Vote-By-Phone Solicitation Script for
PCM U.S. Government and High Quality Bond Fund
This script provides information to contract/policy holders and
solicits their voting instructions by phone, to be confirmed by
written confirmation.
Good Morning/Afternoon/Evening. May I please speak with (name of
holder)? I am representing ITT Hartford Life Insurance Companies
in Hartford and Putnam Investments in Boston. Do you have a
moment? Is this a good time to talk?
To verify that I am speaking with the [contract/policy] holder of
record, may I confirm that you are (name of holder of record) and
that your address of record is (address of record)?
(If the person is unwilling to confirm this information, thank
them for their time and terminate the call.)
We recently mailed you a proxy statement and voting instruction
card regarding PCM U.S. Government and High Quality Bond Fund
shareholder meeting. As of today, we have not received your
voting instructions. Did you receive your proxy material? (If
yes, proceed as follows.) Do you have any questions?
(If there are questions regarding the management fee proposal,
please refer to the Q & A attached.)
To allow the holder to participate in voting, we have set up a
procedure to provide voting instructions to the ITT Hartford Life
Insurance Companies by telephone. Would you like to provide
voting instructions by phone?
(If not, tell the holder they can still use the voting
instruction card that has recently been mailed to them. Thank
them for their time and terminate the call.)
(If they want to provide voting instructions by telephone.) The
procedures for obtaining your voting instructions by telephone
are described in the proxy statement.
I will now read the information on the voting instruction card so
that you can provide us with your voting instructions.
ITT Hartford Life Insurance Companies
Voting instructions for the meeting of shareholders, July 13,
1995, of the PCM U.S. Government and High Quality Bond Fund (the
"fund") of Putnam Capital Manager Trust.
This instruction is solicited by ITT Hartford Life Insurance
Companies ("Hartford") from owners of variable contracts and/or
variable life insurance policies issued by Hartford who have
specified that a portion of their investment be allocated to the
fund.
The [contract/policy] holder hereby instructs that the votes
attributable to the undersigned's interest with respect to the
fund be cast, as directed hereafter, at the meeting of
shareholders of the PCM U.S. Government and High Quality Bond
Fund of Putnam Capital Manager Trust on July 13, 1995, at 2:00
p.m., Boston time, and at any adjournments thereof.
The interests to which this instruction relates when properly
authorized will be voted by Hartford in the manner directed
herein by the holder. Interests for which no instructions are
received will be voted in the same ratio as votes for which
instructions have been received by Hartford. By providing
instructions hereafter, the holder does hereby authorize Hartford
and its affiliates and employees to exercise their discretion in
voting upon such other business as may properly come before the
meeting.
1. APPROVE A NEW MANAGEMENT CONTRACT INCREASING THE FEES
PAYABLE TO PUTNAM INVESTMENT MANAGEMENT, INC.
How would you like Hartford to vote on this proposal?
For, Against or Abstain?
Thank you. Do you wish to send the message?
To repeat your instructions:
You voted:
On proposal 1:
Thank you. We will be sending you a written confirmation of your
voting instruction. Please call us if the information on the
confirmation is incorrect.
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Q & A FOR PCM U.S. GOVERNMENT AND HIGH QUALITY BOND FUND
On approximately May 4, 1995, a proxy statement was sent to
contract and policy holders of PCM U.S. Government and High
Quality Bond Fund subaccounts. Listed below are answers to the
questions and concerns contract and policy holders are likely to
have regarding the proposal regarding a new management contract
for this fund, followed by answers and information regarding each
issue.
WHAT IS THE PROPOSED ANNUAL INCREASE OF MANAGEMENT FEES?
Based upon net assets of the fund as of December 31, 1994 of
$640,457,595, the effective annual management fee rate under
the proposed fee schedule would be 0.63% as compared to
0.60% under the existing schedule. This represents an
increase of $0.03 in annual expenses for each $100 invested
in the fund. This is the first management fee increase for
the fund since its inception in 1988. The new management
fee schedule, unlike the old, provides for lower management
fee rates as the fund's assets increase and will result in a
fee decrease if the fund's assets exceed $1 billion..
For its fiscal year ended December 31, 1994, the fund paid
management fees to Putnam Management of $4,062,088. If the
proposed new management contract had been in effect for the
year, the fund would have paid fees of $4,223,581, or 3.98%
greater.
IS THIS AN ISOLATED FEE INCREASE OR IS PUTNAM RAISING FEES ON ALL
OR MANY OF THEIR FUNDS?
The proposed higher fees for your fund are the result of a
comprehensive review by the Trustees of the management fees
for all Putnam funds. Based upon this review, over the past
several years, new management contracts have been
implemented for most Putnam Funds. These new contracts
provided for fee increases for some funds and for decreases
for others. Overall, the fee changes have resulted in a net
increase in the total management fees paid to Putnam
Management by the Putnam funds. Consistent with these fee
changes for other Putnam funds, the Trustees have
recommended a fee increase for the fund.
ARE PUTNAM'S FEES HIGHER THAN OTHER FUND GROUPS?
The Trustees considered, among other factors, the nature and
quality of the services being provided to each fund and the
relative complexity of managing each fund. In addition, the
Trustees compared investment performance, management fees,
and other expenses with those of comparable funds managed by
other mutual fund companies. The Trustees believe that the
proposed increased fees are generally competitive with those
of similar funds in other fund groups.
HOW DOES PUTNAM DECIDE WHETHER TO RAISE FEES ON FUNDS?
Fee increases are not undertaken lightly. Before a fund's
management fee can be raised, Putnam's Trustees, including
the Trustees who are not affiliated with Putnam Management,
voting separately, must agree to the increase. Then the
proposed increase is put to a shareholder vote. In this
particular instance, after considering a wide range of
information relating to the fund, including comparative
expense and performance information, the Trustees determined
that the proposed new management contract is fair both to
shareholders and to Putnam Management and will help to
assure for the future the high quality of management
services which the fund has received in the past. As a
result, the Trustees concluded that the contract is in the
best interests of shareholders and recommended that
shareholders vote for its approval.
WHAT DOES A MANAGEMENT FEE PAY FOR?
Investors do face expenses beyond the purchase price of
their shares. Included in these fees are the management
fees which are paid to the fund's investment manager. In
the case of all Putnam funds, fees are paid to Putnam
Management as compensation and reimbursement for its
services in managing the funds' portfolios and performing
various administrative functions. The specific items which
management fees pay for include the following:
1. Compensation of Putnam's highly talented investment
advisory staff, including portfolio managers, analysts, and
supporting personnel.
2. Maintaining and obtaining critical investment-related
technology, most notably the sophisticated computer system
employed by Putnam Management's portfolio managers and
analysts.
3. Obtaining other important investment-related information
including economic and market overviews, industry and
company reviews, evaluations of investments, recommendations
on specific investments, specialized publications, and
pricing and quotation services.
HOW CAN IT BE IN SHAREHOLDERS' BEST INTEREST FOR THE FUND'S
MANAGEMENT EXPENSES TO GO UP?
After considering a wide range of information relating to
the fund, including comparative expense and performance
information, the Trustees determined that the proposed new
management contract is fair both to shareholders and to
Putnam Management and will help to assure for the future the
high quality of management services which the fund has
received in the past. As a result, the Trustees concluded
that the contract is in the best interests of shareholders
and recommended that shareholders vote for its approval.
HOW HAS THE FUND PERFORMED IN COMPARISON TO SIMILAR FUNDS?
Another way of evaluating the performance of the fund is to
compare it to other fixed-income funds. In reviewing the
fund's relative performance, the fund's Trustees and Putnam
Management compare the fund to other funds with similar
investment objectives and policies and that underlie
variable insurance subaccount. When evaluated in such a
group ranked by Lipper Analytical Services for periods ended
December 31, 1994, the total return of the fund's shares
ranked in the top 24% of 24 such funds for the one year then
ended, in the top 19% of 21 such funds for the three years
then ended and in the top 28% of 17 such funds for the five
years then ended.