UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-5785
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Colonial Investment Grade Municipal Trust
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Russell L. Kane, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-426-3363
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Date of fiscal year end: November 30, 2003
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Date of reporting period: May 31, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST SEMIANNUAL REPORT
MAY 31, 2003
[photo of domed building]
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The US bond market continued to reward investors with solid returns for the
period covered by this report. As key economic indicators sent mixed signals,
the US economy continued to struggle and interest rates declined. In November,
the Federal Reserve Board lowered a key short-term interest rate--the federal
funds rate--to 1.25%, a new low.1 The yield on the 10-year US Treasury bond fell
to a 45-year low of 3.3% near the end of the period. Although the environment
was favorable to bonds, declining interest rates and relatively low inflation
raised the fear that deflation, which hasn't been seen since the 1930s, would
return.
Bonds reported gains across all sectors. Leadership rotated from higher quality
bonds, which were the top performers in the previous period, to lower quality
bonds. However, in the municipal sector, higher quality bonds outperformed
high-yield issues. Taxable corporate and high-yield bonds also rebounded as
investors became more willing to take on risk.
The following report will provide you with more detailed information about the
trust's performance and the investment strategies used by portfolio manager
Maureen Newman. For more information, please contact your financial advisor.
CONSOLIDATION AND A NEW NAME: COLUMBIA
On April 1, 2003, six of the asset management firms brought together when
Columbia Management Group, Inc. was formed were consolidated and renamed
Columbia Management Advisors, Inc. (Columbia Management). This consolidation
does not affect the management or investment objectives of your trust and is the
next step in our efforts to create a consistent identity and to streamline our
organization. Although the name of the asset manager familiar to you has
changed, what hasn't changed is the commitment of our specialized investment
teams to a multi-disciplined approach to investing, focused on our goal of
offering shareholders the best products and services.
As always, we thank you for choosing Colonial Investment Grade Municipal Trust
and for giving us the opportunity to help you build a strong financial future.
/s/ Joseph R. Palombo
Joseph R. Palombo
President
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MEET THE NEW PRESIDENT
Joseph R. Palombo is president of the Trust. He is also president and chairman
of the Board of Trustees for Liberty Funds and chief operating officer and
executive vice president of Columbia Management Advisors, Inc. (Columbia
Management). Mr. Palombo has over 19 years of experience in the financial
services industry. Prior to joining Columbia Management, he was chief operating
officer and chief compliance officer for Putnam Mutual Funds. Prior to that, he
was a partner at Coopers & Lybrand. Mr. Palombo received his degree in
economics/accounting from the College of the Holy Cross, where he was a member
of Phi Beta Kappa. He earned his master's degree in taxation from Bentley
College and participated in the Executive Program at the Amos B. Tuck School at
Dartmouth College.
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NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
1 On June 25, 2003, the Federal Reserve Board cut the federal funds rate to
1.00%.
Economic and market conditions change frequently. There is no assurance that the
trends described in this report will continue or commence.
PORTFOLIO MANAGER'S REPORT
For the six-month period ended May 31, 2003, Colonial Investment Grade Municipal
Trust returned 10.14%, based on net asset value. The trust did better than its
peer group, the Lipper General Municipal Debt Funds (Leveraged) Category, which
averaged a return of 9.31% for the same period.1
Municipal bonds, especially high-grade insured issues, rose in value as
disappointing economic news and rising jobless claims drove interest rates
lower. The trust benefited from its stake in zero coupon municipal bonds, which
did especially well. Zero coupon bonds pay no interest and are purchased at a
steep discount. These bonds appreciate to face value at maturity. They tend to
outperform when interest rates are falling. The trust's preferred shares, which
represent about one-third of total assets, also helped performance. The trust
used the leverage provided by its preferred shares to invest in longer-term
bonds that earned higher income than the short-term variable rate that the
preferred shares paid out. US Airways bonds posted strong gains, while United
Airlines (0.4% and 0.1% of net assets, respectively) and tobacco bonds
faltered.2 Deterring performance to some extent were short positions in US
Treasury futures contracts, which are employed to reduce the overall duration of
the trust.
About 90% of the trust's assets remained in investment grade issues. New
additions included utilities such as Portland General, Pacificorp, and North
Carolina Eastern Municipal Power (0.1%, 0.3% and 0.2% of net assets,
respectively). These bonds offered attractive yields and relatively short
maturities. We slowed our buying in health care, where cutbacks in Medicaid
reimbursements have hurt nursing home and hospital bonds. To keep the trust's
yield strong, we also added small positions in various high-yield,
non-investment grade bonds.
We expect bonds to do well as the economy slowly recovers and inflation remains
tame. Demand will most likely remain strong for municipal bonds, which ended the
period looking attractively priced compared to US Treasuries. We plan to remain
focused on essential services bonds, which are backed by revenues from user
fees. We also expect to continue to add small stakes in high-yield issues.
/s/ Maureen G. Newman
Maureen G. Newman is the portfolio manager of Colonial Investment Grade
Municipal Trust and a senior vice president of Columbia Management Advisors,
Inc. Ms. Newman received her BA in economics from Boston College and her MBA
from Babson College. She is a Chartered Financial Analyst, a member of the
Boston Security Analysts Society and former chairman of the National Federation
of Municipal Analysts.
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1 Lipper Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment objectives
as those of the trust.
2 Holdings are disclosed as of May 31, 2003, and are subject to change.
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale.
Tax-exempt investing offers current tax-free income, but it also involves
certain risks. The value of the trust shares will be affected by interest rate
changes and the creditworthiness of issues held in the trust. Investing in high
yield securities offers the potential for high current income and attractive
total return, but involves certain risks. Lower-rated bond risks include default
of the issuer and rising interest rates. Interest income from certain tax-exempt
bonds may be subject to the federal alternative minimum tax for individuals and
corporations.
PRICE PER SHARE
AS OF 5/31/03 ($)
Net asset value 11.77
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Market price 10.80
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SIX-MONTH TOTAL RETURNS (%)
Net asset value 10.14
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Market price 10.57
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DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/1/02-5/31/03 ($)
0.34
-----------------------------
A portion of the trust's income may be subject to the alternative minimum tax.
The trust may at times purchase tax-exempt securities at a discount from their
original issue price. Some or all of this discount may be included in the
trust's ordinary income, and any market discount is taxable when distributed.
QUALITY BREAKDOWN
AS OF 5/31/03 (%) (UNAUDITED)
AAA 60.6
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AA 15.8
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A 5.0
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BBB 7.7
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BB 1.1
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Non-rated 8.2
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Cash equivalents 1.6
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TOP 10 INDUSTRY SECTORS
AS OF 5/31/03 (%) (UNAUDITED)
Local general obligations 18.3
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State appropriated 8.7
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Hospitals 6.9
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Education 6.2
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Investor owned utilities 6.2
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Refunded/escrowed 5.7
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State general obligations 5.2
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Special non-property tax 4.8
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Water & sewer 4.1
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Toll facilities 4.1
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Quality breakdowns are calculated as a percentage of total investments,
including short-term obligations. Ratings shown in the quality breakdown
represent the highest rating assigned to a a particular bond by one of the
following nationally-recognized rating agencies: Standard & Poor's Corporation,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc. Sector
breakdowns are calculated as a percentage of net assets.
Because the trust is actively managed, there can be no guarantee that the trust
will continue to maintain this quality breakdown or invest in these sectors in
the future.
1
INVESTMENT PORTFOLIO
May 31, 2003 (Unaudited)
MUNICIPAL BONDS - 97.4% PAR VALUE
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EDUCATION - 7.1%
EDUCATION - 6.2%
AL University of South Alabama,
Series 1999,
(a) 11/15/18 $2,500,000 $ 1,326,900
IL Chicago, State University Auxiliary
Facilities, Series 1998,
5.500% 12/01/23 1,085,000 1,282,578
MA State Health & Educational
Facilities Authority, Brandeis
University, Series 1998 I,
4.750% 10/01/28 500,000 509,775
MA State Industrial Finance Agency,
Tabor Academy, Series 1998,
5.400% 12/01/28 1,000,000 1,027,290
MN University of Minnesota:
Series 1996 A,
5.750% 07/01/14 500,000 613,995
Series 1999 A,
5.500% 07/01/21 2,000,000 2,392,120
MO State Health & Educational
Facilities Authority, Central Institute
for the Deaf, Series 1999,
5.850% 01/01/22 600,000 663,618
NY St. Lawrence County Industrial
Development Agency,
St. Lawrence University, Series 1998 A,
5.500% 07/01/13 1,465,000 1,694,888
TX Texas Tech University,
Series 1999,
5.000% 02/15/29 2,500,000 2,572,150
------------
12,083,314
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STUDENT LOAN - 0.9%
NE Nebhelp, Inc., Series 1993 A-6,
6.450% 06/01/18 1,500,000 1,757,235
------------
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HEALTH CARE - 10.4%
CONGREGATE CARE RETIREMENT - 1.0%
CA La Verne Certificates
of Participation,
Brethren Hillcrest Home,
Series 2003 B,
6.625% 02/15/25 350,000 354,504
CT State Development Authority,
Elim Park Baptist, Inc.,
Series 2003,
5.750% 12/01/23 250,000 260,607
FL Capital Projects Finance Authority,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 500,000 510,105
HI State Department of Budget & Finance,
Kahala Nui Project,
Series 2003 A:
7.875% 11/15/23 250,000 251,385
8.000% 11/15/33 250,000 254,992
PAR VALUE
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TX Abilene Health Facilities Development
Corp., Sears Methodist Retirement
Obligation Group,
Series 2003 A,
7.000% 11/15/33 $ 200,000 $ 201,370
------------
1,832,963
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HOSPITALS - 6.9%
FL Citrus County Hospital Board,
Citrus Memorial Hospital,
Series 2002,
6.375% 08/15/32 350,000 366,677
FL Orange County Health Facilities Authority,
Orlando Regional Healthcare System:
Series 1996 C,
6.250% 10/01/13 720,000 903,982
Series 1999,
6.000% 10/01/26 175,000 185,376
Series 2002,
5.750% 12/01/32 150,000 158,312
FL South Broward Hospital District,
Series 2002,
5.625% 05/01/32 1,000,000 1,066,900
IL Southwestern Illinois Development
Authority, Anderson Hospital,
Series 1999,
5.375% 08/15/15 380,000 391,894
IL State Development Finance Authority,
Adventist Health System, Series 1999,
5.500% 11/15/20 900,000 933,111
IL State Health Facilities Authority,
Swedish American Hospital, Series 2000,
6.875% 11/15/30 500,000 552,015
KS University Hospital Authority,
Kansas University Health System,
Series 2002,
5.625% 09/01/32 500,000 526,665
LA Jefferson Parish Hospital Service
District 2, Series 1998,
5.250% 07/01/12 1,000,000 1,113,140
LA State Public Facilities Authority,
Touro Infirmary, Series 1999 A,
5.625% 08/15/29 500,000 514,410
MA State Health & Educational Facilities
Authority, South Shore Hospital,
Series 1999 F,
5.750% 07/01/29 1,000,000 1,038,830
MD State Health & Educational
Facilities Authority, University of
Maryland Medical System,
Series 2000,
6.750% 07/01/30 250,000 281,405
MD State Health & Higher Education
Facilities Authority, Adventist Healthcare,
Series 2003 A:
5.000% 01/01/16 250,000 253,065
5.750% 01/01/25 250,000 258,808
See notes to investment portfolio.
2
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
MI Flint Hospital Building Authority,
Hurley Medical Center, Series 1998 B,
5.375% 07/01/28 $ 500,000 $ 417,955
MN St. Paul Housing & Redevelopment
Authority, Healtheast, Inc.:
Series 1993 B,
6.625% 11/01/17 250,000 227,213
Series 1997 A,
5.700% 11/01/15 250,000 216,150
NH Higher Educational & Health Facilities,
Catholic Medical Center, Series 1989,
6.125% 07/01/32 500,000 522,585
NV Henderson, Catholic Healthcare West,
Series 1999 A,
6.750% 07/01/20 500,000 541,170
SC Lexington County Health Services
District, Inc., Hospital Revenue,
5.500% 11/01/23 500,000 526,735
TN Metropolitan Government, Nashville
& Davidson Counties, Meharry Medical
College, Series 1996,
6.000% 12/01/16 1,575,000 1,949,677
TX Comal County Health Facilities
Development, McKenna Memorial,
Series 2002 A,
6.250% 02/01/32 500,000 519,800
------------
13,465,875
------------
INTERMEDIATE CARE FACILITIES - 0.2%
IL State Development Finance Authority,
Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 475,000 406,419
------------
NURSING HOMES - 2.3%
AK Juneau, St. Ann's Care Center,
Series 1999,
6.875% 12/01/25 500,000 513,690
CO Health Care Facilities Authority,
Pioneer Health Care, Series 1989,
10.500% 05/01/19 1,580,000 1,534,243
DE State Economic Development
Authority, Churchman Village
Project, Series 1991 A,
10.000% 03/01/21 905,000 979,119
PA Chester County Industrial Development
Authority, RHA/Pennsylvania Nursing Home,
Series 2002,
8.500% 05/01/32 765,000 752,462
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 565,000 339,000
PAR VALUE
-----------------------------------------------------------
WI State Health & Educational Facilities
Authority, Metro Health
Foundation, Inc., Series 1993,
11.000% 11/01/22 (b) $1,300,000 $ 442,000
------------
4,560,514
------------
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HOUSING - 3.0%
ASSISTED LIVING/SENIOR - 0.3%
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
Series 1994,
9.000% 11/01/24 475,000 487,925
------------
MULTI-FAMILY - 2.5%
AZ Maricopa County Industrial
Development Authority,
National Health Facilities II Project,
5.100% 01/01/33 2,500,000 2,610,525
FL Broward County Housing Finance
Authority, Chaves Lake Apartment
Project, Series 2000,
7.500% 07/01/40 500,000 513,170
FL Clay County Housing Finance Authority,
Madison Commons Apartments,
Series 2000 A,
7.450% 07/01/40 250,000 256,600
MN White Bear Lake, Birch Lake
Townhome Project:
Series 1989 A,
10.250% 07/15/19 775,000 786,858
Series 1989 B,
(a) 07/15/19 (c) 675,000 457,640
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993 A,
8.500% 12/01/16 (d) 227,741 228,517
------------
4,853,310
------------
SINGLE FAMILY - 0.2%
CO State Housing Finance Authority,
Series 2000 B-2,
7.250% 10/01/31 230,000 243,522
IL Chicago, Series 2000 A,
7.150% 09/01/31 200,000 210,452
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453,974
------------
-----------------------------------------------------------
INDUSTRIAL - 1.7%
FOOD PRODUCTS - 0.5%
NE Washington County Waste Water
Facilities, Cargill, Inc., Series 2002,
5.900% 11/01/27 1,000,000 1,056,210
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FOREST PRODUCTS - 0.3%
MN International Falls, Boise Cascade
Corp., Series 1999,
6.850% 12/01/29 500,000 507,870
------------
See notes to investment portfolio.
3
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
INDUSTRIAL (CONTINUED)
MANUFACTURING - 0.8%
KS Wichita Airport Authority Facilities,
Cessna Citation Service Center,
Series 2002 A,
6.250% 06/15/32 $ 475,000 $ 493,573
MN Brooklyn Park, TL Systems Corp.,
Series 1991,
10.000% 09/01/16 805,000 831,798
MO State Development Finance Board,
Procter & Gamble Co., Series 1999,
5.200% 03/15/29 250,000 276,530
------------
1,601,901
------------
OIL & GAS - 0.1%
TX Gulf Coast Industrial Development
Authority, Citgo Petroleum,
Series 1998,
8.000% 04/01/28 250,000 252,955
------------
-----------------------------------------------------------
OTHER - 6.9%
OTHER - 0.4%
CA Golden State Tobacco Securitization
Authority, Series 2003 A-1,
6.750% 06/01/39 250,000 234,085
SC Tobacco Settlement Revenue
Management Authority, Series 2001 B,
6.375% 05/15/28 400,000 364,568
WI Badger Tobacco Asset Securitization
Corp., Series 2002,
6.375% 06/01/32 250,000 223,927
------------
822,580
------------
POOL/BOND BANK - 0.8%
FL State Municipal Loan Council,
Series 2000 A,
(a) 04/01/21 520,000 232,268
KS State Development Finance Authority,
Water Pollution Control,
5.500% 11/01/17 1,125,000 1,356,694
------------
1,588,962
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REFUNDED/ESCROWED (e) - 5.7%
CA San Joaquin Hills Transportation
Corridor Agency,
Series 1993,
(a) 01/01/23 5,250,000 2,158,433
CA State Educational Facilities Authority,
Santa Clara University, Series 1996,
5.000% 09/01/15 800,000 908,360
CT State Special Tax Obligation
Infrastructure, Series 2001 A,
5.375% 10/01/16 500,000 592,865
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 360,000 423,745
PAR VALUE
-----------------------------------------------------------
DE State Economic Development
Authority, Osteopathic Hospital
Association of Delaware,
Series 1992 A,
9.500% 01/01/22 $ 210,000 $ 230,288
FL Orange County Health Facilities
Authority, Orlando Regional
Healthcare System,
Series 1996 C,
6.250% 10/01/13 1,740,000 2,219,701
MA State College Building Authority,
Series 1999 A,
(a) 05/01/23 2,710,000 1,095,301
MA State Development Finance Agency,
Western New England College,
6.125% 12/01/32 315,000 327,490
NC Lincoln County, Lincoln County
Hospital, Series 1991,
9.000% 05/01/07 85,000 99,983
NC State Municipal Power Agency,
Catawba No. 1, Series 1986,
5.000% 01/02/20 1,670,000 1,894,465
TN Shelby County, Health, Education
& Housing Facilities Board, Open Arms
Development Center:
Series 1992 A,
9.750% 08/01/19 425,000 557,600
Series 1992 C,
9.750% 08/01/19 425,000 557,715
------------
11,065,946
------------
-----------------------------------------------------------
OTHER REVENUE - 0.8%
RECREATION - 0.8%
DC District of Columbia,
Smithsonian Institute, Series 1997,
5.000% 02/01/28 1,000,000 1,028,390
FL Capital Trust Agency,
Seminole Tribe Convention Center,
Series 2002 A,
10.000% 10/01/33 500,000 568,655
------------
1,597,045
------------
-----------------------------------------------------------
RESOURCE RECOVERY - 1.2%
DISPOSAL - 0.6%
IL Development Finance Authority,
Waste Management, Inc., Series 1997,
5.050% 01/01/10 500,000 514,930
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 115,000 120,647
MI State Strategic Fund, Waste
Management, Series 1995,
5.200% 04/01/10 500,000 522,765
------------
1,158,342
------------
See notes to investment portfolio.
4
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
RESOURCE RECOVERY (CONTINUED)
RESOURCE RECOVERY - 0.6%
MA State Industrial Finance Agency,
Ogden Haverhill Project,
Series 1998 A,
5.450% 12/01/12 $1,250,000 $ 1,220,625
------------
-----------------------------------------------------------
TAX-BACKED - 39.9%
LOCAL APPROPRIATED - 2.2%
CA Los Angeles County, Series 1999 A,
(a) 08/01/21 2,135,000 917,943
MN Hibbing Economic Development
Authority, Series 1997,
6.400% 02/01/12 335,000 345,958
MO St. Louis Industrial Development
Authority, St. Louis Convention
Center, Series 2000,
(a) 07/15/18 300,000 158,340
TX Houston, Series 2000,
6.400% 06/01/27 1,000,000 1,153,370
TX Houston Independent School
District, Public Facilities Corp.,
Series 1998 A,
(a) 09/15/13 2,500,000 1,698,750
------------
4,274,361
------------
LOCAL GENERAL OBLIGATIONS - 18.3%
AK North Slope Borough, Series 2001 A,
(a) 06/30/12 2,000,000 1,439,940
CA Carlsbad Unified School District,
Series 1997,
(a) 05/01/22 2,730,000 1,121,074
CA Las Virgenes Unified School District,
Series 2001 C,
(a) 11/01/22 1,210,000 485,331
CA Modesto High School District,
Stanislaus County, Capital Appreciation,
Series 2002 A,
(a) 08/01/19 1,350,000 657,409
CA Vallejo City Unified School District,
Series 2002 A,
5.900% 08/01/25 2,000,000 2,483,920
CA West Contra Costa Unified School
District, Series 2001 B,
6.000% 08/01/24 250,000 314,718
CO El Paso County School District No. 11,
Colorado Springs, Series 1996,
7.125% 12/01/19 1,870,000 2,517,207
CO Highlands Ranch Metropolitan
District, Series 1996,
6.500% 06/15/11 1,375,000 1,720,029
IL Chicago:
Series 1995 A-2,
6.250% 01/01/14 1,480,000 1,847,824
Series 1999,
5.500% 01/01/23 1,000,000 1,181,240
Series 2001 A,
(a) 01/01/15 3,000,000 1,885,260
PAR VALUE
-----------------------------------------------------------
IL Chicago Board of Education,
Series 1998 B-1:
(a) 12/01/11 $1,000,000 $ 744,020
(a) 12/01/21 2,000,000 846,220
IL St. Clair County,
Series 1999,
(a) 10/01/16 2,000,000 1,154,940
IL St. Clair County Public Building
Commission, Series 1997 B,
(a) 12/01/13 2,000,000 1,351,040
IL Will County School District No. 17,
Series 2001,
8.500% 12/01/15 1,400,000 2,094,820
MI Garden City School District,
Series 2001,
5.500% 05/01/16 325,000 373,090
MI St. John's Public School, Series 1998,
5.100% 05/01/25 1,000,000 1,120,400
NY New York City:
Series 1997 A,
7.000% 08/01/07 2,000,000 2,298,440
Series 2003 J,
5.500% 06/01/18 500,000 541,970
OH Kenston Local School District,
Series 2003,
5.000% 12/01/23 1,000,000 1,069,010
PA Erie, Series 2001 C,
(a) 11/15/26 2,000,000 648,360
TX Brenham, Certificates of Obligation,
Series 2001,
5.375% 08/15/16 1,040,000 1,178,684
TX Dallas County Flood Control
District, Series 2002,
7.250% 04/01/32 500,000 514,615
TX Houston Independent School District,
Series 1999 A,
4.750% 02/15/22 5,000,000 5,107,450
TX La Joya Independent School District,
Series 1998,
5.500% 02/15/12 1,000,000 1,124,390
------------
35,821,401
------------
SPECIAL NON-PROPERTY TAX - 4.8%
CA San Diego Redevelopment Agency,
Capital Appreciation Tax Allocation
Center, Series 2001,
(a) 09/01/21 3,725,000 1,586,850
FL Tampa Sports Authority,
Tampa Bay Arena Project, Series 1995,
5.750% 10/01/25 1,000,000 1,223,140
NM Dona Ana County, Series 1998,
5.500% 06/01/15 1,000,000 1,203,360
NY New York City Transitional
Finance Authority,
Series 1998 A,
5.000% 11/15/26 1,960,000 2,051,689
See notes to investment portfolio.
5
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
SPECIAL NON-PROPERTY TAX (CONTINUED)
NY State Local Government
Assistance Corp.,
Series 1993 E,
5.000% 04/01/21 $3,000,000 $ 3,306,960
------------
9,371,999
------------
SPECIAL PROPERTY TAX - 0.7%
CA Contra Costa County Public Financing
Authority, Series 1992 A,
7.100% 08/01/22 365,000 372,880
CA Huntington Beach Community
Facilities District, Grand
Coast Resort, Series 2001,
6.450% 09/01/31 300,000 313,686
FL Celebration Community Development
District, Special Assessment,
Series 2003 A,
6.400% 05/01/34 250,000 257,078
FL Double Branch Community
Development District,
Series 2002 A,
6.700% 05/01/34 335,000 345,395
FL Lexington Oaks Community
Development District,
Series 1998 B,
5.500% 05/01/05 10,000 10,108
------------
1,299,147
------------
STATE APPROPRIATED - 8.7%
IN State Office Building Commission,
Women's Prison, Series 1995 B,
6.250% 07/01/16 2,820,000 3,597,700
KY State Property & Buildings
Commission, Project No. 73,
Series 2001,
5.500% 11/01/14 455,000 528,860
NY New York State Dormitory Authority:
City University, Series 1993 A,
5.750% 07/01/18 5,000,000 6,120,300
Mental Health Services,
Series 1998 C,
5.000% 02/15/11 1,485,000 1,627,025
State University,
Series 2000 C,
5.750% 05/15/17 1,000,000 1,237,990
NY State Urban Development Corp.,
5.600% 04/01/15 1,000,000 1,191,320
UT State Building Ownership Authority,
Facilities Master Lease,
Series 1998 C,
5.500% 05/15/19 1,750,000 2,091,863
WV State Building Commission,
Series 1998 A,
5.375% 07/01/18 500,000 588,510
------------
16,983,568
------------
PAR VALUE
-----------------------------------------------------------
STATE GENERAL OBLIGATIONS - 5.2%
CA State, Series 1995,
5.750% 03/01/19 $ 70,000 $ 74,883
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 890,000 987,669
MA State, Series 1998 C,
5.250% 08/01/17 1,000,000 1,169,680
NJ State,
Series 2001,
5.250% 07/01/16 2,000,000 2,360,260
PR Commonwealth of Puerto Rico,
Aqueduct & Sewer Authority:
Series 1995:
6.250% 07/01/12 1,000,000 1,260,400
6.250% 07/01/13 750,000 951,773
Series 2001,
5.500% 07/01/17 1,000,000 1,212,170
TX State, Series 1999 ABC,
5.500% 08/01/35 2,000,000 2,214,020
------------
10,230,855
------------
-----------------------------------------------------------
TRANSPORTATION - 10.8%
AIR TRANSPORTATION - 1.9%
CA Los Angeles Regional Airport
Improvement Corp.,
American Airlines, Inc.,
Series 2000 C,
7.500% 12/01/24 750,000 610,425
IL Chicago O'Hare International Airport,
United Airlines, Inc., Series 2000 A,
6.750% 11/01/11 (b) 800,000 103,376
KY Kenton County Airport Board,
Delta Airlines, Inc.,
Series 1992 A:
7.500% 02/01/12 250,000 215,180
7.500% 02/01/20 200,000 163,506
MN Minneapolis & St. Paul
Metropolitan Airport Commission,
Northwest Airlines,
Series 2001 A,
7.000% 04/01/25 350,000 251,118
NC Charlotte, US Airways, Inc.:
Series 1998,
5.600% 07/01/27 (f) 500,000 351,975
Series 2000,
7.750% 02/01/28 (f) 500,000 366,465
NY Port Authority of New York &
New Jersey, JFK International
Air Terminal, Series 1997,
6.250% 12/01/08 1,000,000 1,170,200
TX Houston Industrial Development
Corp., Air Cargo, Perot Development,
Series 2002,
6.000% 03/01/23 400,000 410,456
------------
3,642,701
------------
See notes to investment portfolio.
6
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
TRANSPORTATION (CONTINUED)
AIRPORTS - 2.5%
MA State Port Authority:
Series 1998 D,
5.000% 07/01/28 $2,500,000 $ 2,580,975
Series 1999, IFRN,
9.870% 07/01/29 (g) 1,000,000 1,233,500
MN Minneapolis-St. Paul Metropolitan
Airport Commission, Series 1998,
5.250% 01/01/13 1,000,000 1,093,110
------------
4,907,585
------------
TOLL FACILITIES - 4.1%
CA Foothill/Eastern Transportation
Corridor Agency, Series 1995 A,
5.000% 01/01/35 1,000,000 961,600
CA San Joaquin Hills Transportation
Corridor Agency, Series 1997 A,
(a) 01/15/15 2,000,000 1,253,440
CO State Public Highway Authority,
E-470, Series 1997 B,
(a) 09/01/11 2,000,000 1,502,000
MA State Turnpike Authority,
Series 1999 A:
4.750% 01/01/34 1,850,000 1,877,101
5.000% 01/01/39 1,000,000 1,029,910
NH State Turnpike Systems,
Series 1991 C, IFRN,
12.111% 11/01/17 (g) 1,000,000 1,350,560
------------
7,974,611
------------
TRANSPORTATION - 2.3%
IL Regional Transportation Authority,
Series 1994 C,
7.750% 06/01/20 1,000,000 1,460,980
NV State Department of Business &
Industry, Las Vegas Monorail Project,
Series 2000:
7.375% 01/20/30 250,000 232,507
7.375% 01/01/40 250,000 229,830
NY Metropolitan Transportation Authority,
Series 2002 A,
5.000% 11/15/30 1,465,000 1,539,334
OH Toledo-Lucas County Port Authority,
CSX Transportation, Inc., Series 1992,
6.450% 12/15/21 1,000,000 1,085,130
------------
4,547,781
------------
-----------------------------------------------------------
UTILITIES - 15.6%
INDEPENDENT POWER PRODUCERS - 0.6%
MI Midland County Economic
Development Corp.,
Series 2000,
6.875% 07/23/09 600,000 614,238
NY New York City Industrial
Development Agency, Brooklyn
Navy Yard Partners, Series 1997,
5.650% 10/01/28 200,000 185,058
PAR VALUE
-----------------------------------------------------------
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical &
Environmental Cogeneration
Facilities, AES Project,
Series 2000,
6.625% 06/01/26 $ 325,000 $ 342,570
------------
1,141,866
------------
INVESTOR OWNED - 6.2%
AZ Maricopa County Pollution
Control Revenue,
El Paso Electric Co.,
Series 2002 A,
6.250% 05/01/37 500,000 507,590
IN Petersburg, Indiana Power & Light Co.,
Series 1993 B,
5.400% 08/01/17 2,500,000 2,923,000
MI State Strategic Fund,
Detroit Edison Co.,
Series 1998 A,
5.550% 09/01/29 3,000,000 3,199,590
MS State Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 04/01/22 1,000,000 997,080
MT Forsyth Pollution Control,
Portland General, Series 1998 A,
5.200% 05/01/33 150,000 153,675
OH State Air Quality Development
Authority, Cleveland
Electric Illumination,
Series 2002 A,
6.000% 12/01/13 850,000 894,948
TX Brazos River Authority,
Pollution Control,
TXU Electric Co.:
Series 1999,
7.700% 04/01/33 250,000 276,505
Series 2001,
5.750% 05/01/36 500,000 510,335
TX Matagorda County Navigation
District No.1, Houston Light &
Power Co., Series 1997,
5.125% 11/01/28 2,000,000 2,116,340
WY Converse County Pollution Control,
Pacificorp, Series 1988,
3.900% 01/01/14 500,000 500,415
------------
12,079,478
------------
JOINT POWER AUTHORITY - 2.7%
MA Municipal Wholesale Electric Co.,
Power Supply System, Project 6-A,
5.250% 07/01/14 1,000,000 1,141,810
NC Eastern Municipal Power Agency,
Series 2003,
5.500% 01/01/16 (h) 285,000 301,969
See notes to investment portfolio.
7
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
UTILITIES (CONTINUED)
JOINT POWER AUTHORITY (CONTINUED)
NC State Municipal Power Agency,
Catawba Electric No. 1:
Series 1998 A,
5.500% 01/01/15 $ 640,000 $ 761,037
Series 2003 A,
5.250% 01/01/18 2,500,000 2,810,250
OH Municipal Electricity
Generation Agency,
Series 2001,
(a) 02/15/30 1,000,000 281,720
------------
5,296,786
------------
MUNICIPAL ELECTRIC - 2.0%
CA State Water Resources Authority,
Series 2002 A,
5.500% 05/01/14 1,000,000 1,172,000
NC University of North Carolina at
Chapel Hill,
(a) 08/01/14 1,000,000 655,450
NE Public Power District, Series 1998 A,
5.250% 01/01/11 500,000 560,670
TN Metropolitan Government, Nashville
& Davidson Counties, Series 1996 A,
(a) 05/15/09 1,825,000 1,544,643
------------
3,932,763
------------
WATER & SEWER - 4.1%
GA Atlanta, Series 1993,
5.500% 11/01/22 (i) 1,000,000 1,184,680
MA State Water Resources Authority,
Series 1998 A,
4.750% 08/01/27 3,000,000 3,040,290
MS Five Lakes Utility District,
8.250% 07/15/24 140,000 137,705
NY New York City Municipal
Water Finance Authority,
Water & Sewer System,
Capital Appreciation, Series 1998 D,
(a) 06/15/20 3,900,000 1,885,689
WA King County, Series 1999,
5.250% 01/01/30 1,750,000 1,867,495
------------
8,115,859
------------
TOTAL MUNICIPAL BONDS
(cost of $172,463,036) 190,394,726
------------
MUNICIPAL PREFERRED STOCK - 0.3% SHARES
-----------------------------------------------------------
HOUSING - 0.3%
MULTI-FAMILY - 0.3%
Charter Municipal Mortgage
Acceptance Co.,
7.600% 11/30/50 (d) 500,000 566,360
(cost of $500,000) ------------
PURCHASED PUT OPTION - 0.1% PAR VALUE
-----------------------------------------------------------
U.S. Treasury Notes,
Strike Price $46.875,
Expires 08/31/03 $ 194,000 $ 90,937
(cost of $164,754) ------------
SHORT-TERM OBLIGATIONS - 1.6%
-----------------------------------------------------------
VARIABLE RATE DEMAND NOTES (j) - 1.6%
ID Health Facilities Authority Revenue,
St. Luke's Regional Medical Center,
1.300% 05/01/22 700,000 700,000
IL Health Facilities Authority,
OSF Healthcare System,
Series 2002,
1.300% 11/15/27 1,400,000 1,400,000
MN Brooklyn Center,
Brookdale Corp. III,
Series 2001,
1.300% 12/01/07 200,000 200,000
MS Jackson County Pollution Control,
Chevron USA, Inc.,
Series 1993,
1.250% 06/01/23 600,000 600,000
NM Farmington Pollution Control,
Arizona Public Service,
Series 1994 A,
1.300% 05/01/24 100,000 100,000
OK Development Finance Authority,
Continuing Care Community,
Series 2002 C,
1.350% 02/01/12 200,000 200,000
------------
TOTAL SHORT TERM OBLIGATIONS
(cost of $3,200,000) 3,200,000
------------
TOTAL INVESTMENTS - 99.4%
(cost of $176,327,790)(k) 194,252,023
------------
OTHER ASSETS & LIABILITIES, NET - 0.6% 1,244,104
-----------------------------------------------------------
NET ASSETS* - 100.0% $195,496,127
============
See notes to investment portfolio.
8
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) As of May 31, 2003, the Trust held securities of certain issuers
that have filed for bankruptcy protection under Chapter 11, representing
0.3% of net assets. These issuers are in default of certain debt covenants.
Income is not being accrued.
(c) Denotes a restricted security, which is subject to restrictions on resale
under federal securities laws. At May 31, 2003, the value of this security
amounted to $457,640, which represents 0.2% of net assets.
Additional information on this restricted security is as follows:
Acquisition Acquisition
Security Date Cost
----------------------------------------------------------------
MN White Bear Lake,
Birch Lake Townhouse Project,
Series 1989 B,
(a) 07/15/19 07/19/89 $ 675,000
(d) This security is exempt from registration under Rule 144A of the Securities
Act of 1933 and may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At May 31, 2003, the value of
these securities amounted to $794,877, which represents 0.4% of net assets.
(e) The Trust has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
principal and interest.
(f) This issuer is in default of certain debt covenants. Income is being fully
accrued.
(g) Interest rates on variable rate securities change periodically. The rate
listed is as of May 31, 2003.
(h) Settlement of this security is on a delayed delivery basis.
(i) This security, or a portion thereof with a market value of $710,808, is
being used to collateralize open futures contracts.
(j) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of May 31, 2003.
(k) Cost for federal income tax purposes is $176,087,214.
Short futures contracts open at May 31, 2003:
PAR VALUE UNREALIZED
COVERED BY EXPIRATION DEPRECIATION
TYPE CONTRACTS MONTH AT 05/31/03
--------------------------------------------------------------
10 Year Municipal
Bond Index $ 1,200,000 Jun-03 $(52,566)
10 Year U.S. Treasury
Note 43,000,000 Sept-03 (36,086)
--------
$(88,652)
=========
ACRONYM NAME
-----------------------------------------------------------
IFRN Inverse Floating Rate Note
* Net assets represent both Common Shares and Auction Preferred Shares.
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2003 (Unaudited)
ASSETS:
Investments, at cost $176,327,790
------------
Investments, at value $194,252,023
Cash 8,804
Receivable for:
Investments sold 579,150
Interest 2,749,383
Futures variation margin 28,750
Deferred Trustees' compensation plan 5,480
Other assets 14,628
------------
Total Assets 197,638,218
------------
LIABILITIES:
Payable for:
Investments purchased 1,041,970
Investments purchased on a delayed
delivery basis 297,047
Distributions-- common shares 661,768
Distributions-- preferred shares 10,777
Management fee 104,876
Pricing and bookkeeping fees 1,924
Reports to shareholders 18,249
Deferred Trustees' fees 5,480
------------
Total Liabilities 2,142,091
------------
Auction Preferred Shares (2,400 shares issued and
outstanding at $25,000 per share) $ 60,000,000
------------
COMPOSITION OF NET ASSETS
APPLICABLE TO COMMON SHARES:
Paid-in capital -- common shares $126,993,094
Undistributed net investment income 761,239
Accumulated net realized loss (10,093,787)
Net unrealized appreciation (depreciation) on:
Investments 17,924,233
Futures contracts (88,652)
------------
Net assets at value applicable to 11,509,000
common shares of beneficial interest
outstanding $135,496,127
============
Net asset value per common share $ 11.77
============
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 2003 (Unaudited)
INVESTMENT INCOME:
Interest $ 5,169,068
------------
EXPENSES:
Management fee 616,331
Pricing and bookkeeping fees 43,522
Trustees' fees 4,834
Preferred shares remarketing commissions 74,880
Custody fee 3,147
Other expenses 68,532
------------
Total Expenses 811,246
Custody earnings credit (158)
------------
Net Expenses 811,088
------------
Net Investment Income 4,357,980
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES CONTRACTS:
Net realized gain (loss) on:
Investments 2,007,212
Futures contracts (3,435,382)
------------
Net realized loss (1,428,170)
------------
Net change in unrealized appreciation/
depreciation on:
Investments 10,011,711
Futures contracts (274,183)
------------
Net change in unrealized
appreciation/depreciation 9,737,528
------------
Net Gain 8,309,358
------------
Net Increase in Net Assets from Operations 12,667,338
------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (337,005)
------------
Net Increase in Net Assets from Operations
Applicable to Common Shares $12,330,333
------------
See notes to financial statements.
10
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
INCREASE (DECREASE) IN NET ASSETS: 2003 2002
--------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 4,357,980 $ 9,004,083
Net realized loss on investments and futures contracts (1,428,170) (1,289,037)
Net change in unrealized appreciation/depreciation on investments and futures contracts 9,737,528 654,972
----------- -----------
Net Increase from Operations 12,667,338 8,370,018
----------- -----------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (337,005) (870,588)
----------- -----------
Increase in Net Assets from Operations Applicable to Common Shares 12,330,333 7,499,430
----------- -----------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (3,884,290) (7,722,539)
----------- -----------
Total Increase (Decrease) in Net Assets Applicable to Common Shares 8,446,043 (223,109)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 127,050,084 127,273,193
----------- -----------
End of period (including undistributed net investment income of
$761,239 and $624,554, respectively) $135,496,127 $127,050,084
============ ============
NUMBER OF TRUST SHARES:
Common Shares:
Outstanding at end of period 11,509,000 11,509,000
----------- -----------
Preferred Shares:
Outstanding at end of period 2,400 2,400
----------- -----------
See notes to financial statements.
11
NOTES TO FINANCIAL STATEMENTS
May 31, 2003 (Unaudited)
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Colonial Investment Grade Municipal Trust (the "Trust") is a Massachusetts
business trust registered under the Investment Company Act of 1940 (the "Act"),
as amended, as a diversified, closed-end management investment company. The
Trust's investment goal is to seek as high a level of after-tax total return as
is consistent with prudent risk, by pursuing current income generally exempt
from ordinary federal income tax and opportunities for long-term appreciation
from a portfolio primarily invested in investment grade municipal bonds. The
Trust is authorized to issue an unlimited number of common shares of beneficial
interest and 2,400 Auction Preferred Shares ("APS").
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Trust in the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS:
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
Such services may use various pricing techniques which take into account
appropriate factors such as yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other data, as well as broker quotes. When
management deems it appropriate, an over-the-counter or exchange bid quotation
is used.
Options are valued at the last sale price, or in the absence of a sale, the mean
between the last quoted bid and asking price.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value under
procedures approved by the Board of Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The Trust may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Trust to subsequently invest at less advantageous prices.
FEDERAL INCOME TAXES:
Consistent with the Trust's policy to qualify as a regulated investment company
and to distribute all of its taxable and tax-exempt income, no federal income
tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM:
Interest income is recorded on the accrual basis. Premium and discount are being
amortized and accreted, respectively, for all debt securities.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to common shareholders are recorded on the ex-date.
Distributions to preferred shareholders are recorded daily and are payable at
the end of each dividend period. Each dividend payment period for the APS is
generally seven days. The applicable dividend rate for the APS on May 31, 2003
was 1.19%. For the six months ended May 31, 2003, the Trust declared dividends
to Auction Preferred shareholders amounting to $337,005 representing an average
APS dividend rate of 1.13%.
NOTE 2. FEDERAL TAX INFORMATION
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from accounting principles generally accepted
in the United States of America.
The following capital loss carryforwards, determined as of November 30, 2002,
are available to reduce taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code:
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
2003 $ 172,808
2004 1,454,485
2008 3,464,384
2010 1,238,884
----------
$6,330,561
==========
12
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2003 (Unaudited)
3. FEE AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE:
On April 1, 2003, Colonial Management Associates, Inc. ("Colonial"), the
previous investment advisor to the Trust merged into Columbia Management
Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an
indirect, wholly-owned subsidiary of FleetBoston Financial Corporation. At the
time of the merger, Columbia assumed the obligations of Colonial with respect to
the Trust. The merger did not change the way the Trust is managed, the
investment personnel assigned to manage the Trust or the fees paid by the Trust
to Columbia.
Columbia is the investment advisor of the Trust and furnishes accounting and
other services and office facilities for a fee to be paid monthly at the annual
rate of 0.65% of the Trust's average weekly net assets, including assets
applicable to the APS.
PRICING AND BOOKKEEPING FEES:
Columbia is responsible for providing pricing and bookkeeping services to the
Trust under a Pricing and Bookkeeping Agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Bank and Trust Company ("State Street"). Columbia pays fees to State Street
under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Trust, Columbia receives
from the Trust an annual flat fee of $10,000, paid monthly, and in any month
that the Trust's average weekly net assets, including assets applicable to the
APS, are more than $50 million, a monthly fee equal to the average weekly net
assets, including assets applicable to the APS, of the Trust for that month
multiplied by a fee rate that is calculated by taking into account the fees
payable to State Street under the Outsourcing Agreement. For the six months
ended May 31, 2003, the annualized net asset based fee rate was 0.033%. The
Trust also pays out-of-pocket costs for pricing services.
OTHER:
The Trust pays no compensation to its officers, all of whom are employees of
Columbia or its affiliates.
The Trust's Independent Trustees may participate in a deferred compensation plan
which may be terminated at any time. Obligations of the plan will be paid solely
out of the Trust's assets.
The Trust has an agreement with its custodian bank under which $158 of custody
fees were reduced by balance credits for the six months ended May 31, 2003. The
Trust could have invested a portion of the assets utilized in connection with
the expense offset arrangement in an income-producing asset if it had not
entered into such an agreement.
NOTE 4. PREFERRED SHARES
The Trust currently has outstanding 2,400 APS. The APS are redeemable at the
option of the Trust on any dividend payment date at the redemption price of
$25,000 per share, plus an amount equal to any dividends accumulated on a daily
basis unpaid through the redemption date (whether or not such dividends have
been declared).
Under the Act, the Trust is required to maintain asset coverage of at least 200%
with respect to the APS as of the last business day of each month in which any
APS are outstanding. Additionally, the Trust is required to meet more stringent
asset coverage requirements under the terms of the APS Agreement and in
accordance with the guidelines prescribed by the APS' rating agencies. Should
these requirements not be met, or should dividends accrued on the APS not be
paid, the Trust may be restricted in its ability to declare dividends to common
shareholders or may be required to redeem certain of the APS. At May 31, 2003,
there were no such restrictions on the Trust.
NOTE 5. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
For the six months ended May 31, 2003, purchases and sales of investments, other
than short-term obligations, were $13,930,136 and $18,180,098, respectively.
Unrealized appreciation (depreciation) at May 31, 2003, based on cost of
investments for federal income tax purposes, was:
Gross unrealized appreciation $22,989,528
Gross unrealized depreciation (4,824,719)
-----------
Net unrealized appreciation $18,164,809
===========
FUTURES CONTRACTS AND OPTIONS:
The Trust may invest in municipal and U.S. Treasury futures contracts. The Trust
will invest in these instruments to hedge against the effects of changes in the
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, for duration management, or when the transactions are
economically appropriate to the reduction of risk inherent in the management of
the Trust and not for trading purposes. The use of futures contracts involves
certain risks, which include: (1) imperfect correlation between the price
movement of the instruments and the underlying securities, (2) inability to
close out positions due to different trading hours, or the temporary absence of
a liquid market, for either the instrument or the underlying securities, or (3)
an inaccurate prediction by Columbia of the future direction of interest rates.
Any of these risks may involve amounts exceeding the variation margin recorded
in the Trust's Statement of Assets and Liabilities at any given time.
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2003 (Unaudited)
Upon entering into a futures contract, the Trust deposits cash or securities
with its custodian in an amount sufficient to meet the initial margin
requirement. Subsequent payments are made or received by the Trust equal to the
daily change in the contract value and are recorded as variation margin payable
or receivable and offset in unrealized gains or losses. The Trust recognizes a
realized gain or loss when the contract is closed or expires.
The Trust may write call and put options on futures it owns or in which it may
invest. Writing put options tends to increase the Trust's exposure to the
underlying instrument. Writing call options tends to decrease the Trust's
exposure to the underlying instrument. When the Trust writes a call or put
option, an amount equal to the premium received is recorded as a liability and
subsequently marked-to-market to reflect the current value of the option
written. Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are exercised or
closed are added to the proceeds or offset against the amounts paid on the
underlying future transaction to determine the realized gain or loss. The Trust
as a writer of an option has no control over whether the underlying future may
be sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the future underlying the written option.
There is the risk the Trust may not be able to enter into a closing transaction
because of an illiquid market.
The Trust may also purchase put and call options. Purchasing call options tends
to increase the Trust's exposure to the underlying instrument. Purchasing put
options tends to decrease the Trust's exposure to the underlying instrument. The
Trust pays a premium which is included in the Trust's Statement of Assets and
Liabilities as an investment and subsequently marked-to-market to reflect the
current value of the option. Premiums paid for purchasing options which expire
are treated as realized losses. The risk associated with purchasing put and call
options is limited to the premium paid. Premiums paid for purchasing options
which are exercised or closed are added to the amounts paid or offset against
the proceeds on the underlying future transaction to determine the realized gain
or loss.
Refer to the Trust's Investment Portfolio for a summary of open futures contacts
at May 31, 2003.
OTHER:
The Trust had greater than 10% of its net assets, at May 31, 2003, invested in
issuers located in New York and Texas.
There are certain risks arising from geographic concentration in any state.
Certain revenue or tax related events in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
The Trust may focus its investments in certain industries, subjecting it to
greater risk than a trust that is more diversified.
14
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
(UNAUDITED)
SIX MONTHS PERIOD
ENDED YEAR ENDED NOVEMBER 30, ENDED YEAR ENDED DECEMBER 31,
MAY 31, ----------------------------------- NOVEMBER 30, ------------------------
2003 2002 2001 2000 1999 (a) 1998 1997
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.04 $ 11.06 $ 10.55 $ 10.31 $ 11.49 $ 11.43 $ 10.87
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.38(b) 0.78(b)(c) 0.75(b) 0.81(d) 0.58 0.60 0.62
Net realized and unrealized gain (loss)
on investments and futures contracts 0.72 (0.05)(c) 0.52 0.27 (1.12) 0.07 0.58
--------- --------- --------- --------- --------- --------- ---------
Total from Investment Operations 1.10 0.73 1.27 1.08 (0.54) 0.67 1.20
--------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (0.03) (0.08) (0.16) (0.22) (0.05) -- --
--------- --------- --------- --------- --------- --------- ---------
Total from Investment Operations
Applicable to Common Shareholders 1.07 0.65 1.11 0.86 (0.59) 0.67 1.20
--------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED
TO COMMON SHAREHOLDERS:
From net investment income (0.34) (0.67) (0.60) (0.60) (0.52) (0.61) (0.64)
In excess of net investment income -- -- -- -- -- --(e) --
--------- --------- --------- --------- --------- --------- ---------
Total Distributions Declared
to Common Shareholders (0.34) (0.67) (0.60) (0.60) (0.52) (0.61) (0.64)
--------- --------- --------- --------- --------- --------- ---------
LESS SHARE TRANSACTIONS:
Commission and offering
costs -- preferred shares -- -- -- (0.02) (0.07) -- --
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 11.77 $ 11.04 $ 11.06 $ 10.55 $ 10.31 $ 11.49 $ 11.43
========= ========= ========= ========= ========= ========= =========
Market price per share --
common shares $ 10.80 $ 10.09 $ 10.87 $ 8.92 $ 9.06 $ 11.19 $ 10.56
========= ========= ========= ========= ========= ========= =========
Total return -- based on market
value -- common shares (f) 10.57%(g) (1.10)% 29.28% 5.20% (14.64)%(g) 11.94% 10.76%
========= ========= ========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (h)(i) 1.25%(j) 1.28% 1.28% 1.31% 1.03%(j) 0.77% 0.83%
Net investment income before preferred
stock dividend (h)(i) 6.70%(j) 7.06%(c) 6.80% 7.91% 5.75%(j) 5.24% 5.63%
Net investment income after preferred
stock dividend (h)(i) 6.19%(j) 6.38%(c) 5.38% 5.80% 5.26%(j) 5.24% 5.63%
Portfolio turnover rate 7%(g) 10% 31% 23% 25%(g) 24% 21%
Net assets, end of period (000's)--
common shares $ 135,496 $ 127,050 $ 127,273 $ 121,366 $ 118,660 $ 132,242 $ 131,503
(a)The Trust changed its fiscal year end from December 31 to November 30.
(b)Per share data was calculated using average shares outstanding during the
period.
(c)Effective December 1, 2001, the Trust adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began accreting
market discount on all debt securities. The effect of this change for the
year ended November 30, 2002, was to increase net investment income per
share by $0.01, increase net realized and unrealized loss per share by
$0.01, increase the ratio of net investment income to average net assets
from 6.98% to 7.06% and increase the ratio of net investment income
(adjusted for dividend payments to preferred shareholders) from 6.30% to
6.38%. Per share data and ratios for periods prior to November 30, 2002
have not been restated to reflect this change in presentation.
(d)The per share net investment income amount does not reflect the period's
reclassification of differences between book and tax basis net investment
income.
(e)Rounds to less than $0.01 per share.
(f)Total return at market value assuming all distributions reinvested at prices
calculated in accordance with the Dividend Reinvestment Plan.
(g)Not annualized.
(h)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(i)Ratios reflect average net assets available to common shares only.
(j)Annualized.
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE PER SHARE PER SHARE
---------------------------------------------------------------------------------------------------------------
05/31/03 * $60,000,000 $81,457 $25,004 $25,000
11/30/02 60,000,000 77,937 25,000 25,000
11/30/01 60,000,000 78,030 25,005 25,000
11/30/00 60,000,000 75,569 25,009 25,000
11/30/99** 60,000,000 74,444 25,003 25,000
* Unaudited.
** On August 26, 1999, the Trust began offering Auction Preferred Shares.
15
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.05 $ 9.93 $ 11.05 $ 10.96 $ 11.09
--------- ---------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.63 0.64 0.67 0.79 0.85
Net realized and unrealized gain (loss) on
investments and futures contracts (0.19) 1.11 (1.12) 0.09 (0.13)
--------- ---------- --------- --------- ---------
Total Income from Investment Operations 0.44 1.75 (0.45) 0.88 0.72
--------- ---------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.62) (0.63) (0.67) (0.79) (0.85)
--------- ---------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.87 $ 11.05 $ 9.93 $ 11.05 $ 10.96
========= ========== ========= ========= =========
Market price per share -- common shares $ 10.13 $ 9.88 $ 9.25 $ 10.75 $ 11.75
========= ========== ========= ========= =========
Total return - based on market value -- common shares (a) 9.06% 13.87% (8.12)% (2.16)% 7.43%
========= ========== ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (b) 0.88% 1.08% 0.94% 0.87% 0.86%
Net investment income (b) 5.80% 6.08% 6.46% 7.08% 7.76%
Portfolio turnover rate 20% 37% 34% 35% 18%
Net assets, end of period (000's) - common shares $ 125,125 $ 127,118 $ 114,260 $ 127,213 $ 126,169
(a)Total return at market value assuming all distributions reinvested at prices
calculated in accordance with the Dividend Reinvestment Plan.
(b)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
16
SHAREHOLDER MEETING RESULTS
RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS
On May 21, 2003, the Annual Meeting of Shareholders of the Trust was held to
conduct a vote for or against the approval of the items listed on the Trust's
Proxy Statement for said Meeting. On February 28, 2003, the record date for the
Meeting, the Trust had 11,509,000 common shares outstanding. The votes cast were
as follows:
PROPOSAL 1.
ELECTION OF TRUSTEES: FOR AGAINST
---------------------------- --------------- -------------
Janet Langford Kelly 10,322,219 160,838
Joseph R. Palombo 10,329,021 154,036
On February 28, 2003, the record date for the Meeting, the Trust had 2,400
preferred shares outstanding. The votes cast were as follows:
PROPOSAL 1.
ELECTION OF TRUSTEES: FOR WITHHELD
--------------------------- --------------- -------------
Douglas A. Hacker 2,396 0
Janet Langford Kelly 2,396 0
Joseph R. Palombo 2,396 0
Thomas E. Stitzel 2,396 0
17
DIVIDEND REINVESTMENT PLAN
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), all
shareholders whose shares are registered in their own names will have all
distributions reinvested automatically in additional shares of the Trust by
EquiServe Trust Company, N.A. (the "Plan Agent") unless a shareholder elects to
receive cash. Shareholders whose shares are held in the name of a broker or
nominee will have distributions reinvested automatically by the broker or
nominee in additional shares under the Plan, unless the service is not provided
by the broker or the nominee or the shareholder elects to receive distributions
in cash. If the service is not available, such distributions will be paid in
cash. Shareholders whose shares are held in the name of a broker or nominee
should contact the broker or nominee for details. All distributions to
shareholders who elect not to participate in the Plan will be paid by check
mailed directly to the shareholder of record on the record date therefore by the
Plan Agent as the dividend disbursing agent.
Non-participants in the Plan will receive distributions in cash. Distributions
payable to participants in the Plan will be applied by the Plan Agent, acting as
agent for Plan participants, to the purchase of shares of the Trust. Such shares
will be purchased by the Plan Agent at the then current market price of such
shares in the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts.
Participants in the Plan may withdraw from the Plan upon written notice to the
Plan Agent. When a participant withdraws from the Plan or upon termination of
the Plan as provided below, certificates for whole shares credited to his
account under the Plan will be issued and a cash payment will be made for any
fraction of a share credited to such account. A shareholder's notice of election
to withdraw from the Plan must be received by the Plan Agent before the record
date for a dividend in order to be given effect with respect to that dividend.
In the case of shareholders such as banks, brokers or nominees holding shares
for others who are the beneficial owners of those shares, the Plan Agent will
administer the Plan on the basis of the number of shares certified from time to
time by the shareholder of record as representing the total amount registered in
such shareholder's name and held for the account of beneficial owners who are to
participate in the Plan.
There is no charge to Plan participants for reinvesting distributions. The Plan
Agent's fees for the handling of the reinvestment of distributions will be paid
by the Trust. Each participant in the Plan will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open market
purchases in connection with the reinvestment of distributions. Purchase orders
from the participants in the Plan may be combined with those of other
participants and the price paid by any particular participant may be the average
of the price paid on various orders executed on behalf of groups of participants
in the Plan.
The automatic reinvestment of distributions will not relieve participants of any
income tax that may be payable on such dividends or distributions.
The Plan may be amended or terminated on 30 days' written notice to Plan
participants. All correspondence concerning the Plan should be directed to
EquiServe Trust Company, N.A., by mail at P.O. Box 43010, Providence, RI
02940-3010, or by phone at 1-800-730-6001.
18
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TRANSFER AGENT
--------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Investment Grade Municipal Trust is:
EquiServe Trust Company, N.A.
150 Royall Street
Canton, MA 02021
The trust mails one shareholder report to each shareholder address. Shareholders
can order additional reports by calling 800-730-6001. In addition,
representatives at that number can provide shareholders information about the
trust.
Financial advisors who want additional information about the trust may speak to
a representative at 800-426-3750.
This report has been prepared for shareholders of Colonial Investment Grade
Municipal Trust.
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST SEMIANNUAL REPORT
130-03/241O-0503 (07/03) 03/1844
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable at this time.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Registrant's Chief Executive Officer and Chief Financial Officer,
based on their evaluation of the Registrant's disclosure controls and procedures
as of June 20, 2003, have concluded that such controls and procedures are
adequately designed to ensure that information required to be disclosed by the
Registrant in its reports that it files or submits under the Securities Exchange
Act of 1934, as amended, is accumulated and communicated to the Registrant's
management, including the Chief Executive Officer and Chief Financial Officer,
or persons performing similar functions, as appropriate, to allow timely
decisions regarding required disclosure.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could affect these controls subsequent to the date of our
evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable at
this time.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) in the exact form set forth below: Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Colonial Investment Grade Municipal Trust
-----------------------------------------------------------
By (Signature and Title)* /s/ Joseph R. Palombo
----------------------------------------------
Joseph R. Palombo, President
Date August 6, 2003
-------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Joseph R. Palombo
----------------------------------------------
Joseph R. Palombo, President
Date August 6, 2003
-------------------------------------------------------------------
By (Signature and Title)* /s/ J. Kevin Connaughton
----------------------------------------------
J. Kevin Connaughton, Treasurer
Date August 6, 2003
-------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.