Putnam
Investment
Grade
Municipal
Trust
ANNUAL REPORT
November 30, 1994
(Art--balance scales)
B O S T O N * L O N D O N * T O K Y O
<PAGE>
Performance highlights
From the Chairman
> According to Lipper Analytical Services, the fund was ranked number one
among all closed-end general municipal debt funds for both the three- and
five-year periods ended November 30, 1994.*
> Performance should always be considered in light of a fund's investment
strategy. Putnam Investment Grade Municipal Trust is designed for investors
seeking high current income, free from federal income tax, consistent with
preservation of capital.
FISCAL 1994 RESULTS AT A GLANCE
<TABLE>
<CAPTION>
Total return Market
(common shares) NAV price
<S> <S> <S> <S> <S> <S>
12 months ended 11/30/94
(change in value during period plus
reinvested distributions) -8.21% -6.74%
Market
Share value NAV price
11/30/93 $13.44 $ 14.000
11/30/94 11.22 11.875
In
Capital Excess
Distributions(1) No. Income Gains Gain Total
Common shares 12 $ 0.97 $ 0.21 $ 0.02 $ 1.20
Preferred shares
Series A (1,400 shares) $2,776.14 $56.60 $ 5.94 $2,838.68
Taxable
equivalent(2)
Current return Market Market
(common shares) NAV price NAV price
Year ended 11/30/94
Current dividend rate(3) 8.56% 8.08% 14.17% 13.38%
</TABLE>
Performance data represent past results. For performance over longer periods,
see pages 8 and 9. (1)Capital gains, if any, are taxable for federal and, in
most cases, state tax purposes. For some investors, investment income may
also be subject to the federal alternative minimum tax. Investment income may
be subject to state and local taxes. (2)Assumes maximum 39.6% federal tax
rate. Results for investors subject to lower tax rates would not be as
advantageous. (3)Income portion of most recent distribution, annualized and
divided by NAV or market price at end of period.
*Ratings by Lipper, an independent research firm, vary over time and do not
include the effect of sales charges. The firm ranked the fund 28th out of 60
funds for one year; 6th out of 44 funds for two years; 1st out of 26 funds
for three years; and 1st out of 17 funds for five years. Past performance is
not indicative of future results.
<PAGE>
From the Chairman
(Photo George Putnam)
(c) Karsh, Ottawa
Dear Shareholder:
When markets turn downward, investors with vision look beyond the unfolding
negatives for opportunities farther down the road. Throughout Putnam
Investment Grade Municipal Trust's fiscal year that ended on November 30,
1994, there was plenty to obstruct the view.
Well in advance of the Federal Reserve Board's first increase in interest
rates last February, Fund Manager Michael Bouscaren had adopted defensive
strategies designed to reduce the impact of rising rates on your fund's
portfolio. While defensive strategies proved relatively successful, fund
performance generally edged into the negative numbers.
Even so, we believe tax-exempt securities should strengthen. Supplies may
become tighter, as fewer issues come to market and more investors seek tax
relief. Many sectors of the tax-exempt market, including health care,
education, and resource recovery, are poised for growth. Mike will focus on
these positive factors as he seeks out the most promising opportunities for
your fund.
His report on fiscal 1994 performance and what he sees in store for fiscal
1995 follows.
Respectfully yours,
(Signature George Putnam)
George Putnam
Chairman of the Trustees
January 18, 1995
<PAGE>
Report from the fund manager
Michael F. Bouscaren
During Putnam Investment Grade Municipal Trust's fiscal 1994, the municipal
bond market endured what can truly be called tough times. Market volatility,
investor uncertainty about further interest rate increases, and a tide of
no-load fund redemptions helped drive bond prices down, particularly those of
high- quality bonds. Your fund was not immune to the dampening effects of
these events, providing a total return of -8.21% at net asset value for the
12 months ended November 30, 1994.
We encourage you to keep in mind, however, that many mutual funds,
particularly those that emphasize long-term municipal bonds, require
investors to have a long-term view. Corrections are not only a natural part
of any business cycle, but they also frequently bring about rewarding
opportunities for investors.
> DIVERSIFICATION HELPS CUSHION VOLATILITY
Health care, utilities, transportation, housing, and education continue to be
the fund's top five industry sectors. Holdings are spread across the country,
with greater emphasis on certain regions. For example, California,
Massachusetts, and New York are significantly represented in the portfolio,
and high-demand states like Texas and Florida are given additional exposure.
Primarily, high taxes, strong investor demand, the outlook for an improving
state economy -- which can contribute to credit upgrades -- and the
availability of some attractively yielding issues have drawn our attention to
these states.
Issues of particular interest to us, which we believe will do well over time,
include the Denver City and County Airport revenue bonds in the fund's
portfolio. Although the project incurred cost overruns, experienced
technological problems, and underwent contractual disagreements between the
city and certain airlines, these concerns seem to have been ironed out to the
satisfaction of all parties. The facility is scheduled to open in February
1995, when it will become the only airport serving greater
<PAGE>
Denver. Because of its distance from downtown Denver, we anticipate there
will be more than the usual number of revenue-generating sources from
airport operations and associated facilities. Restaurants, parking, hotels,
and retail outlets are all sources of fees and cash flow. With such an
optimistic long-term outlook, we took the opportunity last summer to increase
the fund's position in these bonds. We look forward to the anticipated
progress of these issues.
Despite recent financial problems in Orange County, California, we believe
the state's municipal bond market offers tremendous value. We will continue
to draw on Putnam Management's strong research capabilities in order to find
attractive opportunities there.
> PROVIDING A STREAM OF TAX-FREE INCOME
While prices of virtually all fixed-income investments are down this year,
municipal bond prices have fallen less than those of U.S. Treasury
securities, Meanwhile, the yield spread between the two remains relatively
narrow. In today's low-inflation, high- tax environment, this can mean
attractive real rates of return for municipal bond fund investors.
Because we focus the fund's investments primarily on long-term bonds, we have
been able to generate a relatively high level of tax-free income. It is
fortunate, however, that Putnam Management established a conservative
dividend policy for the fund at its inception. This prudent policy is serving
the fund well in today's higher interest rate environment -- we are able to
maintain a conservative, top-quality orientation without being
TOP INDUSTRY SECTORS*
Utilities 19.6%
Hospital/Healthcare 18.5%
Transportation 13.1%
Education 9.4%
Housing 5.6%
*Based on net assets as of 11/30/94.
<PAGE>
unduly challenged by high dividend obligations. In the meantime, the fund's
dividends remain attractive: A taxable investment at the maximum federal
income tax rate of 39.6% would have had to provide a current return of 14.17%
to equal the fund's 8.56% current dividend rate at net asset value at the end
of the period.
Leveraging has also helped bolster the fund's income level. By issuing and
selling preferred shares of the fund to institutional short-term investors,
we've been able to reinvest the proceeds in longer-term, higher-paying bonds.
A portion of the income generated from these higher-paying bonds is then
distributed to the fund's common shareholders, enhancing their monthly
dividend (38.4% of the fund's net assets were leveraged as of November 30,
1994).
> FAVORABLE SUPPLY/DEMAND ENVIRONMENT
Supply in the new-issue market was lean at fiscal year's end. At a time when
issuers traditionally are flooding the market, sales are running a little
less than $2 billion per week. At the end of November 1994, volume was around
$140 billion in new issues, compared with $290 billion for all of 1993. In
1995, we expect new-issue supply will be about equal to 1994 supply. The
important difference in 1995, however, will be that bond redemptions are
likely to match or exceed new-issue supply. This may result in a net supply
deficit which would be very positive for municipal bond performance
potential.
> BUYING OPPORTUNITIES FOR MUNICIPAL BOND INVESTORS
Today's post-correction prices may actually represent a buying opportunity
for many closed-end municipal bond fund shareholders. For the long-term
investor, acquiring shares at current prices, either through direct purchase
or reinvestment of dividends, creates a larger income-generating share base
for the future.
<PAGE>
CONCENTRATION OF HOLDINGS BY STATE
Massachusetts 17.4%
Texas 10.1%
California 7.8%
Colorado 7.4%
New York 6.3%
Geographically, the fund is diversified among 25 states. The top five states
represent 49.0% of the portfolio, based on net assets as of 11/30/94.
Our outlook for municipal bonds remains positive for the long term, although
we anticipate continued turmoil in the near term. We believe decreased
supply, combined with growing investor demand for tax relief, bodes well for
the appreciation potential of tax-free bonds -- which we believe may happen
quite suddenly and be sustained when investors come to recognize the positive
effect of these two factors. We have endeavored to position the fund
accordingly.
The views expressed throughout the report are exclusively those of Putnam
Management. They are not meant as investment advice. Although the described
holdings were viewed favorably as of November 30, 1994, there is no guarantee
the fund will continue to hold these securities in the future.
<PAGE>
Performance Summary
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares have
changed over time, assuming you held the shares through the entire period and
reinvested all distributions back into the fund. We show total return in two
ways: on a cumulative long-term basis and on average how the fund might have
performed over varying periods. For comparative purposes, we show how the
fund performed relative to appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 11/30/94
<TABLE>
<CAPTION>
Lehman Bros.
Municipal
NAV Market price Bond Index CPI
<S> <C> <C> <C> <C>
1 year -8.21% -6.74% -5.25% 2.68%
5 years 49.59 49.19 37.52 18.90
Annual average 8.39 8.33 6.58 3.52
Life of fund
(since 10/26/89) 50.68 47.65 39.92 19.19
Annual average 8.37 7.94 6.81 3.50
</TABLE>
TOTAL RETURN FOR PERIODS ENDED 12/31/94
(most recent calendar quarter)
<TABLE>
<CAPTION>
NAV Market price
<S> <C> <C>
1 year -8.52% -8.92%
5 years 51.72 65.71
Annual average 8.69 10.63
Life of fund
(since 10/26/89) 53.76 47.65
Annual average 8.66 7.81
</TABLE>
Performance data represent past results. Investment returns and net asset
value will fluctuate so an investor's shares, when sold, may be worth more or
less than their original cost. Fund performance data do not take into account
any adjustment for taxes payable on reinvested distributions.
<PAGE>
TERMS AND DEFINITIONS
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, the par value of the preferred shares and cumulative undeclared
dividends on the remarketed preferred shares divided by the number of
outstanding common shares.
Market price is the current trading price of one share of the fund. Market
prices are set by transactions between buyers and sellers on the New York
Stock Exchange.
COMPARATIVE BENCHMARKS
Lehman Brothers Municipal Bond Index is an unmanaged list of long-term
fixed-rate investment-grade tax-exempt bonds representative of the municipal
bond market.
Consumer Price Index (CPI) is a commonly used measure of inflation; it does
not represent an investment return.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take into account brokerage fees or taxes. Securities in
the fund do not match those in the indexes and performance of the fund will
differ.
<PAGE>
Report of Independent Accountants
For the Year Ended November 30, 1994
To the Trustees and Shareholders of
Putnam Investment Grade Municipal Trust
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments owned, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Putnam Investment
Grade Municipal Trust (the "fund") at November 30, 1994, and the results of
its operations, the changes in its net assets and the financial highlights
for the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits,
which included confirmation of investments owned at November 30, 1994 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
January 17, 1995
<PAGE>
Portfolio of investments owned
November 30, 1994
<TABLE>
<CAPTION>
Municipal Bonds and Notes (101.7%)(a)
Principal Amount Ratings (b) Value
<S> <C> <C> <C>
Alabama (1.7%)
$5,500,000 Gadsden East, Med. Clinic Board Rev.
Bonds (Baptist Hosp. of Gadsden Inc.),
Ser. A, 7.8s, 11/1/21 BBB $ 6,111,875
California (7.8%)
500,000 CA Poll. Control Fin. Auth. Variable Rate
Demand Notes (VRDN) (Shell Oil Co.),
3.4s, 10/1/11 VMIG1 500,000
3,750,000 CA State Pub. Works Board Lease Rev. Bonds
(U. of CA Projects), Ser. A, 5-1/2s,
6/1/21 A 2,948,437
9,300,000 CA State U. Rev. Bonds, American Municipal
Bond Assurance Corp. (AMBAC), 7s,
11/1/21 ($900,000 par, acquired 8/5/91,
cost $920,127 $8,400,000 par, acquired
8/31/94, cost $8,400,000)(c) Aaa 9,393,000
5,000,000 Los Angeles, Dept. Wtr. & Pwr. Elec. Plant
Rev. Bonds, Municipal Bond Insurance
Association (MBIA), 5-1/4s, 11/15/26 AAA 3,818,750
1,580,000 Los Angeles, Regl. Arpts. Impt. Corp. Rev.
Bonds (Western Airlines-Delta Airlines),
11-1/4s, 11/1/25 Ba 1,688,625
5,000,000 Orange Cnty., Sanitation Dist. Certif. of
Participation VRDN, 3.35s, 8/1/15 VMIG1 5,000,000
5,000,000 U. of CA Rev. Bonds (USCD Med. Ctr.
Satellite Fac.), 7.9s, 12/1/19 (acquired
3/2/92, cost $5,229,150)(c) BBB 5,118,750
28,467,562
Colorado (7.4%)
Denver, City & Cnty. Arpt. Rev. Bonds
3,500,000 Ser. A, 8-1/2s, 11/15/23 Baa 3,517,500
4,900,000 Ser. A, 8-1/4s, 11/15/12 Baa 4,875,500
5,200,000 Ser. A, 8s, 11/15/25 Baa 4,946,500
7,000,000 Ser. D, 7-3/4s, 11/15/21 Baa 6,693,750
3,000,000 Ser. D, 7-3/4s, 11/15/13 Baa 2,883,750
4,800,000 Ser. D, 7s, 11/15/25 Baa 4,182,000
27,099,000
Florida (5.3%)
3,670,000 FL State Board Regents U. Syst. Impt. Rev.
Bonds, AMBAC 5-1/4s, 7/1/08 AAA 3,142,437
3,665,000 FL State Board of Public Ed. Cap. Outlay
Rfdg. Rev. Bonds, 5.7s, 6/1/03 AA 3,573,375
3,000,000 FL State Board of Regents U. Syst. Impt.
Rev. Bonds, AMBAC, 5.2s, 7/1/07 AAA 2,595,000
2,000,000 Hernando Cnty., Indl. Dev. Rev. Bonds (FL
Crushed Stone Co.), 8-1/2s, 12/1/14 B/P 2,010,000
<PAGE>
Municipal Bonds and Notes (101.7%)(a)
Principal Amount Ratings (b) Value
Florida (continued)
$ 7,000,000 Orlando, Util. Coml. Wtr. & El. Rev.
Bonds, 5-3/4s, 10/1/05 AA $ 6,693,750
1,500,000 Tampa, Wtr. & Swr. Cap. Inverse Floating
Bonds (IFB), Ser. A, Federal Guaranty
Insurance Co. (FGIC), 3.34s, 10/1/12 AAA 1,436,250
19,450,812
Georgia (1.7%)
1,600,000 Burke Cnty., Dev. Auth. Poll. Control Rev.
Bonds (Oglethorpe Pwr. Corp.-Vogtle
Project), 9-7/8s, 1/1/10 A 1,632,000
4,800,000 De Kalb Cnty., Hsg. Auth. Muni. Rev. Bonds
(Briarcliff Pk. Apts. Project), Ser. A,
7-1/2s, 4/1/17 A/P 4,686,000
6,318,000
Hawaii (1.1%)
4,500,000 HI State Dept. of Budget & Fin. Mtge. IFB
(Citizens Util. Co.), Ser. 91-B, 9.385s,
11/1/21(d) AAA 3,841,875
Illinois (0.5%)
1,800,000 IL Dev. Fin. Auth. Poll. Control Rev.
Bonds (Cmnwlth. Edison Co. Project),
10-5/8s, 3/1/15 Baa 1,856,250
Louisiana (0.8%)
3,000,000 West Feliciana, Poll. Control Rev. Bonds
(Gulf States Util. Co.), 7.7s, 12/1/14 BBB 2,970,000
Maryland (0.6%)
2,000,000 MD State Hlth. & Higher Edl. Facs. Auth.
Rev. Bonds (Doctors Cmnty. Hosp.),
8-3/4s, 7/1/12 Aaa 2,292,500
Massachusetts (17.4%)
6,030,000 MA Muni Whls. Electric Co. Pwr. Supply
Sys. Rev. Bonds,
Ser. B, 6-3/4s, 7/1/17 A 5,751,113
MA State Cons. Loan General Obligation
(G.O.) Bonds
6,000,000 Ser. D, 6s, 7/1/12 A 5,407,500
12,000,000 Ser. A, 6s, 6/1/11(d) A 10,860,000
4,000,000 MA State Hlth. & Ed. Facs. Auth. Rev.
Bonds 4.9s, 7/1/06 AAA 3,475,000
16,500,000 MA State Hlth. & Ed. Facs. Auth. Rev.
Bonds, AMBAC, 6.41s, 6/23/22 AAA 15,613,125
5,000,000 MA State Indl. Fin. Agcy. Rev. Bonds (Cape
Cod Hlth. Syst.), 8-1/2s, 11/15/20(d) Aaa 5,731,250
15,000,000 MA State Wtr. Resource Auth. Rev. Bonds
Ser. A, 7-5/8s, 4/1/14(d) AAA 16,462,500
63,300,488
<PAGE>
Municipal Bonds and Notes
Principal Amount Ratings (b) Value
Michigan (5.4%)
$1,875,000 Detroit, Dev. Fin. Auth. Tax Increment
Rev. Bond, Ser. A, 9-1/2s, 5/1/21 BBB/P $ 2,226,562
1,000,000 Grand Rapids Wtr. Supply Syst. VRDN,
FGIC, 3.55s, 1/1/20 VMIG1 1,000,000
1,690,000 Highland Park, Hosp. Fin. Auth. Fac. Rev.
Bonds (MI Hlth. Care Corp. Project),
Ser. A, 9-3/4s, 12/1/06 B 1,436,500
7,400,000 MI State Hsg. Dev. Auth. Rental Hsg. Rev.
Bonds, Ser. B, 5.7s, 4/1/12 A 6,243,750
3,000,000 MI State Strategic Fund Ltd. Oblig. Rev.
Bonds (Mercy Svcs. for Aging Project),
9.4s, 5/15/20 BBB/P 3,127,500
5,435,000 Monroe Cnty., Poll. Control Rev. Bonds
(Detroit Edison Co.), Ser. A, 10-1/2s,
12/1/16 Baa 5,829,038
19,863,350
Mississippi (1.5%)
4,950,000 Claiborne Cnty., Poll. Control Rev. Bonds
(Middle South Energy Inc.), Ser. C,
9-7/8s, 12/1/14 BBB/P 5,513,063
Missouri (1.3%)
5,000,000 MO State Hlth. & Edl. Facs. Auth. Rev.
Bonds (BJC Hlth. Sys.), Ser. A, 6-1/2s,
5/15/20 AA 4,568,750
Nebraska (3.3%)
2,800,000 NE Investment Fin. Auth. Single Fam. Mtge.
IFB, Ser. B. Government National
Mortgage Assn. Coll. (GNMA), 10.66s,
3/15/22(d) AAA 2,866,500
8,840,000 NE Investment Fin. Auth. Single Fam. Mtge.
Rev. Bonds, Ser. 1, GNMA Coll., 8-1/8s,
8/15/38(d) AAA 9,072,050
11,938,550
Nevada (1.8%)
6,500,000 Clark Cnty., Indl. Dev. Rev. Bonds (NV
Pwr. Co. Project), 7.8s, 6/1/20 Baa 6,621,875
New York (6.3%)
6,500,000 Battery Park, City Auth. Rev. Bonds,
Ser. A, 4-3/4s, 11/1/19 AA 4,623,125
NY City VRDN
1,000,000 Ser. B, FGIC, 3.7s, 10/1/21 VMIG1 1,000,000
1,000,000 Sub. Ser. B-4, 3.65s, 8/15/21 VMIG1 1,000,000
1,865,000 NY City, Hsg. Dev. Corp. Multi-Fam. Rev.
Bonds, Ser. 85-1, Federal Housing
Authority (FHA) Insd., 9-1/2s, 10/1/00 AA 1,923,281
6,500,000 NY City, Mun. Wtr. Fin. Auth. VRDN,
Ser. G, FGIC, 3.4s, 6/15/24 VMIG1 6,500,000
1,700,000 NY State Dorm. Auth. U. Ed. Facs. Rev.
Bonds Ser. A, 6-1/4s, 5/15/08 BBB 1,570,375
<PAGE>
Municipal Bonds and Notes
Principal Amount Ratings (b) Value
New York (continued)
$ 1,900,000 NY State Energy Research & Dev. Auth.
Poll. Control VRDN (Niagara Mohawk Pwr.
Project), Ser. A, 3-3/4s, 7/1/15 A1+ $ 1,900,000
4,050,000 NY State Local Government Assistance Corp.
Rev. Bonds, Ser. B, 5-1/2s, 4/1/21 A 3,199,500
1,125,000 Riverton Hsg. Corp. Mtge. Rev. Bonds
(Conifer Genesee Apt.), FHA Insd.,
10-1/2s, 1/15/25 A 1,170,000
22,886,281
North Dakota (3.1%)
10,850,000 Mercer Cnty., Poll. Control Rev. Bonds
(Basin Elec. Pwr. Coop.-Antelope),
AMBAC, 10-1/2s, 6/30/13(d) AAA 11,128,031
Ohio (3.0%)
OH State Air Quality Dev. Auth. Poll.
Control Rev. Bonds
3,600,000 (Cincinnati Gas & Elec.), 10-1/8s,
12/1/15 Baa 3,829,500
5,000,000 (Cleveland Co. Project), FGIC, 8s,
12/1/13 AAA 5,487,500
OH State Wtr. Dev. Auth. Poll. Control
Facs. Rev. Bonds
1,575,000 (OH Edison Co. Project), 10-5/8s, 7/1/15 Baa 1,673,438
10,990,438
Oklahoma (0.9%)
3,500,000 Tulsa, Muni. Arpt. Rev. Bonds (American
Airlines, Inc.), 7-3/8s, 12/1/20 Baa 3,185,000
Pennsylvania (5.8%)
3,930,000 Allegheny Cnty., Res. Fin. Auth. Single
Fam. Mtge. Rev. Bonds, GNMA Coll., 7.9s,
6/1/11 Aaa 4,013,512
4,500,000 Geisinger, Auth. Hlth. Syst. Muni. IFB,
Ser. A, 5.45s, 7/1/22 AA 4,320,000
5,000,000 Montgomery Cnty., Indl. Dev. Auth.
Resource Recvy. Rev. Bonds, 7-1/2s,
1/1/12 A 5,068,750
7,600,000 PA State Higher Edl. Assistance Agcy.
Student Loan IFB, Ser. B, MBIA, 11.123s,
3/1/20(d) AAA 7,847,000
21,249,262
Rhode Island (1.7%)
8,500,000 Convention Ctr. Auth, Rev. Bonds
Ser. C, MBIA, 5s, 5/15/23 AAA 6,279,375
South Carolina (1.0%)
4,125,000 Grand Strand Wtr. & Swr. Auth. Rev. Bonds,
MBIA, 6s, 6/1/19 AAA 3,630,000
<PAGE>
Municipal Bonds and Notes
Principal Amount Ratings (b) Value
Tennessee (0.3%)
$ 1,000,000 Metro. Nashville & Davidson Cnty., Hlth. &
Edl. Fac. Board Rev. Bonds (Vanderbilt
U.), Ser. A, 10-1/2s, 12/1/14 A $ 1,020,000
Texas (10.1%)
2,500,000 Bexar Cnty., Hlth. Fac. Dev. Corp. Rev.
Bonds (St. Luke's Lutheran Hosp.
Project), 7.9s, 5/1/11 Baa 2,525,000
4,000,000 Brazos River Auth. Poll. Ctrl. Rev. Bonds,
8-1/4s, 1/1/19 Baa 4,160,000
5,250,000 Dallas-Fort Worth, Intl. Arpt. Fac. Impt.
Corp. Rev. Bonds (American Airlines,
Inc.), 7-1/2s, 11/1/25(d) Baa 4,830,000
Harris Cnty. Rev. Bonds (Toll Road, Sr.
Lien)
6,000,000 FGIC, 5-1/2s, 8/15/21 AAA 4,860,000
7,000,000 AMBAC, 5.3s, 8/15/13 AAA 5,810,000
9,750,000 North Central TX Hlth. Fac. Dev. Corp. IFB
(Presbyterian Hlth. Care Syst.),
Ser. C, MBIA, 9.295s, 6/15/21(d) AAA 8,385,000
7,000,000 Northeast Hosp. Auth. Rev. Bonds
(Northeast Med. Ctr. Hosp.), Ser. B,
FGIC, 7-1/4s, 7/1/22 AAA 6,326,250
36,896,250
Washington (5.4%)
1,000,000 Port Longview, Indl. Dev. Corp. Export
Fac. Rev. Bonds (Atlantic Richfield
Co.), 10-3/4s, 9/1/12 A 1,031,250
WA State Pub. Pwr. Supply Syst. Rev. Bonds
(Nuclear Project No. 1)
2,500,000 Ser. B, MBIA, 5.6s, 7/1/15 AAA 2,093,750
9,425,000 Ser. A, prerefunded, 7-1/2s, 7/1/99 AA 10,202,563
6,075,000 Ser. A, 7-1/2s, 7/1/15 AA 6,318,000
19,645,563
West Virginia (4.9%)
2,000,000 Marion Cnty., Cmnty. Solid Waste Disp.
Fac. Rev. Bonds (American Pwr. Paper
Recycling Project), 8-1/4s, 12/1/11 B/P 1,875,000
15,000,000 Marion Cnty., Ind. Hosp. Auth. Hosp. Fac.
Rev. Bonds, 10-1/8s, 11/1/15 Aa 15,862,500
17,737,500
Wisconsin (1.7%)
7,500,000 WI Hsg. & Econ. Dev. Auth. Hsg. Rev.
Bonds, Ser. C, 5.8s, 11/1/13 A 6,253,125
Total Investments (cost $378,164,649) $371,114,775
</TABLE>
<PAGE>
NOTES
(a) Percentages indicated are based on a total net assets of $364,813,668.
Net assets available to common shareholders are $224,784,133, which
correspond to a net asset value per common share of $11.22.
(b) The Moody's or Standard & Poor's ratings indicated are believed to be the
most recent ratings available at November 30, 1994 for the securities listed.
Ratings are generally ascribed to securities at the time of issuance. While
the rating agencies may from time to time revise such ratings, they undertake
no obligation to do so, and the ratings indicated do not necessarily
represent ratings which the agencies would ascribe to these securities at
November 30, 1994. Securities rated by Putnam are indicated by "/P" and are
not publicly rated. Ratings are not covered by the Report of Independent
Accountants.
(c) Restricted to public resale. At the date of acquisition, these securities
were valued at cost. There were no outstanding unrestricted securities of the
same class as those held. The total market value of restricted securities
owned at November 30, 1994 was $14,511,750 or 4.0% of net assets.
(d) A portion of these securities was pledged to cover margin requirements
for future contracts at November 30, 1994. The market value segregated with
the custodian for transactions in future contracts was $81,024,206, or 22% of
net assets.
(e) The aggregate identified cost for Federal income tax purposes is
$378,403,564, resulting in gross unrealized appreciation and depreciation of
$7,716,142 and $15,004,931, respectively, or net unrealized depreciation of
$7,288,789.
The rates shown on Inverse Floating Bonds (IFB), which are securities paying
variable interest rates that vary inversely to changes in market interest
rates and Variable Rate Demand Notes (VRDN) are the current interest rates at
November 30, 1994 which are subject to change based on the terms of the
security.
The Fund had the following industry group concentrations greater than 10% on
November 30, 1994 (as a percentage of net assets):
<TABLE>
<S> <C>
Utilities 19.6%
Hospitals/Healthcare 18.5
Transportation 10.1
</TABLE>
The Fund had the following insurance group concentrations greater than 10% at
November 30, 1994 (as a percentage of net assets):
<TABLE>
<S> <C>
AMBAC 13.1%
</TABLE>
Futures Contracts Outstanding at November 30, 1994
<TABLE>
<CAPTION>
Total Aggregate Expiration Unrealized
Value Face Value Date Appreciation
<S> <C> <C> <C> <C>
US Treasury
Bond Futures (Sell) $35,204,437 $35,316,625 Mar/95 $112,188
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of assets and liabilities
November 30, 1994
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments in securities (identified cost $378,164,649) (Note 1) $371,114,775
Cash 55,610
Receivable for securities sold 1,099,977
Interest and other receivables 7,049,449
Total assets 379,319,811
Liabilities
Distributions payable to common shareholders 1,603,119
Payable for securities purchased 11,846,536
Payable for compensation of Manager (Note 3) 650,241
Payable for administrative services (Note 3) 3,117
Payable for compensation of Trustees (Note 3) 186
Payable for investor servicing and custodian fees (Note 3) 81,602
Payable for variation margin on open futures contracts 235,594
Other accrued expenses 85,748
Total liabilities 14,506,143
Net assets $364,813,668
Represented by
Series A remarketed preferred shares, without par value; 2,000
shares authorized (1,400 shares issued at $100,000 per share)
(Note 2) $140,000,000
Common shares, without par value; unlimited shares authorized;
20,039,145 shares outstanding (Notes 1 and 5) 221,001,994
Undistributed net investment income (Notes 1 and 5) 12,447,836
Accumulated net realized loss on investments (Notes 1 and 5) (1,698,476)
Net unrealized depreciation of investments and futures contracts (6,937,686)
Net assets $364,813,668
Computation of net asset value
Series A remarketed preferred shares $140,000,000
Cumulative undeclared income dividends on Series A remarketed
preferred shares 29,535
Net assets allocated to Series A remarketed preferred shares at
liquidation preference 140,029,535
Net assets available to common shares: Net asset value per share
$11.22 ($224,784,133 divided by 20,039,145) 224,784,133
Net assets $364,813,668
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of operations
Year ended November 30, 1994
<TABLE>
<CAPTION>
<S> <C>
Tax exempt investment income $ 27,530,451
Expenses:
Compensation of Manager (Note 3) 2,715,985
Investor servicing and custodian fees (Note 3) 288,953
Compensation of Trustees (Note 3) 14,356
Registration fees 974
Reports to shareholders 24,824
Auditing 54,934
Legal 11,603
Postage 62,140
Administrative services (Note 3) 10,724
Amortization of organization expenses (Note 1) 6,405
Preferred share remarketing agent fees 332,667
Exchange listing fees 24,218
Other expenses 36,098
Total expenses 3,583,881
Net investment income 23,946,570
Net realized loss on investments (Notes 1 and 4) (5,277,854)
Net realized gain on future contracts (Notes 1 and 4) 4,090,542
Net unrealized depreciation of investments during the period (39,271,513)
Net loss on investment transactions (40,458,825)
Net decrease in net assets resulting from operations $(16,512,255)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of changes in net assets
<TABLE>
<CAPTION>
Year ended November 30
1994 1993
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 23,946,570 $ 25,957,759
Net realized gain (loss) on investments (5,277,854) 5,190,582
Net realized gain (loss) on futures contracts 4,090,542 (189,197)
Net unrealized appreciation (depreciation) of
investments during the year (39,271,513) 12,914,296
Net increase (decrease) in net assets resulting from
operations (16,512,255) 43,873,440
Distributions to remarketed preferred shareholders:
From net investment income (3,886,607) (3,172,332)
From net realized gain on investments (79,242) (551,080)
In excess of realized gain (8,311) --
Net increase (decrease) in net assets resulting from
operations applicable to common shareholders
(excluding cumulative undeclared income dividends on
remarketed preferred shares of $29,535 and $9,590,
respectively, and cumulative undeclared capital gain
dividends on remarketed preferred shares of $0 and
$30,643 respectively) (20,486,415) 40,150,028
Distributions to common shareholders:
From net investment income (19,335,095) (18,883,406)
From net realized gain on investments (4,109,912) --
In excess of realized gain (431,033) --
Increase from capital share transactions from
issuance of common shares 3,505,942 2,722,866
Total increase (decrease) in net assets (40,856,513) 23,989,488
Net assets
Beginning of year 405,670,181 381,680,693
End of year (including undistributed net investment
income of $12,447,836 and $11,091,758, respectively) $364,813,668 $405,670,181
Number of fund shares
Common shares outstanding at beginning of period 19,764,439 19,560,916
Common shares issued in connection with reinvestment
of distributions 274,706 203,523
Common shares outstanding at end of year 20,039,145 19,764,439
Remarketed preferred shares outstanding at the
beginning and end of year 1,400 1,400
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Financial Highlights
(For a common share outstanding throughout the year)
<TABLE>
<CAPTION>
For the period
October 26, 1989
(commencement of
operations) to
Year ended November 30 November 30
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period
(common shares) $ 13.44 $ 12.36 $ 11.51 $ 11.03 $ 11.19 $ 11.11*
Investment operations
Net investment income 1.20 1.32 1.35 1.27 1.14 .07
Net realized and unrealized
gain (loss) on investments (2.03) .91 .65 .43 (.08) .01
Total from investment
operations (.83) 2.23 2.00 1.70 1.06 .08
Less distributions:
From net investment income:
to Common Shareholders (.97) (.96) (.91) (.89) (.87) --
to Preferred Shareholders (.19) (.16) (.24) (.29) (.23) --
From net realized gain on
investments
to Common Shareholders (.21) -- -- -- (.01) --
to Preferred Shareholders -- (.03) -- -- -- --
In excess of realized gains
to Common Shareholders (.02) -- -- -- -- --
to Preferred Shareholders -- -- -- -- -- --
Total distributions (1.39) (1.15) (1.15) (1.18) (1.11) --
Preferred shares offering costs -- -- -- (.04) (.11) --
Net asset value, end of period
(common shares) $ 11.22 $ 13.44 $ 12.36 $ 11.51 $ 11.03 $ 11.19
Market value, end of period
(common shares) $ 11.88 $ 14.00 $ 13.25 $ 11.88 $ 11.25 $ 11.88
Total investment return at
market price (common shares)
(%)(a) (6.74) 13.54 20.24 14.23 2.58 (1.04)(c)
Net assets, end of period
(total fund) (in thousands) $364,814 $405,670 $381,681 $362,974 $311,731 $213,924
Ratio of expenses to average
net assets (%)(b) 1.45 1.40 1.45 1.46 1.21 .12(c)
Ratio of net investment income
to average net assets (%)(b) 8.07 8.59 9.20 8.70 8.29 --
Portfolio turnover (%) 78.97 33.73 44.39 72.49 89.65 13.17(c)
</TABLE>
* Represents initial net asset value of $11.16 less offering expenses of
approximately $0.05.
(a) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b) Ratios reflect net assets available to common shares only; net investment
income ratio also reflects reduction for dividend payments to preferred
shareholders.
(c) Not annualized.
<PAGE>
Notes to financial statements
November 30, 1994
Note 1
Significant accounting policies
The fund is registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end management investment company. The fund's
investment objective is to provide as high a level of current income exempt
from federal income tax as is believed to be consistent with preservation of
capital. The fund intends to achieve its objective by investing in a
diversified portfolio of tax-exempt municipal securities that the fund's
Manager believes do not involve undue risk to income or principal. Under
normal market conditions, the fund will invest at least 80% of its total
assets in tax-exempt municipal securities rated "investment grade" at the
time of investment or, if not rated, determined by the fund's Manager to be
of comparable quality.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Security valuation Tax-exempt bonds and notes are stated on the basis of
valuations provided by a pricing service, approved by the Trustees, which
uses information with respect to transactions in bonds, quotations from bond
dealers, market transactions in comparable securities and various
relationships between securities in determining value.
Short term investments having remaining maturities of 60 days or less are
stated at amortized cost, which approximated market value, and other
investments including restricted securities are stated at fair market value
following procedures approved by the Trustees.
B Determination of net asset value Net asset value of the common shares is
determined by dividing the value of all assets of the fund (including accrued
interest and dividends), less all liabilities (including accrued expenses),
and the liquidation value of any outstanding remarketed preferred shares, by
the total number of common shares outstanding.
C Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis.
D Futures A futures contract is an agreement between two parties to buy and
sell a security at a set price on a future date. Upon entering into such a
contract the fund is required to pledge to the broker an amount of cash or
U.S. government securities equal to the minimum "initial margin" requirements
of the exchange. Pursuant to the contract, the fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the fund as unrealized gains or losses. When the contract
is closed, the fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at
the time it was closed. The potential risk to the fund is that the change in
value of the underlying securities may not correspond to the change in value
of the futures contracts
E Federal taxes It is the policy of the fund to distribute all of its income
<PAGE>
within the prescribed time and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986. Therefore, no provision has been made for federal taxes on income,
capital gains or unrealized appreciation of securities held and excise tax on
income and capital gains.
F Distributions to shareholders Distributions to common and preferred
shareholders are recorded by the fund on the ex-dividend date. Dividends on
remarketed preferred shares become payable, when, as and if declared by the
Trustees. Each dividend period for the remarketed preferred shares is
generally a 7-day period. The applicable dividend rate for the remarketed
preferred shares on November 30, 1994 was 3.85%.
The amount and character of income and gains to be distributed are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences include market discount and
amortization of organization costs. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations. For the
period ended November 30, 1994, the fund reclassified $72,550 to increase
undistributed net investment income, $71,820 to increase net realized loss,
and $730 to decrease paid-in capital.
G Amortization of bond premium and discount Any premium resulting from the
purchase of securities in excess of maturity value is amortized on a
yield-to-maturity basis. Discount on zero-coupon bonds is accreted according
to the effective yield method.
H Unamortized organization expenses Expenses incurred by the fund in
connection with its organization aggregated $35,502. These expenses were
amortized on a straight-line basis over a five-year period.
Note 2
Remarketed Preferred Shares
The Series A RP shares are redeemable at the option of the fund on any
dividend payment date at a redemption price of $100,000 per share, plus an
amount equal to any dividends accumulated on a daily basis but unpaid through
the redemption date (whether or not such dividends have been declared) and,
in certain circumstances, a call premium. Additionally, the fund has
authorized a separate series of 2,000 Serial Remarketed Preferred shares,
which are issuable only under certain conditions in exchange for Series A RP
shares. No Serial Remarketed Preferred shares are currently outstanding.
It is anticipated that approximately 98% of total distributions and dividends
paid during fiscal 1994 to holders of remarketed preferred shares will be
considered tax-exempt dividends under the Internal Revenue Code of 1986, as
amended. To the extent that the fund earns taxable income and taxable gains
by the conclusion of a fiscal year, it is required to apportion to holders of
the remarketed preferred shares throughout the year additional dividends as
necessary to result in an after-tax yield equivalent to the applicable
dividend rate for the period. During the year ended November 30, 1994, the
fund paid additional dividends of $30,643 to holders of remarketed preferred
shares.
Under the Investment Company Act of 1940, the fund is required to maintain
asset coverage of at least 200% with respect to the remarketed preferred
shares as of the last business day of each month in which any such shares are
outstanding. Additionally, the fund
<PAGE>
is required to meet more stringent asset coverage requirements under the
terms of the remarketed preferred shares and by the shares' rating agencies.
Should these requirements not be met, or should dividends accrued on the
remarketed preferred shares not be paid, the fund may be restricted in its
ability to declare dividends to common shareholders or may be required to
redeem certain of the remarketed preferred shares. At November 30, 1994,
there were no such restrictions on the fund.
Note 3
Management fee, administrative services, and other transactions
Compensation of Putnam Investment Management, Inc. (Putnam Management), the
fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc., for
management and investment advisory services is paid quarterly based on the
average net assets of the fund, including those allocated to the remarketed
preferred shares. Such fee is based on the annual rate of 0.70% of the
average weekly net assets.
If dividends payable on remarketed preferred shares during any dividend
payment period plus any expenses attributable to remarketed preferred shares
for that period exceed the fund's net income attributable to the proceeds of
the remarketed preferred shares during that period, then the fee payable to
Putnam for that period will be reduced by the amount of the excess (but not
more than 0.70% of the liquidation preference of the remarketed preferred
shares outstanding during the period).
The fund also reimburses the Manager for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $870 and an
additional fee for each Trustees' meeting attended. Trustees who are not
interested persons of the Manager and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
Custodial functions are provided to the fund by Putnam Fiduciary Trust
Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc.
Investor servicing agent functions for the fund's common shares are provided
by PFTC.
Investor servicing and custodian fees reported in the Statement of operations
have been reduced by credits allowed by PFTC.
Note 4
Purchases and sales of securities
During the year ended November 30, 1994, purchases and sales of investment
securities other than short-term municipal obligations aggregated
$294,391,839 and $286,395,534, respectively. Purchases and sales of
short-term municipal obligations aggregated $276,245,000 and $282,645,000,
respectively. In determining the net gain or loss on securities sold, the
cost of securities has been determined on the identified cost basis.
<PAGE>
Transactions in futures contracts during the period are summarized as
follows:
<TABLE>
<CAPTION>
Sales of Futures Contracts
Number of Contracts Aggregate Face Value
<S> <C> <C>
Contracts opened 10,443 $ 1,075,962,189
Contracts closed (10,084) $(1,040,645,564)
Open at end of period 359 $ 35,316,625
</TABLE>
<TABLE>
<CAPTION>
Purchase of Future Contracts
Number of Contracts Aggregate Face Value
<S> <C> <C>
Contracts opened 755,000 $ 71,996,563
Contracts closed (755,000) $(71,996,563)
Open at end of period -- --
</TABLE>
Note 5
Reclassification of Capital Accounts
Effective December 1, 1993 Putnam Investment Grade Municipal Trust has
adopted the provisions of the AICPA Statement of Position (SOP) 93-2
"Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies."
The purpose of this SOP is to report the accumulated net investment income
and accumulated net realized gain (loss) accounts in such a manner as to
approximate amounts available for future distributions (or to offset future
realized capital gains) and to achieve uniformity in the presentation of
distributions by investment companies.
As a result of the SOP, the fund has reclassified $558,660 to increase
undistributed net investment income, $552,774 to decrease accumulated net
realized gain and $5,916 to decrease paid-in capital. These adjustments
represent the cumulative amounts necessary to report these balances through
November 30, 1994, the close of the fund's most recent fiscal year end for
financial reporting and tax purposes.
These reclassifications, which have no impact on the total net asset value of
the fund, are attributable to organization expenses which are treated
differently in the computation of distributable income and capital gains
under federal income tax rules and regulations versus generally accepted
accounting principles.
<PAGE>
Selected quarterly data
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
November 30 August 31 May 31 February 28
1994 1994 1994 1994
<S> <C> <C> <C> <C>
Total investment income
Total $ 6,977,508 $ 6,585,179 $ 6,855,768 $ 7,111,996
Per share* $ .33 $ .34 $ .35 $ .35
Net investment income
available to common
shareholders
Total $ 4,852,138 $ 4,650,396 $ 5,062,217 $ 5,495,212
Per share* $ .24 $ .24 $ .26 $ .27
Net realized and unrealized
gain (loss) on investments
Total $(21,330,357) $ 616,807 $(16,604,981) $ (3,137,847)
Per share* $ (1.06) $ .02 $ (.84) $ (.15)
Net increase (decrease) in
net assets available to
common shareholders
resulting from operations
Total $(16,480,666) $ 5,267,203 $(11,630,317) $ 2,357,365
Per share* $ (.82) $ .26 $ (.58) $ .12
Net assets available to
common shareholders at the
end of the period
Total $224,784,133 $245,458,624 $244,275,695 $259,982,643
Per share* $ 11.22 $ 12.28 $ 12.26 $ 13.08
</TABLE>
*Per common share.
<PAGE>
Selected quarterly data
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
November 30 August 31 May 31 February 28
1993 1993 1993 1993
<S> <C> <C> <C> <C>
Total investment income
Total $ 7,299,845 $ 7,412,198 $ 7,460,790 $ 7,410,737
Per share* $ .37 $ .38 $ .37 $ .38
Net investment income
available to common
shareholders
Total $ 5,266,270 $ 5,650,335 $ 5,679,969 $ 5,637,773
Per share* $ .27 $ .29 $ .28 $ .29
Net realized and unrealized
gain (loss) on investments
Total $ (3,629,890) $ 9,372,959 $ (4,510,500) $ 16,683,112
Per share* $ (.19) $ .48 $ (.22) $ .84
Net increase (decrease) in
net assets available to
common shareholders
resulting from operations
Total $ 1,636,380 $ 15,023,294 $ 1,169,469 $ 22,320,885
Per share* $ .08 $ .77 $ .06 $ 1.13
Net assets available to
common shareholders at the
end of the period
Total $265,629,948 $268,053,202 $257,065,067 $259,927,102
Per share* $ 13.44 $ 13.60 $ 13.07 $ 13.25
</TABLE>
*Per common share.
<PAGE>
Fund information
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
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary Coburn
Vice President
James E. Erickson
Vice President
Michael F. Bouscaren
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
<PAGE>
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time for
up-to-date information about the fund's NAV or to request Putnam's quarterly
Closed-End Fund Commentary.
<PAGE>
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
058-15833
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS:
(1) Bold and italic typefaces are displayed in normal type.
(2) Headers (e.g., the name of the fund) are omitted.
(3) Certain tabular and columnar headings and symbols are displayed
differently in this filing.
(4) Bullet points and similar graphic signals are omitted.
(5) Page numbering is omitted.
(6) Trademark symbol replaced with (TM)
