PUTNAM CAPITAL MANAGER TRUST
PROSPECTUS - MAY 1, 1995 , as revised MARCH 1, 1996
Putnam Capital Manager Trust (the "Trust") offers shares of
beneficial interest in separate investment portfolios
(collectively, the "Funds") for purchase by separate accounts of
various insurance companies. This Prospectus only offers the
Trust's PCM New Opportunities Fund (the "Fund").
This Prospectus explains concisely information about 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 May 1, 1995
Statement of Additional Information, as amended from time to
time. For a free copy of the Statement, call Putnam Investor
Services at 1-800-521-0538. The Statement has been filed with
the Securities and Exchange Commission and is incorporated into
this Prospectus by reference.
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.<PAGE>
What you need to know
ABOUT THE TRUST
Financial highlights
The Trust
Investment objectives and policies of the Fund
How performance is shown
How the Trust is managed
Organization and history
ABOUT YOUR INVESTMENT
Sales and redemptions
How the Trust values its shares
How distributions are made; tax information
Financial information
ABOUT PUTNAM INVESTMENTS, INC.
<PAGE>
About the Trust
FINANCIAL HIGHLIGHTS
The table below presents per share financial information
for the life of the Fund. This information has been
audited and reported on by the Trust's independent accountants.
The Report of Independent Accountants and financial statements
for the Fund included in the Trust's Annual Report to
shareholders for the 1994 fiscal year are incorporated by
reference into this Prospectus. The Trust's Annual Report, which
contains additional unaudited performance information, will be
made available without charge upon request.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
Less
Investment Net Distributions
Operations Realized and From From
Net Unrealized Total from Net Net Realized
Year (period) Net Asset Value Investment Gain (Loss) on Investment Investment Gain on
ended Beginning of Period Income Investments Operations Income Investments
<S> <C> <C> <C> <C> <C> <C>
December 31, 1994* $10.00 $- $.82 $.82 $- $-
Ratio of
Total Net Net
Net Asset Investment Assets, Ratio of Investment
Value, Return at End of Expenses to Income to
Total End of Net Asset Period (in Average Net Average Net Portfolio
Distributions Period Value(%)(a) thousands) Assets(%) Assets(%) Turnover(%)
<S> <C> <C> <C> <C> <C> <C> <C>
$- $10.82 8.20(b) $68,592 .47(b)(c) .03(d)(c) 32.77(b)
* For the period May 2, 1994 (commencement of operations) to December 31, 1994
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Not annualized.
(c) Reflects an expense limitation in effect during the period. As a result of expense limitations, expenses of PCM
New Opportunities Fund for the period ended December 31, 1994 reflect a reduction of less than $0.02 per share.
</TABLE>
<PAGE>
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 FUND
The investment objectives and policies of the Fund may,
unless otherwise specifically stated, be changed by the Trustees
of the Trust without a vote of the shareholders. As a matter of
policy, the Trustees would not materially change the investment
objective or objectives of the Fund without shareholder
approval. There is no assurance that the Fund will
achieve its objective or objectives.
Additional portfolios may be created from time to time with
different investment objectives and policies 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 the Fund or
divide the Fund into two or more classes of shares with
such special or relative rights and privileges as the Trustees
may determine.
PCM NEW OPPORTUNITIES FUND
PCM New Opportunities Fund seeks long-term capital appreciation.
The Fund seeks its investment 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 Investment Management , Inc. ("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 up to 20% of its assets in foreign securities. For a
discussion of the risks associated with foreign investing, see
" 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 "Foreign currency exchange transactions " 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 "Defensive strategies " 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 as having an
above-average growth potential over the next three to five years:
Personal Communications - cellular telephone, paging, personal
communication networks;
Media/Entertainment - cable television system operators, cable
television network programmers, film entertainment providers,
theme park operators, casino operators;
Medical Technology/Cost-Containment - home and outpatient care,
medical device companies, biotechnology, health care
information services;
Environmental Services - solid waste disposal, hazardous waste
disposal, remediation services, environmental testing;
Applied/Advanced Technology - database software, application
software, networking software, computer systems integrators,
information services companies;
Personal Financial Services - specialty insurance companies,
credit card issuers, and other consumer-oriented financial
services companies; and
Value-oriented Consuming - retailers, restaurants, hotel chains
and travel 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 particular sector.
The Fund will invest in securities which 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 the company's size. Companies in the Fund's
portfolio will range from small, rapidly growing companies to
larger, well-established firms. The securities of small to
medium-sized companies often trade less frequently and in more
limited volume, and may be subject to more abrupt or erratic
price movements, than securities of larger, more established
companies. Such companies may have limited product lines,
markets, or financial resources, or may depend on a limited
management group.
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 shares
of such an investment company.
PCM New Opportunities Fund will generally be managed in a style
similar to that of Putnam New Opportunities Fund. The two
funds may, however, employ different investment practices and may
invest in different securities from each other, and
consequently will not have identical portfolios or experience
identical investment results.
Defensive strategies
At times, Putnam Management may judge that conditions in the
securities markets make pursuing the Fund's basic
investment strategy inconsistent with the best interests of the
Fund's shareholders. At such times, Putnam Management may
temporarily use alternative strategies, primarily designed to
reduce fluctuations in the value of the Fund's assets. In
implementing these "defensive" strategies, the 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 invest in any other securities
Putnam Management considers consistent with such defensive
strategies. It is impossible to predict when, or for how long,
the Fund will use such alternative strategies.
Portfolio turnover
The length of time the Fund has held a particular security
is not generally a consideration in investment decisions. A
change in the securities held by the Fund is known as
"portfolio turnover." As a result of the 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 generally involves some expense to the
Fund, including brokerage commissions or dealer mark-ups and
other transaction costs on the sale of securities and
reinvestment in other securities. Such transactions may result
in realization of taxable capital gains. Portfolio turnover
rates for the life of the Fund are shown in "Financial
highlights."
Foreign investments
The Fund may invest to the extent described above in
securities principally traded in foreign markets. The
Fund may also purchase Eurodollar certificates of deposit without
limitation. Since foreign securities are normally denominated
and traded in foreign currencies, the values of the Fund's
assets may be affected favorably or unfavorably by currency
exchange rates and exchange control regulations. There may be
less information publicly available about a foreign company than
about a U.S. company, and foreign companies 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 companies are less liquid and at times
more volatile than securities of comparable U.S. companies.
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 domestic investments.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial
instability and diplomatic developments which could affect the
value of the Fund's investments in certain foreign
countries. 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
the Fund's ability to invest in securities of certain
issuers located in those foreign countries. Special tax
considerations apply to
foreign securities.
The risks described above are typically increased to the extent
that the Fund invests in securities traded in lesser-
developed and developing nations, which are sometimes referred to
as "emerging markets."
A more detailed explanation of foreign investments, and the risks
and special tax considerations associated with them, is included
in the Statement of Additional Information.
Foreign currency exchange transactions
To the extent described above, the Fund may engage
in currency exchange transactions to protect against uncertainty
in the level of future exchange rates. Putnam Management may
engage in currency exchange transactions in connection with the
purchase and sale of portfolio securities ("transaction
hedging"), and to protect the value of specific portfolio
positions ("position hedging").
The Fund may engage in transaction hedging to protect
against a change in currency exchange rates between the date on
which the Fund contracts to purchase or sell the security
and the settlement date, or to "lock in" the value of a dividend
or interest payment in a particular currency. For that purpose,
the Fund may purchase or sell a 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, the 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 as a hedge against changes in foreign currency
exchange rates between the trade and settlement dates on
particular transactions and not for speculation. 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. For transaction hedging purposes, the Fund
may also purchase and sell call and put options on foreign
currency futures contracts and on currencies.
The Fund may engage in position hedging to protect against
a decline in 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 a currency in which securities the
Fund intends to buy are denominated, when the Fund holds cash
reserves and short-term investments). For position hedging
purposes, the Fund may purchase or sell foreign currency
futures contracts,
foreign currency forward contracts, and options on foreign
currency futures contracts and on foreign currencies. In
connection with position hedging, the Fund may also
purchase or sell foreign currency on a spot basis.
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.
<PAGE>
For a discussion of the risks associated with options and futures
strategies in connection with the Fund's foreign currency
exchange transactions, see "Risks related to options and futures
strategies."
Options and futures
Futures and options on futures. The Fund may
invest in futures and options, as described above, and
may, to the extent consistent with their investment objectives
and policies, buy and sell index futures contracts ("index
futures") for hedging purposes. An "index future" is a contract
to buy or sell units of a particular bond or stock index at an
agreed price on a specified future date. Depending on the change
in value of the index between the time when the Fund
enters into and terminates an index futures transaction, the Fund
realizes a gain or loss. The Fund may also, to the extent
consistent with its investment objectives and policies, buy and
sell call and put options on index futures or on stock or bond
indices in addition to or as an alternative to buying or selling
index futures or, to the extent permitted by applicable law, to
earn additional income. In addition, if the Fund's
investment policies permit it to invest in foreign securities,
the Fund may invest in futures and options on foreign
securities, to the extent permitted by applicable law, as a
substitute for direct investment in foreign securities.
To the extent described above, the 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 the Fund may invest and may, as a result, provide
hedging opportunities for the Fund . U.S. Government
Securities futures and related options would be used in a way
similar to the Fund's use of index futures and options.
The Fund will only buy or sell U.S. Government Securities
futures and related options when, in the opinion of Putnam
Management, price movements in such futures and options are
expected to correlate closely with price movements in the
securities which are the subject of the hedge.
Options. As described above, the Fund may, to the
extent consistent with its investment objectives and
policies, seek to increase current return by writing covered call
and put options on securities the Fund owns or in which
it may invest. The Fund receives a premium from
writing a call or put option, which increases the Fund's return
if the option expires unexercised or is closed out at a net
profit. When the 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, the Fund 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. 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 may also, to the extent consistent with its
investment objectives and policies, buy and sell put and call
options for hedging purposes and from time to time buy and sell
combinations of put and call options on the same underlying
security to earn additional income. The aggregate value of the
securities underlying the options may not exceed 25% of the
Fund's assets.
Risks related to options and futures strategies
The use of futures and options involves certain special risks.
Futures and options transactions involve costs and may result in
losses. Certain risks arise because of the possibility of
imperfect correlations between movements in the prices of futures
and options and movements in the prices of the underlying bond or
stock index, securities or currencies or of the securities or
currencies that are the subject of a hedge. The successful use
of the strategies described above further depends on Putnam
Management's ability to forecast market movements correctly.
Other risks arise from the Fund's potential inability to
close out its futures or options positions, and there can be no
assurance that a liquid secondary market will exist for any
future or option at any particular time. Certain provisions of
the Internal Revenue Code and certain regulatory requirements may
limit the Fund's ability to engage in futures and options
transactions.
A more detailed explanation of futures and options transactions,
including the risks associated with them, is included in the
Statement of Additional Information.
Securities loans, repurchase agreements and forward commitments
The 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. The
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 to
the Fund if the other party should default on its
obligation and the Fund is delayed or prevented from recovering
the collateral or completing the transaction.
HOW PERFORMANCE IS SHOWN
The Fund's investment performance may from time to time be
included in advertisements . "Total return" for
the one-, five-and ten-year periods (or for the life of
the Fund, if shorter) through the most recent calendar
quarter represents the average annual compounded rate of return
on an investment of $1,000 in the Fund. Total return may
also be presented for other periods.
All data is based on the Fund's past investment results
and does not predict future performance. Investment performance,
which will vary, is based on many factors, including market
conditions, the composition of the Fund's portfolio, and
the Fund's operating expenses. Investment performance
also often reflects the risks associated with the Fund's
investment objective or objectives and policies. These factors
should be considered when comparing the Fund's investment
results to those of other mutual funds and other investment
vehicles. Quotations of investment performance for any period
when an expense limitation was in effect will be greater than if
the limitation had not been in effect.
Performance information presented for the Fund 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 Fund's performance information and would
reduce an investor's return under the insurance product.
For performance information through the Fund's most recent
fiscal year, see "Investment Performance of the Trust" in the
Statement of Additional Information.
HOW THE TRUST IS MANAGED
The Trustees of the Trust are responsible for generally
overseeing the conduct of the Trust's 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.
Daniel L. Miller, Managing Director of Putnam Management and Vice
President of the Trust, has had primary responsibility for the
day-to-day management of PCM New Opportunities Fund's portfolio
since 1994. Mr. Miller has been employed by Putnam Management
since 1983.
The Trust, on behalf of the Fund , 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 to
the Trust. The total reimbursement is determined annually by the
Trustees.
General expenses of the Trust will be allocated among and charged
to the assets of each Fund on a basis that the Trustees deem fair
and equitable, which may be based on the relative assets of each
Fund or the nature of the services performed and relative
applicability to each Fund. Expenses directly charged or
attributable to a Fund will be paid from the assets of that Fund.
Total expenses, including management fees, for the fiscal year
ended December 31, 1994, based on the Fund's average net
assets, were:
Total Management
Expenses Fees
PCM New Opportunities Fund* 0.47% 0.45%
(commenced operations on May 1, 1994)
*The total expenses and management fees shown above for
PCM New Opportunities Fund reflect an expense limitation in
effect for the period and are not annualized. In the absence of
the expense limitation in effect for the period, annualized total
expenses and management fees would have been 1.00% and 0.70%,
respectively.
Putnam Management places all orders for purchases and sales of
the securities of the 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.
ORGANIZATION AND HISTORY
Putnam Capital Manager 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.
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 eleven
series of shares, each representing a separate investment
portfolio which is being offered through separate accounts of
various insurance companies. The Fund is managed as a
diversified investment company . Shares vote by individual
portfolio on all matters except (i) when required by the
Investment Company Act of 1940, shares of all portfolios shall be
voted in the aggregate, and (ii) when the Trustees have
determined that the matter affects only the interests of one or
more portfolios, only the shareholders of such portfolio or
portfolios shall be entitled to vote.
Each share has one vote, with fractional shares voting
proportionately. Shares of each of the portfolios 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 Fund may only be purchased by an insurance
company's separate account. For matters requiring shareholder
approval, you may be able to instruct the insurance company's
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 Fund'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, M.I.T.; Jameson
Adkins Baxter, President, Baxter Associates, Inc.; Hans H. Estin,
Vice Chairman, North American Management Corp.; John A. Hill,
Principal and Managing Director, First Reserve Corporation;
Elizabeth T. Kennan, President, 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.;
Robert E. Patterson, Executive Vice President, Cabot Partners
Limited Partnership; Donald S. Perkins,* Chairman of the Board
and Director of Kmart Corporation and Director of various
corporations, including AT&T and Time Warner Inc.; George Putnam,
III,* President, New Generation Research, Inc.; Eli Shapiro,
Alfred P. Sloan Professor of Management, Emeritus, Alfred P.
Sloan School of Management, M.I.T.; A.J.C. Smith,* Chairman,
Chief Executive Officer and Director, Marsh & McLennan Companies,
Inc.; 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 Massachusetts General Hospital and Eastern Utilities
Associates. The Fund'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
Fund with Putnam Mutual Funds, One Post Office Square,
Boston, Massachusetts 02109. Putnam Mutual Funds presently
offers shares of the Fund continuously to separate
accounts of various insurers. The underwriting agreement
presently provides that Putnam Mutual Funds accepts orders for
shares at net asset value and no sales commission or load is
charged. Putnam Mutual Funds may, at its expense, provide
promotional incentives to dealers that sell variable insurance
products.
Shares are sold or redeemed at the net asset value per share next
determined after receipt of an order . Orders for
purchases or sales of shares of the Fund must be received
by Putnam Mutual Funds before the close of regular trading on the
New York Stock Exchange in order to receive that day's net asset
value. No fee is charged to a separate account when it redeems
Fund shares.
As noted above, only PCM New Opportunities Fund is offered by
this Prospectus. A Fund may not be available in your state
due to various insurance regulations. Inclusion of a Fund in
this Prospectus that is not available in your state is not to be
considered a solicitation. This Prospectus should be read in
conjunction with the prospectus of the separate account of the
specific insurance product which accompanies this Prospectus.
The Fund currently does not foresee any disadvantages to
policyowners arising out of the fact that the Fund offers
its shares to separate accounts of various insurance companies to
serve as the investment medium for their variable products.
Nevertheless, the Board of Trustees intends to monitor events in
order to identify any material irreconcilable conflicts which may
possibly arise, and to determine what action, if any, should be
taken in response to such conflicts. If such a conflict were to
occur, one or more insurance companies' separate accounts might
be required to withdraw their investments in the Fund and
shares of another portfolio of the Trust may be
substituted. This might force the Fund to sell portfolio
securities at disadvantageous prices. In addition, the Trustees
may refuse to sell shares of the Fund to any separate
account or may suspend or terminate the offering of shares of
the Fund if such action is required by law or regulatory
authority or is in the best interests of the shareholders of the
Fund.
Under unusual circumstances, the Trust may suspend repurchases or
postpone payment for up to seven days or longer, as permitted by
federal securities law.
EXCHANGE PRIVILEGE
A shareholder may exchange shares of the Fund in the Trust
for shares of any other Fund in the Trust on the basis of their
respective net asset values. Exchanges may not be made into
portfolios of the Trust not offered by your variable annuity
contract or variable life policy.
HOW THE TRUST VALUES ITS SHARES
The Trust calculates the net asset value of a share of the
Fund by dividing the total value of the assets of the Fund, less
liabilities, by the number of shares of the Fund outstanding.
Shares are valued as of the close of regular trading on the New
York Stock Exchange each day the Exchange is open. Fund
securities for which market quotations are readily available are
stated at market value. Short-term investments that will mature
in 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.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Fund will distribute any net investment income and net
realized capital gains at least annually. Both types of
distributions will be made in shares of the Fund unless an
election is made on behalf of a separate account to receive some
or all of the distributions in cash.
Distributions are reinvested without a sales charge, using the
net asset value determined on the ex-dividend date .
The Fund intends to qualify each year as a "regulated
investment company" for federal income tax purposes and to meet
all other requirements that are 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 portfolios
that serve as the funding vehicles for variable annuity and
variable life insurance separate accounts generally require that
those portfolios 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. The Fund intends
to comply with these requirements.
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 Fund will receive an unaudited
semi-annual financial statement and an audited annual financial
statement for the Fund . These reports show the
investments owned by the Fund and provide other relevant
information about the Fund.
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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
Trust's custodian. Putnam Investor Services, a division of
Putnam Fiduciary Trust Company, is the Trust's investor servicing
and transfer agent.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., which is
wholly 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.
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Putnam Capital Manager Trust
One Post Office Square
Boston, MA 02109
Investment Manager
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
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
