International Growth Fund 0.22%
Putnam VT International New Opportunities Fund *
Putnam VT New Value Fund 0.01%
Putnam VT Vista Fund 0.02%

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 56.75%
Putnam VT Growth and Income Fund 16.24%
Putnam VT International Growth and Income Fund 15.05%

(2) HARTFORD LIFE AND ANNUITY INSURANCE COMPANY

(a) ICMG Registered Variable Life Separate Account One

Putnam VT International Growth Fund 21.65%
Putnam VT Vista Fund 15.66%
Putnam VT Voyager Fund 0.18%

(3) PUTNAM HARTFORD CAPITAL ACCESS VARIABLE ANNUITY

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

Putnam VT Asia Pacific Growth Fund 50.00%
Putnam VT Diversified Income Fund 13.37%
Putnam VT Global Asset Allocation Fund 12.23%
Putnam VT Global Growth Fund 9.85%
Putnam VT The George Putnam Fund of Boston 27.58%
Putnam VT Growth and Income Fund 12.15%
Putnam VT Health Sciences Fund 28.66%
Putnam VT High Yield Fund 8.35%
Putnam VT International Growth Fund 20.91%
Putnam VT International Growth and Income Fund 9.58%
Putnam VT International New Opportunities Fund 47.34%
Putnam VT Investors Fund 18.30%
Putnam VT Money Market Fund 0.13%
Putnam VT New Opportunities Fund *
Putnam VT New Value Fund 24.13%
Putnam VT OTC & Emerging Growth Fund 35.14%
Putnam VT U.S. Government and High Quality
Bond Fund 0.09%
Putnam VT Utilities Growth and Income Fund 14.98%
Putnam VT Vista Fund 24.46%
Putnam VT Voyager Fund 0.45%

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

Putnam VT Asia Pacific Growth Fund 50.00%
Putnam VT Diversified Income Fund 29.88%
Putnam VT Global Asset Allocation Fund 66.20%
Putnam VT Global Growth Fund 90.15%
Putnam VT The George Putnam Fund of Boston 72.42%
Putnam VT Growth and Income Fund 71.61%
Putnam VT Health Sciences Fund 71.34%
Putnam VT High Yield Fund 91.65%
Putnam VT International Growth Fund 35.79%
Putnam VT International Growth and Income Fund 75.37%
Putnam VT International New Opportunities Fund 52.66%
Putnam VT Investors Fund 69.33%
Putnam VT Money Market Fund 0.59%
Putnam VT New Opportunities Fund 0.01%
Putnam VT New Value Fund 75.69%
Putnam VT OTC & Emerging Growth Fund 64.86%
Putnam VT U.S. Government and High Quality
Bond Fund 1.56%
Putnam VT Utilities Growth and Income Fund 85.02%
Putnam VT Vista Fund 29.23%
Putnam VT Voyager Fund 5.38%

(4) PFL LIFE INSURANCE COMPANY

(a) Flexible Premium Individual Deferred Variable Annuity

Putnam VT Global Growth Fund *
Putnam VT Money Market Fund *
Putnam VT New Value Fund *

(5) PRINCIPAL MUTUAL LIFE INSURANCE COMPANY

(a) PrinFlex Life

Putnam VT Global Asset Allocation Fund 21.56%
Putnam VT Vista Fund 15.00%
Putnam VT Voyager Fund 4.44%

(6) AMERICAN EXPRESS INSURANCE COMPANY

(a) American Enterprise Life
Putnam VT Diversified Income Fund *
Putnam VT Growth and Income Fund *
Putnam VT High Yield Fund *
Putnam VT Voyager Fund *

*Less than 1/10th of 1%.

The address for the separate accounts for Class IA shares listed in
(1) and (2) above is: 200 Hopmeadow St., Simsbury, CT 06089. The
address for the separate accounts listed in (3) and (4) above is: 20
Washington Avenue South, Minneapolis, MN 55401. The address for the
separate account listed in (5) above is: 80 South 8th Street,
Minneapolis, MN 55440. The address for the separate account listed in
(6) above is: Austin Centre, 701 Brazos Street, Austin, TX 78701. The
address for the separate account listed in (7) above is: 100 South
Brentwood, St. Louis, MO 63105. The address for the separate account
listed in (8) above is: IDS Tower 10, Minneapolis, MN 55440. The
address for the separate account listed in (9) above is: One Tower
Lane, Suite 3000, Oakbrook Terrace, IL 60181.

The address for the separate accounts for Class IB shares listed in
(1) 2727-A Allen Parkway, Houston, TX 77019. The address for the
separate account listed in (2) above is: 100 Campus Drive, Suite 250,
Florham Park, NJ. The address for the separate account listed in (3)
above is: 200 Hopmeadow St., Simsbury, CT 06089. The address for the
separate accounts listed in (4) above is: 4333 Edgewood Rd., NE Cedar
Rapids, IA 52499. The address for the separate account listed in (5)
above is 711 High st., DesMoines, IA 50392. The address for the
separate account listed in (6) above is: 80 South 8th Street,
Minneapolis, MN 55440.

Each of the insurance companies issuing the separate accounts listed
above have agreed to vote their shares in proportion to and in the
manner instructed by contract and policy owners. By virtue of the
foregoing, each of these insurance companies, or any of them together,
may be deemed to be a controlling person of each of the funds.

PUTNAM MANAGEMENT AND ITS AFFILIATES

Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced portfolio
managers and research analysts selects securities and constantly
supervises the fund's portfolio. By pooling an investor's money with
that of other investors, a greater variety of securities can be
purchased than could be purchased by the investor individually; the
resulting diversification helps reduce investment risk. Putnam
Management has been managing mutual funds since 1937. Today, the firm
serves as the investment manager for the funds in the Putnam Family,
with nearly $182 billion in assets in over 9 million shareholder
accounts at December 31, 1997. 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, 1997, Putnam Management and its affiliates
managed nearly $181 billion in assets, including over $19 billion in
tax-exempt securities and over $57 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 is in turn wholly owned by Marsh & McLennan Companies,
Inc., a publicly-owned holding company whose principal operating
subsidiaries are international insurance and reinsurance brokers,
investment managers and management consultants.
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
subject to such policies as the Trustees may determine, Putnam
Management, at its expense, furnishes continuously an investment
program for the funds and makes investment decisions on their behalf.
Subject to the control of the Trustees, Putnam Management also
manages, supervises and conducts the other affairs and business of the
Trust, furnishes office space and equipment, provides bookkeeping and
clerical services (including determination of the net asset value, but
excluding shareholder accounting services) and places all orders for
the purchase and sale of the Trust's portfolio securities. Putnam
Management may place the Trust's portfolio transactions with
broker-dealers which furnish Putnam Management, without cost to it,
certain research, statistical and quotation services of value to
Putnam Management and its affiliates in advising the Trust and other
clients. In so doing, Putnam Management may cause a fund to pay
greater brokerage commissions than it might otherwise pay.

The compensation payable to Putnam Management under the Management
Contract for its investment management services to the funds is paid
quarterly at the following annual rates of each fund's average net
assets, as determined at the close of each business day during the
quarter:

FUND RATE
Putnam VT International New 1.20% of the first $500
Opportunities Fund million of average net
assets, 1.10% of the next
$500 million, 1.05% of the
next $500 million, 1.00% of
the next $5 billion, 0.975%
of the next $5 billion,
0.955% of the next $5
billion, 0.94% of the next
$5 billion, and 0.93% of any
excess thereafter

Putnam VT Asia Pacific Growth Fund, 0.80% of the first $500
Putnam VT International Growth Fund, and million of average net Putnam
VT International Growth and assets, 0.70% of the
Income Fund next $500 million, 0.65% of
the next $500 million, 0.60%
of the next $5 billion,
0.575% of the next $5
billion, 0.555% of the next
$5 billion, 0.54% of the
next $5 billion, and 0.53%
of any excess thereafter.

Putnam VT Diversified Income Fund, 0.70% of the first $500
Putnam VT Global Asset Allocation Fund, million of average
Putnam VT Health Sciences Fund, Putnam net assets, 0.60% of
VT High Yield Fund, Putnam VT New the next $500 million,
Opportunities Fund, Putnam VT New 0.55% of the next $500
Value Fund, Putnam VT OTC & Emerging million, 0.50% of the
Growth Fund, Putnam VT Utilities Growth next $5 billion, 0.475%
and Income Fund, and Putnam VT Voyager of the next $5 billion, Fund
0.455% of the next $5 billion,
0.44%
of the next $5 billion
and 0.43% of any
excess thereafter.
Putnam VT Growth and Income Fund,0.65% of the first $500
Putnam VT Investors Fund, Putnam million of average net
VT The George Putnam Fund of Boston, assets, 0.55% of the
Putnam VT Research Fund, Putnam VT next $500 million, U.S.
Government & High Quality Bond 0.50% of the next $500 Fund,
and Putnam VT Vista Fund million, 0.45% of the
next $5 billion, 0.425% of the next $5 billion, 0.405% of the
next $5 billion, 0.39% of the next $5 billion and 0.38% of any
excess thereafter.

Putnam VT Global Growth Fund 0.60% of average net assets.

Putnam VT Money Market Fund 0.45% of the first $500
million of average net
assets, 0.35% of the next
$500 million, 0.30% of the
next $500 million, 0.25% of
the next $5 billion, 0.225%
of the next $5 billion,
0.205% of the next $5
billion, 0.19% of the next
$5 billion and 0.18% of any
excess thereafter.

The Trust pays affiliates of Putnam Management additional amounts for
investor servicing and custody services.

In addition to the fee paid to Putnam Management, the Trust reimburses
Putnam Management for the compensation and related expenses of certain
officers of the funds and certain persons who assist them in carrying
out the responsibilities of their offices. During fiscal 1996, the
Trust reimbursed Putnam Management $192,769 in this regard, including
$170,800 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.

MANAGEMENT FEES

REFLECTING A
REDUCTION IN THE
FOLLOWING AMOUNTS
PURSUANT TO AN
FUND FISCAL MANAGEMENT EXPENSE
NAME YEAR FEE PAID LIMITATION
- ---- ------ ---------- -----------------

Putnam VT Asia
Pacific Growth 1997 $1,076,596
Fund 1996 $681,628
1995+ $67,583 $40,348

Putnam VT Diversified
Income Fund 1997 $3,811,378
1996 $2,766,551
1995 $1,741,950

Putnam VT Global
Asset Allocation
Fund 1997 $5,755,350
1996 $4,262,397
1995 $3,253,739
Putnam VT Global
Growth Fund 1997 $9,366,376
1996 $6,444,626
1995 $4,329,841

Putnam VT Growth
and Income Fund 1997 $34,012,687
1996 $21,454,942
1995 $13,096,405

Putnam VT High
Yield Fund 1997 $5,842,951
1996 $4,142,115
1995 $2,909,080

Putnam VT International
Growth Fund 1997* $608,193 $55,502
1996 N/A
1995 N/A

Putnam VT International
Growth & Income
Fund 1997* $871,531
1996 N/A
1995 N/A

Putnam VT International
New Opportunities 1997* $893,002 $206,574
Fund 1996 N/A
1995 N/A

Putnam VT Money
Market Fund 1997 $2,090,282
1996 $1,689,370
1995 $1,061,046

Putnam VT New
Opportunities Fund 1997 $12,267,574
1996 $7,144,796
1995 $1,618,748

Putnam VT New
Value Fund 1997* $757,486
1996 N/A
1995 N/A

Putnam VT U.S.
Government and High
Quality Bond Fund 1997 $4,731,739
1996 $4,628,688
1995 $4,133,901

Putnam VT Utilities
Growth and Income
Fund 1997 $4,703,343
1996 $3,753,576
1995 $2,666,363

Putnam VT Vista Fund 1997* $600,249
1996 N/A
1995 N/A
Putnam VT Voyager
Fund 1997 $21,134,308
1996 $15,143,788
1995 $8,864,927

+ Commencement of operations May 1, 1995
* Commencement of operations January 2, 1997

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.

FUND FISCAL BROKERAGE
NAME YEAR COMMISSIONS
- ---- ------ -----------

Putnam VT Asia
Pacific Growth
Fund (Commencement 1997 $679,699
of operations 1996 $829,577
May 1, 1995) 1995 $205,198

Putnam VT Diversified
Income Fund 1997 $32,813
1996 $11,983
1995 $14,676

Putnam VT Global Asset
Allocation Fund 1997 $1,043,014
1996 $908,217
1995 $797,004

Putnam VT Global
Growth Fund 1997 $8,339,967
1996 $3,111,557
1995 $2,275,831

Putnam VT Growth and
Income Fund 1997 $8,609,589
1996 $5,056,587
1995 $3,637,703

Putnam VT High
Yield Fund 1997 $9,384
1996 $14,940
1995 $11,800

Putnam VT International
Growth Fund 1997 $553,235
1996 N/A
1995 N/A

Putnam VT International
Growth & Income Fund 1997 $659,464
1996 N/A
1995 N/A

Putnam VT International
New Opportunities
Fund 1997 $733,380
1996 N/A
1995 N/A

Putnam VT Money
Market Fund 1997 $0
1996 $0
1995 $0

Putnam VT New
Opportunities Fund
(Commencement of
operations
May 2, 1994) 1997 $2,268,158
1996 $1,584,684
1995 $312,487

Putnam VT New
Value Fund 1997 $292,442
1996 N/A
1995 N/A

Putnam VT U.S. Government
and High Quality
Bond Fund 1997 $85,584
1996 $23,582
1995 $2,880

Putnam VT Utilities
Growth and Income Fund 1997 $785,994
1996 $898,263
1995 $938,350

Putnam VT Vista Fund 1997 $174,221
1996 N/A
1995 N/A

Putnam VT Voyager Fund 1997 $3,624,594
1996 $3,380,235
1995 $2,171,392

PRINCIPAL UNDERWRITER

Putnam Mutual Funds is the principal underwriter of shares of the
Trust, which are continuously offered, and shares of the other
continuously offered Putnam funds. Putnam Mutual Funds is not
obligated to sell any specific amount of shares of the Trust and will
purchase shares for resale only against orders for shares.

INVESTOR SERVICING AGENT AND CUSTODIAN

Putnam Investor Services, a division of Putnam Fiduciary Trust Company
("PFTC"), is the Trust's investor servicing agent (transfer, plan and
dividend disbursing agent), for which it receives fees which are paid
monthly by the Trust as an expense of all its shareholders. The fee
paid to Putnam Investor Services is determined on the basis of the
number of shareholder accounts, the number of transactions and the
assets of the fund. Putnam Investor Services won the DALBAR Quality
Tested Service Seal in 1990, 1991, 1992, 1993, 1994 and 1995. Over
10,000 tests of 38 separate shareholder service components
demonstrated that Putnam Investor Services tied for the highest
scores, with two other mutual fund companies in all categories.

The Trust paid $12,166,403 in gross fees to PFTC for its investor
servicing and custody services during fiscal 1997. 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, 1997 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, 1997) is shown. All data is based on
past performance and does not predict future results.

CLASS IA SHARES
TOTAL RETURN -------------
------------
1 5 LIFE
PUTNAM VT FUND YIELD* YEAR YEARS OF FUND

Asia Pacific N/A -14.66% N/A -1.81%

Diversified Income 8.19% 7.38 N/A 7.50%
Global Asset
Allocation 2.55 19.67 14.60% 12.11

Global Growth N/A 14.33 15.24 10.63

Growth and Income 1.82 24.15 18.86 16.65

High Yield 9.12 14.34 12.57 11.49

International
Growth & Income 1.33 N/A N/A 19.43
International Growth N/A N/A N/A 16.13
International
New Opportunities N/A N/A N/A -0.10

Money Market 5.34 5.22 4.47 5.50

New Opportunities N/A 23.29 N/A 22.86

New Value N/A N/A N/A 17.60

U.S. Government and
High Quality Bond 5.56 8.64 7.60 8.73
Utilities
Growth and Income 3.09 27.10 15.26 14.72

Vista N/A N/A N/A 23.21
Voyager N/A 26.51 19.25 18.08
* Information shown for all funds except Putnam VT Money Market Fund
represents 30-day yield. Information shown for Putnam VT Money Market
Fund represents 7-day yield.
CLASS IB SHARES
TOTAL RETURN -------------
------------
1 5 LIFE
PUTNAM VT FUND YIELD* YEAR YEARS OF FUND

Asia Pacific N/A -14.78 N/A -1.95

Diversified Income 8.04% 7.22 N/A 7.33
Global Asset
Allocation 2.40% 19.49 14.43 11.94

Global Growth N/A 14.16 15.07 10.47

Growth and Income 1.67 23.96 16.69 16.57

High Yield 8.97 14.17 12.40 11.31

International
Growth & Income 1.18 N/A N/A 19.26

International
Growth N/A N/A N/A 15.95

International
New Opportunities N/A N/A N/A -0.25

Money Market 5.19 5.06 4.32 5.33
New Opportunities N/A 23.10 N/A 22.71
New Value N/A N/A N/A 17.42
U.S. Government and
High Quality Bond 5.41 8.48 7.44 8.56

Utilities
Growth and Income 2.94 26.91 15.09 14.56

Vista N/A N/A N/A 23.03

Voyager N/A 26.33 19.07 17.90

* 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.
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.

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, 1997
filed electronically on February 27, 1998 (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, 1997
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.