Putnam
Investment
Grade
Municipal
Trust II
ANNUAL REPORT
April 30, 1998
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "In today's low interest-rate environment, maintaining the fund's
competitive yield is our number one priority. We've developed tools to
more precisely manage the current and future income stream. However, in a
market with downside risk, we're also balancing the need for sustainable
income with the need for total return strategies that build net asset
value."
-- Richard P. Wyke, fund manager
Putnam Investment Grade Municipal Trust II
* "Surging tax revenues in most states help bolster municipal credit
bond ratings. Standard & Poor's says the number of rating upgrades in this
year's first quarter was more than nine times the number of downgrades."
-- The Wall Street Journal, April 8, 1998
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
11 Portfolio holdings
17 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The fragility of market rallies was clearly demonstrated once again as Putnam
Investment Grade Municipal Trust II approached the end of fiscal 1998. The
suggestion that the Federal Reserve Board might be assuming a more cautious
stance on inflation was enough to stop the bond market's most recent advance
in its tracks.
One consequence of this turnabout was a slight erosion in total return for the
period (based on market value). Fund Manager Richard Wyke considers the
development merely a minor setback; he remains confident that the fundamentals
- -- strong demand, attractive value -- remain in place.
In this volatile environment, Rick continues to focus on maintaining a high
level of current tax-free income, consistent with capital preservation. In the
following report, he discusses his strategy during the 12 months ended April
30, 1998, and looks at prospects for the new fiscal year.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
June 17, 1998
Report from the Fund Manager
Richard P. Wyke
Without the drama played out almost every day in the stock market, the $1.3
trillion municipal bond market has become very attractively priced relative to
the Treasury market -- a state of affairs that hasn't occurred since the
flat-tax scare of 1996. Municipal bonds (as represented by 30-year insured
municipals) are now offering almost 90% of the yield of long-term Treasury
bonds. Since the typical level is 84%, the current percentage makes municipal
prices remarkably low.
During the year, the Federal Reserve Board has remained on the sidelines in
deference to the noninflationary economic environment and fears of the
eventual impact of Asia's troubles on the United States. Within this
relatively tranquil yet cautious environment, Putnam Investment Grade
Municipal Trust II has delivered what it has promised to shareholders: a
steady stream of income exempt from federal taxes along with relatively low
share price volatility. Your fund produced strong returns of 9.91% at net
asset value and 5.63% at market price for the 12 months ended April 30, 1998.
By comparison, the Lehman Brothers Municipal Bond Index posted a return of
9.30% for the same period. Please see pages 8 and 9 for additional performance
information.
* FUNDAMENTALS KEEP BALANCE IN MARKET
The first quarter of 1998 has been most notable for its huge incremental
supply -- an increase of approximately 70% over the supply brought to market
one year ago. Demand for municipal bonds has also risen, keeping balance in
this market and being fueled primarily by the bargain prices.
As we ended the fiscal year, there was anxiety brewing over the sale of the
largest bond offering in history. However, when the Long Island Power
Authority came to market with $3.4 billion of utility bonds, this enormous
issue was absorbed quite well.
* HEALTH CARE, TRANSPORTATION, UTILITIES OUTPERFORM
The health-care sector continues to perform well in spite of forthcoming
reductions in the Medicare budget. Merger and acquisition activity along with
credit upgrades has helped overall performance in this sector.
Your fund's significant position in the transportation industry has been
bolstered by positive earnings that stem from strong passenger demand and low
fuel prices, particularly in the airline sector. Standard & Poor's has raised
the credit outlook for American Airlines to positive from stable, reflecting
the industry's and each company's good health. While these securities and
others discussed in this report were viewed favorably during the period, all
holdings are subject to review in accordance with the fund's investment
strategy.
As you probably know, deregulation has hit the utility industry, the last
legal monopoly in the United States. The demand for cheaper electricity,
combined with new power plant technology and federal legislation, set the
stage for the deregulation of utilities several years ago. The same type of
restructuring has already occurred in the telephone, natural gas, airline, and
trucking industries. With the ensuing increase in competition, we are
beginning to see lower electricity rates for both homeowners and businesses.
[GRAPHIC OMITTED: HORIZONTAL BAR CHART OF TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Transportation 17.6%
Hospitals/health care 16.7%
Water and sewer 14.6%
Utilities 12.7%
Education 5.4%
Footnote reads:
* Based on net assets as of 4/30/98. Holdings will vary over time.
The restructuring of the utility industry has created some dynamic investment
opportunities for the fund. For example, one of the fund's utility holdings,
Nevada Power, has just proposed a merger with Sierra Pacific Resources, which
holds a higher credit rating from Moody's and Standard & Poor's. Sierra
Pacific has experienced a rapid service territory growth rate and one of the
highest growth rates in the United States. This merger should help the
lower-rated Nevada Power reduce costs and improve cash flow with the overall
impact of enhancing investor security in its bonds.
* SUSTAINING DIVIDENDS WITHIN FLAT YIELD CURVE
Fund management remains focused on sustaining the fund's dividend level in a
market in which higher-yielding bonds are steadily called away. As we replace
the called bonds, our goal is to acquire bonds with at least four years of
call protection to enable us to provide the highest and most durable level of
income. This strategy should give the fund some protection even if interest
rates continue to stay low or decline further.
Also noteworthy is the unusually flat tax-exempt yield curve. Simply put, the
difference between short-term and long-term interest rates is known as the
yield curve. Right now the yields between short and long maturities are
remarkably similar, causing the curve to be flat. With the 30-year bond paying
only a modest 30 to 40 basis points more than a 10-year bond, investors are
not compensated for taking on higher risk. For this reason, we have found the
best value (attractive yield with minimal volatility) in the intermediate
range of the yield curve -- anywhere from 8 to 15 years.
* INFLATION RATE KEY VARIABLE IN OUTLOOK
The Asian crisis has not yet had an impact on interest rates in the United
States. While interest rates may remain low, we believe that the inflation
rate is the key economic variable to watch in 1998. Because we expect
continued U.S. economic growth to be supported by consumer demand, low
interest rates, and the wealth effect of a strong equity market, there is the
potential for a rise in inflation in the second half of 1998.
[GRAPHIC OMITTED: PIE CHART OF PORTFOLIO QUALITY OVERVIEW]
PORTFOLIO QUALITY OVERVIEW*
Ba -- 3.6%
Baa -- 19.8%
A -- 20.3%
Aa -- 8.5%
VMIGI -- 0.4%
AAA -- 47.4%
Footnote reads:
* As a percentage of portfolio market value on 4/30/98. A bond rated Baa or
higher is considered investment grade. All ratings reflect Moody's
terminologies and may include unrated bonds considered by Putnam Management to
be of comparable quality. Portfolio quality will vary over time.
Consequently, this is not a good time to expose the portfolio to bonds with
longer maturities and higher interest-rate risk. We believe that a cautious
strategy will produce the best returns in the months ahead.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed
favorably as of 4/30/98, there is no guarantee the fund will continue to hold
these securities in the future.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam Investment Grade Municipal Trust II is designed for
investors seeking high current income free from federal income tax,
consistent with preservation of capital.
TOTAL RETURN FOR PERIODS ENDED 4/30/98
Lehman Bros.
Market Municipal Consumer
(common shares) NAV price Bond Index Price Index
- ------------------------------------------------------------------------------
1 year 9.91% 5.63% 9.30% 1.44%
- ------------------------------------------------------------------------------
5 years 35.20 38.62 37.14 12.85
Annual average 6.22 6.75 6.52 2.45
- ------------------------------------------------------------------------------
Life of fund (11/27/92) 47.38 38.09 45.14 14.44
Annual average 7.42 6.14 7.12 2.52
- ------------------------------------------------------------------------------
Performance data represent past results and do not reflect future
performance. They do not take into account any adjustment for taxes
payable on reinvested distributions. Investment returns, net asset value
and market price will fluctuate so that an investor's shares when sold may
be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 4/30/98
- ------------------------------------------------------------------------------
Distributions (common shares)
- ------------------------------------------------------------------------------
Number 12
- ------------------------------------------------------------------------------
Income $0.96
- ------------------------------------------------------------------------------
Total $0.96
- ------------------------------------------------------------------------------
Preferred shares Series A (630 shares) Series B (630 shares)
- ------------------------------------------------------------------------------
Income $1,847.85 $1,835.53
- ------------------------------------------------------------------------------
Total $1,847.85 $1,835.53
- ------------------------------------------------------------------------------
Share value
- ------------------------------------------------------------------------------
(common shares): NAV Market price
- ------------------------------------------------------------------------------
4/30/97 $13.70 $14.250
- ------------------------------------------------------------------------------
4/30/98 14.13 14.125
- ------------------------------------------------------------------------------
Current return
(end of period)
- ------------------------------------------------------------------------------
(common shares): NAV Market price
- ------------------------------------------------------------------------------
Current dividend rate1 6.79% 6.80%
- ------------------------------------------------------------------------------
Taxable equivalent2 11.24 11.26
- ------------------------------------------------------------------------------
1Income portion of most recent distribution, annualized and divided by NAV
or market price at end of period.
2Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
TOTAL RETURN FOR PERIODS ENDED 3/31/98
(most recent calendar quarter)
Market
(common shares) NAV price
- ------------------------------------------------------------------------------
1 year 11.95% 15.21%
- ------------------------------------------------------------------------------
5 years 38.59 45.94
Annual average 6.74 7.85
- ------------------------------------------------------------------------------
Life of fund (11/27/92) 48.73 45.83
Annual average 7.72 7.32
- ------------------------------------------------------------------------------
Performance data represent past results and do not reflect future
performance. They do not take into account any adjustment for taxes
payable on reinvested distributions. Investment returns, net asset value
and market price will fluctuate so that an investor's shares, when sold,
may be worth more or less than their original cost.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities and the net assets allocated to 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. The index assumes reinvestment of all distributions
and interest payments and does not take in account brokerage fees or
taxes. Securities in the fund do not match those in the indexes and
performance of the fund will differ. It is not possible to invest directly
in an index.
Consumer Price Index (CPI ) is a commonly used measure of inflation; it
does not represent an investment return.
Report of independent accountants
For the fiscal year ended April 30, 1998
To the Trustees and Shareholders of
Putnam Investment Grade Municipal Trust II
We have audited the accompanying statement of assets and liabilities of Putnam
Investment Grade Municipal Trust II, including the portfolio of investments
owned, as of April 30, 1998, and the related statement of operations for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the periods then ended. These financial statements and financial
highlights are the responsibility of the fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of April 30, 1998, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Putnam Investment Grade Municipal Trust II as of April 30, 1998, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights
for each of the five years in the periods then ended, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 12, 1998
Portfolio of investments owned
April 30, 1998
Key to Abbreviations
AMBAC - AMBAC Indemnity Corporation
CLI Insd. - Connie Lee Insurance Insured
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Assurance
G.O. Bonds - General Obligation Bonds
IFB - Inverse Floating Rate Bonds
MBIA - Municipal Bond Investors Assurance Corporation
VRDN - Variable Rate Demand Notes
<TABLE>
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MUNICIPAL BONDS AND NOTES (98.4%)
PRINCIPAL AMOUNT RATINGS(RAT) VALUE
Alaska (0.9%)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
$ 2,000,000 Valdez, Marine Term. Rev. Bonds (Sohio Pipeline),
7 1/8s, 12/1/25 AA2 $ 2,215,000
Arizona (1.6%)
- -------------------------------------------------------------------------------------------------------------
6,000,000 Maricopa Cnty., U. School Dist. No. 41 Gilbert
Cap. Appn. G.O. Bonds, FGIC, zero %, 1/1/07 Aaa 4,012,500
California (6.5%)
- -------------------------------------------------------------------------------------------------------------
5,000,000 CA Hlth. Fac. Fin. Auth. IFB (Catholic Healthcare
West), AMBAC, 6.456s, 7/1/17 Aaa 4,981,250
3,855,000 CA State G.O. Bonds, 7s, 8/1/07 A1 4,539,263
2,500,000 CA State U. IFB, AMBAC, 9.71s, 11/1/21
(acquired 9/2/94, cost $2,681,272) (RES) Aaa 2,912,500
3,500,000 Foothill/Eastern Trans. Corridor Agcy. Toll Rd.
Rev. Bonds, Sr. Lien, Ser. A, stepped-coupon
zero % (7s, 1/1/05), 2008 (STP) Baa 2,594,375
1,420,000 Fountain Valley, Agcy. for Cmnty. Dev. Tax Alloc.
Rev. Bonds (Indl. Area Redev.), 9.1s, 1/1/16 BBB+ 1,434,356
--------------
16,461,744
Colorado (7.4%)
- -------------------------------------------------------------------------------------------------------------
Denver, City & Cnty. Arpt. Rev. Bonds
3,675,000 Ser. A, 8 3/4s, 11/15/23 Baa1 4,221,656
1,325,000 Prerefunded, Ser. A, 8 3/4s, 11/15/23 Aaa 1,533,688
2,285,000 Ser. A, 8 1/2s, 11/15/23 Baa1 2,530,638
215,000 Prerefunded, Ser. A, 8 1/2s, 11/15/23 Aaa 240,263
1,525,000 Ser. A, 8s, 11/15/25 Baa1 1,671,781
735,000 Ser. A, 8s, 11/15/25 Baa1 814,013
265,000 Prerefunded, Ser. A, 8s, 11/15/25 Aaa 295,806
145,000 Prerefunded, Ser. A, 8s, 11/15/25 Aaa 160,406
1,000,000 Ser. D, 7 3/4s, 11/15/13 Baa1 1,250,000
5,250,000 SCA Tax Exempt Trust Multi-Fam. Mtge. Rev. Bonds
(Newport Village), Ser. A-8, FSA, 7.1s, 1/1/30 Aaa 5,847,188
--------------
18,565,439
Florida (9.3%)
- -------------------------------------------------------------------------------------------------------------
Broward Cnty., Resource Recvy. Rev. Bonds
10,145,000 (SES Broward Cnty. LP South), 7.95s, 12/1/08 A 10,956,600
1,100,000 (Waste-Energy LP North), 7.95s, 12/1/08 A 1,188,000
1,000,000 FL State Board of Ed. Cap. Outlay G.O. Bonds,
Ser. A, 7 1/4s, 6/1/23 Aa2 1,075,000
5,000,000 Lee Cnty., Board of Directors Hosp. IFB
(Lee Memorial Hosp.), MBIA, 8.685s, 3/26/20 Aaa 5,756,250
5,000,000 Port Everglades Auth. Rev. Bonds, Ser. A, 5s, 9/1/16 BBB 4,712,500
--------------
23,688,350
Georgia (3.0%)
- -------------------------------------------------------------------------------------------------------------
6,340,000 Burke Cnty., Dev. Auth. Poll. Control Rev. Bonds
(Oglethorpe Pwr. Co. Vogtle), MBIA, 8s, 1/1/22 (SEG) Aaa 7,433,650
Hawaii (2.6%)
- -------------------------------------------------------------------------------------------------------------
HI State Arpt. Syst. Rev. Bonds
2,000,000 AMBAC, 7.3s, 7/1/20 Aaa 2,155,000
4,000,000 FGIC, 7s, 7/1/10 Aaa 4,370,000
--------------
6,525,000
Illinois (5.0%)
- -------------------------------------------------------------------------------------------------------------
7,750,000 Central Lake Cnty., Joint Action Wtr. Agcy.
G.O. Bonds, 6s, 2/1/19 Aa 8,069,688
Chicago, O'Hare Intl. Arpt. Special Fac. Rev. Bonds
2,005,000 (United Air Lines, Inc.), Ser. C, 8.2s, 5/1/18 Baa2 2,126,423
2,250,000 (American Airlines, Inc.), Ser. A, 7 7/8s, 11/1/25 Baa2 2,444,063
--------------
12,640,174
Indiana (0.9%)
- -------------------------------------------------------------------------------------------------------------
2,000,000 Marion Cnty., Ind. Convention & Rectl. Fac. Auth.
Rev. Bonds (Excise Tax Rev. Lease Rental),
Ser. A, AMBAC, 7s, 6/1/21 Aaa 2,167,500
Kansas (1.1%)
- -------------------------------------------------------------------------------------------------------------
2,600,000 Burlington, Poll. Control Rev. Bonds
(Kansas Gas & Electric Co.), MBIA, 7s, 6/1/31 Aaa 2,840,500
Kentucky (2.0%)
- -------------------------------------------------------------------------------------------------------------
5,030,000 Jefferson Cnty., Cap. Corp. Rev. Bonds, MBIA,
5 1/2s, 6/1/28 Aaa 5,111,738
Louisiana (1.1%)
- -------------------------------------------------------------------------------------------------------------
2,000,000 Beauregard, Parish Rev. Bonds (Boise Cascade
Corp.), 7 3/4s, 6/1/21 Baa3 2,207,500
500,000 St. Charles Parish, Poll. Control Rev. Bonds
(LA Pwr. & Lt.), 8 1/4s, 6/1/14 Baa3 532,260
--------------
2,739,760
Maryland (1.2%)
- -------------------------------------------------------------------------------------------------------------
3,000,000 MD State Hlth. & Higher Edl. Fac. Auth. Rev. Bonds
(Johns Hopkins U.), 7 1/2s, 7/1/20 Aa2 3,076,830
Massachusetts (5.7%)
- -------------------------------------------------------------------------------------------------------------
MA State Hlth. & Edl. Fac. Auth. IFB
5,500,000 (Med. Ctr. of Central MA), Ser. B, AMBAC,
8.82s, 6/23/22 Aaa 6,888,750
2,000,000 (Boston U.), Ser. L, MBIA, 9.477s, 10/1/31 Aaa 2,340,000
3,000,000 MA State Port Auth. Rev. Bonds, 13s, 7/1/13 Aaa 5,073,750
--------------
14,302,500
Michigan (5.9%)
- -------------------------------------------------------------------------------------------------------------
2,000,000 Detroit, Wtr. Supply Syst. IFB, FGIC, 8.613s, 7/1/22 Aaa 2,302,500
6,000,000 MI State Hosp. Fin. Auth. Rev. Bonds (Pontiac
Osteopathic Hosp.), Ser. A, 6s, 2/1/24 Baa1 6,142,500
6,250,000 Western Township, Util. Auth. Swr. Disp. Syst.
Rev. Bonds, 8.2s, 1/1/18 BBB+ 6,540,375
--------------
14,985,375
Mississippi (2.5%)
- -------------------------------------------------------------------------------------------------------------
6,000,000 Claiborne Cnty., Poll. Control Rev. Bonds (Middle
South Energy, Inc.), Ser. C, 9 7/8s, 12/1/14 Ba1 6,343,140
Nevada (1.4%)
- -------------------------------------------------------------------------------------------------------------
1,500,000 Clark Cnty., Indl. Dev. Rev. Bonds (Southwest Gas
Corp.), Ser. B, 7 1/2s, 9/1/32 Baa2 1,663,125
2,000,000 Clark Cnty., Indl. Dev. Rev. Bonds (NV Pwr. Co.),
Ser. C, 5 1/2s, 10/1/30 BBB/P 1,952,500
--------------
3,615,625
New York (18.3%)
- -------------------------------------------------------------------------------------------------------------
5,370,000 Babylon, Indl. Dev. Agcy. Res. Recvy. Rev. Bonds
(Ogden Martin Syst., Inc.), Ser. A, 8 1/2s, 1/1/19 Aaa 5,569,120
NY City, G.O. Bonds
2,900,000 Ser. B, 7 1/2s, 2/1/06 A3 3,211,750
5,000,000 Ser. D, 5 1/4s, 8/1/21 A3 4,856,250
1,100,000 NY City, G.O. Bonds, Prerefunded, Ser. B,
7 1/2s, 2/1/06 A3 1,230,625
6,250,000 NY City, Muni. Wtr. & Swr. Fin. Auth. Syst.
Rev. Bonds, Ser. C, 7 3/4s, 6/15/20 Aaa 6,960,938
NY State Dorm. Auth. Rev. Bonds
(State U. Edl. Fac.), Ser. A
6,500,000 7.7s, 5/15/12 Aaa 7,076,875
5,000,000 5 7/8s, 5/15/17 A3 5,456,250
5,000,000 NY State Energy Res. & Dev. Auth. Elec. Fac.
Rev. Bonds (Cons. Edison Co. of NY, Inc.),
Ser. A, 7 1/2s, 1/1/26 A1 5,300,000
NY State Urban Dev. Corp. Rev. Bonds (Syracuse U.)
1,440,000 6s, 1/1/07 Baa1 1,548,000
1,360,000 6s, 1/1/06 Baa1 1,456,900
3,000,000 Suffolk Cnty., Wtr. Auth. Rev. Bonds, Sub. Lien,
MBIA, 6s, 6/1/14 Aaa 3,315,000
--------------
45,981,708
Oklahoma (1.6%)
- -------------------------------------------------------------------------------------------------------------
3,555,000 Tulsa, Indl. Auth. Hosp. Rev. Bonds (Hillcrest
Med. Ctr.), CLI Insd., 6 1/4s, 6/1/10 AAA 3,999,375
Pennsylvania (5.1%)
- -------------------------------------------------------------------------------------------------------------
3,000,000 Allegheny Cnty., Hosp. Dev. Auth. Rev. Bonds
(Magee-Womens Hosp.), FGIC, 6s, 10/1/13 Aaa 3,187,500
5,000,000 Dauphin Cnty., Auth. Hosp. Rev. Bonds (Hapsco-
Western PA Hosp.), Ser. A, MBIA, 6 1/2s, 7/1/12 Aaa 5,418,750
1,380,000 Montgomery Cnty., Indl. Dev. Auth. Rev. Bonds,
Ser. B, MBIA, 6.7s, 12/1/21 AAA 1,495,575
2,700,000 PA State Higher Ed. Assistance Agcy. Rev. Bonds
(Student Loan IFB), Ser. A, AMBAC, 6 1/4s, 7/1/13 Bb 2,662,875
--------------
12,764,700
Puerto Rico (2.3%)
- -------------------------------------------------------------------------------------------------------------
4,500,000 Cmnwlth. of PR, Med. and Env. Poll. Ctrl. Fac.
Rev. Bonds (Baxter Travenol Labs., Inc.), 8s, 9/1/12 A3 4,691,655
1,000,000 Cmnwlth. of PR, Hwy & Trans Auth. Rev. Bonds
Ser. A, VRDN, AMBAC, 3.75s, 7/1/28 VMIG1 1,000,000
--------------
5,691,655
South Carolina (2.3%)
- -------------------------------------------------------------------------------------------------------------
5,000,000 Spartanburg Cnty. Solid Waste Disp. Rev. Bonds
(Bayerische Motoren Werke), 7.55s, 11/1/24 A-/P 5,768,750
Tennessee (5.1%)
- -------------------------------------------------------------------------------------------------------------
3,000,000 Maury Cnty. Indl. Dev. Board Poll. Control
Rev. Bonds (Saturn Corp.), 6 1/2s, 9/1/24 A 3,288,750
8,300,000 Metropolitan Govt. Nashville & Davidson Cnty.,
Tenn. Wtr. & Swr. IFB, AMBAC, 8.216s, 1/1/22 Aaa 9,565,750
--------------
12,854,500
Texas (2.1%)
- -------------------------------------------------------------------------------------------------------------
1,700,000 Alliance, Arpt. Auth. Rev. Bonds (Federal Express
Corp.), 6 3/8s, 4/1/21 Baa2 1,840,250
1,250,000 Dallas-Fort Worth, Intl. Arpt. Fac. Impt. Corp. Rev.
Bonds (American Airlines, Inc.), 7 1/2s, 11/1/25 Baa2 1,348,433
1,750,000 North Central Hlth. Fac. Dev. Corp. IFB
(Presbyterian Hlth. Care Syst.), Ser. C, MBIA,
9.265s, 6/15/21 Aaa 2,047,500
--------------
5,236,183
Washington (3.5%)
- -------------------------------------------------------------------------------------------------------------
6,000,000 King Cnty., G.O. Bonds, Ser. C, 6 1/4s, 1/1/32 Aa1 6,517,500
2,000,000 Tacoma, Elec. Syst. IFB, AMBAC, 8.896s, 1/2/15 Aaa 2,297,500
--------------
8,815,000
- -------------------------------------------------------------------------------------------------------------
Total Investments (cost $239,765,799) (b) $ 247,836,696
- -------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $251,864,492.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available
at April 30, 1998 for the securities listed. Ratings are generally ascribed to securities at the time of
issuance. While the agencies may from time to time revise such ratings, they undertake no obligation to
do so, and the ratings do not necessarily represent what the agencies would ascribe to these securities
at April 30, 1998. Securities rated by Putnam are indicated by "/P" and are not publicly rated. Ratings
are not covered by the Report of independent accountants.
(b) The aggregate identified cost on a tax basis is $239,765,799, resulting in gross unrealized appreciation
and depreciation of $11,923,040 and $3,852,143, respectively, or net unrealized appreciation of $8,070,897.
(STP) The interest rate and date shown parenthetically represent the interest rate to be paid and the date the
fund will begin receiving interest at this rate.
(RES) Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities
held at April 30, 1998 was $2,912,500 or 1.2% of net assets.
(SEG) A portion of this security was pledged and segregated with the custodian to cover margin requirements for
futures contracts at April 30, 1998.
The rates shown on IFB's, which are securities paying interest rates that vary inversely to changes in the
market interest rates, and VRDNs are the current interest rates at April 30, 1998.
The fund had the following industry group concentrations greater than 10% at April 30, 1998 (as a percentage
of net assets):
Transportation 17.6%
Hospitals/healthcare 16.7
Water and sewer 14.6
Utilities 12.7
The fund had the following insurance concentrations greater than 10% at April 30, 1998 (as a percentage of net
assets):
AMBAC 13.6%
MBIA 11.9
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Futures Contracts Outstanding at April 30, 1998
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Index
Future (long) $16,948,750 $17,093,125 Jun-98 $(144,375)
- ------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
April 30, 1998
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $239,765,799) (Note 1) $247,836,696
- ---------------------------------------------------------------------------------------------------
Cash 345,512
- ---------------------------------------------------------------------------------------------------
Interest receivable 5,038,681
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 45,000
- ---------------------------------------------------------------------------------------------------
Receivable for variation margin 188,125
- ---------------------------------------------------------------------------------------------------
Total assets 253,454,014
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 1,068,492
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 446,669
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 22,627
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 9,485
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 540
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 41,709
- ---------------------------------------------------------------------------------------------------
Total liabilities 1,589,522
- ---------------------------------------------------------------------------------------------------
Net assets $251,864,492
Represented by
- ---------------------------------------------------------------------------------------------------
Series A and B remarketed preferred shares, (1,260 shares
issued and outstanding at $50,000 per share) (Note 4) $ 63,000,000
- ---------------------------------------------------------------------------------------------------
Paid-in capital -- common shares (unlimited shares authorized)
(Note 1) 186,297,698
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 412,576
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment (Note 1) (5,772,304)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 7,926,522
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $251,864,492
Computation of net asset value
- ---------------------------------------------------------------------------------------------------
Series A and B remarketed preferred shares $ 63,000,000
- ---------------------------------------------------------------------------------------------------
Cumulative undeclared dividends on remarketed preferred shares 76,159
- ---------------------------------------------------------------------------------------------------
Net assets allocated to remarketed preferred shares
at liquidation preference 63,076,159
- ---------------------------------------------------------------------------------------------------
Net assets available to common shares 188,788,333
- ---------------------------------------------------------------------------------------------------
Net asset value per common share
($188,788,333 divided by 13,357,092 shares) $14.13
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended April 30, 1998
<S> <C>
Tax exempt interest income: $16,544,116
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,776,755
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 226,653
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 14,498
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 6,623
- --------------------------------------------------------------------------------------------------
Amortization of organization expense (Note 1) 3,063
- --------------------------------------------------------------------------------------------------
Reports to shareholders 18,969
- --------------------------------------------------------------------------------------------------
Auditing 50,134
- --------------------------------------------------------------------------------------------------
Legal 18,369
- --------------------------------------------------------------------------------------------------
Postage 20,358
- --------------------------------------------------------------------------------------------------
Exchange listing fees 26,282
- --------------------------------------------------------------------------------------------------
Preferred share remarketing agent fees 190,500
- --------------------------------------------------------------------------------------------------
Other 36,450
- --------------------------------------------------------------------------------------------------
Total expenses 2,388,654
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (62,573)
- --------------------------------------------------------------------------------------------------
Net expenses 2,326,081
- --------------------------------------------------------------------------------------------------
Net investment income 14,218,035
- --------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (433,612)
- --------------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 941,370
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
futures contracts during the year 6,253,086
- --------------------------------------------------------------------------------------------------
Net gain on investments 6,760,844
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $20,978,879
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended April 30
1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 14,218,035 $ 14,225,340
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 507,758 (1,580,939)
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 6,253,086 1,180,783
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 20,978,879 13,825,184
- ----------------------------------------------------------------------------------------------------------------------
Distributions to remarketed preferred shareholders:
From net investment income (2,320,529) (2,209,265)
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations
applicable to common shareholders (excluding
cumulative undeclared dividends on remarketed
preferred shares of $76,159 and $67,420, respectively) 18,658,350 11,615,919
- ----------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income (12,821,881) (12,822,022)
- ----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 5,836,469 (1,206,103)
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of year 246,028,023 247,234,126
- ----------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $412,576 and $1,336,951, respectively) 251,864,492 246,028,023
- ----------------------------------------------------------------------------------------------------------------------
Number of fund shares
- ----------------------------------------------------------------------------------------------------------------------
Common shares outstanding at beginning
and end of year 13,357,092 13,357,092
- ----------------------------------------------------------------------------------------------------------------------
Remarketed preferred shares outstanding
at beginning and end of year 1,260 1,260
- ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended April 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.70 $13.79 $13.94 $14.30 $15.00
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 1.06 1.07 1.09 1.14 1.16
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments .50 (.03) (.10) (.16) (.66)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.56 1.04 .99 .98 .50
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders (.17) (.17) (.18) (.15) (.15)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders (.96) (.96) (.96) (.96) (.96)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders -- -- -- -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders -- -- -- -- (.08)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders -- -- -- (.03) --
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders -- -- -- (.20) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.13) (1.13) (1.14) (1.34) (1.20)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $14.13 $13.70 $13.79 $13.94 $14.30
- ------------------------------------------------------------------------------------------------------------------------------------
Market value, end of period
(common shares) $14.125 $14.250 $13.875 $12.75 $13.25
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return at market value
(common shares) (%)(a) 5.63 9.86 16.62 5.39 (2.81)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(total fund) (in thousands) $251,864 $246,028 $247,234 $249,223 $254,025
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) 1.26 1.26 1.24 1.28 1.14
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(b) 6.26 6.51 6.41 7.10 6.66
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 25.71 45.48 160.28 85.63 32.27
- ------------------------------------------------------------------------------------------------------------------------------------
(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) The ratio of expenses to average net assets for the period ended April 30, 1996 and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
</TABLE>
Notes to financial statements
April 30, 1998
Note 1
Significant accounting policies
Putnam Investment Grade Municipal Trust II (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 portfolio of investment grade
municipal securities that the fund's Manager believes does not involve undue
risk to income or principal.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally accepted
accounting principles and requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
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. The fair value of
restricted securities is determined by Putnam Investment Management, Inc.
("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam
Investments, Inc. following procedures approved by the Trustees, and such
valuations and procedures are reviewed periodically by the Trustees.
B) 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.
C) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund owns
or expects to purchase. The fund may also write options on securities it owns
or in which it may invest to increase its current returns.
The potential risk to the fund is that the change in value of futures and
options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparty to the contract is unable to perform. 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. Realized gains and losses on purchased
options are included in realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices established
by the exchange on which they trade. Exchange traded options are valued at the
last sale price, or if no sales are reported, the last bid price for purchased
options and the last ask price for written options. Options traded
over-the-counter are valued using prices supplied by dealers.
D) Federal taxes It is the policy of the fund to distribute all of its income
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, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
At April 30, 1998, the fund had a capital loss carryover of approximately
$5,097,000 available to offset future capital gains, if any. The amount of the
carryover and the expiration dates are:
Loss Carryover Expiration
------------------ ----------------
$2,203,000 April 30, 2004
2,651,000 April 30, 2005
243,000 April 30, 2006
E) 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 28 day period. The applicable dividend rate for the remarketed
preferred shares on April 30, 1998 was Series A-3.83%, Series B-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 temporary and permanent differences of unrealized
gains and losses on certain futures contracts, post-October deferral losses,
capital loss carryover, straddle loss deferrals, and dividends payable.
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 year ended April 30, 1998, the fund
required no such reclassification.
F) Determination of net asset value Net asset value of the common shares is
determined by dividing the value of all assets of the fund, less all
liabilities and the liquidation preference of any outstanding remarketed
preferred shares, by the total number of common shares outstanding.
G) Amortization of bond premium and accretion of bond discount Any premium
resulting from the purchase of securities in excess of maturity value is
amortized on a yield-to-maturity basis. The premium in excess of the call
price, if any, is amortized to the call date; thereafter, the remaining excess
premium is amortized to maturity. Discounts on zero coupon bonds and original
issue discount bonds are accreted according to the yield to maturity basis.
H) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities and
Exchange Commission and with various states and the initial public offering of
its shares were $26,528. These expenses have been fully amortized over a
five-year period as of April 30, 1998.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund. Such
fee is based on the following annual rates: 0.70% of the first $500 million of
the average net asset value of the fund, 0.60% of the next $500 million, 0.55%
of the next $500 million, and 0.50% thereafter.
If dividends are 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 gross income attributable to the proceeds of
the remarketed preferred shares during that period, then the fee payable to
Putnam management for that period will be reduced by the amount of the excess
(but not more than .70% of the liquidation preference of the remarketed
preferred shares outstanding during the period).
The fund reimburses Putnam Management an allocated amount 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.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a division
of PFTC.
For the year ended April 30, 1998, fund expenses were reduced by $62,573 under
expense offset arrangements with PFTC and brokerage service arrangements.
Investor servicing and custodian fees reported in the Statement of operations
exclude these credits. The fund could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an income
producing asset if it had not entered into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $480 has
been allocated to the fund, and an additional fee for each Trustee's meeting
attended. Trustees who are not interested persons of Putnam Management and who
serve on committees of the receive additional fees for attendance
at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which
allows the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund and are
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
Note 3
Purchase and sales of securities
During the year ended April 30, 1998, purchases and sales of investment
securities other than short-term investments aggregated $63,317,284 and
$64,062,103, respectively. There were no purchases and sales of U.S.
government obligations. In determining the net gain or loss on securities
sold, the cost of securities has been determined on the identified cost basis.
Note 4
Remarketed preferred shares
The Series A (630 shares) and B (630 shares) shares are redeemable at the
option of the fund on any dividend payment date at a redemption price of
$50,000 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.
It is anticipated that dividends paid to holders of remarketed preferred
shares will be considered tax-exempt dividends under the Internal Revenue Code
of 1986. To the extent that the fund earns taxable income and capital gains by
the conclusion of a fiscal year, it will be required to apportion to the
holders of the remarketed preferred shares throughout that year additional
dividends as necessary to result in an after-tax equivalent to the applicable
dividend rate for the period.
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 is required to meet more stringent asset
coverage requirements under terms of the remarketed preferred shares and 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 April
30, 1998 no such restrictions have been placed on the fund.
Federal tax information
(Unaudited)
The fund has designated 100.0% of dividends paid from net investment income
during the fiscal year as tax exempt for Federal income tax purposes.
The Form 1099 you receive in January 1999 will show the tax status of all
distributions paid to your account in calendar 1998.
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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
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
William J. Curtin
Vice President
Jerome J. Jacobs
Vice President
Blake E. Anderson
Vice President
Richard P. Wyke
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or visit
our website (www.putnaminv.com) any time for up-to-date information about
the fund's NAV.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
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