Putnam
Investment Grade
Municipal Trust II
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Shareholder:
It is a pleasure to greet you in our new roles as Chairman of the
Trustees and President of the Funds. As you know, both of us have been
members of the Board of Trustees for a number of years -- years during
which the global securities markets, the mutual fund industry, and
Putnam itself have experienced tremendous growth and change.
As we look to the future, we are certain that the changes will be
breathtaking in their scope. What will not change is the Trustees'
dedication to serving the best interests of our shareholders.
We welcome the challenges that lie ahead and are confident that Putnam
and your Board will continue to face those challenges successfully as
they have for more than 60 years. We look forward to helping you meet
your financial objectives for many years to come.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
December 20, 2000
REPORT FROM FUND MANAGEMENT
Richard P. Wyke
This year, investors have been reminded of a basic principle of
investing: when the financial markets turn around, they move so fast
that those who are not already positioned in the recovering sector are
often too late to benefit. After the Nasdaq plunged in March, setting
off a long string of declines in other equity markets, bonds were
suddenly the place to be. The municipal bond market had begun to
anticipate the beginning of a slowdown in the economy -- and delivering
better performance to investors who had maintained their positions,
including investors in Putnam Investment Grade Municipal Trust II.
Total return for 6 months ended 10/31/00
NAV Market price
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7.13% 9.62%
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Past performance is not indicative of future results. Performance
information for longer periods begins on page 5.
* INVESTMENT GRADE SECTOR PERFORMED WELL
During the past six months, we have begun to see positive total returns
as interest rates in the municipal market have fallen. The investment
grade and AAA/Aaa-rated sectors of the municipal market have benefited
the most. As a result, we witnessed a dramatic difference in yields
between the highest-rated and lowest-rated municipal bonds (known as
credit yield spread). As spreads have widened, your fund has benefited
because its portfolio comprises over 95% investment-grade bonds,
including 36.6% AAA/Aaa-rated bonds.
As investors have moved into the higher-quality municipal bonds, pushing
up their prices, the prices of lower-rated bonds have lagged. This price
drop created an unusual opportunity for us to invest in a greater number
of lower-rated investment grade bonds (BBB/Baa) at undervalued prices,
with the goal of increasing the fund's income level. However, it is
important to note that we are continuing to look for well-known bonds,
issues that have provided solid disclosure to potential investors. This
strategy will be especially beneficial if yield spreads begin to narrow,
as we believe they will. At this stage credit selection becomes
extremely important and depends on the most meticulous research efforts
on the part of Putnam's analytical team.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Health care 23.8%
Transportation 17.8%
Utilities 12.1%
Water and sewer 5.5%
Education 5.2%
Footnote reads:
*Based on net assets as of 10/31/00. Holdings will vary over time.
* EXPOSURE TO TRANSPORTATION SECTOR PAYS OFF
Your fund has a healthy exposure to the transportation sector,
particularly the airline industry, which has had a fairly profitable
year despite significant fuel cost increases. One of the fund's longtime
holdings is American Airlines (Dallas-Fort Worth International Airport
Facility), which, despite the high cost of oil, continues to post strong
net profits based on unwavering passenger demand and high passenger
capacity per flight.
Airports, like airlines, also are continuing to expand to meet higher
carrier and passenger needs. Airlines are increasingly serving smaller
regional airports like Providence, Rhode Island, and Manchester, New
Hampshire, thereby adding to airport revenues. Bonds issued by a
well-known airport in a larger city, Denver City & County Airport, have
been upgraded this year by all three major rating agencies (Standard &
Poor's, Moody's, and Fitch). The Denver airport's debt service coverage
remains strong and passenger traffic continues to surpass record highs,
which explains why these bonds continue to perform well within your
fund's portfolio.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
AAA/Aaa -- 36.6%
AA/Aa -- 6.8%
A -- 24.6%
BBB/Baa -- 27.4%
B and under -- 4.6%
Footnote reads:
*As a percentage of market value as of 10/31/00. A bond rated BBB/Baa or
higher is considered investment grade. All ratings reflect Moody's
descriptions unless noted otherwise; percentages may include unrated
bonds considered by Putnam Management to be of comparable quality.
Ratings will vary over time.
Revenue bonds issued to support toll roads continue to attract interest
from investors. They offer relatively high yields, because of slightly
higher risks from uncertainties surrounding construction and traffic
flows. The E-470 Public Highway is one relatively new bond-financed toll
road project in Colorado that we believe offers excellent performance
potential. The project involves the extension of an existing toll road
to loop around the eastern side of Denver. When complete, it will
improve access to the Denver International Airport from the north.
Issued by the Colorado Public Highway Authority, the bonds are rated
BBB- by Standard & Poor's and Baa3 by Moody's. While this holding and
others discussed in this report were viewed favorably as of October 31,
2000, all holdings are subject to review in accordance with the fund's
investment strategy and may vary in the future.
* OUTLOOK FOR IMPROVING PERFORMANCE
The supply of municipal bonds has been notably light over the past
several months, both in terms of new issues and within the secondary
market. Because of the strong economy, state and local governments are
flush with revenues and have little reason to issue new bonds. This
light supply in the face of improved demand should help municipal bond
performance in the months ahead.
Recent economic reports indicated that the U.S economy is still healthy,
put growing more slowly than earlier in the year. The Fed did not raise
interest rates in November and the odds are good it will move to a
neutral bias if the equity markets remain volatile. Inflation seems to
be tame, projected to be in the 3% to 4% range. As performance improves
in the municipal bond market, the investments in your fund, especially
the bonds at the lower end of the investment-grade spectrum, offer the
opportunity for increased tax-exempt income and potential price
appreciation.
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 10/31/00, there is no guarantee the fund
will continue to hold these securities in the future.
A NOTE ABOUT DUPLICATE MAILINGS
In response to investors' requests, the SEC has modified mailing regulations
for semiannual and annual reports and prospectuses. Putnam is now able to
send a single copy of these materials to customers who share the same address.
This change will automatically apply to all shareholders except those who
notify us. If you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
PERFORMANCE SUMMARY
This section provides information about your fund's performance, which
should always be considered in light of its 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 10/31/00
Lehman Brothers
Market Municipal Consumer
NAV price Bond Index price index
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6 months 7.13% 9.62% 5.72% 1.52%
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1 year 9.93 9.14 8.51 3.45
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5 years 26.90 13.46 32.05 13.14
Annual average 4.88 2.56 5.72 2.50
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Life of fund
(11/27/92) 59.88 29.36 62.60 22.46
Annual average 6.10 3.30 6.33 2.59
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Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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 redeemed may be worth more or less than their
original cost.
TOTAL RETURN FOR PERIODS ENDED 9/30/00(most recent calendar quarter)
NAV Market price
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6 months 4.92% 10.05%
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1 year 6.51 10.92
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5 years 27.46 18.99
Annual average 4.97 3.54
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Life of fund (11/27/92) 57.75 33.67
Annual average 5.99 3.77
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Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 10/31/00
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Distributions from common shares
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Number 6
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Income $0.394
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Capital gains1 --
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Total $0.394
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Preferred shares Series A Series B
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(630 shares) (630 shares)
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Income $1,185.20 $990.73
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Capital gains1 -- --
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Total $1,185.20 $990.73
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Share value (common shares) NAV Market price
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4/30/00 $12.52 $10.563
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10/31/00 12.96 11.188
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Current return (common shares/end of period)
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Current dividend rate2 5.93% 6.86%
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Taxable equivalent3 9.82 11.36
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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 Most recent distribution, excluding capital gains, annualized and
divided by NAV or POP at end of period.
3 Assumes maximum 39.6% federal tax rate. Results for investors subject
to lower tax rates would not be as advantageous.
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 into account
brokerage fees or taxes. Securities in the fund do not match those in
the index and performance of the fund will differ. It is not possible
to invest directly in the index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss
for the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that
remain in the portfolio -- any change in unrealized gains or losses over
the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
October 31, 2000 (Unaudited)
KEY TO ABBREVIATIONS
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FRB -- Floating Rate Bonds
FSA -- Financial Security Assurance
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
MUNICIPAL BONDS AND NOTES (98.5%) (a)
PRINCIPAL AMOUNT RATING (RAT) VALUE
<S> <C> <C> <C>
Alaska (0.9%)
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$ 2,000,000 Valdez, Marine Term. Rev. Bonds (Sohio Pipeline),
7 1/8s, 12/1/25 Aa1 $ 2,095,860
Arkansas (0.6%)
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1,600,000 Baxter Cnty., Hosp. Rev. Bonds, Ser. B, 5 5/8s,
9/1/28 Baa2 1,322,000
California (2.5%)
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5,000,000 CA Hlth. Fac. Fin. Auth. IFB (Catholic Healthcare
West), AMBAC, 6.068s, 7/1/17 Aaa 4,837,500
1,250,000 CA Statewide Cmntys. Dev. Auth. COP
(The Internext Group), 5 3/8s, 4/1/30 BBB 1,075,000
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5,912,500
Colorado (9.2%)
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34,000,000 CO Pub. Hwy. Auth. Rev. Bonds (E-470 Pub. Hwy.),
Ser. B, zero %, 9/1/35 Baa3 2,550,000
2,500,000 CO Springs Hosp. Rev. Bonds, 6 3/8s, 12/15/30 A3 2,503,125
Denver, City & Cnty. Arpt. Rev. Bonds
3,675,000 Ser. A, 8 3/4s, 11/15/23 A2 3,872,274
1,325,000 Ser. A, 8 3/4s, 11/15/23, Prerefunded AAA 1,406,514
2,285,000 Ser. A, 8 1/2s, 11/15/23 A2 2,333,533
735,000 Ser. A, 8s, 11/15/25 A2 755,051
1,525,000 Ser. A, 8s, 11/15/25, Prerefunded A2 1,557,147
1,000,000 Ser. D, 7 3/4s, 11/15/13 A2 1,186,250
5,250,000 SCA Tax Exempt Trust Multi-Fam. Mtge. Rev.
Bonds (Newport Village), Ser. A-8, FSA,
7.1s, 1/1/30 Aaa 5,624,063
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21,787,957
Florida (9.4%)
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Broward Cnty., Resource Recvy. Rev. Bonds
9,100,000 (SES Broward Cnty. LP South), 7.95s, 12/1/08 A3 9,304,750
990,000 (Waste-Energy LP North), 7.95s, 12/1/08 A3 1,012,275
3,000,000 Escambia Cnty., Hlth. Facs. Auth. Rev. Bonds
(Baptist Hosp. & Baptist Manor), 5 1/8s, 10/1/19 A3 2,501,250
5,000,000 Lee Cnty., Board of Directors Hosp. IFB
(Lee Memorial Hosp.), MBIA, 8.269s, 3/26/20 Aaa 5,275,000
1,625,000 Martin Cnty., Indl. Dev. Auth. Rev. Bonds
(Indian Cogeneration), Ser. A, 7 7/8s, 12/15/25 Baa3 1,657,500
2,500,000 Orange Cnty., Hlth. Facs. Auth. Rev. Bonds
(Regl. Hlth. Care Syst.), Ser. E, 6s, 10/1/26 A2 2,471,875
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22,222,650
Georgia (3.0%)
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6,340,000 Burke Cnty., Dev. Auth. Poll. Control Rev. Bonds
(Oglethorpe Pwr. Co. Vogtle), MBIA, 8s, 1/1/22 (SEG) Aaa 6,958,150
Hawaii (1.8%)
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4,000,000 HI State Arpt. Syst. Rev. Bonds, FGIC, 7s, 7/1/10 Aaa 4,141,480
Illinois (5.2%)
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6,250,000 Central Lake Cnty., Joint Action Wtr. Agcy. G.O.
Bonds, 6s, 2/1/19 Aa2 6,429,688
Chicago, O'Hare Intl. Arpt. Special Fac. Rev. Bonds
(American Airlines, Inc.)
2,000,000 8.2s, 12/1/24 Baa1 2,215,000
2,250,000 Ser. A, 7 7/8s, 11/1/25 Baa1 2,322,518
1,500,000 IL, Dev. Fin. Auth. Hosp. Rev. Bonds (Adventist Hlth.
Syst./Sunbelt Obligation), 5.65s, 11/15/24 Baa1 1,271,250
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12,238,456
Indiana (0.9%)
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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 2,064,400
Kansas (1.1%)
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2,600,000 Burlington, Poll. Ctrl. Rev. Bonds (Kansas Gas &
Electric Co.), MBIA, 7s, 6/1/31 Aaa 2,686,294
Kentucky (4.2%)
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2,000,000 Jefferson Cnty., Cap. Corp. Rev. Bonds, MBIA,
5 1/2s, 6/1/28 Aaa 1,982,500
2,200,000 Jefferson Cnty., Hosp. Rev. Bonds, MBIA,
6.436s, 10/1/14 Aaa 2,290,750
4,000,000 Kenton Cnty., Special Fac. Arpt. Rev. Bonds
(Delta Airlines), Ser. A, 7 1/2s, 2/1/12 Baa3 4,145,000
1,475,000 KY Econ. Dev. Fin. Auth. Hlth. System Rev. Bonds
(Norton Healthcare, Inc.), Ser. A, 6 5/8s, 10/1/28 BBB 1,439,969
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9,858,219
Louisiana (0.9%)
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2,000,000 Beauregard, Parish Rev. Bonds
(Boise Cascade Corp.), 7 3/4s, 6/1/21 Baa3 2,058,900
Massachusetts (7.4%)
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1,850,000 MA State Dev. Fin. Agcy. Rev. Bonds
(Ma. Biomedical Research), Ser. C,
6 1/4s, 8/1/20 A2 1,863,875
2,750,000 MA State Hlth. & Edl. Fac. Auth. Rev. Bonds
(Caritas Christian Oblig. Group), Ser. A,
5 5/8s, 7/1/20 Baa2 2,340,938
MA State Hlth. & Edl. Fac. Auth. IFB
2,000,000 (Beth Israel-Deaconess Hosp.), AMBAC,
8.676s, 10/1/31 Aaa 2,131,400
5,500,000 (Med. Ctr. of Central MA), Ser. B, AMBAC,
8.97s, 6/23/22 Aaa 6,359,375
3,000,000 MA State Port Auth. Rev. Bonds, 13s, 7/1/13 Aaa 4,713,750
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17,409,338
Michigan (0.9%)
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2,000,000 Detroit, Wtr. Supply Syst. IFB, FGIC, 8.106s, 7/1/22 Aaa 2,120,000
Minnesota (0.4%)
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1,000,000 MN State Hsg. Fin. Agy. Rev. Bonds
(Single Family Mtg.), 6.05s, 7/1/31 Aa1 1,005,000
Mississippi (0.6%)
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1,500,000 Mississippi Bus. Fin. Corp. Poll. Ctrl. Rev. Bonds
(Syst. Energy Res., Inc.), 5.9s, 5/1/22 Ba1 1,380,000
Missouri (0.4%)
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1,000,000 MO State Hlth. & Edl. Fac. Rev. Bonds
(St. Anthony's Med. Ctr.), 6 1/4s, 12/1/30 A2 987,500
Nevada (4.1%)
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Clark Cnty., Indl. Dev. Rev. Bonds
3,000,000 (Southwest Gas Corp.), Ser. B, 7 1/2s, 9/1/32 Baa2 3,131,250
3,000,000 (Southwest Gas Corp.), Ser. A, AMBAC,
6.1s, 12/1/38 Aaa 3,071,250
2,000,000 (NV Pwr. Co.), Ser. C, 5 1/2s, 10/1/30 BBB- 1,720,000
1,760,000 Clark Cnty., Dist. Impt. G.O. Bonds
(Special Assmt. Dist. No. 124), 7 1/4s, 2/1/20 BBB-/P 1,812,800
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9,735,300
New Jersey (0.9%)
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2,000,000 NJ Hlth. Care Facs. Fin. Auth. Rev. Bonds, AMBAC,
6 3/4s, 7/1/19 Aaa 2,125,000
New York (11.7%)
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2,000,000 Long Island, Pwr. Auth. NY Elec. Syst. Rev. Bonds,
Ser. A, 5 1/4s, 12/1/26 Baa1 1,860,000
NY City, G.O. Bonds
2,000,000 Ser. B, 7 1/2s, 2/1/06 A2 2,100,000
1,100,000 Ser. B, 7 1/2s, 2/1/06, Prerefunded A2 1,156,375
5,000,000 Ser. D, 5 1/4s, 8/1/21 A2 4,725,000
6,250,000 NY City, Muni. Wtr. & Swr. Fin. Auth. Rev. Bonds,
Ser. C, 7 3/4s, 6/15/20 Aaa 6,474,625
5,000,000 NY State Dorm. Auth. Rev. Bonds (State U. Edl.
Fac.), Ser. A, 5 7/8s, 5/15/17 A3 5,262,500
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 5,049,550
1,000,000 Port Auth. NY & NJ 144A FRB, Ser. N18,
8.75s, 12/1/17 Aaa 1,112,500
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27,740,550
North Carolina (2.1%)
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3,000,000 NC Eastern Muni. Pwr. Agcy. Pwr. Syst. Rev.
Bonds (No. 1 Catawba Elec.), Ser. B,
6 1/2s, 1/1/20 BBB+ 3,078,750
1,500,000 Ser. A, 5 3/4s, 1/1/26 Baa3 1,383,750
500,000 Ser. B, 5.65s, 1/1/16 BBB 476,250
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4,938,750
North Dakota (0.6%)
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1,500,000 Grand Forks, Hlth. Care Syst. Rev. Bonds
(Altru Hlth. Syst. Oblig. Group), 7 1/8s, 8/15/24 Baa1 1,524,375
Ohio (0.6%)
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1,600,000 OH State Env. Impt. Rev. Bonds (USX Corp.),
5 5/8s, 5/1/29 Baa1 1,440,000
Oklahoma (0.6%)
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2,000,000 OK Dev. Fin. Auth. Rev. Bonds (Hillcrest
Healthcare), Ser. A, 5 5/8s, 8/15/29 Ba1 1,395,000
Pennsylvania (5.9%)
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3,000,000 Allegheny Cnty., Hosp. Dev. Auth. Rev. Bonds
(Magee-Womens Hosp.), FGIC, 6s, 10/1/13 Aaa 3,101,250
2,000,000 Allegheny Cnty., Indl. Dev. Auth. Rev. Bonds
(Environmental Impt.), Ser. A, 6.7s, 12/1/20 BBB- 2,040,000
750,000 Carbon Cnty., Indl. Dev. Auth. Rev. Bonds
(Panter Creek Partners PJ), 6.65s, 5/1/10 BBB- 768,750
5,000,000 Dauphin Cnty., Auth. Hosp. Rev. Bonds
(Hapsco-Western PA Hosp.), Ser. A, MBIA,
6 1/2s, 7/1/12 B2 5,243,750
2,000,000 Delaware Cnty., Indl. Dev. Auth. Rev. Bonds,
Ser. A, 6.2s, 7/1/19 B2 1,772,500
2,700,000 PA State Higher Ed. Assistance Agcy. Rev. Bonds
(Student Loan IFB), Ser. A, 6 1/4s, 7/1/13
(acquired 5/1/96, cost 2,544,068.)
(In default) (NON) (RES) D 891,000
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13,817,250
Puerto Rico (1.3%)
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3,000,000 PR Comnwlth. Hwy. & Trans. Auth. Rev. Bonds,
Ser. B, 6s, 7/1/39 Baa1 3,142,500
South Carolina (2.8%)
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1,000,000 Connector 2000 Association, Inc. SC Toll Road
Rev. Bonds (Southern Connector Project),
Ser. A, 5 1/4s, 1/1/23 BBB- 785,000
400,000 SC State Jobs Econ. Dev. Auth. Hosp. Fac. Rev.
Bonds (Palmetto Hlth. Alliance), Ser. A,
7 3/8s, 12/15/21 Baa1 413,500
5,000,000 Spartanburg Cnty. Solid Waste Disp. Rev. Bonds
(Bayerische Motoren Werke), 7.55s, 11/1/24 A/P 5,400,000
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6,598,500
Tennessee (6.3%)
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Johnson City, Hlth. & Edl. Facs. Rev. Bonds.
3,300,000 (Mtn. States Hlth.), Ser. A, 7 1/2s, 7/1/33 Baa2 3,316,500
2,500,000 Ser. A2, MBIA, 8.2s, 7/1/21 (acquired 2/8/00,
cost 2,355,021) (RES) Aaa 2,637,500
8,300,000 Metropolitan Govt. Nashville & Davidson Cnty.,
Tenn. Wtr. & Swr. IFB, AMBAC, 7.557s, 1/1/22 Aaa 8,881,000
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14,835,000
Texas (5.5%)
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1,700,000 Alliance, Arpt. Auth. Rev. Bonds (Federal Express
Corp.), 6 3/8s, 4/1/21 Baa2 1,702,125
Dallas-Fort Worth Intl. Arpt. Fac. Impt. Corp.
Rev. Bonds (American Airlines)
1,250,000 7 1/2s, 11/1/25 Baa1 1,275,000
2,500,000 6 3/8s, 5/1/35 Baa1 2,428,125
3,000,000 Nueces Cnty., Port of Corpus Christi Rev. Bonds
(Union Pacific), 5.65s, 12/1/22 Baa3 2,670,000
3,000,000 Titus Cnty., Fresh Wtr. Supply Dist. No. 1 Poll.
Rev. Bonds (Southwestern Elec. Pwr. Co.),
Ser. A, 8.2s, 8/1/11 A2 3,140,578
Tomball, Hosp. Auth. Rev. Bonds
(Tomball Regl. Hosp.)
1,100,000 6 1/8s, 7/1/23 Baa2 947,375
1,100,000 6s, 7/1/29 Baa2 915,750
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13,078,953
Utah (2.2%)
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5,000,000 UT, State Board Regents Student Loan Rev. Bonds,
Ser. H, AMBAC, 6.7s, 11/1/15 Aaa 5,212,500
Virginia (0.6%)
-------------------------------------------------------------------------------------------------------------------
1,800,000 Pocahontas Pkwy Assn. Toll Rd. Rev. Bonds, Ser. A,
5 1/2s, 8/15/28 Baa3 1,485,000
Washington (2.6%)
-------------------------------------------------------------------------------------------------------------------
6,000,000 King Cnty., G.O. Bonds, Ser. C, 6 1/4s, 1/1/32 Aa1 6,247,500
West Virginia (1.3%)
-------------------------------------------------------------------------------------------------------------------
3,000,000 Mason Cnty., Poll. Ctrl. Rev. Bonds
(Appalachian Pwr. Co.), Ser. I, 6.85s, 6/1/22 Baa1 3,101,250
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $236,658,256) (b) $ 232,666,132
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $236,174,340.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at October 31, 2000, 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 October 31, 2000. Securities rated by Putnam are indicated
by "/P" and are not publicly rated.
(b) The aggregate identified cost on a tax basis is $236,658,256,
resulting in gross unrealized appreciation and depreciation of
$6,074,169 and $10,066,293, respectively, or net unrealized depreciation
of $3,992,124.
(NON) Non-income-producing security.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at October 31, 2000,
was $3,528,500 or 1.5% of net assets.
(SEG) A portion of this security was pledged and segregated to cover
margin requirements for futures contracts at October 31, 2000.
The rates shown on IFB, which are securities paying interest rates
that vary inversely to changes in the market interest rates, are the
current interest rates at October 31, 2000.
The fund had the following industry group concentrations greater
than 10% at October 31, 2000. (as a percentage of net assets):
Health care 23.8%
Transportation 17.8
Utilities 12.1
The fund had the following insurance concentrations greater than 10% at October 31, 2000.
(as a percentage of net assets):
AMBAC 14.7%
MBIA 12.5
------------------------------------------------------------------------------
Futures Contracts Outstanding at October 31, 2000 (Unaudited)
Aggregate Face Expiration Unrealized
Total Value Value Date Appreciation
------------------------------------------------------------------------------
Municipal Bond
Index (long) $11,847,938 $11,795,577 Dec-00 $52,361
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000 (Unaudited)
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $236,658,256) (Note 1) $232,666,132
-------------------------------------------------------------------------------------------
Cash 195,367
-------------------------------------------------------------------------------------------
Interest receivable 4,739,771
-------------------------------------------------------------------------------------------
Total assets 237,601,270
Liabilities
-------------------------------------------------------------------------------------------
Payable for variation margin 40,906
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 854,782
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 425,862
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 37,412
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 13,895
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,940
-------------------------------------------------------------------------------------------
Other accrued expenses 52,133
-------------------------------------------------------------------------------------------
Total liabilities 1,426,930
-------------------------------------------------------------------------------------------
Net assets $236,174,340
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) 185,817,939
-------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (1,189,688)
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (7,514,148)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (3,939,763)
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $236,174,340
Computation of net asset value
-------------------------------------------------------------------------------------------
Series A and B remarketed preferred shares $ 63,000,000
-------------------------------------------------------------------------------------------
Cumulative undeclared dividends on remarketed preferred shares 122,461
-------------------------------------------------------------------------------------------
Net assets allocated to remarketed preferred shares --
liquidation preference $ 63,122,461
-------------------------------------------------------------------------------------------
Net assets available to common shares $173,051,879
-------------------------------------------------------------------------------------------
Net asset value per common share ($173,051,879 divided by
13,357,092 shares) $12.96
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended October 31, 2000 (Unaudited)
<S> <C>
Tax exempt interest income: $ 7,697,326
-------------------------------------------------------------------------------------------
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 836,685
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 86,600
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 4,855
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 2,896
-------------------------------------------------------------------------------------------
Preferred share remarketing agent fees 98,389
-------------------------------------------------------------------------------------------
Other 63,909
-------------------------------------------------------------------------------------------
Total expenses 1,093,334
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (30,272)
-------------------------------------------------------------------------------------------
Net expenses 1,063,062
-------------------------------------------------------------------------------------------
Net investment income 6,634,264
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (1,137,232)
-------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 1,878,346
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
futures contracts during the year 5,164,071
-------------------------------------------------------------------------------------------
Net gain on investments 5,905,185
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 12,539,449
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six months ended Year ended
October 31 April 30
2000* 2000
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $6,634,264 $13,153,286
--------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 741,114 (1,249,796)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 5,164,071 (17,250,810)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 12,539,449 (5,347,320)
Distributions to remarketed preferred shareholders:
--------------------------------------------------------------------------------------------------
From net investment income (1,370,836) (2,307,070)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations
applicable to common shareholders (excluding cumulative
undeclared dividends on remarketed preferred shares of
$122,461 and $101,974, respectively) 11,168,613 (7,654,390)
--------------------------------------------------------------------------------------------------
Distributions to common shareholders:
--------------------------------------------------------------------------------------------------
From net investment income (5,262,252) (10,847,178)
--------------------------------------------------------------------------------------------------
From in excess of net investment income -- (494,454)
--------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 5,906,361 (18,996,022)
Net assets
--------------------------------------------------------------------------------------------------
Beginning of period 230,267,979 249,264,001
--------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income of $1,189,688 and $1,190,864,
respectively) $236,174,340 $230,267,979
--------------------------------------------------------------------------------------------------
Number of fund shares
--------------------------------------------------------------------------------------------------
Common shares outstanding at beginning and end of period 13,357,092 13,357,092
--------------------------------------------------------------------------------------------------
Remarketed preferred shares outstanding at beginning
and end of period 1,260 1,260
--------------------------------------------------------------------------------------------------
*Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
--------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share October 31
operating performance (Unaudited) Year ended April 30
--------------------------------------------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period
(common shares) $12.52 $13.94 $14.13 $13.70 $13.79 $13.94
--------------------------------------------------------------------------------------------------------------
Investment operations:
--------------------------------------------------------------------------------------------------------------
Net investment income .50 .98 1.00 1.06 1.07 1.09
--------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .43 (1.37) (.07) .50 (.03) (.10)
--------------------------------------------------------------------------------------------------------------
Total from investment operations .93 (.39) .93 1.56 1.04 .99
--------------------------------------------------------------------------------------------------------------
Less distributions:
--------------------------------------------------------------------------------------------------------------
From net investment income
--------------------------------------------------------------------------------------------------------------
To preferred shareholders (.10) (.18) (.16) (.17) (.17) (.18)
--------------------------------------------------------------------------------------------------------------
To common shareholders (.39) (.82) (.96) (.96) (.96) (.96)
--------------------------------------------------------------------------------------------------------------
In excess of net investment income
--------------------------------------------------------------------------------------------------------------
To common shareholders -- (.03) -- -- -- --
--------------------------------------------------------------------------------------------------------------
Total distributions (.49) (1.03) (1.12) (1.13) (1.13) (1.14)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $12.96 $12.52 $13.94 $14.13 $13.70 $13.79
--------------------------------------------------------------------------------------------------------------
Market value, end of period
(common shares) $11.188 $10.563 $15.250 $14.125 $14.250 $13.875
--------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
--------------------------------------------------------------------------------------------------------------
Total return at market
value (common shares)(%)(a) 9.62* (25.71) 15.08 5.63 9.86 16.62
--------------------------------------------------------------------------------------------------------------
Net assets, end of period
(total fund)(in thousands) $236,174 $230,268 $249,264 $251,864 $246,028 $247,234
--------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) .64* 1.29 1.23 1.26 1.26 1.24
--------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(b) 3.08* 6.27 5.93 6.26 6.51 6.41
--------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 10.74* 17.71 17.07 25.71 45.48 160.28
--------------------------------------------------------------------------------------------------------------
(a) Total 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) Includes amounts paid through expense offset arrangements (Note 2).
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 2000 (Unaudited)
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 Putnam
Investment Management, Inc. ("Putnam Management"), the fund's manager, a
wholly-owned subsidiary of Putnam Investments, Inc. 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 of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reporting period. 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.
Restricted securities are stated at fair value following procedures
approved by the Trustees. 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). Gains or losses on securities sold are determined
on the identified cost basis.
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, 2000, the fund had a capital loss carryover of
approximately $7,823,000 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
32,000 April 30, 2007
2,694,000 April 30, 2008
E) Distributions to shareholders Distributions to common and preferred
shareholders from net investment income are recorded by the fund on the
ex-dividend date. Capital gains, if any, are recorded on the ex-dividend
date and paid at least annually. 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 October 31, 2000 was Series A 4.30% and Series B 4.30%. 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. 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.
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. Discounts on zero
coupon bonds, original issue discount, stepped-coupon bonds and payment
in kind bonds are accreted according to the yield-to-maturity basis.
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, 0.50% of any
amount thereafter.
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 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 0.70% 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 six months ended October 31, 2000, fund expenses were reduced by
$30,272 under expense offset arrangements with PFTC. 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 $565
has been allocated to the fund, and an additional fee for each Trustees
meeting attended. Trustees 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
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 a 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
Purchases and sales of securities
During the six months ended October 31, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $24,504,805 and $24,859,323, respectively. There
were no purchases and sales of U.S. government obligations.
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, 2000, no such
restrictions have been placed on the fund.
RESULTS OF OCTOBER 5, 2000 SHAREHOLDER MEETING
(Unaudited)
An annual meeting of shareholders of the fund was held on October 5,
2000. At the meeting, each of the nominees for Trustees was elected, as
follows:
Votes
Votes for withheld
Jameson Adkins Baxter 9,973,257 108,271
Hans H. Estin 9,963,229 118,299
Ronald J. Jackson 9,970,588 110,940
Paul L. Joskow 9,970,107 111,421
Elizabeth T. Kennan 9,964,041 117,487
Lawrence J. Lasser 9,966,805 114,723
John H. Mullin III 9,972,850 108,678
George Putnam, III 9,966,579 114,949
A.J.C. Smith 9,968,964 112,564
W. Thomas Stephens 9,973,150 108,378
W. Nicholas Thorndike 9,964,639 116,889
A proposal to ratify the selection of PricewaterhouseCoopers LLP as the
independent auditors of your fund was approved as follows: 9,987734
votes for, and 23,312 votes against, with 70,482 abstentions and broker
non-votes.
FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
John A. Hill, Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam, III
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
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Richard P. Wyke
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or
visit our Web site (www.putnaminvestments.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
---------------------
PRST STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
66569 183 12/00
