PUTNAM VARIABLE TRUST, 485APOS, 1998-07-20

PUTNAM VARIABLE TRUST
485APOS, 1998-07-20

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As filed with the Securities and Exchange Commission on
July 20, 1998

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

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FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 18 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 19 / X /
(Check appropriate box or boxes) ----

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

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

Registrant's Telephone Number, including Area Code
(617) 292-1000
--------------------

It is proposed that this filing will become effective
(check appropriate box)

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/ / immediately upon filing pursuant to paragraph (b)
- ----
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/ / on (date) pursuant to paragraph (b)
- ----
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/ / 60 days after filing pursuant to paragraph (a)(1)
- ----
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/ / on (date) pursuant to paragraph (a)(1)
- ----
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/ X / 75 days after filing pursuant to paragraph (a)(2)
- ----
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/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
- ----

If appropriate, check the following box:

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

CROSS REFERENCE SHEET

(as required by Rule 481(a))

Part A

N-1A Item No. Location

1. Cover Page . . . . . . . . . . Cover page

2. Synopsis . . . . . . . . . . . Omitted

3. Condensed Financial Information . Financial highlights;
How performance is shown

4. General Description of Registrant . The Trust; Investment
objectives and policies;
Common investment
policies and techniques;
Organization and history

5. Management of the Fund. . . . . . How the Trust is
managed; Organization
and history; About
Putnam Investments, Inc.

5A. Management's Discussion. . . . (Contained in the annual
of Fund Performance report of the
Registrant)

6. Capital Stock and Other
Securities . . . . . . . . . . Cover page; Sales and
redemptions; How a fund
values its shares; How
each Fund makes
distributions to
shareholders; tax
information;
Organization and history

7. Purchase of Securities Being
Offered. . . . . . . . . . . . The Trust; Sales and
redemptions; How a Fund
values its shares;
Organization and history

8. Redemption or Repurchase . . . Cover page; Sales and
redemptions; How a Fund
values its shares;
Organization and history

9. Pending Legal Proceedings. . . Not applicable

Part B

N-1A Item No. Location

10. Cover Page . . . . . . . . . . Cover page

11. Table of Contents. . . . . . . Cover page

12. General Information and History . . Organization and history
(Part A)

13. Investment Objectives and
Policies . . . . . . . . . . . Investment objectives
and policies; Investment
restrictions; Portfolio
turnover

14. Management of the Registrant . Management

15. Control Persons and Principal. Management
Holders of Securities

16. Investment Advisory and Other. Management; Custodian;
Services Independent accountants
and financial statements

17. Brokerage Allocation . . . . . Management

18. Capital Stock and Other
Securities . . . . . . . . . . Management;
Determination of net
asset value; Suspension
of redemptions;
Shareholder liability

19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . Sales and redemptions
(Part A); Management;
Determination of net
asset value; Suspension
of redemptions

20. Tax Status . . . . . . . . . . How each Fund makes
distributions to
shareholders; tax
information (Part A);
Taxes

21. Underwriter. . . . . . . . . . Management

22. Calculation of Performance Data . How performance is shown
(Part A); Investment
performance of the Trust
(Standard performance
measures)

23. Financial Statements . . . . . . . Independent accountants
and financial statements

Part C

Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of the
Registration Statement.

PUTNAM VARIABLE TRUST
Class IA Shares
PROSPECTUS - APRIL 30, 1998, as revised September 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
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. 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. Information related to fiscal year ends
(December 31) 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. In addition unaudited financial
information for the six-months ended June 30, 1998 are also
presented in the table below. The Trust's annual report and
semi-annual report, which contain additional unaudited
performance information, are 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
, Putnam VT OTC & Emerging Growth Fund and Putnam VT
Research 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
June 30, 1998
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
June 30, 1998
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
June 30, 1998
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 - - - -

Putnam VT Global Growth Fund
June 30, 1998
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
June 30, 1998
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 - - - -

Putnam VT High
Yield Fund
June 30, 1998
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
June 30, 1998
December 31, 1997******* $10.00 $.05(b) $1.56 $1.61 $(.05) $(.02) $(.04) $(.06)

Putnam VT International
Growth and Income Fund
June 30, 1998
December 31, 1997****** $10.00 $.07 $1.87 $1.94 $(.08) $(.05) $(.28) -

Putnam VT International
New Opportunities Fund
June 30, 1998
December 31, 1997******* $10.00 $.01(b) $(.02) $(.01) $(.01) $(.02) - -

Putnam VT Money
Market Fund
June 30, 1998
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
June 30, 1998
December 31, 1997 $17.22 $-(f) $4.01 $4.01 - - -
December 31, 1996 15.63 (.01) 1.60 1.59 - - -
December 31, 1995 10.82 - 4.84 4.84 - (.02) -
December 31, 1994****** 10.00 -(b) .82 .82 - - -

Putnam VT New Value
Fund
June 30, 1998
December 31,
1997******* $10.00 $.18(a) $1.58 $1.76 $ - $- $ - $ -

Putnam VT U.S. Government
and High Quality Bond Fund
June 30, 1998
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
June 30, 1998
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 - - - -

Putnam VT Vista
Fund
June 30, 1998
December 31,
1997******** $10.00 $ - (f) $2.32 $2.32 $ - (f) $- $-- $--

Putnam VT Voyager Fund
June 30, 1998
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 - - - -

Putnam VT Asia
Pacific Growth Fund
June 30, 1998
December 31, 1997 $- $(.22) $9.20 (14.66) $112,902 1.07 .70
December 31, 1996 - (.15) 11.01 9.10 130,548 1.23 .84
December 31, 1995** - - 10.23 2.30* 25,045 .81(b)* .72(b)*

Putnam VT Diversified
Income Fund
June 30, 1998
December 31, 1997 $- $(.73) $11.31 $7.38 $608,148 $.80 7.43
December 31, 1996 - (.67) 11.27 8.81 494,811 .83 7.45
December 31, 1995 - (.51) 11.03 19.13 303,721 .85 7.85
December 31, 1994 - (.06) 9.74 (4.23) 215,935 .80 7.60
December 31, 1993*** - - 10.23 2.30* 80,449 .28* 1.45*

Putnam VT Global Asset
Allocation Fund
June 30, 1998
December 31, 1997 $- $(1.62) $18.76 $19.67 $956,532 $.77 3.01
December 31, 1996 - $(1.27) 17.25 15.62 747,734 .83 3.08
December 31, 1995 - (.25) 16.15 24.71 535,666 .84 3.31
December 31, 1994 - (.74) 13.19 (2.50) 414,223 .76 3.19
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*

Putnam VT Global Growth
Fund
June 30, 1998
December 31, 1997 $- $(.85) $18.34 $14.33 $1,611,503 .75 .77
December 31, 1996 - (.82) $16.88 17.20 1,344,887 .76 1.25
December 31, 1995 - (.35) 15.18 15.67 831,593 .75 1.49
December 31, 1994 - (.07) 13.48 (.96) 669,821 .77 1.21
December 31, 1993 - (.16) 13.68 32.40 352,786 .75 1.38
December 31, 1992 - (.09) 10.48 (.36) 86,854 .85 1.82
December 31, 1991 - (.10) 10.61 15.01 40,183 .99 2.01
December 31, 1990***** - - 9.32 (6.80)* 13,203 .99* 2.35*

Putnam VT Growth and
Income Fund
June 30, 1998
December 31, 1997 $- $(1.79) $28.32 $24.15 $8,337,334 $.51 2.08
December 31, 1996 - (1.40) 24.56 21.92 5,679,100 .54 2.90
December 31, 1995 - (.81) 21.47 36.71 3,312,306 .57 3.34
December 31, 1994 - (.96) 16.44 .35 1,907,380 .62 3.64
December 31, 1993 - (.76) 17.38 14.27 1,407,382 .64 3.49
December 31, 1992 - (.83) 15.93 9.75 641,508 .69 3.79
December 31, 1991 - (.70) 15.33 19.05 325,861 .72 4.37
December 31, 1990 - (.16) 13.51 1.96 155,942 .75 5.02
December 31, 1989 - (1.08) 13.41 21.30 100,335 .74 5.73
December 31, 1988*** - - 12.00 19.89* 26,205 .92* 4.08*

Putnam High Yield
Fund
June 30, 1998
December 31, 1997 $- $(1.05) $13.62 $14.32 $1,025,298 $.72
December 31, 1996 - (.91) 12.96 12.81 769,918 .76 9.57
December 31, 1995 - (1.05) 12.37 18.32 498,467 .79 9.42
December 31, 1994 - (.95) 11.46 (.94) 327,119 .74 9.79
December 31, 1993 - (.74) 12.53 19.57 291,737 .67 9.88
December 31, 1992 - (.80) 11.17 18.98 118,804 .71 11.53
December 31, 1991 - (1.11) 10.12 44.83 42,823 .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**** - - 10.76 7.56* 19,506 .94(b)* 10.99(b)*

Putnam VT International
Growth Fund
June 30, 1998
December 31, 1997******** $(.01) $(.18) $11.43 $16.13 $150,884 1.20(b) .79(b)

Putnam VT International
Growth and Income Fund
June 30, 1998
December 31, 1997******** $- $(.41) $11.53 19.43 $206,598 1.12 1.11

Putnam VT International New
Opportunities Fund
June 30, 1998
December 31, 1997******** $- $(.03) $9.96 (.10) $107,000 1.60(b) .09(b)

Putnam VT Money Market Fund
June 30, 1998
December 31, 1997 $- $(.0509) $1.00 5.22 $405,577 .54 5.10
December 31, 1996 - (.0497) 1.00 5.08 $437,132 .53 4.93
December 31, 1995 - (.0533) 1.00 5.46 263,213 .57 5.43
December 31, 1994 - (.0377) 1.00 3.82 244,064 .55 3.90
December 31, 1993 - (.0276) 1.00 2.79 129,329 .42 2.77
December 31, 1992 - (.0352) 1.00 3.57 105,694 .48 3.49
December 31, 1991 - (.0576) 1.00 5.92 78,568 .50 5.74
December 31, 1990 - (.0770) 1.00 7.98 77,892 .53 7.67
December 31, 1989 - (.0859) 1.00 8.88 24,975 .63 8.62
December 31, 1988**** - (.0575) 1.00 5.84* 14,001 .71* 6.70*

Putnam VT New Opportunities Fund
June 30, 1998
December 31, 1997 $- $- $21.23 23.29 $2,590,244 .63 (.01)
December 31, 1996 - - 17.22 10.17 $1,674,197 .72 (.13)
December 31, 1995 (.01) (.03) 15.63 44.87 515,109 .84 (.03)
December 31, 1994****** - - 10.82 8.20* 68,592 .47(b)* .03(b)*

Putnam VT New Value Fund
June 30, 1998
December 31, 1997******** $- $(.85) $13.42 8.64 $789,540 .69 6.58

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
June 30, 1998
December 31, 1997 $- $(1.30) $17.14 27.10 $822,257 .74 3.63
December 31, 1996 - (.82) 13.21 2.42 778,924 .69 6.48
December 31, 1995 - (.85) 13.74 20.44 747,024 .70 6.22
December 31, 1994 - (.88) 12.22 (3.23) 640,458 .67 6.24
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
June 30, 1998
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
June 30, 1998
December 31, 1998******** $-(f) $- $12.32 23.31 $170,660 .87

Putnam VT Voyager Fund
June 30, 1998
December 31, 1997 $- $(1.56) $39.08 26.51 $4,538,535 .59 .30
December 31, 1996 - (1.81) 32.53 12.97 $3,281,490 .63 .36
December 31, 1995 - (.56) 30.50 40.67 2,000,232 .68 .49
December 31, 1994 - (.42) 22.20 1.04 1,026,972 .71 .40
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
June 30, 1998
December 31, 1997 102.92 $.0144
December 31, 1996 66.10 .0197
December 31, 1995** 67.72*

Putnam VT Diversified
Income Fund
June 30, 1998
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
June 30, 1998
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
June 30, 1998
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
June 30, 1998
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
June 30, 1998
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
June 30, 1998
December 31, 1997******** 75.18 $.0352

Putnam VT International
Growth and Income Fund
June 30, 1998
December 31, 1997******** 53.20 $.0330

Putnam VT International New
Opportunities Fund
June 30, 1998
December 31, 1997******** 131.89 $.0207

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

Putnam VT Money Market Fund
June 30, 1998
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
June 30, 1998
December 31, 1997 71.78 $.0472
December 31, 1996 57.94 .0488
December 31, 1995 30.87
December 31, 1994****** 32.77*

Putnam VT New Value Fund
June 30, 1998
December 31, 1997******** 64.15

Putnam VT U.S. Government and
High Quality Bond Fund
June 30, 1998
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
June 30, 1998
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
June 30, 1998
December 31, 1997******** 74.43 $.0381

Putnam VT Voyager Fund
June 30, 1998
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, 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 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 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% 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.

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.

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 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.

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, 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.

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 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 fixed-
income 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 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 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 -- 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 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 -- 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." 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 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 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.

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.

With the exception of certain performance related fees, Putnam VT
Research Fund will generally be managed in a style similar to that of
Putnam Research Fund. See "How performance is shown - Prior
Performance of Similar Fund."

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

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 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 "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 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."

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. 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 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 (other than the U.S. government , its
agencies and instrumentalities.) 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 and 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 , its agencies or
instrumentalities;*

(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 ;* or

(c) 15% of its net assets in any combination of securities that are
not readily marketable, 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
non-fundamental 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 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 Research Fund which will commence operations on
, 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, 200% for Putnam VT
Research 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-
the-counter 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 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.

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 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.

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.

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.

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.

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

Mortgage-backed and asset-backed securities

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

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

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 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, 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.

Prior Performance of Similar Fund

Because Putnam VT Research Fund has not commenced operations as of the
date of this prospectus, it has no operating history or performance
information. However, Putnam VT Research Fund is expected to be
managed in a style that is substantially similar to that of Putnam
Research Fund, which is also managed by Putnam Management and which
has investment objectives and policies identical to those of Putnam VT
Research Fund. Putnam Research Fund is a registered open-end
management investment company that began investment operations on
October 2, 1995.

The performance information below relates solely to Putnam Research
Fund. Past performance is no guarantee of future results. Moreover,
although Putnam VT Research Fund is expected to be managed in a style
that is substantially similar to that of Putnam Research Fund, you
should not assume that Putnam VT Research Fund would have had the same
performance as Putnam Research Fund. Putnam VT Research Fund's
performance may vary from that of Putnam Research Fund due to factors
including differences in the funds' expenses and cash flows, as well
as differences in the tax considerations of for the funds'
shareholders. The performance of the funds may also differ because,
under a so-called "fulcrum fee" arrangement, Putnam Research Fund's
management fee may vary from time to time based upon its performance
relative to an investment benchmark. Putnam VT Research Fund does not
have such an arrangement and the management fees borne by the funds,
and the fund's performance may therefore diverge. During periods in
which Putnam Research Fund's performance is below that of the
investment benchmark, the total return of Putnam VT Research Fund
will, all other things being equal, be lower than that of Putnam
Research Fund.

The following table sets forth the total return at net asset value
("NAV") and public offering price ("POP") of the Putnam Research Fund
since the inception of that fund.

Total Return as of 6/30/98*

Class A shares
(inception 10/2/95) NAV POP

Since inception (cumulative)
One year (annualized)

* Performance is shown at the NAV and POP for Putnam Research Fund
during the relevant periods. POP reflects the current maximum sales
charge for that fund of 5.75% All returns assume reinvestment of
distributions at NAV and represent past performance; they do not
guarantee future results. Putnam Research Fund's performance for
these periods reflects an expense limitation in effect during the
relevant periods. Without the limitation, total return would have
been lower.

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

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.

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 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 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.

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

Jeanne L. 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. 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, Putnam VT Research 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%, 0.85% 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 Research Fund* 0.85% 0.37% 0.48%
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%

* 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%
Putnam VT Research Fund+ 1.13% 0.65% 0.48%

+ 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

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.

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 Bond Fund was known as PCM
U.S. Government and High Quality Bond Fund, Putnam VT
Utilities Growth and Income Fund was known as PCM Utilities Growth and
Income Fund, and Putnam VT Voyager Fund was known as PCM Voyager Fund.

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

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

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

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

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

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

HOW A FUND VALUES ITS SHARES

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

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

HOW A FUND MAKES DISTRIBUTIONS TO SHAREHOLDERS; TAX
INFORMATION

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

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

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 semi-annual financial
statement and an audited annual financial statement for such funds.
These reports show the investments owned by each fund and provide
other relevant information about the fund.

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, as
revised September 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

PUTNAM VARIABLE TRUST
Class IB shares
PROSPECTUS - April 30, 1998, as revised September 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 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. 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

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.

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.

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.

APPENDIX
Securities ratings

About the Trust

FINANCIAL HIGHLIGHTS

The following table present per share unaudited financial information
for Class IB Shares for the for the six-months ended June 30, 1998.
The Trust's annual report, which contains additional unaudited
performance information, is available without charge upon request.

Financial information for Putnam VT Research Fund is not included
because that fund had not commenced operations as of June 30, 1998.

<TABLE><CAPTION>
Financial Highlights

Putnam VT Asia Pacific Growth Fund
June 30, 1998

Putnam VT Diversified Income Fund
June 30, 1998

Putnam VT Global Asset Allocation Fund
June 30, 1998

Putnam VT Global Growth Fund
June 30, 1998

Putnam VT Growth and Income Fund
June 30, 1998

Putnam VT High
Yield Fund
June 30, 1998

Putnam VT International
Growth Fund
June 30, 1998

Putnam VT International
Growth and Income Fund
June 30, 1998

Putnam VT International
New Opportunities Fund
June 30, 1998

Putnam VT Money
Market Fund
June 30, 1998

Putnam VT New
Opportunities Fund
June 30, 1998

Putnam VT New Value
Fund
June 30, 1998

Putnam VT U.S. Government
and High Quality Bond Fund
June 30, 1998

Putnam VT Utilities
Growth and Income Fund
June 30, 1998

Putnam VT Vista
Fund
June 30, 1998

Putnam VT Voyager Fund
June 30, 1998
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

Putnam VT Diversified
Income Fund
June 30, 1998

Putnam VT Global Asset
Allocation Fund
June 30, 1998

Putnam VT Global Growth
Fund
June 30, 1998

Putnam VT Growth and
Income Fund
June 30, 1998

Putnam High Yield
Fund
June 30, 1998

Putnam VT International
Growth Fund
June 30, 1998

Putnam VT International
Growth and Income Fund
June 30, 1998

Putnam VT International New
Opportunities Fund
June 30, 1998

Putnam VT Money Market Fund
June 30, 1998

Putnam VT New Opportunities Fund
June 30, 1998

Putnam VT New Value Fund
June 30, 1998

Putnam VT Utilities
Growth and Income Fund
June 30, 1998

Putnam Vista Fund
June 30, 1998

Putnam VT Voyager Fund
June 30, 1998

</TABLE>

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

Putnam VT Asia
Pacific Growth Fund
June 30, 1998

Putnam VT Diversified
Income Fund
June 30, 1998

Putnam VT Global Asset
Allocation Fund
June 30, 1998

Putnam VT Global Growth
Fund
June 30, 1998

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

Putnam VT Growth and
Income Fund
June 30, 1998

Putnam High Yield
Fund
June 30, 1998

Putnam VT International
Growth Fund
June 30, 1998

Putnam VT International
Growth and Income Fund
June 30, 1998

Putnam VT International New
Opportunities Fund
June 30, 1998

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

Putnam VT Money Market Fund
June 30, 1998

Putnam VT New Opportunities Fund
June 30, 1998

Putnam VT New Value Fund
June 30, 1998

Putnam VT U.S. Government and
High Quality Bond Fund
June 30, 1998

Putnam VT Utilities
Growth and Income Fund
June 30, 1998

Putnam Vista Fund
June 30, 1998

Putnam VT Voyager Fund
June 30, 1998

THE TRUST

INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS

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.

"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

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.

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

* 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 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.

High Yield Sector

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%
====== =====

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.

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

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 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

U.S. Equities
International Equities
U.S. Fixed Income
International Fixed Income

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.

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 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.

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 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 health sciences 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.

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 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.

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%
====== ======

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.

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.

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.

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

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.

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

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.

* 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.

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 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

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 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.

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

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 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.

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.

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.

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

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.

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.

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

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

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

PUTNAM VT UTILITIES GROWTH AND INCOME FUND

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. 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.

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.

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 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 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. 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 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.

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

GENERAL

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;*

(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.

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 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 Research Fund,
which commenced operations on , 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, 200% for Putnam VT Research Fund, and 300% for Putnam VT OTC &
Emerging Growth Fund.

Investments in premium securities

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.

For more information about foreign securities and the risks associated
with investment in such securities, see the SAI.

Foreign currency exchange transactions

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.

Futures and options

Risks related to options and futures strategies

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

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

- - 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.

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.

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

Prior Performance of Similar Fund

The following table sets forth the total return at net asset value
("NAV") and public offering price ("POP") of the Putnam Research Fund
since the inception of that fund.

Total Return as of 6/30/98*

Class A shares
(inception 10/2/95) NAV POP

Since inception (cumulative)
One year (annualized)

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.

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, Mr. Warren 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

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.

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 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

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

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 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.

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

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.

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.

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.

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 separate-account 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 Research Fund* 1.00% 0.37% 0.15% 0.48%
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%
Putnam VT Research Fund + 1.28% 0.65% 0.15% 0.48%

+ 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

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 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.

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

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

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 2/VMIG 2 -- This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

Commercial paper

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.

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

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-2

INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . B-2

TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-32

INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .B-35

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B- 38

INVESTMENT PERFORMANCE OF THE TRUST. . . . . . . . . . . . . . . . .B- 84

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . .B- 87

DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . .B- 90

SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . .B- 91

SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . .B- 91

CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B- 91

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . . . . .B- 92

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.

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.

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 (71), 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 (54), 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 (69), Trustee. Chartered Financial Analyst and Vice
Chairman, North American Management Corp. (a registered investment
adviser).

John A. Hill (56), Trustee. 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 (50), 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. He
has been a consultant to National Economic Research Associates, Inc.
since 1972.

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 (56), 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 (46), 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 (55), 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 (59), 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.

Ian C. Ferguson (40), Vice President. Senior Managing Director of
Putnam Management.

John R. Verani (58), Vice President. Senior Vice President of Putnam
Investments, Inc. and Putnam Management.

John D. Hughes (63), Senior Vice President and Treasurer.

Beverly Marcus (53), 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 (40) (101 funds), Senior Managing Director of Putnam
Management.

Anthony W. Regan (58) (2 funds), Senior Managing Director of Putnam
Management.

Thomas R. Bogan (57) (2 funds), Managing Director of Putnam
Management.

Robert R. Beck (57) (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 (35) (4 funds), Managing Director of Putnam Management.

D. William Kohli (37) (8 funds), Managing Director of Putnam
Management.

Anthony I. Kreisel (53) (12 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 (42) (14 funds), Managing Director of Putnam
Management.

Daniel L. Miller (40) (6 funds), Managing Director of Putnam
Management.

Justin M. Scott (40) (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.

Ami T. Kuan Danoff (35) (4 funds), Senior Vice President of Putnam
Management.

Richard England (39) (2 funds), Senior Vice President of Putnam
Management.

Richard M. Frucci (53) (1 fund), Senior Vice President of Putnam
Management.

Roland W. Gillis (48) (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.

Kelly A. Morgan (35) (2 funds), Senior Vice President of Putnam
Management.

Michael J. Mufson (35) (1 fund), 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 (39) (1 fund), Senior Vice President of Putnam
Management.

Sheldon N. Simon (40) (4 funds), Senior Vice President of Putnam
Management.

Michael P. Stack (39) (2 funds), Senior Vice President of Putnam
Management.

Charles H. Swanberg (50) (4 funds), Senior Vice President of Putnam
Management.

Robert Swift (37) (5 funds), Senior Vice President of Putnam
Management.

David K. Thomas (56) (3 funds), Senior Vice President of Putnam
Management.

Paul Warren (37) (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 (27) (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 1993, Mr. Jackson was Chairman of the Board,
President and Chief Executive Officer of Fisher-Price, Inc. 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 November, 1993, Ms. Attridge was an Analyst at Keystone
Custody International. Prior to April, 1993, Ms. Kuan attended the
MIT Sloan School of Management. 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 and, prior to
October, 1993, Senior Portfolio Manager, at Franklin
Advisors/Templeton Investment Counsel. Prior to December, 1992, Mr.
Ray was Vice President and Portfolio Manager at Scudder, Stevens &
Clark, Inc. Prior to June, 1993, Mr. Siegel was Vice President at
Salomon Brothers International LTD. 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, and prior to
February, 1993 was a Director at Rothschild Asset Management. 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
June, 1993, Ms. Driscoll was an Investment Associate at BayBanks
Investment Management. Prior to September, 1995, Ms. Cotner was
Executive Vice President of Kemper Financial Services. Prior to June,
1993, Mr. Mufson was Senior Equity Analyst at Stein Roe & Farnham.
Prior to November, 1994, Mr. Bogan was Senior Analyst at Lord, Abbett
& Co.

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 $
Hans H. Estin/1972 401 401 401 401
John A. Hill/1985 (5) 401 401 401 401
Ronald J. Jackson/1996 (5) 401 401 401 401
Paul L. Joskow/1997 (8) 401 401 401 401
Elizabeth T. Kennan/1992 401 401 401 401
Lawrence J. Lasser/1992 401 401 401 401
John H. Mullin/1997 (8) 401 401 401 401
Robert E. Patterson/1984 401 401 401 401
Donald S. Perkins/1982 401 401 401 401
William F. Pounds/1971 (6) 418 418 418 418
George Putnam/1957 401 401 401 401
George Putnam, III/1984 401 401 401 401
A.J.C. Smith/1986 401 401 401 401
W. Thomas Stephens (5) (7) 401 401 401 401
W. Nicholas Thorndike/1992 401 401 401 401
</TABLE>

<TABLE><CAPTION>
COMPENSATION TABLE (continued)
Aggregate compensation (1) from:

Estimated
annual
benefits
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> <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
March 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 March 31, 1998.

Issuer and name of
Separate Account

(1) Hartford Life Percentage of
Insurance Company Fund shares owned of record

(a) Putnam Capital Manager Trust
Separate Account

Putnam VT Asia
Pacific Growth Fund 38.70%

Putnam VT Diversified
Income Fund 51.71%

Putnam VT Global
Asset Allocation Fund 50.25%

Putnam VT Global
Growth Fund 44.33%

Putnam VT Growth and
Income Fund 51.41%

Putnam VT High Yield Fund 43.67%

Putnam VT International
Growth Fund 36.61%

Putnam VT International
Growth and Income Fund 41.49%

Putnam VT International
New Opportunities Fund 39.84%

Putnam VT Money Market Fund 48.31%

Issuer and name of
Separate Account

(1) Hartford Life Percentage of
Insurance Company Fund shares owned of record

(a) Putnam Capital Manager Trust
Separate Account (continued)

Putnam VT New Opportunities
Fund 4.04%

Putnam VT New Value Fund 38.91%

Putnam VT U.S. Government
and High Quality Bond Fund 66.33%

Putnam VT Utilities
Growth and Income Fund 54.01%

Putnam VT Vista Fund 41.09%

Putnam VT Voyager Fund 46.72%

(b) Putnam Capital Manager Trust
Separate Account VLI

Putnam VT Diversified
Income Fund *

Putnam VT Global Asset
Allocation Fund 1.05%

Putnam VT Global
Growth Fund 1.23%

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 *

Issuer and name of
Separate Account

(1) Hartford Life Percentage of
Insurance Company Fund shares owned of record

(b) Putnam Capital Manager Trust
Separate Account VLI (continued)

Putnam VT Utilities Growth
and Income Fund *

Putnam VT Voyager Fund 1.00%

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 *

Issuer and name of
Separate Account

(1) Hartford Life Percentage of
Insurance Company Fund shares owned of record

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

Putnam VT Asia Pacific
Growth Fund *

Putnam VT Diversified
Income Fund *

Putnam VT Global Asset
Allocation Fund *

Putnam VT Global
Growth Fund *

Putnam VT Growth and
Income Fund *

Putnam VT High Yield Fund *

Putnam VT International
Growth Fund *

Putnam VT International
Growth and Income Fund *

Putnam VT International
New Opportunities Fund *

Putnam VT Money
Market Fund *

Putnam VT New
Opportunities Fund *

Putnam VT New Value Fund *

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

Issuer and name of
Separate Account

(1) Hartford Life Percentage of
Insurance Company Fund shares owned of record

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

Putnam VT Utilities Growth
and Income Fund *

Putnam VT Vista Fund *

Putnam VT Voyager Fund *

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

Putnam VT Diversified
Income Fund *

Putnam VT Global Asset
Allocation Fund *

Putnam VT Global
Growth Fund *

Putnam VT Growth and
Income Fund *

Putnam VT High Yield Fund *

Putnam VT Money
Market Fund *

Putnam VT New
Opportunities Fund *

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

Putnam VT Utilities Growth
and Income Fund *

Putnam VT Voyager Fund *

(2) ITT Hartford Life
and Annuity Percentage of
Insurance Company Fund shares owned of record

(a) Putnam Capital Manager Trust
Separate Account Two

Putnam VT Asia Pacific
Growth Fund 60.09%

Putnam VT Diversified
Income Fund 44.21%

Putnam VT Global Asset
Allocation Fund 47.68%

Putnam VT Global Growth
Fund 52.99%

Putnam VT Growth and
Income Fund 45.95%

Putnam VT High Yield Fund 54.08%

Putnam VT International
Growth Fund 54.88%

Putnam VT International
Growth and Income Fund 58.25%

Putnam VT International
New Opportunities Fund 59.38%

Putnam VT Money Market Fund 46.20%

Putnam VT New
Opportunities Fund 5.76%

Putnam VT New Value Fund 60.60%

Putnam VT U.S. Government
and High Quality Bond Fund 30.41%

Putnam VT Utilities Growth
and Income Fund 43.39%

Putnam VT Vista Fund 58.59%

Putnam VT Voyager Fund 48.53%

(2) ITT Hartford Life
and Annuity Percentage of
Insurance Company Fund shares owned of record

(b) Putnam Capital Manager Trust
Separate Account VLI

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 *

Putnam VT Diversified
Income Fund *
Putnam VT Global Asset
Allocation Fund *

Putnam VT Global
Growth Fund *

Putnam VT Growth and
Income Fund *

(2) ITT Hartford Life
and Annuity Percentage of
Insurance Company Fund shares owned of record

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 *

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

Putnam VT Asia Pacific
Growth Fund *

Putnam VT Diversified
Income Fund *

Putnam VT Global Asset
Allocation Fund *

Putnam VT Global
Growth Fund *

Putnam VT Growth and
Income Fund *

Putnam VT High Yield Fund *

Putnam VT International
Growth Fund *

Putnam VT International
Growth and Income Fund *

(2) ITT Hartford Life
and Annuity Percentage of
Insurance Company Fundshares owned of record

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

Putnam VT International
New Opportunities Fund *

Putnam VT Money
Market Fund *

Putnam VT New
Opportunities Fund *

Putnam VT New Value Fund *

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

Putnam VT Utilities Growth
and Income Fund *

Putnam VT Vista Fund *

Putnam VT Voyager Fund *

(e) Putnam Capital Manager Trust
Separate Account Six

Putnam VT Diversified
Income Fund *

Putnam VT Global Asset
Allocation Fund *

Putnam VT Global
Growth Fund *

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

(2) ITT Hartford Life
and Annuity Percentage of
Insurance Company Fund shares owned of record

(g) Putnam Capital Manager Trust
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 *

Issuer and name
of Separate Account

(3) ReliaStar Life Percentage of
Insurance Company Fund shares owned of record

(a) Putnam Variable Trust
Select Life I

Putnam VT Diversified
Income Fund 1.12%

Putnam VT Growth and
Income Fund *

Putnam VT Utilities Growth
and Income Fund *

Putnam VT Voyager Fund *

(b) Putnam Variable Trust
Select Life II

Putnam VT Asia Pacific
Growth Fund 1.12%

Putnam VT Diversified
Income Fund *

Putnam VT Growth and
Income Fund *

Putnam VT New
Opportunities Fund *

Putnam VT Utilities Growth
and Income Fund *

Putnam VT Voyager Fund *

Putnam VT Asia Pacific
Growth Fund *

Putnam VT Diversified
Income Fund *

Putnam VT Growth and
Income Fund *

(3) ReliaStar Life Percentage of
Insurance Company Fund shares owned of record

Putnam VT New
Opportunities Fund *

Putnam VT Utilities
Growth and Income Fund *

Putnam VT Voyager Fund *

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

Putnam VT Asia Pacific
Growth Fund *

Putnam VT Diversified
Income Fund *

Putnam VT Growth and
Income Fund *

Putnam VT New
Opportunities Fund *

Putnam VT Utilities
Growth and Income Fund *

Putnam VT Voyager Fund *

(e) Putnam Variable Trust
ReliaStar Select Annuity II

Putnam VT Diversified
Income Fund *

Putnam VT Growth and
Income Fund *

Putnam VT Utilities Growth
and Income Fund *

Putnam VT Voyager Fund *

(3) ReliaStar Life Percentage of
Insurance Company Fund shares owned of record

(f) Putnam Variable Trust
ReliaStar Select Annuity III

Putnam VT Asia Pacific
Growth Fund 2.86%

Putnam VT Diversified
Income Fund 1.72%

Putnam VT Growth and
Income Fund *

Putnam VT New
Opportunities Fund 87.71%

Putnam VT Utilities Growth
and Income Fund 1.03%

Putnam VT Voyager Fund 1.32%

(4) ReliaStar Life Percentage of
Insurance Company Fund shares owned of record
of New York

(a) Putnam Variable Trust
ReliaStar Select Life New York

Putnam VT Diversified
Income Fund *

Putnam VT Growth and
Income Fund *

Putnam VT Voyager
Fund *

(5) American Enterprise
Life Insurance Company

(a) American Enterprise
Variable Annuity Account

Putnam VT Diversified
Income Fund *

Putnam VT Growth and
Income Fund *

(5) American Enterprise Percentage of
Life Insurance Company Fund shares owned of record

(a) American Enterprise
Variable Annuity Account (continued)

Putnam VT Global Growth
Fund *

Putnam VT High Yield Fund *

Putnam VT New
Opportunities Fund *

Putnam VT Voyager Fund *

(b) American Enterprise
American Centurion Life

Putnam VT Diversified Income Fund *

Putnam VT Global Growth and Income
Fund *

Putnam VT High Yield Fund *

Putnam VT New
Opportunities Fund *

Putnam VT Voyager Fund *

(6) Investors Life
Insurance Company of Percentage of
North America Fund shares owned of record

Putnam Variable Trust
CIGNA Separate
Account I
Putnam VT Growth and
Income Fund *

Putnam VT Money
Market Fund *

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

Putnam VT Voyager Fund *

Issuer and name of
Separate Account

(7) Paragon Life Percentage of shares
Insurance Company Fund owned of record as

(a) Putnam Variable Trust
Paragon Variable Life

Putnam VT Asia Pacific Growth Fund *

Putnam VT Diversified
Income Fund *

Putnam VT Global Asset
Allocation Fund *

Putnam VT Global Growth Fund *

Putnam VT Growth and
Income Fund *

Putnam VT High Yield Fund *

Putnam VT Money Market Fund *

Putnam VT New
Opportunities Fund *

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

Putnam VT Utilities
Growth and Income Fund *

Putnam VT Voyager Fund *

(b) Putnam Variable Trust
Paragon Variable Life
Multi-Manager

Putnam VT High Yield Fund *

Putnam VT New
Opportunities Fund *

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

Putnam VT Voyager Fund *

Issuer and name of
Separate Account

(8) IDS Life Percentage of shares
Insurance Company Fund owned of record as

(a) IDS Life Variable
Account 10
Putnam VT New
Opportunities Fund 1.68%

(b) IDS Life of New York
Flexible Portfolio
Annuity Account
Putnam VT New
Opportunities Fund *

(d) IDS Life of New
York Account 8
Putnam VT New
Opportunities Fund *

(9) Cova Financial Life Percentage of shares
Insurance Company Fund owned of record as

(a) Variable Annuity
Account One

Putnam VT Growth and Income Fund *

Putnam VT International Growth Fund *

Putnam VT International
New Opportunities Fund *

Putnam VT New Value Fund *

Putnam VT Vista Fund *

(b) Variable Annuity
Account Five

Putnam VT Growth and
Income Fund *

Putnam VT International
Growth Fund *

Issuer and name of
Separate Account

(9) Cova Financial Life Percentage of shares
Insurance Company Fund owned of record as

(b) Variable Annuity
Account Five (continued)

Putnam VT International
New Opportunities Fund *

Putnam VT New Value Fund *

Putnam VT Vista Fund *

*Less than 1/10th of 1%.

The address for the separate accounts listed in (1) and (2) above is:
P.O. Box 2099, Hartford, CT 06140-2999. The address for the separate
account listed in (3) above is: 20 Washington Avenue South,
Minneapolis, MN 55401. The address for the separate account listed
in (4) above is: 80 S. Eighth Street, Minneapolis, MN 55440. The
address for the separate account listed in (5) above is: Austin
Centre, 701 Brazos Street, Austin, TX 78701. The address for the
separate account listed in (6) above is: 100 South Brentwood, St.
Louis, MO 63105. The address for the separate account listed in (7)
above is: IDS Tower 10, 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 , 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

Diversified Income 8.04%

Global Asset
Allocation 2.40%

Global Growth N/A

Growth and Income 1.67

High Yield 8.97

International
Growth & Income 1.18

International
Growth N/A

International
New Opportunities N/A

Money Market 5.19

New Opportunities N/A

New Value N/A

U.S. Government and
High Quality Bond 5.41

Utilities
Growth and Income 2.94

Vista N/A

Voyager N/A

* 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 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.

Effective July 1, 1998, Coopers & Lybrand L.L.P. and Price Waterhouse
LLP combined their businesses and practices and began doing business
as PricewaterhouseCoopers LLP.

PUTNAM VARIABLE TRUST

FORM N-lA
PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Index to Financial Statements and Supporting Schedules:

(1) Financial Statements:

Statements of assets and liabilities --December
31, 1997 (a)(audited) and June 30, 1998
(unaudited).
Statements of operations -- year ended December
31, 1997 (a)(audited) and six months ended June
30, 1998 (unaudited).
Statement of changes in net assets -- years ended
December 31, 1997 and December 31, 1996
(a)(audited) and six months ended June 30, 1998
(unaudited).
Financial highlights (a) (b)(audited) and six
months ended June 30, 1998 (unaudited).
Notes to financial statements (a)(audited) and six
months ended June 30, 1998 (unaudited).

(2) Supporting Schedules:

Schedule I - Portfolios of investments
owned -- December 31, 1997 (a)(audited) and
six months ended June 30, 1998 (unaudited)
Schedules II through IX omitted because the
required matter is not present.

(a) Included in Part B.
(b) Included in Part A.
- ---------------

(b) Exhibits:

1. Agreement and Declaration of Trust dated September
24, 1987, as revised January 1, 1997 --
Incorporated by reference to Post-Effective
Amendment No. 14 to the Registrant's Registration
Statement.
2. By-Laws, as amended through January 30, 1997 --
Incorporated by reference to Post-Effective
Amendment No. 14 to the Registrant's Registration
Statement.
3. Not applicable.
4a. Not applicable
4b. Portions of Agreement and Declaration of Trust
Relating to Shareholders' Rights --Incorporated by
reference to Post-Effective Amendment No. 14 to
the Registrant's Registration Statement.
4c. Portions of By-Laws Relating to Shareholders'
Rights -- Incorporated by reference to Post-
Effective Amendment No. 14 to the Registrant's
Registration Statement.
5. Form of Management Contract, dated October 2,
1987, as supplemented March 2, 1990, as further
supplemented February 27, 1992, July 9, 1993,
April 5, 1994, June 2, 1994, April 7, 1995, July
13, 1995, July 11, 1996, December 20, 1996
, February 6, 1998 and July , 1998 --
Exhibit 1.
6a. Distributor's Contract dated May 6, 1994 --
Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement.
6b. Form of Specimen Dealer Sales Contract --
Incorporated by reference to Post-Effective
Amendment No. 11 to the Registrant's Registration
Statement.
6c. Form of Specimen Financial Institution Sales
Contract -- Incorporated by reference to Post-
Effective Amendment No. 11 to the Registrant's
Registration Statement.
7. Not applicable.
8. Custodian Agreement with Putnam Fiduciary Trust
Company dated May 3, 1991, as amended July 13,
1992 -- Incorporated by reference to Post-
Effective Amendment No. 10 to the Registrant's
Registration Statement.
9. Investor Servicing Agreement, dated June 3, 1991
with Putnam Fiduciary Trust Company --
Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement.
10. Opinion of Ropes & Gray, including consent --
Incorporated by reference to Post-Effective
Amendment No. 10 to the Registrant's Registration
Statement.
11. Not applicable.
12. Not applicable.
13. Investment Letters from The Putnam Management
Company, Inc. to the Registrant --Incorporated by
reference to Post-Effective Amendment No. 10 to
the Registrant's Registration Statement.
14. Not applicable.
15a. Class IB Distribution Plan and Agreement --
Incorporated by reference to Post-Effective
Amendment No. 15 to the Registrant's Registration
Statement.
15b. Form of Specimen Dealer Service Agreement --
Incorporated by reference to Post-Effective
Amendment No. 15 to the Registrant's Registration
Statement.
16. Schedules for computation of performance
quotations -- To be filed by amendment.
17a. Financial Data Schedule -- PVT Asia Pacific Growth
Fund -- To be filed by amendment.
17b. Financial Data Schedule -- PVT Diversified Income
Fund -- To be filed by amendment.
17c. Financial Data Schedule -- PVT Global Asset
Allocation Fund -- To be filed by
amendment.
17d. Financial Data Schedule -- PVT Global Growth Fund
-- To be filed by amendment.
17e. Financial Data Schedule -- PVT Growth and Income
Fund - To be filed by amendment.
17f. Financial Data Schedule -- PVT High Yield Fund --
To be filed by amendment.
17g. Financial Data Schedule -- PVT International
Growth Fund -- To be filed by amendment.
17h. Financial Data Schedule -- PVT International
Growth and Income Fund - To be filed by
amendment.
17i. Financial Data Schedule -- PVT International New
Opportunities Fund -- To be filed by
amendment.
17j. Financial Data Schedule -- PVT Money Market Fund -
- To be filed by amendment.
17m. Financial Data Schedule -- PVT New Opportunities
Fund -- To be filed by amendment.
17m. Financial Data Schedule -- PVT New Value Fund --
To be filed by amendment.
17n. Financial Data Schedule -- PVT U.S. Government and
High Quality Bond Fund -- To be filed by
amendment.
17o. Financial Data Schedule -- PVT Utilities Growth
and Income Fund -- To be filed by
amendment.
17p. Financial Data Schedule -- PVT Vista Fund--
To be filed by amendment.
17p. Financial Data Schedule -- PVT Voyager Fund --
To be filed by amendment.
18. Rule 18f-3(d) Plan -- Incorporated by reference to
Post-Effective Amendment No. 15 to the
Registrant's Registration Statement.

Item 25. Persons Controlled by or under Common Control with
Registrant

None.

Item 26. Number of Holders of Securities

As of June 30, 1998 there were 31
shareholders of the Registrant's Class IA shares of beneficial
interest and 4 shareholders of the Registrant's Class IB shares
.

Item 27. Indemnification

The information required by this item is incorporated by
reference to the Registrant's Initial Registration Statement on Form
N-1A under the Investment Company Act of 1940 (File No. 33-17486).

<PAGE>

6/17/1998

Item 28. Business and Other Connections of Investment Adviser
<TABLE>
<CAPTION>
Except as set forth below, the directors and officers of the Registrant's
investment adviser have been engaged during the past two fiscal years in no
business, vocation or employment of a substantial nature other than as directors
or officers of the investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of some or all of
the Putnam funds. The address of the investment adviser, its corporate
affiliates and the Putnam Funds is One Post Office Square, Boston, Massachusetts
02109.

Non - Putnam business and other
Name connections
<S> <C>
Michael J. Abata Prior to May, 1997, Assistant Vice President,
Alliance Capital
Assistant Vice President Management Corp., 1345 Avenue of the
Americas, New York, NY 10020

Barry R. Allen Prior to December, 1997, Analyst/Director of
Research,
Vice President Harbor Capital Management, 125 High St.,
Boston, MA 02110

Jennifer Antill Prior to November, 1996, Director, IAI
International/Hill
Managing Director Samuel Investment Advisors, 10 Fleet Place,
London, England

Nikesh Arora Prior to April, 1997, Chief Financial Officer,
Fidelity
Vice President Fidelity Investments, 82 Devonshire St.,
Boston, MA 02110

Michael Arends Prior to May, 1997, Managing Director, Equities,
Phoenix
Senior Vice President Duff & Phelps, 56 Prospect St., Hartford, CT
06101

Michael J. Atkin Prior to July, 1997, Director of Latin America
Institute
Senior Vice President of International Finance, 2000 Pennsylvania
Avenue, Washington, D.C. 20006

Jeffrey B. Augustine Prior to January, 1998, Vice President, Investment
Consulting,
Senior Vice President Investor Tools, Inc., 100 Bridge St. Plaza,
Yorkville, IL 60560. Prior to April, 1996,
Consultant, 110 Aletha Rd., Needham, MA 02192.

Rowland T. Bankes Prior to July, 1997, Senior Fixed-Income Trader,
Jennison,
Vice President Jennison Associates Capital Corp., One
Financial Center, Boston, MA 02110

Robert R. Beck Director, Charles Bridge Publishing, 85 Main St.,
Watertown,
Senior Vice President MA 02172

Carl D. Bell Prior to January,
1998, Principal,
Smith Breedon
Association,
Vice President 100 Europa
Drive, Suite 200,
Chapel Hill, NC
27514

Geoffrey C. Blaisdell Prior to October, 1997, Vice President, Blackrock
Financial
Senior Vice President Financial, 345 Park Avenue, New York, NY 10010

Jeffrey M. Bray Prior to October, 1997, Analyst, Lehman Brothers, 3
World
Vice President Financial Center, New York, NY 10285

David J. Buckle Prior to March, 1998, Vice President, J.P. Morgan
Investment
Vice President Management, 28 King St., London, England SW1
YXA

Ronald J. Bukovac Prior to October, 1997, Senior Manager, Valuation,
Price
Vice President Waterhouse, 200 E. Randolph Drive, Chicago, IL
60601

Robert W. Burke Member-Executive Committee, The Ridge Club, Country
Club Road,
Senior Managing Director Sandwich, MA 02563; Member-Advisory Board,
Cathedral High School, 74 Union Park St., So.
Boston, MA 02118

Jack P. Chang Prior to July, 1997, Vice President, Columbia
Management
Vice President Company, 1300 S.W. 6th Ave., Portland, OR
97207

Mary Claire Chase Prior to January, 1997, Director of Staff
Development,
Vice President Arthur D. Little Co., 25 Acorn Park,
Cambridge, MA 02140

James E. Corning Prior to October, 1996, Assistant Vice President of
Plan
Vice President Investments at State Street Bank & Trust, 1776
Heritage Dr., Quincy, MA 02171

C. Beth Cotner Director, The Lyric Stage Theater, 140 Clarendon St.,
Senior Vice President Boston, MA

Kevin M. Cronin Prior February, 1997, Vice President and Portfolio
Manager,
Managing Director MFS Investment Management, 500 Boylston St.,
Boston, MA 02117

William J. Curtin Prior to August, 1996, Managing Director, Chief
Global Fixed-
Managing Director Income Strategist, Lehman Brothers, 3 World
Financial Center, New York, NY 10285

Michael W. Davis Prior to August, 1997, Technical Finance Consultant,
Bank of
Vice President America Mortgage, 50 California St., San
Francisco, CA 94111

Edwin M. Denson Prior to November, 1997, Vice President and Senior
Economist
Vice President Primark Decision Economics, 260 Franklin St.,
Boston, MA 02110; Prior to August, 1996, Senior
Economist, Lehman Brothers, Inc. 260 Franklin St.,
Boston, MA 02110

Ralph C. Derbyshire Prior to November, 1997, Partner, Palmer & Dodge,
One Beacon
Senior Vice President Street, Boston, MA 02108

Michael G. Dolan Chairman-Finance Council, St. Mary's Parish, 44
Myrtle St.,
Assistant Vice President Melrose, MA 02176; Member, School Advisory
Board, St. Mary's School, 44 Myrtle St., Melrose,
MA 02176

Martha A. Donovan Prior to July, 1996, Assistant Treasurer, CBS Inc.,
Vice President 51 W. 52nd St., New York, NY 10020

Mark E. Dow Prior to November, 1997, Economist, International
Monetary
Vice President Fund, Washington, DC

Nathan Eigerman Prior to July, 1996, Quantitative Analyst, Fidelity
Management
Vice President & Research, 82 Devonshire St., Boston, MA
02110

Irene M. Esteves Prior to January, 1997,
Vice President, Miller
Brewing Co.,
Managing Director 3939 West Highland Blvd. Milwaukee, WI 53201

Edward R. Finch Prior to December, 1997, Managing Director, M.A.
Weatherbie
Vice President & Co., 265 Franklin St., Boston, MA 02110

Kate Fleisher Prior to January, 1998, Director of Human
Resources, Laura
Vice President Ashley, 6 St. James Ave, Suite 410, Boston, MA
02116

J. Peter Grant Trustee, The Dover Church, Dover, MA, 02030
Senior Vice President

Patrice Graviere Prior to March, 1998, Regional Director for Latin
America,
Senior Vice President MFS International, LTD, Buenos Aires, Brazil

Donnalee Guerin Prior to September, 1996, Corporate Service Manager,
Assistant Vice President Haemonetics Corp., 400 Wood Rd., Braintree, MA
02184.

Paul E. Haagensen Director, Haagensen Research Foundation, 630 West
168th St.,
Senior Vice President New York, NY 10032

James B. Haines Prior to February, 1997, Associate, Benefit
Department
Assistant Vice President Ropes & Gray, One International Place, Boston,
MA 02110

Mary S. Hapij Prior to March, 1997, Research Library Manager,
Pioneering
Assistant Vice President Management Corp., 60 State Street, Boston, MA
02109

Nigel P. Hart Prior to October, 1997, Senior Vice President and
Portfolio
Vice President Manager, Investment Advisers, 3700 First Bank
Place, Minneapolis, MN 55402

Thomas R. Haslett Prior to December, 1996, Managing Director and
Senior
Managing Director Portfolio Manager, Montgomery Asset
Management, LTD, 101 California St., San
Franscisco, CA 94111

Marianne P. Isgur Prior to March, 1998, Executive Recruiter,
Professions,
Assistant Vice President 2 Villa Rd., So. Hamilton, MA 01982

Jerome J. Jacobs Prior to September, 1996, Head of Municipal Bond
Group,
Managing Director Vanguard Group Investments, 100 Vanguard
Blvd., Malvern, PA 19482

Ira C. Kalus-Bystricky Prior to March, 1998, Consultant, Arthur D. Little,
25 Acorn
Vice President Park, Cambridge, MA 02140

Mary E. Kearney Trustee, Massachusetts Eye and Ear Infirmary, 243
Charles St.,
Managing Director Boston, MA 02114

Catherine Kennedy Prior to September, 1997, Principal, Morgan Stanley,
1585
Vice President Broadway, New York, NY 10036

Jeffrey K. Kerrigan Prior to June, 1997, Vice President, Fleet
Investments,
Assistant Vice President 75 State St., Boston, MA 02109

David R. King Prior to October, 1997, Vice President, Massachusetts
Financial
Vice President Services, 500 Boylston St., Boston, MA

William P. King Prior to November, 1997, Portfolio Manager, TSA
Global Asset
Vice President Management, 700 South Flower St., Los Angeles,
CA 90017

Deborah F. Kuenstner Prior to March, 1997, Senior Portfolio Manager,
DuPont Pension
Managing Director Fund Investment, 1 Right Parkway, Wilmington,
DE 19850

Thomas J. Kurey Prior to August, 1997, Vice President, Evergreen
Securities,
Vice President 77 W. Wacker, Chicago, IL 60601

Kenneth W. Lang Prior to April, 1997, Vice President, Montgomery
Securities,
Vice President 600 Montgomery St., San Francisco, CA 94111

Coleman N. Lannum, III Prior to June, 1997, Director-Investor Relations,
Mallinckrodt,
Senior Vice President Inc., 7733 Forsyth Blvd., St. Louis, MO 63105

Leonard LaPorta, Jr. Prior to March, 1998, Assistant Vice President,
State Street
Vice President Global Advisors, Two International Place,
Boston, MA 02110

Lawrence J. Lasser Director, Marsh & McLennan Companies, Inc., 1221
Avenue of the
President, Director Americas, New York, NY 10020; Board Member, Artery
Business
and Chief Executive Committee, One Beacon Street, Boston, MA
02108; Board of Managers, Investment and Finance
Committees, Beth Israel Hospital, 330 Brookline
Avenue, Boston, MA 02215; Board of Governors,
Executive Committee, Investment Company Institute,
1401 H. St., N.W., Suite 1200, Washington, DC
20005; Board of Overseers, Museum of Fine Arts, 465
Huntington Ave., Boston, MA 02115; Board Member,
Trust for City Hall Plaza, Three Center Plaza,
Boston, MA 02108; Board Member, The Vault
Coordinating Committee, c/o John Hancock Mutual
Life Insurance Company, Law Sector, T-55, P.O. Box
111, Boston, MA 02117

Joan M. Leary Prior to January, 1997, Senior Tax Manager, KMPG, 99
High
Vice President High St., Boston, MA 02110

Christine Leonardo Prior to January, 1998, Employment Manager, Lotus
Development
Vice President Corp., 55 Cambridge Parkway, Canton, MA 02021

Craig s. Lewis Prior to January, 1998, Analyst, Keystone
Investments, 200
Vice President Berkeley Street, Boston, MA 02101

Geirulv Lode Prior to July, 1997, Vice President, Chancellor Lgt.
Asset
Vice President Management, 1166 Avenue of the Americas, New
York, NY 10036

Elizabeth M. MacElwee Prior to January, 1998, Principal, Morgan Stanley,
1585
Senior Vice President Broadway, New York, NY 10036

Diana R. Madonna Prior to January, 1997, Librarian, Lipper Analytical
Services,
Assistant Vice President Inc., 1380 Lawrence St., Denver CO 80204

Saba Malak Prior to October, 1997, Consultant, The Boston
Consultant,
Vice President Exchange Place, Boston, MA 02109

Bruce D. Martin Prior to April, 1997, Vice President, Eaton Vance, 29
Vice President Boston, MA 02110

Kevin Maloney Trustee, Town of Hanover, NH Trust Funds, Hanover, NH
03755;
Managing Director President and Board Member, Hampshire
Cooperative Nursery School, Dartmouth College
Highway, Hanover, NH 03755

Scott M. Maxwell Prior to March, 1997, Chief Financial Officer-Equity
Division,
Managing Director Lehman Brothers, 3 World Financial Center, New
York, NY 10285

Bridget McCavoy Prior to October, 1997, Senior Recruiter,
BankBoston,
Assistant Vice President 100 Federal St., Boston, MA 02110; Prior to
October, 1996, Executive Recruiter, HI Hunt & Co.,
99 Summer St., Boston, MA 02110

Mary G. McNamee Prior to December, 1996, Recruitment Consultant, 171
Walnut
Assistant Vice President Boston, MA 02110

Paul K. Michaud Prior to December, 1997, Assistant Vice President,
Union Bank
Vice President of Switzerland, Bahnhofstrasse 45, 8021
Zurich, Switzerland

Carol H. Miller Board Member, The Lyric Stage Theater, 140 Clarendon
St.,
Assistant Vice President Boston, MA 02116

Christopher G. Miller Prior to January, 1998, Portfolio Manager, Analytic
TSA
Vice President Global Asset Management, 700 So. Flower St.,
Los Angeles, CA 90017

William H. Miller Prior to October, 1997, Vice President and Asset
Portfolio
Senior Vice President Manager, Delaware Management, One Commerce
Square, Philadelphia, PA; Prior to January, 1995,
Vice President and Analyst, Janney, Montgomery,
Scott, 1801 Market St., Philadelphia, PA 19104

Jeanne L. Mockard Trustee, The Bryn Mawr School, 109, W. Melorose
Avenue,
Senior Vice President Baltimore, MD 21210

Gerard I. Moore Prior to August, 1997, Vice President/Equity
Research,
Vice President Boston Company Asset Management, One Boston,
Place, Boston, MA 02109

Kelly A. Morgan Prior to September, 1996, Senior Vice President and
Senior Vice President International Portfolio Manager, Alliance
Capital Management, 1345 Avenue of the Americas,
New York, NY 10020

David D. Motill Prior to April, 1996, Independent Consultant, 417
Valley
Vice President Wayne, PA 19087; Prior to July, 1995, Senior
Investment Analyst, SEI Investments, One Freedom
Valley Drive, Oaks, PA 19456

Ellen E. Natale Prior to November, 1996, Human Resources Recruiter,
Assistant Vice President Strategic Outsourcing, 175 Federal St.,
Boston, MA 02110

Gayle M. O'Connell Prior to March, 1997, Assistant Director of Human
Resources,
Assistant Vice President ITT Sheraton Corporation, 60 State St.,
Boston, MA 02109

Stephen S. Oler Prior to June, 1997, Vice President, Templeton
Investment
Senior Vice President Counsel, 500 E. Broward Blvd., Ft. Lauderdale,
FL 33394; Prior to February, 1996, Senior Vice
President, Baring Asset Management, 125 High St.,
Boston, MA 02110

Kimberly A.M. Page Prior to February, 1998, Senior Consulting,
Andersen
Assistant Vice President Consulting, 100 Williams St., Wellesley, MA
02181

Margery C. Parker Prior to December, 1997, Vice President and
Portfolio Manager,
Senior Vice President Keystone Investments 200 Berkeley Street,
Boston, MA 02101

Carmel Peters Prior to April, 1997, Managing Director/Chief
Investment
Senior Vice President Asia Pacific, Wheelock NatWest Investment
Management, Ltd, NatWest Tower, Times Square,
Causeway Bay, Hong Kong, China

William Perry Prior to September, 1997, Senior Trader, Fidelity
Management &
Senior Vice President Research, 82 Devonshire St., Boston, MA 02110

Keith Plapinger Vice Chairman and Trustee, Advent School, 17 Brimmer
St.,
Vice President Boston, MA 02108

Charles E. Porter Director, The Boston Fulbright Committee, 99 Garden
St.,
Executive Vice President Cambridge, MA; Trustee, Anatolia College and
The American College of Thessaloniki, 555 10 Pycea,
Thessaloniki, Greece

George Putnam Chairman and Director, Putnam Mutual Funds Corp.;
Chairman and Director Director, The Boston Company, Inc., One Boston
Place, Boston, MA 02108; Director, Boston Safe
Deposit and Trust Company, One Boston Place,
Boston, MA 02108; Director, Freeport-McMoRan, Inc.,
200 Park Avenue, New York, NY 10166; Director,
General Mills, Inc., 9200 Wayzata Boulevard,
Minneapolis, MN 55440; Director, Houghton Mifflin
Company, One Beacon Street, Boston, MA 02108;
Director, Marsh & McLennan Companies, Inc., 1221
Avenue of the Americas, New York, NY 10020;
Director, Rockefeller Group, Inc., 1230 Avenue of
the Americas, New York, NY 10020

Robert A. Piepenburg Prior to December, 1997, Assistant Vice President,
BankBoston
Vice President Corp./Boston Security, 100 Federal St.,
Boston, MA 02106

Elizabeth Price Prior to January, 1998, Investment Analyst,
Schroder Investment
Assistant Vice President Management Limited, 33 Gutter Lane, London,
EC2V 8AS, England

Edward Qian Prior to February, 1998, Back Bay Advisors, 399
Boylston St.,
Vice President Boston, MA 02116; Prior to September, 1996,
Post-Doctorate Research, Massachusetts Institute of
Technology, 77 Massachusetts Avenue, Cambridge, MA
02109

Keith Quinton Director, Eleazar, Inc., West Wheelock St., Hanover,
NH 03755
Senior Vice President

Marc J. Ritenhouse Prior to January, 1998, Director of Finance,
Fidelity
Vice President Investments, Inc. 82 Devonshire St., Boston,
MA 02109

Paul A. Rokosz Prior to November,
1996, Analyst,
Kemper Financial
Services,
Vice President 120 S. Casalle St., Chicago, IL 60606

Olivier Rudigoz Prior to April, 1998, Portfolio Manager, Paribas
Asset
Vice President Management, #3 Rue D'Antin, Paris, France,
75002

Michael V. Salm Prior to November, 1997, Mortgage Analyst, Blackrock
Financial
Vice President 345 Park Ave., New York, NY 10010; Prior to
May, 1996, Trader, Nomura Securities, 2 World
Financial Center, New York, NY 10048

Robert J. Schoen Prior to June, 1997, Sole Proprietor, Schoen Timing
Strategies,
Assistant Vice President 315 E. 21st St., New York, NY 10010

Justin M. Scott Director, DSI Properties (Neja) Ltd., Epping Rd.,
Reydon,
Managing Director Reydon, Essex CM19 5RD; Director, DSI
Management (Neja) Ltd., Epping Rd., Reydon, Essex
CM19 5RD

Max S. Senter General Partner, M.S. Senter & Sons Partnership, 4900
Senior Vice President Fayetteville, Rd., Raleigh, NC 27611

Mitchell D. Schultz Prior to September, 1996, Vice President, Human
Resources
Managing Director The Walt Disney Co., 500 South Buena Vista
St., Burbank, CA 91510

Edward Shadek, Jr. Prior to March, 1997, Portfolio Manager, Newhold
Asset
Vice President Management, 950 Haverford Rd., Bryn Mawr, PA
19010

Raj Ken Sharma Prior to January, 1998, Vice President and
Portfolio Manager,
Vice President Fleet Financial, 75 State Street, Boston, MA
02106

Saied Simozar Prior to March, 1998, Manager, Portfolio Analytics,
Dupont
Senior Vice President Pension Fund Investment, Wilmington, DE 19801

Gordon H. Silver Trustee, Wang Center for the Performing Arts, 270
Tremont St.,
Managing Director Boston, MA 02116

Steven Spiegel Director, Ultra Corp., 29 East Madison St., Chicago,
IL 60602;
Senior Managing Director Trustee, Babson College, One College Drive,
Wellesley, MA 02157

Christopher A. Spurlock Prior to May, 1997, Sales Trader, J.P. Morgan, 60
Wall St.,
Vice President New York, NY

Michael P. Stack Prior to November, 1997, Senior Vice President and
Portfolio
Senior Vice President Manager, Independence Investment Associates,
53 State St., Boston, MA 02109

Casey Strumpf Prior to January, 1997, Director, Blue Cross and Blue
Shield,
Senior Vice President 100 Summer St., Boston, MA 02110

Maryann Sullivan Prior to August,
1996, Unit
Manager, First
Data Services,
Assistant Vice President 4400 Computer Dr., Westboro, MA 01581

Robert E. Sweeney Prior to February, 1998, Vice President, Corporate
Research
Vice President Smith Barney, One New York Plaza, New York, NY
10004

Judith H. Swirbalus Prior to January, 1998, Alex, Brown & Sons, One
South St.,
Vice President Baltimore, MD 21202

Robert J. Toner Prior to September, 1998, Associate, Goodwin Procter
& Hoar,
Assistant Vice President LLP, Exchange Place, Boston, MA 02109

John R. Tonkin Prior to January, 1998, Analyst, Credit Suisse First
Boston
Assistant Vice President Celtic Towers, The Terrace, Wellington, New Zealand

Wendy S. Trowbridge Prior to June, 1996, Senior HRIS Analyst, New England
Medical
Assistant Vice President Center, 750 Washington, St., Boston, 02110

Heidi A. Tuchen Prior to December 1996, Vice President and Credit
Officer,
Assistant Vice President Fleet Financial Group, 75 State St., Boston,
MA 02109

Scott G. Vierra Prior to September, 1997, Staffing Lead, Cisco
Systems, 250
Vice President 250 Apollo Drive, Chelmsford, MA 01824

David L. Waldman Prior to June, 1997, Senior Portfolio Manager, Lazard
Feres
Managing Director Asset Management, 30 Rockefeller Center, New
York, NY 10112

Paul C. Warren Prior to May, 1997, Director, IDS Fund Management,
LT,
Senior Vice President One Pacific Place, Squuensway, Hong Kong,
China

Eric Wetlaufer Prior to November, 1997, Managing Director and
Portfolio
Managing Director Manager, Cadence Capital Management, Exchange
Place, Boston, MA 02109

Burton Wilson Prior to March, 1997, Associate Investments-Banking,
Vice President Robertson Stephens & Co., 555 California St.,
Suite 2600, San Francisco, CA 94104

Michael R. Yogg Prior to November, 1996, Portfolio Manager, State
Street
Senior Vice President Research & Management, One Financial Center,
Boston, MA 02111

Scott D. Zaleski Prior to May, 1997, Investment Officer, State Street
Bank &
Assistant Vice President Trust, 1776 Heritage Dr., Quincy, MA 02171;
Prior to September, 1996, Investment Associate
Fidelity Investments, 82 Devonshire St., Boston, MA
02109

Michael P. Zeller Prior to July, 1997, Sales Manager, NYNEX Information
Vice President Resources, 35 Village Rd., Middleton, MA 01949

William E. Zieff Prior to December, 1996, Global Asset Allocation,
Grantham,
Managing Director Mayo, Van Otterloo & Co., 40 Rowes Wharf,
Boston, MA 02110

Item 29. Principal Underwriter

(a) Putnam Mutual Funds Corp. is the principal underwriter for each of the
following investment companies, including the Registrant:

Putnam American Government Income Fund, Putnam Arizona Tax Exempt Income Fund,
Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds, Putnam Balanced
Retirement Fund, Putnam California Tax Exempt Income Fund, Putnam California Tax
Exempt Money Market Fund, Putnam Capital Appreciation Fund, Putnam Convertible
Income-Growth Trust, Putnam Diversified Equity Trust, Putnam Diversified Income
Trust, Putnam Diversified Income Trust II, Putnam Equity Income Fund, Putnam
Europe Growth Fund, Putnam Federal Income Trust, Putnam Florida Tax Exempt
Income Fund, Putnam Funds Trust, The George Putnam Fund of Boston, Putnam Global
Governmental Income Trust, Putnam Global Growth Fund, Putnam Global Natural
Resources Fund, The Putnam Fund for Growth and Income, Putnam Growth and Income
Fund II, Putnam Health Sciences Trust, Putnam High Yield Trust, Putnam High
Yield Advantage Fund, Putnam High Yield Municipal Trust, Putnam Income Fund,
Putnam Intermediate U.S. Government Income Fund, Putnam Investment Funds, Putnam
Investors Fund, Putnam Massachusetts Tax Exempt Income Fund, Putnam Michigan Tax
Exempt Income Fund, Putnam Minnesota Tax Exempt Income Fund, Putnam Money Market
Fund, Putnam Municipal Income Fund, Putnam New Jersey Tax Exempt Income Fund,
Putnam New Opportunities Fund, Putnam New York Tax Exempt Income Fund, Putnam
New York Tax Exempt Money Market Fund, Putnam New York Tax Exempt Opportunities
Fund, Putnam Ohio Tax Exempt Income Fund, Putnam OTC & Emerging Growth Fund,
Putnam Pennsylvania Tax Exempt Income Fund, Putnam Preferred Income Fund, Putnam
Tax Exempt Income Fund, Putnam Tax Exempt Money Market Fund, Putnam Tax-Free
Income Trust, Putnam U.S. Government Income Trust, Putnam Utilities Growth and
Income Fund, Putnam Variable Trust, Putnam Vista Fund, Putnam Voyager Fund,
Putnam Voyager Fund II.

(b) The directors and officers of the Registrant's principal underwriter are
listed below. The principal business address of each person is One Post Office
Square, Boston, MA 02109:

Name Positions and Offices with Positions and
Underwriter Offices with
Registrant
Aaron,Jeff F. Asst. Vice President None
Adduci,John V. Vice President None
Albanese,Frank Vice President None
Alberts,Richard W. Asst. Vice President None
Alden,Donald F. Vice President None
Alders,Christopher A. Senior Vice President None
Alpaugh,Christopher S. Vice President None
Amisano,Paulette C. Vice President None
Andrews,Margaret Vice President None
Antill,Jeanne Vice President None
Arends,Michael K. Senior Vice President None
Asher,Steven E. Senior Vice President None
Avery,Scott A. Senior Vice President None
Aymond,Christian E. Senior Vice President None
Aymond,Colin C. Vice President None
Battit,Suzanne J Vice President None
Beatty,Steven M. Senior Vice President None
Bent,John J. Vice President None
Beringer,Thomas A. Vice President None
Berka,Sharon A. Senior Vice President None
Boneparth,John F. Managing Director None
Bonfilio Jr.,Peter J. Asst. Vice President None
Bouchard,Keith R. Senior Vice President None
Bradford Jr.,Linwood E. Senior Vice President None
Brady,Linda M. Asst. Vice President None
Bray,Jeffrey M. Vice President None
Brennan,Mary Ann Asst. Vice President None
Bresnahan,Leslee R. Senior Vice President None
Brockelman,James D. Senior Vice President None
Brookman,Joel S. Vice President None
Brown,Timothy K. Senior Vice President None
Buckner,Gail D. Senior Vice President None
Burke,Robert W. Sr Managing Director None
Cabana,Susan D. Vice President None
Callahan,Thomas C. Asst. Vice President None
Capone,Robert G. Senior Vice President None
Cartwright,Patricia A. Asst. Vice President None
Casale-Sweeney,Janet Senior Vice President None
Casey,David M. Vice President None
Castle Jr.,James R. Vice President None
Chase,Mary Claire Vice President None
Chrostowski,Louis F. Senior Vice President None
Church,Daniel J. Vice President None
Clark,Richard B. Senior Vice President None
Clermont,Mary Asst. Vice President None
Clinton,John C. Asst. Vice President None
Collman,Kathleen M. Sr Managing Director None
Commane,Karen L. Asst. Vice President None
Coneeny,Mark L. Senior Vice President None
Connelly,Clare D. Vice President None
Connelly,Donald A. Senior Vice President None
Connolly,Karen E. Asst. Vice President None
Conyers,Barry M. Vice President None
Corbett,Dennis Vice President None
Corvinus,F. Nicholas Senior Vice President None
Cosmer,Thomas A. Senior Vice President None
Cristo,Chad H. Vice President None
Cropper,Joy Bacher Asst. Vice President None
Crowley,Colleen J. Asst. Vice President None
Curran,Peter J. Senior Vice President None
Dahill,Jessica E. Vice President None
Daly,Kenneth L. Managing Director None
Dane,Edward H. Senior Vice President None
Daylor,Donna M. Vice President None
Days,Nancy M. Asst. Vice President None
De Oliveira-Smith,Pamela Asst. Vice President None
Deluse,Laura R. Asst. Vice President None
DeMont,Lisa M. Vice President None
Dennehy,Teresa F. Vice President None
DiRe,Lisa M. Asst. Vice President None
DiStasio,Karen E. Vice President None
Dolan,Michael G. Vice President None
Donaldson,Scott M. Vice President None
Duffy,Deirdre E. Senior Vice President None
Durbin,Emily J. Vice President None
Edlin,David B. Managing Director None
Eisenkraft,Gail A. Managing Director None
English,James M. Senior Vice President None
Esposito,Vincent Managing Director None
Fechter,Michael J. Vice President None
Feldman,Susan H. Senior Vice President None
Fisher,C. Nancy Managing Director None
Fishman,Mitchell B. Senior Vice President None
Fiumara,Joseph C. Vice President None
Flaherty,Patricia C. Senior Vice President None
Fleisher,Kate Vice President None
Ford,William D. Asst. Vice President None
Fullerton,Brian J. Senior Vice President None
Gates,Judy S. Senior Vice President None
Gennaco,Joseph P. Senior Vice President None
Gindel,Caroline E. Asst. Vice President None
Goodfellow,Mark D. Vice President None
Goodman,Robert Managing Director None
Gould,Carol J. Asst. Vice President None
Grace,Anthony J. Asst. Vice President None
Grace,Linda K. Vice President None
Grossberg,Jill Asst. Vice President None
Grove,Denise Vice President None
Guay,Timothy R. Asst. Vice President None
Gubala,Jeffrey P. Vice President None
Guerin,Donnalee Asst. Vice President None
Guerra,Salvatore F. Vice President None
Hall,Debra L. Vice President None
Halloran,James E. Vice President None
Halloran,Thomas W. Senior Vice President None
Harbeck,John D. Vice President None
Harrington,Bruce D. Vice President None
Hartigan,Craig W. Vice President None
Hartley,Deborah M. Asst. Vice President None
Hawkins III,Howard W. Vice President None
Hayes-Castro,Deanna R. Vice President None
Hearns,Dennis P. Senior Vice President None
Hedstrom,Gayle A. Asst. Vice President None
Heffernan,Paul P. Senior Vice President None
Heimanson,Susan M. Senior Vice President None
Hochstein,Bess J.M. Senior Vice President None
Holly Sr.,Jeremiah K. Vice President None
Holmes,Maureen A. Asst. Vice President None
Hooley,Daniel F Jr. Asst. Vice President None
Hoyt,Paula J. Asst. Vice President None
Hurley,William J. Managing Director & CFO None
Isgur,Marianne P. Asst. Vice President None
Jacobsen,Dwight D. Managing Director None
Jennings,Susan M. Asst. Vice President None
Jordan,Stephen R. Asst. Vice President None
Kapinos,Peter J. Vice President None
Kay,Karen R. Senior Vice President None
Kelley,Brian J. Vice President None
Kelly,A.Siobhan Asst. Vice President None
Kennedy,Alicia C. Asst. Vice President None
Kennedy,Charlotte B. Senior Vice President None
King,David R. Vice President None
Kinsman,Anne Senior Vice President None
Kirk,Deborah H. Senior Vice President None
Koontz,Jill A. Senior Vice President None
Kreutzberg,Howard H. Senior Vice President None
Krieger,Marjorie B. Vice President None
Lacascia,Charles Vice President None
Lane,Linda Asst. Vice President None
LaPierre,Christopher W Asst. Vice President None
Lathrop,James D. Senior Vice President None
Lawlor,Stephanie T. Asst. Vice President None
Leary,Joan M. Vice President None
Ledbetter,Charles C. Vice President None
Leipsitz,Margaret Asst. Vice President None
Lemire,Kevin Vice President None
Leonardo,Christine A. Vice President None
Levy,Eric S. Senior Vice President None
Lewandowski Jr.,Edward V. Vice President None
Lewandowski,Edward V. Senior Vice President None
Li,Mei Asst. Vice President None
Lieberman,Samuel L. Vice President None
Lifsitz,David M. Vice President None
Lilien,David R. Vice President None
Linehan,Ann-Marie Asst. Vice President None
Litant,Lisa M. Asst. Vice President None
Lockwood,Maura A. Senior Vice President None
Lomba,Rufino R. Senior Vice President None
Long,Gregory T. Vice President None
Lucey,Kevin J Vice President None
Lucey,Robert F. Director None
Lyons,Robert F. Asst. Vice President None
Malatos,Ann Vice President None
Mallin,Bonnie J. Senior Vice President None
Mancini,Dana Asst. Vice President None
Manthorne,Heather M. Asst. Vice President None
Maravel,Alexi A. Asst. Vice President None
Marius,Frederick S. Vice President None
McAvoy,Bridget Asst. Vice President None
McCafferty,Karen A. Vice President None
McCarthy,Anne B. Asst. Vice President None
McConville,Paul D. Senior Vice President None
McCracken,Brian Asst. Vice President None
McCutcheon,Bruce A Senior Vice President None
McDermott,Daniel E. Asst. Vice President None
McKenna,Mark J. Senior Vice President None
McNamara,Laura Vice President None
McNamee,Mary G. Asst. Vice President None
Metelmann,Claye A. Vice President None
Milgroom,Eric D. Asst. Vice President None
Miller,Bart D. Senior Vice President None
Miller,Janis E. Managing Director None
Miller,Jeffrey M. Managing Director None
Mills,Ronald K. Vice President None
Minsk,Judith Asst. Vice President None
Mintzer,Matthew P. Senior Vice President None
Monahan,Kimberly A. Vice President None
Moody,Paul R. Vice President None
Moret,Mitchell L. Senior Vice President None
Mosher,Barry L. Asst. Vice President None
Mullen,Donald E. Senior Vice President None
Murphy,Paul G. Vice President None
Murray,Brendan R. Vice President None
Nadherny,Robert Senior Vice President None
Natale,Ellen E. Asst. Vice President None
Neary,Ellen R. Vice President None
Nelson,Alexander L. Managing Director None
Newell,Amy Jane Vice President None
Nickodemus,John P. Senior Vice President None
Nickse,Gail A. Asst. Vice President None
O'Brien,Lois C. Vice President None
O'Brien,Nancy E. Vice President None
O'Connell,Gayle M. Asst. Vice President None
Onofrio,Ellen Asst. Vice President None
Page,Kimberly A.M. Asst. Vice President None
Palmer,Patrick J. Vice President None
Palombo,Joseph R. Managing Director None
Papes,Scott A. Vice President None
Parr,Cynthia O. Vice President None
Pelletier,Dale M. Vice President None
Peterson,Jennifer H. Asst. Vice President None
Peterson,Kate Vice President None
Phoenix,John G. Senior Vice President None
Phoenix,Joseph Senior Vice President None
Plapinger,Keith Senior Vice President None
Pollock,Jeffrey F. Vice President None
Potorski,Margaret J. Asst. Vice President None
Present,Howard B. Senior Vice President None
Pulkrabek,Scott M. Vice President None
Putnam,George Director Chairman and
President
Raynor,Kimberly Vice President None
Rezabek,Joseph L. Asst. Vice President None
Riley,Megan G. Asst. Vice President None
Ritenhouse,Marc J. Vice President None
Rodammer,Kris Vice President None
Rogers,Deborah A. Vice President None
Rothman,Debra V. Vice President None
Rowe,Robert B. Vice President None
Rowell,Kevin A. Senior Vice President None
Ruys de Perez,Charles A. Senior Vice President None
Ryan,Carolyn M. Asst. Vice President None
Ryan,Deborah A. Vice President None
Salm,Michael V. Vice President None
Saunders,Catherine A. Senior Vice President None
Saunders,Robbin L. Vice President None
Saur,Karl W. Vice President None
Scanlon,Michael M. Vice President None
Schaefer,Jennifer L. Asst. Vice President None
Schofield,Shannon D. Vice President None
Schroeder,Paul R. Asst. Vice President None
Schultz,Mitchell D. Managing Director None
Scordato,Christine A. Senior Vice President None
Scott,Joseph W. Asst. Vice President None
Segers,Elizabeth R. Senior Vice President None
Shamburg,John B. Vice President None
Sharpless,Kathy G. Managing Director None
Shea,Terence B. Asst. Vice President None
Shiebler,William N. President & Director Vice President
Silver,Gordon H. Sr Managing Director Vice President
Skistimas Jr,John J. Vice President None
Smith,Stuart C. Asst. Vice President None
Southard,Peter J. Vice President None
Spiegel,Steven Sr Managing Director None
Stack,Michael P. Senior Vice President None
Stanojev,Nicholas T. Senior Vice President None
Steinberg,Lauren B. Asst. Vice President None
Stern,Derek A. Asst. Vice President None
Stickney,Paul R. Senior Vice President None
Strumpf,Casey Senior Vice President None
Sullivan,Brian L. Senior Vice President None
Sullivan,Donna G Vice President None
Sullivan,Elaine M. Senior Vice President None
Sullivan,Guy Managing Director None
Sullivan,Kevin J. Senior Vice President None
Sullivan,Maryann Asst. Vice President None
Sullivan,Moira Vice President None
Sutherland,George C. Vice President None
Tanner,B Iris Vice President None
Tavares,April M. Asst. Vice President None
Taylor,David S. Vice President None
Telling,John R. Senior Vice President None
Tercha,Cynthia Vice President None
Thomas,Tracy A. Asst. Vice President None
Tibbetts,Richard B. Managing Director None
Tirado,Patrice M. Vice President None
Tosi,Janet E. Vice President None
Troped,Bonnie L. Senior Vice President None
Trowbridge,Wendy S. Asst. Vice President None
Twigg,Christine M. Asst. Vice President None
Vander Linde,Douglas J. Senior Vice President None
Verani,John R. Senior Vice President Vice President
Vierra,Scott G. Vice President None
Vora,Rajeshri Vice President None
Waters,Mitchell J. Vice President None
Waystack,Karen M. Asst. Vice President None
West-Smith,Deirdre Asst. Vice President None
Wetlaufer,Eric Managing Director None
Whalen,Brian Vice President None
Whalen,Edward F. Senior Vice President None
Whitaker,J. Greg Vice President None
White,J. Bennett Vice President None
Williams,Robert A. Vice President None
Williamson,Leigh T. Vice President None
Wolfson,Jane Senior Vice President None
Woloshin,Benjamin I. Senior Vice President None
Woolverton,William H. Managing Director None
Zeller,Michael P. Vice President None
Zografos,Laura J. Vice President None
Zukowski,Virginia A. Senior Vice President None

</TABLE>

Item 30. Location of Accounts and Records

Persons maintaining physical possession of accounts, books
and other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated thereunder
are Registrant's Clerk, Beverly Marcus; Registrant's investment
adviser, Putnam Investment Management, Inc.; Registrant's principal
underwriter, Putnam Mutual Funds Corp.; Registrant's custodian, Putnam
Fiduciary Trust Company ("PFTC"); and Registrant's transfer and
dividend disbursing agent, Putnam Investor Services, a division of
PFTC. The address of the Clerk, investment adviser, principal
underwriter, custodian and transfer and dividend disbursing agent is
One Post Office Square, Boston, Massachusetts 02109.

Item 31. Management Services

None.

Item 32. Undertakings

The Registrant undertakes to furnish to each person to whom
a prospectus of the Registrant is delivered a copy of the Registrant's
latest annual report to shareholders, upon request and without charge.

NOTICE

A copy of the Agreement and Declaration of Trust of Putnam
Variable Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and notice is hereby given that this
instrument is executed on behalf of the Registrant by an officer of
the Registrant as an officer and not individually and the obligations
of or arising out of this instrument are not binding upon any of the
Trustees, officers or shareholders individually but are binding only
upon the assets and property of the relevant series of the Registrant.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant duly caused
this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and The Commonwealth of Massachusetts, on the 20th day
of July, 1998.

PUTNAM VARIABLE TRUST

By: Gordon H. Silver, Vice President

Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement of Putnam Variable Trust
has been signed below by the following persons in the capacities and
on the dates indicated:

Signature Title

George Putnam President and Chairman of the Board;
Principal Executive Officer; Trustee

John D. Hughes Senior Vice President; Treasurer and
Principal Financial Officer

Paul G. Bucuvalas Assistant Treasurer and Principal
Accounting Officer

Jameson Adkins Baxter Trustee

Hans H. Estin Trustee

John A. Hill Trustee

Ronald J. Jackson Trustee

Paul L. Joskow Trustee

Elizabeth T. Kennan Trustee

Lawrence J. Lasser Trustee

John H. Mullin, III Trustee

Robert E. Patterson Trustee

Donald S. Perkins Trustee

William F. Pounds Trustee

George Putnam, III Trustee

A.J.C. Smith Trustee

W. Thomas Stephens Trustee

W. Nicholas Thorndike Trustee

By: Gordon H. Silver,
as Attorney-in-Fact
July 20, 1998

PUTNAM VARIABLE TRUST
(formerly Putnam Capital Manager Trust)
MANAGEMENT CONTRACT

Management Contract dated as of October 2, 1987, as supplemented
March 2, 1990, as further supplemented February 27, 1992, as
further supplemented July 9, 1993, as further supplemented April
5, 1994, as further supplemented June 2, 1994, as further
supplemented April 7, 1995, as further supplemented July 13,
1995, as further supplemented July 11, 1996, as further
supplemented December 20, 1996 as further supplemented February
6, 1998 and as further supplemented July __, 1998 between Putnam
Variable Trust (formerly Putnam Capital Manager Trust), a
Massachusetts business trust (the "Fund"), and PUTNAM INVESTMENT
MANAGEMENT, INC., a Massachusetts corporation (the "Manager").

WITNESSETH:

That in consideration of the mutual covenants herein contained,
it is agreed as follows:

1. SERVICES TO BE RENDERED BY MANAGER TO FUND.

(a) The Manager, at its expense, will furnish continuously an
investment program for the Fund, will determine what investments
shall be purchased, held, sold or exchanged by the Fund and what
portion, if any, of the assets of the Fund shall be held
uninvested and shall, on behalf of the Fund, make changes in the
Fund's investments. Subject always to the control of the
Trustees of the Fund and except for the functions carried out by
the officers and personnel referred to in Section 1(d), the
Manager will also manage, supervise and conduct the other affairs
and business of the Fund and matters incidental thereto. In the
performance of its duties, the Manager will comply with the
provisions of the Agreement and Declaration of Trust and By-Laws
of the Fund and its stated investment objectives, policies and
restrictions, and will use its best efforts to safeguard and
promote the welfare of the Fund and to comply with other policies
which the Trustees may from time to time determine and shall
exercise the same care and diligence expected of the Trustees.

(b) The Manager, at its expense, except as such expense is paid
by the Fund as provided in Section 1(d), will furnish (1) all
necessary investment and management facilities, including
salaries of personnel, required for it to execute its duties
faithfully; (2) suitable office space for the Fund; and (3)
administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct of
the affairs of the Fund, including determination of the Fund's
net asset value, but excluding shareholder accounting services.
Except as otherwise provided in Section 1(d), the Manager will
pay the compensation, if any, of the officers of the Fund.

(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for the Fund's account
with brokers or dealers selected by the Manager. In the
selection of such brokers or dealers and the placing of such
orders, the Manager shall use its best efforts to obtain for the
Fund the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described
below. In using its best efforts to obtain for the Fund the most
favorable price and execution available, the Manager, bearing in
mind the Fund's best interests at all times, shall consider all
factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker
or dealer in other transactions. Subject to such policies as the
Trustees of the Fund may determine, the Manager shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Manager an amount of
commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager
determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Manager's overall
responsibilities with respect to the Fund and to other clients of
the Manager as to which the Manager exercises investment
discretion. The Manager agrees that in connection with purchases
or sales of portfolio investments for the Fund's account, neither
the Manager nor any officer, director, employee or agent of the
Manager shall act as a principal or receive any commission other
than as provided in Section 3.

(d) The Fund will pay or reimburse the Manager for (i) the
compensation of the Vice Chairman of the Fund and of persons
assisting him in these offices, as determined from time to time
by the Trustees of the Fund, (ii) the compensation in whole or in
part of such other officers of the Fund and persons assisting
them as may be determined from time to time by the Trustees of
the Fund, and (iii) the cost of suitable office space, utilities,
support services and equipment of the Vice Chairman and persons
assisting him and, as determined from time to time by the
Trustees of the Fund, all or a part of such cost attributable to
the other officers and persons assisting them whose compensation
is paid in whole or in part by the Fund. The Fund will pay the
fees, if any, of the Trustees of the Fund.

(e) The Manager shall pay all expenses incurred in connection
with the organization of the Fund and the initial public offering
and sale of its shares of beneficial interest, provided that upon
the issuance and sale of such shares to the public pursuant to
the offering, and only in such event, the Fund shall become
liable for, and to the extent requested reimburse the Manager
for, registration fees payable to the Securities and Exchange
Commission and for an additional amount not exceeding $125,000 as
its agreed share of such expenses.

(f) The Manager shall not be obligated to pay any expenses of or
for the Fund not expressly assumed by the Manager pursuant to
this Section 1 other than as provided in Section 3.

2. OTHER AGREEMENTS, ETC.

It is understood that any of the shareholders, Trustees, officers
and employees of the Fund may be a shareholder, director, officer
or employee of, or be otherwise interested in, the Manager, and
in any person controlled by or under common control with the
Manager, and that the Manager and any person controlled by or
under common control with the Manager may have an interest in the
Fund. It is also understood that the Manager and any person
controlled by or under common control with the Manager have and
may have advisory, management, service or other contracts with
other organizations and persons, and may have other interests and
business.

3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.

The Fund will pay to the Manager as compensation for the
Manager's services rendered, for the facilities furnished and for
the expenses borne by the Manager pursuant to paragraphs (a),
(b), (c) and (e) of Section 1, a fee, computed and paid quarterly
at the following annual rates applicable to the average net asset
value of each Series of the Fund (a "Series") of:

Putnam VT International New Opportunities Fund:

(a) 1.20% of the first $500 million of average net
assets;
(b) 1.10% of the next $500 million;
(c) 1.05% of the next $500 million;
(d) 1.00% of the next $5 billion;
(e) 0.975% of the next $5 billion;
(f) 0.955% of the next $5 billion;
(g) 0.94% of the next $5 billion; and
(h) 0.93% of any excess thereafter.

Putnam VT Asia Pacific Growth Fund, Putnam VT International
Growth Fund and Putnam VT International Growth and Income Fund:

(a) 0.80% of the first $500 million of average net
assets;
(b) 0.70% of the next $500 million;
(c) 0.65% of the next $500 million;
(d) 0.60% of the next $5 billion;
(e) 0.575% of the next $5 billion;
(f) 0.555% of the next $5 billion;
(g) 0.54% of the next $5 billion; and
(h) 0.53% of any excess thereafter.

Putnam VT Diversified Income Fund, Putnam VT Global Asset
Allocation Fund, Putnam VT Health Sciences Fund, Putnam VT High
Yield Fund, Putnam VT New Opportunities Fund, Putnam VT New Value
Fund, Putnam VT Utilities Growth and Income Fund, Putnam VT
Voyager Fund and Putnam VT OTC Emerging Growth Fund:

(a) 0.70% of the first $500 million of average net
assets;
(b) 0.60% of the next $500 million;
(c) 0.55% of the next $500 million;
(d) 0.50% of the next $5 billion;
(e) 0.475% of the next $5 billion;
(f) 0.455% of the next $5 billion;
(g) 0.44% of the next $5 billion; and
(h) 0.43% of any excess thereafter.

Putnam VT Growth and Income Fund, Putnam VT U.S. Government and
High Quality Bond Fund, Putnam VT Vista Fund, Putnam VT Investors
Fund, Putnam VT The George Putnam Fund of Boston and Putnam VT
Research Fund:

(a) 0.65% of the first $500 million of average net
assets;
(b) 0.55% of the next $500 million;
(c) 0.50% of the next $500 million;
(d) 0.45% of the next $5 billion;
(e) 0.425% of the next $5 billion;
(f) 0.405% of the next $5 billion;
(g) 0.39% of the next $5 billion; and
(h) 0.38% of any excess thereafter.

Putnam VT Money Market Fund:

(a) 0.45% of the first $500 million of average net
assets;
(b) 0.35% of the next $500 million;
(c) 0.30% of the next $500 million;
(d) 0.25% of the next $5 billion;
(e) 0.225% of the next $5 billion;
(f) 0.205% of the next $5 billion;
(g) 0.19% of the next $5 billion; and
(h) 0.18% of any excess thereafter.

Putnam VT Global Growth Fund: 0.60% of average net assets.
Such fees computed
with respect to the net asset value of each
Series shall be paid from the assets of such Series. Such
average net asset value of each Series of the Fund shall be
determined by taking an average of all of the determinations of
such net asset value during such quarter at the close of business
on each business day during such quarter while this Contract is
in effect. Such fee shall be payable for each month within 30
days after the end of such quarter.

The fees payable by the Fund to the Manager pursuant to this
Section 3 with respect to any Series of the Fund shall be reduced
by any commissions, fees, brokerage or similar payments received
by the Manager or any affiliated person of the Manager in
connection with the purchase and sale of portfolio investments of
such Series, less any direct expenses approved by the Trustees
incurred by the Manager or any affiliated person of the Manager
in connection with obtaining such payments.

In the event that expenses of any Series of the Fund for any
fiscal year should exceed the expense limitation on investment
company expenses imposed by any statute or regulatory authority
of any jurisdiction in which shares of that Series are qualified
for offer or sale, the compensation due the Manager for such
fiscal year shall be reduced by the amount of such excess by a
reduction or refund thereof. In the event that the expenses of
any Series of the Fund exceed any expense limitation which the
Manager may, by written notice to the Fund, voluntarily declare
to be effective subject to such terms and conditions as the
Manager may prescribe in such notice, the compensation due the
Manager shall be reduced, and, if necessary, the Manager shall
assume expenses of the Series to the extent required by the terms
and conditions of such expense limitation.

If the Manager shall serve for less than the whole of a month,
the foregoing compensation shall be prorated.

4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.

This Contract shall automatically terminate, without the payment
of any penalty, in the event of its assignment; and this Contract
shall not be amended as to any Series of the Fund unless such
amendment be approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the Series, and by the
vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trustees of the
Fund who are not interested persons of the Fund or of the
Manager.

5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.

This Contract shall become effective upon its execution, and
shall remain in full force and effect as to each Series
continuously thereafter (unless terminated automatically as set
forth in Section 4) until terminated as follows:

(a) Either party hereto may at any time terminate this Contract
as to any Series or as to the Fund by not more than sixty days'
nor less than thirty days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party, or

(b) If (i) the Trustees of the Fund or the shareholders by the
affirmative vote of a majority of the outstanding shares of the
Series, and (ii) a majority of the Trustees of the Fund who are
not interested persons of the Fund or of the Manager, by vote
cast in person at a meeting called for the purpose of voting on
such approval, do not specifically approve at least annually the
continuance of this Contract, then this Contract shall
automatically terminate as to such Series at the close of
business on:

January 31, 1989 in the case of Putnam VT Global Growth Fund,
and the second anniversary of its execution with respect to
any other Series,

or the expiration of one year from the effective date of the last
such continuance, whichever is later; provided, however, that if
the continuance of this Contract is submitted to the shareholders
of a Series for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the
Manager may continue to serve hereunder in a manner consistent
with the Investment Company Act of 1940 and the Rules and
Regulations thereunder.

Action by the Fund under (a) above may be taken either (i) by
vote of a majority of its Trustees, or (ii) by the affirmative
vote of a majority of the outstanding shares of one or more
Series affected.

Termination of this Contract pursuant to this Section 5 will be
without the payment of any penalty.

6. CERTAIN DEFINITIONS.

For the purposes of this Contract, the "affirmative vote of a
majority of the outstanding shares" means the affirmative vote,
at a duly called and held meeting of shareholders, (a) of the
holders of 67% or more of the shares of the Fund or the Series,
as the case may be, present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Fund or the Series, as the case may be,
entitled to vote at such meeting are present in person or by
proxy, or (b) of the holders of more than 50% of the outstanding
shares of the Fund, or the Series, as the case may be, entitled
to vote at such meeting, whichever is less.

For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their
respective meanings defined in the Investment Company Act of 1940
and the Rules and Regulations thereunder, subject, however, to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act; the term "specifically approve at
least annually" shall be construed in a manner consistent with
the Investment Company Act of 1940 and the Rules and Regulations
thereunder; and the term "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and
the Rules and Regulations thereunder.

7. NON-LIABILITY OF MANAGER.

In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of
its obligations and duties hereunder, the Manager shall not be
subject to any liability to the Fund or to any shareholder of the
Fund, for any act or omission in the course of, or connected
with, rendering services hereunder.

8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.

A copy of the Agreement and Declaration of Trust of the Fund is
on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and
not individually and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Fund.

IN WITNESS WHEREOF, PUTNAM VARIABLE TRUST and PUTNAM INVESTMENT
MANAGEMENT, INC. have each caused this instrument to be signed in
duplicate in its behalf by its President or a Vice President
thereunto duly authorized, all as of the day and year first above
written.

PUTNAM VARIABLE TRUST

By: _______________________________
Charles E. Porter
Executive Vice President

PUTNAM INVESTMENT MANAGEMENT, INC.

By: _______________________________
Gordon H. Silver
Senior Managing Director