Putnam Investment Grade Municipal Trust II
                      Investment Company Act of 1940 File Number 811-7270

                      Putnam Investment Grade Municipal Trust III
                      Investment Company Act of 1940 File Number 811-7099

FOR IMMEDIATE RELEASE

CONTACT: Nancy Fisher                    Matthew Keenan
         Putnam Investments, LLC         Putnam Investments, LLC
         617-760-1608                    617-760-8368


            PUTNAM INVESTMENT GRADE MUNICIPAL TRUST II
         AND PUTNAM INVESTMENT GRADE MUNICIPAL TRUST III
                       PROPOSE MERGER

Boston, Massachusetts -- February 9, 2001 -- Putnam Investments announced
today that the Trustees of Putnam Investment Grade Municipal Trust II
(NYSE: PMG) ("Trust II") and Putnam Investment Grade Municipal Trust III
(AMEX: PML) ("Trust III"), closed-end municipal bond funds, approved in
principle the merger of the two funds and a number of related changes to
the funds, including an increase in money market preferred shares
following the merger. The Trustees also approved an investment policy
change to permit limited investment in securities rated BB and B.
The primary purpose of the proposals is to make the funds more
attractive to shareholders by increasing yield.

Trust II and Trust III have substantially similar investment policies.
Each seeks as high a level of current income exempt from federal
income tax as is consistent with preservation of capital and invests
primarily in investment grade securities. Each fund also has
outstanding money market preferred shares, a form of investment leverage
intended to increase income to common shareholders. The funds' manager,
Putnam Investment Management, L.L.C., has advised the Trustees that,
when compared to other closed-end funds, the funds have a relatively low
amount of preferred shares outstanding and to provide competitive yield
over the long term, the amount of leverage should be increased. Putnam
has further advised the Trustees that the most efficient manner to
accomplish this would be to merge the two funds and then issue
additional preferred shares in the merged fund.

In the merger transaction, common shareholders of Trust III would receive
Trust II common shares with an equal net asset value to the Trust III
shares held. Trust III preferred shareholders would receive preferred
shares of Trust II with an equal aggregate liquidation preference and
value. The combined fund would be renamed "Putnam Municipal Bond Fund"
following the merger. Once the merger had been completed, the combined
fund would seek to issue approximately $60 million of additional
preferred shares.

The completion of the merger transaction and the preferred offering are
subject to significant conditions, including final approval by the
Trustees, approval by shareholders at meetings expected to be held in
July, 2001, SEC and rating agency review and, with respect to the
preferred share offering, market conditions at the time of the offering.
There can be no assurance that the transactions will be completed.

The Trustees also approved a new investment policy for each fund,
effective February 9, 2001, to permit each fund to invest up to 20% of
its total assets in below-investment grade fixed-income securities
rated at least B by a nationally recognized rating agency or
determined by Putnam to be of comparable quality.

The foregoing is not an offer to sell, nor a solicitation of an offer to
buy shares of any fund, nor is it a solicitation of any proxy. To receive
a free copy of the prospectus/proxy statement relating to the proposed
merger (and containing important information about fees, expenses and
risk considerations) after a registration statement relating to the merger
has been filed with the SEC and becomes effective, please call 1-800-225-1581.
The prospectus/proxy statement will also be available without charge on the
SEC's website (http://www.sec.gov). Read the prospectus/proxy statement
carefully before making any investment decisions.