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)
Vincent Pietropaolo, 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: 1-617-772-3698
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Date of fiscal year end: 11/30/2004
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Date of reporting period: 05/31/2004
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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, 2004
[photo of domed building]
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
PRESIDENT'S MESSAGE
July 21, 2004
Dear Shareholder:
We are pleased to let you know that FleetBoston Financial Corporation and Bank
of America Corporation have merged, effective April 1, 2004. As a result of the
merger, Columbia Management Group and your Colonial Investment Grade Municipal
Trust became part of the Bank of America family of companies. Looking ahead, we
believe this merger will be a real benefit to our shareholders. Preserving and
leveraging our strengths, the combined organization intends to deliver
additional research and management capabilities, as well as new products. There
are no immediate changes planned for fund names, product lines, or customer
service contacts.
As you might know, on March 15, 2004, FleetBoston Financial announced an
agreement in principle with the staff of the Securities and Exchange Commission
("SEC") and the New York Attorney General ("NYAG") to settle charges involving
market timing in Columbia Management mutual funds. (You may also know that Bank
of America came to a similar settlement in principle at the same time.) The
agreement requires the final approval of the SEC and the NYAG. This settlement
in principle reflects our strong wish to put this regrettable situation behind
us. Columbia Management has taken and will continue to take steps to strengthen
policies, procedures and oversight to curb frequent trading of Columbia open-end
fund shares.
Both your fund's trustees and Columbia Management are committed to serving the
interests of our shareholders, and we will continue to work hard to help you
achieve your financial goals.
As always, thank you for choosing Colonial Investment Grade Municipal Trust, and
for giving us the opportunity to help you build a strong financial future.
Sincerely,
/s/ Thomas C. Theobald /s/ J. Kevin Connaughton
Thomas C. Theobald J. Kevin Connaughton
Chairman, Board of Trustees President
J. Kevin Connaughton was named president of Colonial Investment Grade Municipal
Trust on February 27, 2004.
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
[SIDEBAR DATA]:
PRICE PER SHARE
AS OF 05/31/04 ($)
Net asset value 10.91
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Market price 9.69
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SIX-MONTH (CUMULATIVE) TOTAL
RETURN AS OF 05/31/04 (%)
Net asset value -2.01
-----------------------------
Market price -5.83
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Lipper General Municipal
Debt Funds (Leveraged)
Category average -0.58
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All results shown assume reinvestment of distributions.
DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/01/03-05/31/04 ($)
0.34
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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.
TOP 5 SECTORS
AS OF 05/31/04 (%)
Local general obligations 18.2
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Hospitals 10.0
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State appropriated 8.5
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Investor owned 6.7
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State general obligations 5.8
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QUALITY BREAKDOWN
AS OF 05/31/04 (%)
AAA 51.4
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AA 14.9
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A 8.8
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BBB 12.0
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BB 1.6
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B 0.3
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CCC 0.1
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Non-rated 9.3
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Cash equivalents 1.6
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Sector breakdown is calculated as a percentage of net assets (including auction
preferred shares). Quality breakdown is calculated as a percentage of total
investments. Ratings shown in the quality breakdown represent the highest rating
assigned to a particular bond by one of the following nationally-recognized
rating agencies: Standard & Poor's Corporation, Moody's Investors Service, Inc.
or Fitch Ratings Ltd.
Because the trust is actively managed, there is no guarantee that the trust will
continue to invest in these sectors or maintain this quality breakdown in the
future.
For the six-month period ended May 31, 2004, Colonial Investment Grade Municipal
Trust returned negative 2.01%, based on investment at net asset value. The trust
underperformed its peer group, the Lipper General Municipal Debt Funds
(Leveraged) Category, which averaged a negative return of 0.58% for the same
period.1
The trust's relatively light exposure to lower quality, higher-yielding
bonds resulted in a dividend that was lower than its peer group during the
period. Duration was also a factor in the trust's relative underperformance.
Duration is a measure, expressed in years, of a bond's sensitivity to changes in
interest rates. Overall, the trust's duration was shorter than its peer group,
which hurt relative performance when interest rates declined during the first
part of the period. We positioned the trust with a shorter duration because we
expected a strengthening economy to push interest rates slightly higher and bond
prices lower. We made up some, but not all, of the performance shortfall when
interest rates moved higher near the end of the period.
The trust's above-average stake in zero coupon municipal bonds also hampered
relative returns. Zeroes are bought at a steep discount to face value and
appreciate to face value at maturity. They tend to have relatively long
durations and do not do well when interest rates rise, which occurred at the end
of the period. The market's fairly large supply of zeros also held back their
returns.
LEVERAGED POSITIONS PUT A DAMPER ON INVESTOR ENTHUSIASM
For the six-month period ended May 31, 2004, the trust posted an even lower
return of negative 5.83%, based on the market price of the stock, as the
discount to net asset value widened. As investors began to anticipate that
rising short-term interest rates could erode the income the trust earns on its
leveraged positions, the shares lost some ground. The trust's preferred shares,
issued in 1999, allowed the trust to borrow against its underlying investments.
We invested the proceeds from these shares in longer maturity, higher-yielding
bonds, while paying out a short-term rate that is influenced by the federal
funds rate. The trust earns the difference between the rate paid on the
preferred shares and the yield on the longer maturity securities. With the
federal funds rate at 1.0%, during this reporting period, the difference was
significant and resulted in added income for the trust. However, going forward,
if the trend is toward higher interest rates all around, we expect the rate paid
on the preferred
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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.
1
shares to rise, which could lower the income available to pay the dividend on
the common shares.
EMPHASIS ON INCREASING YIELD
Our focus throughout the period was on increasing yield from the trust's
investments. We added to our stake in lower-quality municipal bonds with higher
yields and reduced bonds, such as zeros, that are geared more toward price
appreciation. Some higher-yielding bonds helped performance. Of particular note
were securities issued by HealthEast, a Minnesota hospital, and Charter
Municipal Mortgage Acceptance Co., a pooled loan program for multi-family
housing (0.3% and 0.6% of total investments, respectively).2 Both benefited from
credit improvement. We also took advantage of the higher yields offered in the
health care and retirement community sectors, raising the trust's stake in both.
Elsewhere, we reduced the trust's reliance on hedging to manage duration.
However, as Treasuries trailed other sectors, the trust benefited by selling
Treasury futures contracts short.
LOOKING AHEAD TO RISING INTEREST RATES
We plan to maintain the trust's slightly short duration on the expectation that
interest rates will rise gradually as job gains fuel the economy while high oil
prices keep growth somewhat in check. In this environment, we expect to continue
to boost our stake in higher-yielding bonds.
/s/ Maureen G. Newman
Maureen G. Newman has been the portfolio manager of Colonial Investment Grade
Municipal Trust since January 2002. Ms. Newman has managed various other
municipal funds for Columbia Management Advisors, Inc. or its predecessors since
May 1996.
Past performance is no guarantee of future investment results. Current
performance may be higher or lower than performance data shown.
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.
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2 Holdings are disclosed as of May 31, 2004, and are subject to change.
2
INVESTMENT PORTFOLIO
May 31, 2004 (Unaudited)
MUNICIPAL BONDS - 97.0% PAR ($) VALUE ($)
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EDUCATION - 7.2%
EDUCATION - 5.2%
AL University of South Alabama,
Series 1999,
(a) 11/15/18 2,500,000 1,230,750
FL Broward County Educational Facilities
Authority, Nova Southeastern,
Series 2004 B,
5.500% 04/01/24 155,000 153,878
IL Chicago, State University Auxiliary
Facilities, Series 1998,
5.500% 12/01/23 1,085,000 1,181,945
MA State Development Finance Agency,
Western New England College,
6.125% 12/01/32 315,000 314,786
MN University of Minnesota:
Series 1996 A,
5.750% 07/01/14 500,000 568,265
Series 1999 A,
5.500% 07/01/21 2,000,000 2,201,340
NY St. Lawrence County Industrial
Development Agency,
St. Lawrence University, Series 1998 A,
5.500% 07/01/13 1,465,000 1,611,368
TX Texas Tech University,
Series 1999,
5.000% 02/15/29 2,500,000 2,437,475
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Education Total 9,699,807
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PREP SCHOOL - 1.1%
MA State Industrial Finance Agency,
Tabor Academy, Series 1998,
5.400% 12/01/28 1,000,000 987,950
MO State Health & Educational
Facilities Authority, Central Institute
for the Deaf, Series 1999,
5.850% 01/01/22 600,000 631,362
NH State Business Finance Authority,
Proctor Academy,
Series 1998 A,
5.400% 06/01/17 410,000 417,142
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Prep School Total 2,036,454
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STUDENT LOAN - 0.9%
NE Nebhelp, Inc., Series 1993 A-6, AMT,
6.450% 06/01/18 1,500,000 1,609,545
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Student Loan Total 1,609,545
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EDUCATION TOTAL 13,345,806
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HEALTH CARE - 14.5%
CONGREGATE CARE RETIREMENT - 2.0%
CA La Verne Certificates
of Participation,
Brethren Hillcrest Home,
Series 2003 B,
6.625% 02/15/25 350,000 351,820
PAR ($) VALUE ($)
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CT State Development Authority,
Elim Park Baptist, Inc.,
Series 2003,
5.750% 12/01/23 250,000 251,818
FL Capital Projects Finance Authority,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 500,000 491,610
GA Fulton County Residential Care Facilities,
Canterbury Court, Series 2004 A,
6.125% 02/15/34 250,000 242,522
HI State Department of Budget & Finance,
Kahala Nui Project,
Series 2003 A:
7.875% 11/15/23 250,000 247,517
8.000% 11/15/33 250,000 248,375
IL State Health Facilities Authority,
Washington and Jane Smith Community,
Series 2003 A,
7.000% 11/15/32 250,000 244,233
MD Westminster Economic Development,
Carroll Lutheran Village,
Series 2004 A,
5.875% 05/01/21 500,000 491,615
NJ Economic Development Authority,
First Mortgage, Winchester Gardens,
Series 2004 A,
5.800% 11/01/31 250,000 239,865
PA Delaware County Authority,
Dunwoody Village, Inc.,
Series 2003 A,
5.375% 04/01/17 250,000 255,540
TN Shelby County, Health, Education
& Housing Facilities Board,
Germantown Village,
Series 2003 A,
7.250% 12/01/34 150,000 145,327
TX Abilene Health Facilities Development
Corp., Sears Methodist Retirement
Obligation Group,
Series 2003 A,
7.000% 11/15/33 200,000 201,702
WI State Health & Educational Facilities
Authority, Three Pillars Senior
Communities, Series 2003,
5.600% 08/15/23 300,000 292,059
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Congregate Care Retirement Total 3,704,003
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HEALTH SERVICES - 0.2%
MA State Health & Educational
Facilities Authority, Civic Investments,
Inc., Series 2002 A,
9.000% 12/15/15 250,000 280,933
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Health Services Total 280,933
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See notes to investment portfolio.
3
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE - (CONTINUED)
HOSPITALS - 10.0%
AZ Yavapai County Industrial Development
Authority Hospital Facilities,
Yavapai Regional Medical Center,
Series 2003 A,
6.000% 08/01/33 150,000 150,405
CA Health Facilities Financing,
Catholic Healthcare West,
Series 2004 I,
4.950% 07/01/26 200,000 198,972
CA Rancho Mirage Joint Powers,
Eisenhower Medical Center,
5.625% 07/01/29 1,000,000 992,630
CA Statewide Communities
Development Authority,
Kaiser Permanente,
Series 2004 I,
3.450% 04/01/35 250,000 237,428
CO Health Facilities Authority,
National Jewish Medical & Research
Center, Series 1998 B,
5.375% 01/01/29 250,000 224,710
FL Orange County Health Facilities Authority,
Orlando Regional Healthcare System:
Series 1996 C,
6.250% 10/01/13 720,000 842,133
Series 1999,
6.000% 10/01/26 175,000 180,425
Series 2002,
5.750% 12/01/32 150,000 152,012
FL South Broward Hospital District,
Series 2002,
5.625% 05/01/32 1,000,000 1,024,970
IL Southwestern Illinois Development
Authority, Anderson Hospital,
Series 1999,
5.375% 08/15/15 380,000 380,756
IL State Development Finance Authority,
Adventist Health System, Series 1999,
5.500% 11/15/20 900,000 910,953
IL State Health Facilities Authority,
Swedish American Hospital, Series 2000,
6.875% 11/15/30 500,000 543,865
IN Health Facilities Financing Authority
Hospital, Community Foundation
Northwest, Series 2004 A,
6.000% 03/01/34 150,000 142,981
KS University Hospital Authority,
Kansas University Health System,
Series 2002,
5.625% 09/01/32 500,000 496,105
LA State Public Facilities Authority,
Touro Infirmary, Series 1999 A,
5.625% 08/15/29 500,000 491,685
PAR ($) VALUE ($)
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MA State Health & Educational
Facilities Authority:
Milford-Whitinsville Regional,
Series 1998 C,
5.750% 07/15/13 500,000 506,730
South Shore Hospital,
Series 1999 F,
5.750% 07/01/29 1,000,000 1,010,370
MD State Health & Higher Educational
Facilities Authority:
Adventist Healthcare,
Series 2003 A:
5.000% 01/01/16 250,000 244,400
5.750% 01/01/25 250,000 247,605
Lifebridge Health,
Series 2004 A,
5.125% 07/01/34 500,000 482,950
University of Maryland Medical System,
Series 2000,
6.750% 07/01/30 250,000 281,005
MI Flint Hospital Building Authority,
Hurley Medical Center, Series 1998 B,
5.375% 07/01/28 250,000 238,782
MI State Hospital Finance Authority,
Oakwood Obligated Group,
Series 2003,
5.500% 11/01/18 400,000 410,932
MN St. Paul Housing & Redevelopment
Authority, HealthEast, Inc.:
Series 1993 B,
6.625% 11/01/17 240,000 241,147
Series 1997 A,
5.700% 11/01/15 250,000 239,045
NH Health &Education Facilities Authority,
Catholic Medical Center, Series 1989,
6.125% 07/01/32 500,000 500,150
NJ Health Care Facilities,
Capital Health System, Inc.,
Series 2003 A,
5.750% 07/01/23 350,000 355,925
NV Henderson, Catholic Healthcare West:
Series 1998,
5.375% 07/01/26 250,000 230,710
Series 1999 A,
6.750% 07/01/20 500,000 534,205
NY New York State Dormitory Authority:
North Shore Long Island Jewish
Medical Center, Series 2003,
5.500% 05/01/33 100,000 99,851
Winthrop/South Nassau Hospital,
Series 2003,
5.500% 07/01/23 150,000 151,594
See notes to investment portfolio.
4
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE - (CONTINUED)
HOSPITALS (CONTINUED)
OH Lakewood Hospital Improvement,
Lakewood Hospital Association,
Series 2003,
5.500% 02/15/14 385,000 406,475
RI State Health & Educational Building Corp.,
Hospital Financing,
Lifespan Obligation Group,
6.375% 08/15/21 500,000 520,175
SC Jobs Economic Development Authority,
Bon Secours Health Systems, Inc.,
Series 2002 A,
5.500% 11/15/23 500,000 483,755
SC Lexington County Health Services
District, Inc., Hospital Revenue,
5.500% 11/01/23 500,000 502,165
TN Metropolitan Government, Nashville
& Davidson Counties, Meharry
Medical College, Series 1996,
6.000% 12/01/16 1,575,000 1,794,240
TX Comal County Health Facilities
Development, McKenna Memorial,
Series 2002 A,
6.250% 02/01/32 500,000 500,940
VA Augusta County Industrial Development
Authority, Augusta Health Care, Inc.,
Series 2003,
5.250% 09/01/19 1,000,000 1,039,410
WI State Health & Educational
Facilities Authority:
Aurora Health Care, Inc.,
Series 2003,
6.400% 04/15/33 175,000 180,260
Fort Healthcare, Inc.,
5.375% 05/01/18 385,000 376,318
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Hospitals Total 18,549,169
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INTERMEDIATE CARE FACILITIES - 0.2%
IL State Development Finance Authority,
Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 465,000 377,496
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Intermediate Care Facilities Total 377,496
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NURSING HOMES - 2.1%
AK Juneau, St. Ann's Care Center,
Series 1999,
6.875% 12/01/25 500,000 502,870
CO Health Care Facilities Authority,
Pioneer Health Care, Series 1989,
10.500% 05/01/19 1,540,000 1,306,967
DE State Economic Development Authority,
Churchman Village Project, Series 1991 A,
10.000% 03/01/21 885,000 933,560
PAR ($) VALUE ($)
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PA Chester County Industrial Development
Authority, RHA/Pennsylvania Nursing Home,
Series 2002,
8.500% 05/01/32 755,000 719,085
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 (b) 565,000 339,000
WI State Health & Educational Facilities
Authority, Metro Health Foundation, Inc.,
Series 1993,
11.000% 11/01/22 (b) 1,300,000 169,000
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Nursing Homes Total 3,970,482
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HEALTH CARE TOTAL 26,882,083
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HOUSING - 3.2%
ASSISTED LIVING/SENIOR - 0.5%
NY Suffolk County Industrial
Development Agency,
Civic Facility, Gurwin Jewish Phase II,
Series 2004,
6.700% 05/01/39 500,000 499,930
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
Series 1994,
9.000% 11/01/24 470,000 423,743
-----------
Assisted Living/Senior Total 923,673
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MULTI-FAMILY - 2.6%
AZ Maricopa County Industrial
Development Authority,
National Health Facilities II Project,
5.100% 01/01/33 2,500,000 2,463,600
FL Broward County Housing Finance
Authority, Chaves Lake Apartment Project,
Series 2000, AMT,
7.500% 07/01/40 500,000 490,150
FL Clay County Housing Finance Authority,
Madison Commons Apartments,
Series 2000 A, AMT,
7.450% 07/01/40 250,000 246,585
MN White Bear Lake, Birch Lake
Townhome Project:
Series 1989 A, AMT,
10.250% 07/15/19 775,000 775,542
Series 1989 B,
(a) 07/15/19 669,000 325,408
NJ Middlesex County Improvement
Authority, Street Student Housing
Project, Series 2004 A,
5.000% 08/15/18 300,000 300,453
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993 A,
9.750% 12/01/16 (c) 227,741 218,303
-----------
Multi-Family Total 4,820,041
-----------
See notes to investment portfolio.
5
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HOUSING - (CONTINUED)
SINGLE FAMILY - 0.1%
CO State Housing Finance Authority,
Series 2000 B-2, AMT,
7.250% 10/01/31 130,000 131,842
IL Chicago, Series 2000 A, AMT,
7.150% 09/01/31 75,000 75,755
-----------
Single Family Total 207,597
-----------
HOUSING TOTAL 5,951,311
-----------
-----------------------------------------------------------
INDUSTRIAL - 1.6%
FOOD PRODUCTS - 0.6%
NE Washington County Waste Water Facilities,
Cargill, Inc., Series 2002, AMT,
5.900% 11/01/27 1,000,000 1,037,700
-----------
Food Products Total 1,037,700
-----------
FOREST PRODUCTS - 0.5%
AL Camden Industrial Development Board,
Weyerhaeuser Co.,
Series 2003 B, AMT,
6.375% 12/01/24 275,000 286,635
FL Escambia County Environmental
Improvement, International Paper,
Series 2003 A, AMT,
5.750% 11/01/27 250,000 241,265
MN International Falls, Boise Cascade Corp.,
Series 1999, AMT,
6.850% 12/01/29 500,000 497,550
-----------
Forest Products Total 1,025,450
-----------
MANUFACTURING - 0.1%
MO State Development Finance Board,
Procter & Gamble Co., Series 1999, AMT,
5.200% 03/15/29 250,000 249,635
-----------
Manufacturing Total 249,635
-----------
OIL & GAS - 0.4%
NV Clark County Industrial Development,
Southwest Gas Corp.,
Series 2003 E, AMT,
5.800% 03/01/38 250,000 263,660
TX Gulf Coast Industrial Development
Authority, Citgo Petroleum,
Series 1998, AMT,
8.000% 04/01/28 250,000 260,843
VI Public Finance Authority,
Hovensa Refinery, AMT,
6.125% 07/01/22 200,000 205,904
-----------
Oil & Gas Total 730,407
-----------
INDUSTRIAL TOTAL 3,043,192
-----------
PAR ($) VALUE ($)
-----------------------------------------------------------
OTHER - 6.9%
OTHER - 0.3%
NY Convention Center,
Yale Building Project, Series 2003,
(a) 06/01/08 700,000 581,217
-----------
Other Total 581,217
-----------
POOL/BOND BANK - 0.8%
FL State Municipal Loan Council,
Series 2000 A,
(a) 04/01/21 520,000 216,679
KS State Development Finance Authority,
Water Pollution Control,
5.500% 11/01/17 1,125,000 1,248,199
-----------
Pool/Bond Bank Total 1,464,878
-----------
REFUNDED/ESCROWED (d) - 4.9%
CA San Joaquin Hills Transportation
Corridor Agency, Series 1993,
(a) 01/01/23 5,250,000 1,977,990
CA State Educational Facilities Authority,
Santa Clara University, Series 1996,
5.000% 09/01/15 800,000 866,760
CT State Special Tax Obligation
Infrastructure, Series 2001 A,
5.375% 10/01/16 500,000 556,550
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 360,000 399,622
DE State Economic Development
Authority, Osteopathic Hospital
Association of Delaware,
Series 1992 A,
9.500% 01/01/22 205,000 210,617
FL Orange County Health Facilities
Authority, Orlando Regional Healthcare
System, Series 1996 C,
6.250% 10/01/13 1,740,000 2,060,908
NC Lincoln County, Lincoln County
Hospital, Series 1991,
9.000% 05/01/07 65,000 72,706
NC State Municipal Power Agency,
Catawba No. 1, Series 1986,
5.000% 01/02/20 1,670,000 1,745,785
NY New York,
Series 1996 A,
7.000% 08/01/07 80,000 89,404
TN Shelby County, Health, Education
& Housing Facilities Board,
Open Arms Development Center:
Series 1992 A,
9.750% 08/01/19 415,000 509,279
Series 1992 C,
9.750% 08/01/19 415,000 507,943
-----------
Refunded/Escrowed Total 8,997,564
-----------
See notes to investment portfolio.
6
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
OTHER - (CONTINUED)
TOBACCO - 0.9%
CA Golden State Tobacco Securitization
Authority:
Series 2003 A-1,
6.250% 06/01/33 750,000 674,595
Series 2003 B,
5.500% 06/01/43 500,000 484,410
SC Tobacco Settlement Revenue
Management Authority, Series 2001 B,
6.375% 05/15/28 400,000 344,348
WI Badger Tobacco Asset Securitization Corp.,
Series 2002,
6.375% 06/01/32 250,000 212,163
-----------
Tobacco Total 1,715,516
-----------
OTHER TOTAL 12,759,175
-----------
-----------------------------------------------------------
OTHER REVENUE - 0.9%
RECREATION - 0.9%
DC District of Columbia,
Smithsonian Institute, Series 1997,
5.000% 02/01/28 1,000,000 975,270
FL Capital Trust Agency,
Seminole Tribe Convention Center,
Series 2002 A,
10.000% 10/01/33 (c) 500,000 601,470
-----------
Recreation Total 1,576,740
-----------
OTHER REVENUE TOTAL 1,576,740
-----------
-----------------------------------------------------------
RESOURCE RECOVERY - 1.5%
DISPOSAL - 0.8%
IL Development Finance Authority,
Waste Management, Inc.,
Series 1997, AMT,
5.050% 01/01/10 500,000 510,715
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 80,000 81,986
MI State Strategic Fund, Waste Management,
Series 1995, AMT,
5.200% 04/01/10 500,000 513,970
OH State Solid Waste,
Republic Services, AMT,
4.250% 04/01/33 500,000 471,100
-----------
Disposal Total 1,577,771
-----------
RESOURCE RECOVERY - 0.7%
MA State Industrial Finance Agency,
Ogden Haverhill Project,
Series 1998 A, AMT,
5.450% 12/01/12 1,250,000 1,226,063
-----------
Resource Recovery Total 1,226,063
-----------
RESOURCE RECOVERY TOTAL 2,803,834
-----------
PAR ($) VALUE ($)
-----------------------------------------------------------
TAX-BACKED - 40.6%
LOCAL APPROPRIATED - 2.6%
CA Compton Certificates of Participation,
Civic Center & Capital Improvement,
Series 1997 A,
5.500% 09/01/15 500,000 509,540
CA Los Angeles County, Series 1999 A,
(a) 08/01/21 2,135,000 845,033
MN Andover Economic Development
Authority, Andover Community Center,
5.000% 02/01/19 600,000 594,420
MN Hibbing Economic Development
Authority, Series 1997,
6.400% 02/01/12 335,000 341,345
MO Development Finance Board,
St. Louis Convention Center,
Series 2000 C,
(a) 07/15/18 300,000 146,625
SC Berkeley County School District,
Series 2003,
5.000% 12/01/28 500,000 476,320
SC Dorchester County School District
No. 002, Growth Remedy Opportunity,
Series 2004,
5.250% 12/01/29 250,000 240,820
TX Houston Independent School District,
Public Facilities Corp., Series 1998 A,
(a) 09/15/13 2,500,000 1,634,850
-----------
Local Appropriated Total 4,788,953
-----------
LOCAL GENERAL OBLIGATIONS - 18.2%
AK North Slope Borough, Series 2001 A,
(a) 06/30/12 2,000,000 1,403,700
CA Las Virgenes Unified School District,
Series 2001 C,
(a) 11/01/22 1,210,000 450,084
CA Modesto High School District,
Stanislaus County, Capital Appreciation,
Series 2002 A,
(a) 08/01/19 1,350,000 615,802
CA Pomona Unified School District,
Series 2000 A,
6.450% 08/01/22 1,000,000 1,204,240
CA Vallejo City Unified School District,
Series 2002 A,
5.900% 08/01/25 2,000,000 2,264,420
CA West Contra Costa Unified School
District, Series 2001 B,
6.000% 08/01/24 250,000 287,418
CO El Paso County School District No. 11,
Colorado Springs, Series 1996,
7.125% 12/01/19 1,870,000 2,403,249
See notes to investment portfolio.
7
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TAX-BACKED - (CONTINUED)
LOCAL GENERAL OBLIGATIONS (CONTINUED)
CO Highlands Ranch Metropolitan District,
Series 1996,
6.500% 06/15/11 1,375,000 1,617,481
IL Chicago:
Series 1995 A-2,
6.250% 01/01/14 1,480,000 1,731,467
Series 1999,
5.500% 01/01/23 1,000,000 1,086,700
Series 2001 A,
(a) 01/01/15 3,000,000 1,800,270
IL Chicago Board of Education,
Series 1998 B-1:
(a) 12/01/11 1,000,000 728,540
(a) 12/01/21 2,000,000 787,340
IL Hoffman Estates Park District,
Debt Certificates,
5.000% 12/01/16 500,000 511,910
IL St. Clair County,
Series 1999,
(a) 10/01/16 2,000,000 1,088,560
IL St. Clair County Public Building
Commission, Series 1997 B,
(a) 12/01/13 2,000,000 1,300,520
IL Will County School District No. 17,
Series 2001,
8.500% 12/01/15 1,400,000 1,911,686
MI Garden City School District, Series 2001,
5.500% 05/01/16 325,000 349,544
MI St. John's Public School, Series 1998,
5.100% 05/01/25 1,000,000 1,025,960
NY New York City:
Series 1996 A,
7.000% 08/01/07 1,920,000 2,106,605
Series 2003 J,
5.500% 06/01/18 500,000 526,100
OH Kenston Local School District,
Series 2003,
5.000% 12/01/23 1,000,000 1,009,380
TX Brenham, Certificates of Obligation,
Series 2001,
5.375% 08/15/16 1,040,000 1,108,640
TX Dallas County Flood Control
District, Series 2002,
7.250% 04/01/32 500,000 506,150
TX Houston Independent School District,
Series 1999 A,
4.750% 02/15/22 5,000,000 4,865,350
TX La Joya Independent School District,
Series 1998,
5.500% 02/15/12 1,000,000 1,078,070
-----------
Local General Obligations Total 33,769,186
-----------
PAR ($) VALUE ($)
------------------------------------------------------------
SPECIAL NON-PROPERTY TAX - 4.7%
CA San Diego Redevelopment Agency,
Capital Appreciation Tax Allocation Center,
Series 2001,
(a) 09/01/21 3,725,000 1,475,137
FL Tampa Sports Authority,
Tampa Bay Arena Project, Series 1995,
5.750% 10/01/25 1,000,000 1,111,660
NM Dona Ana County, Series 1998,
5.500% 06/01/15 1,000,000 1,111,780
NY New York City Transitional
Finance Authority,
Series 1998 A,
5.000% 11/15/26 1,960,000 1,931,345
NY State Local Government
Assistance Corp.,
Series 1993 E,
5.000% 04/01/21 3,000,000 3,079,080
-----------
Special Non-Property Tax Total 8,709,002
-----------
SPECIAL PROPERTY TAX - 0.8%
CA Huntington Beach Community
Facilities District, Grand Coast
Resort, Series 2001,
6.450% 09/01/31 300,000 305,604
CA Oakdale Public Financing Authority
Tax Allocation, Central
Redevelopment Project,
5.375% 06/01/33 500,000 471,670
FL Celebration Community Development
District, Special Assessment,
Series 2003 A,
6.400% 05/01/34 250,000 253,370
FL Double Branch Community
Development District,
Series 2002 A,
6.700% 05/01/34 335,000 350,956
FL Lexington Oaks Community
Development District,
Series 1998 B,
5.500% 05/01/05 5,000 5,016
-----------
Special Property Tax Total 1,386,616
-----------
STATE APPROPRIATED - 8.5%
IN State Office Building Commission,
Women's Prison, Series 1995 B,
6.250% 07/01/16 2,820,000 3,310,088
KY State Property & Buildings Commission,
Project No. 73, Series 2001,
5.500% 11/01/14 455,000 501,274
See notes to investment portfolio.
8
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TAX-BACKED - (CONTINUED)
STATE APPROPRIATED (CONTINUED)
NY State Dormitory
Authority:
City University, Series 1993 A,
5.750% 07/01/18 5,000,000 5,682,150
Mental Health Services,
Series 1998 C,
5.000% 02/15/11 1,485,000 1,571,813
State University,
Series 2000 C,
5.750% 05/15/17 1,000,000 1,136,530
NY State Urban Development Corp.,
5.600% 04/01/15 1,000,000 1,105,370
UT State Building Ownership Authority,
Facilities Master Lease,
Series 1998 C,
5.500% 05/15/19 1,750,000 1,924,982
WV State Building Commission,
Series 1998 A,
5.375% 07/01/18 500,000 542,000
-----------
State Appropriated Total 15,774,207
-----------
STATE GENERAL OBLIGATIONS - 5.8%
CA State:
Series 1995,
5.750% 03/01/19 70,000 72,290
Series 2004,
5.000% 02/01/21 1,000,000 998,810
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 890,000 940,819
MA State, Series 1998 C,
5.250% 08/01/17 1,000,000 1,070,780
NJ State, Series 2001,
5.250% 07/01/16 2,000,000 2,181,560
PR Commonwealth of Puerto Rico:
Series 2004 A,
5.000% 07/01/30 300,000 314,004
Aqueduct & Sewer Authority:
Series 1995:
6.250% 07/01/12 1,000,000 1,178,790
6.250% 07/01/13 750,000 888,210
Series 2001,
5.500% 07/01/17 1,000,000 1,119,140
TX State, Series 1999 ABC,
5.500% 08/01/35 2,000,000 2,063,640
-----------
State General Obligations Total 10,828,043
-----------
TAX-BACKED TOTAL 75,256,007
-----------
-----------------------------------------------------------
TRANSPORTATION - 6.9%
AIR TRANSPORTATION - 1.9%
CA Los Angeles Regional Airport
Improvement Corp.,
American Airlines, Inc.,
Series 2000 C, AMT,
7.500% 12/01/24 750,000 642,577
PAR ($) VALUE ($)
-----------------------------------------------------------
IL Chicago O'Hare International Airport,
United Airlines, Inc., Series 2000 A, AMT,
6.750% 11/01/11 (b) 800,000 266,280
KY Kenton County Airport Board,
Delta Air Lines, Inc.,
Series 1992 A, AMT,
7.500% 02/01/12 250,000 212,610
MN Minneapolis & St. Paul Metropolitan
Airport Commission, Northwest Airlines,
Series 2001 A, AMT,
7.000% 04/01/25 350,000 309,039
NC Charlotte, US Airways, Inc.:
Series 1998, AMT,
5.600% 07/01/27 500,000 267,500
Series 2000, AMT,
7.750% 02/01/28 500,000 357,365
NY Port Authority of New York &
New Jersey, JFK International Air Terminal,
Series 1997, AMT,
6.250% 12/01/08 1,000,000 1,104,380
TX Houston Industrial Development Corp.,
Air Cargo, Perot Development,
Series 2002, AMT,
6.000% 03/01/23 390,017 388,563
-----------
Air Transportation Total 3,548,314
-----------
AIRPORTS - 0.6%
MA State Port Authority,
Series 1999, IFRN,
10.000% 07/01/29 (e) 1,000,000 1,110,990
-----------
Airports Total 1,110,990
-----------
TOLL FACILITIES - 2.8%
CA Foothill/Eastern Transportation
Corridor Agency, Series 1995 A,
5.000% 01/01/35 1,000,000 869,360
CA San Joaquin Hills Transportation
Corridor Agency, Series 1997 A,
(a) 01/15/15 2,000,000 1,205,420
CO Northwest Parkway Public Highway
Authority, First Tier,
Series 2001 D,
7.125% 06/15/41 500,000 518,105
CO State Public Highway Authority,
E-470, Series 1997 B,
(a) 09/01/11 2,000,000 1,474,200
NH State Turnpike Systems,
Series 1991 C, IFRN,
12.716% 11/01/17 (e) 1,000,000 1,234,780
-----------
Toll Facilities Total 5,301,865
-----------
See notes to investment portfolio.
9
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TRANSPORTATION - (CONTINUED)
TRANSPORTATION - 1.6%
IL Regional Transportation Authority,
Series 1994 C,
7.750% 06/01/20 1,000,000 1,337,740
NV State Department of Business & Industry,
Las Vegas Monorail Project,
Series 2000:
7.375% 01/01/30 250,000 247,788
7.375% 01/01/40 250,000 244,578
OH Toledo-Lucas County Port Authority,
CSX Transportation, Inc., Series 1992,
6.450% 12/15/21 1,000,000 1,079,330
-----------
Transportation Total 2,909,436
-----------
TRANSPORTATION TOTAL 12,870,605
-----------
-----------------------------------------------------------
UTILITIES - 13.7%
INDEPENDENT POWER PRODUCERS - 0.7%
MI Midland County Economic Development
Corp., Series 2000, AMT,
6.875% 07/23/09 600,000 619,050
NY New York City Industrial
Development Agency,
Brooklyn Navy Yard Partners,
Series 1997, AMT,
5.650% 10/01/28 200,000 177,560
PA Carbon County Industrial Development
Authority, Panther Creek Partners,
Series 2000, AMT,
6.650% 05/01/10 140,000 149,848
PR Commonwealth of Puerto Rico Industrial,
Educational, Medical & Environmental
Cogeneration Facilities, AES Project,
Series 2000, AMT,
6.625% 06/01/26 320,000 331,581
-----------
Independent Power Producers Total 1,278,039
-----------
INVESTOR OWNED - 6.7%
AZ Maricopa County Pollution Control
Revenue, El Paso Electric Co.,
Series 2002 A,
6.250% 05/01/37 500,000 517,745
CA Chula Vista Industrial Development
Authority, San Diego Gas & Electric,
Series 1996 B, AMT,
5.500% 12/01/21 (f) 625,000 633,775
FL Polk County Industrial Development
Authority, Tampa Electric Co.,
Series 1996, AMT,
5.850% 12/01/30 500,000 486,810
IN Petersburg, Indiana Power & Light Co.,
Series 1993 B,
5.400% 08/01/17 2,500,000 2,695,800
MI State Strategic Fund, Detroit Edison Co.,
Series 1998 A, AMT,
5.550% 09/01/29 3,000,000 3,059,820
PAR ($) VALUE ($)
-----------------------------------------------------------
MS State Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 04/01/22 1,000,000 1,003,000
MT Forsyth Pollution Control,
Portland General, Series 1998 A,
5.200% 05/01/33 150,000 155,870
OH State Air Quality Development Authority,
Cleveland Electric Illumination,
Series 2002 A,
6.000% 12/01/13 650,000 665,633
TX Brazos River Authority, Pollution Control,
TXU Electric Co.:
Series 1999, AMT,
7.700% 04/01/33 250,000 283,233
Series 2001, AMT,
5.750% 05/01/36 125,000 130,931
Series 2003 C, AMT,
6.750% 10/01/38 375,000 393,484
TX Matagorda County Navigation
District No.1,
Houston Light & Power Co.,
Series 1997, AMT,
5.125% 11/01/28 2,000,000 1,968,700
WY Converse County Pollution Control,
Pacificorp, Series 1988,
3.900% 01/01/14 500,000 468,670
-----------
Investor Owned Total 12,463,471
-----------
JOINT POWER AUTHORITY - 2.5%
MA Municipal Wholesale Electric Co.,
Power Supply System, Project 6-A,
5.250% 07/01/14 1,000,000 1,079,650
NC Eastern Municipal Power Agency,
Series 2003,
5.500% 01/01/16 285,000 297,876
NC State Municipal Power Agency,
Catawba Electric No. 1:
Series 1998 A,
5.500% 01/01/15 640,000 705,907
Series 2003 A,
5.250% 01/01/18 2,500,000 2,628,650
-----------
Joint Power Authority Total 4,712,083
-----------
MUNICIPAL ELECTRIC - 1.2%
CA State Water Resources Authority,
Series 2002 A,
5.500% 05/01/14 1,000,000 1,101,130
NC University of North Carolina at
Chapel Hill, Series 1997,
(a) 08/01/14 1,000,000 630,300
NE Public Power District, Series 1998 A,
5.250% 01/01/11 500,000 538,785
-----------
Municipal Electric Total 2,270,215
-----------
See notes to investment portfolio.
10
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
UTILITIES - (CONTINUED)
WATER & SEWER - 2.6%
GA Atlanta, Series 1993,
5.500% 11/01/22 (g) 1,000,000 1,095,250
MS V Lakes Utility District,
8.250% 07/15/24 140,000 133,692
NY New York City Municipal
Water Finance Authority,
Water & Sewer System,
Capital Appreciation, Series 1998 D,
(a) 06/15/20 3,900,000 1,779,453
WA King County, Series 1999,
5.250% 01/01/30 1,750,000 1,762,512
-----------
Water & Sewer Total 4,770,907
-----------
UTILITIES TOTAL 25,494,715
-----------
TOTAL MUNICIPAL BONDS
(cost of $174,959,123) 179,983,468
-----------
MUNICIPAL PREFERRED STOCKS - 0.6%
-----------------------------------------------------------
HOUSING - 0.6%
MULTI-FAMILY - 0.6%
Charter Municipal Mortgage
Acceptance Co.:
6.300% 04/30/19 500,000 503,860
AMT,
7.600% 11/30/10 (c) 500,000 567,055
-----------
Multi-Family Total 1,070,915
-----------
HOUSING TOTAL 1,070,915
-----------
TOTAL MUNICIPAL PREFERRED STOCKS
(cost of $1,000,000) 1,070,915
-----------
SHORT-TERM OBLIGATIONS - 1.5%
-----------------------------------------------------------
VARIABLE RATE DEMAND NOTES (H) - 1.5%
CO Denver Health & Hospital Authority,
Series 2001 B,
1.140% 12/01/31 300,000 300,000
IL Health Facilities Authority,
OSF Healthcare System,
1.100% 11/15/27 500,000 500,000
IL Quad Cities Regional Economic Development
Authority, Two Rivers YMCA Project,
1.140% 12/01/31 300,000 300,000
IN Health Facilities Financing Authority,
Fayette Memorial Hospital Association,
Series 2002 A,
1.140% 10/01/32 800,000 800,000
MO State Health & Educational Facilities,
Authority, Washington University,
Series 1996 C,
1.090% 09/01/30 1,000,000 1,000,000
-----------
VARIABLE RATE DEMAND NOTES TOTAL 2,900,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $2,900,000) 2,900,000
-----------
VALUE ($)
-----------------------------------------------------------
TOTAL INVESTMENTS - 99.1%
(cost of $178,859,123)(i) 183,954,383
-----------
OTHER ASSETS & LIABILITIES, NET - 0.9% 1,613,999
-----------------------------------------------------------
NET ASSETS* - 100.0% 185,568,382
===========
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------------
* Net assets represent both Common Shares and Auction Preferred Shares.
(a) Zero coupon bond.
(b) The issuer has filed for bankruptcy protection under Chapter 11 and is in
default of certain debt covenants. Income is not being accrued. As of May
31, 2004, the value of these securities amounted to $774,280, which
represents 0.4% of net assets.
(c) Security exempt from registration pursuant to Rule 144A under the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31, 2004
these securities amounted to $1,386,828, which represents 0.7% of net
assets.
(d) The Trust has been informed that this issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
principal and interest.
(e) Variable rate security. The interest rate shown reflects the rate as of May
31, 2004.
(f) Security purchased on a delayed delivery basis.
(g) A portion of this security with a market value of $1,051,440 pledged as
collateral for open futures contracts.
(h) Variable rate demand notes. These securities are payable upon demand and
are secured by letters of credit or other credit support agreements from
banks. The interest rates change periodically and the interest rates shown
reflect the rates as of May 31, 2004.
(i) Cost for federal income tax purposes is $178,575,023.
At May 31, 2004, the Trust held the following open short futures contracts:
UNREALIZED
AGGREGATE EXPIRATION APPRECIATION
TYPE VALUE FACE VALUE DATE (DEPRECIATION)
----------------------------------------------------------------------------
10-Year U.S.
Treasury Note $23,952,750 $24,801,410 Jun-2004 $848,660
U.S. Long Bond 14,204,531 14,195,351 Sep-2004 (9,180)
--------
$839,480
--------
ACRONYM NAME
-----------------------------------------------------------
AMT Alternative Minimum Tax
IFRN Inverse Floating Rate Note
See notes to financial statements.
11
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2004 (Unaudited)
ASSETS:
Investments, at cost $178,859,123
------------
Investments, at value $183,954,383
Cash 75,861
Receivable for:
Interest 2,793,062
Futures variation margin 191,078
Deferred Trustees' compensation plan 9,090
------------
Total Assets 187,023,474
------------
LIABILITIES:
Payable for:
Investments purchased on a delayed
delivery basis 625,000
Distributions--common shares 656,013
Distributions--preferred shares 11,866
Preferred shares remarketing commissions 2,879
Investment advisory fee 99,632
Pricing and bookkeeping fees 17,811
Trustees' fees 35
Custody fee 1,579
Audit fee 25,270
Transfer agent fee 4,706
Deferred Trustees' fees 9,090
Other liabilities 1,211
------------
Total Liabilities 1,455,092
------------
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 696,410
Accumulated net realized loss (8,055,862)
Net unrealized appreciation on:
Investments 5,095,260
Futures contracts 839,480
------------
Net assets at value applicable to 11,509,000
common shares of beneficial interest
outstanding $125,568,382
============
Net asset value per common share $ 10.91
============
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 2004 (Unaudited)
INVESTMENT INCOME:
Interest $ 4,982,990
Dividends 351
------------
Total Investment Income 4,983,341
------------
EXPENSES:
Investment advisory fee 620,587
Transfer agent fee 24,678
Pricing and bookkeeping fees 52,018
Trustees' fees 4,095
Preferred shares remarketing commissions 75,291
Custody fee 6,614
Other expenses 69,153
------------
Total Expenses 852,436
Custody earnings credit (118)
------------
Net Expenses 852,318
------------
Net Investment Income 4,131,023
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES CONTRACTS:
Net realized gain (loss) on:
Investments 832,206
Futures contracts (1,231,706)
------------
Net realized loss (399,500)
------------
Net change in unrealized
appreciation/depreciation on:
Investments (6,737,145)
Futures contracts 774,657
------------
Net change in unrealized
appreciation/depreciation (5,962,488)
------------
Net Loss (6,361,988)
------------
Net Decrease in Net Assets from Operations (2,230,965)
------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (277,032)
------------
Net Decrease in Net Assets from Operations
Applicable to Common Shares $ (2,507,997)
------------
See notes to financial statements.
12
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
INCREASE (DECREASE) IN NET ASSETS: 2004 2003
---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 4,131,023 $ 8,560,489
Net realized gain (loss) on investments and futures contracts (399,500) 998,519
Net change in unrealized appreciation/depreciation on investments and futures contracts (5,962,488) 3,799,175
------------ ------------
Net Increase (Decrease) from Operations (2,230,965) 13,358,183
------------ ------------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (277,032) (586,950)
------------ ------------
Increase (Decrease) in Net Assets from Operations Applicable to Common Shares (2,507,997) 12,771,233
------------ ------------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (3,890,042) (7,854,896)
------------ ------------
Net Increase (Decrease) in Net Assets Applicable to Common Shares (6,398,039) 4,916,337
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 131,966,421 127,050,084
------------ ------------
End of period (including undistributed net investment income of
$696,410 and $732,461, respectively) $125,568,382 $131,966,421
------------ ------------
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.
13
NOTES TO FINANCIAL STATEMENTS
May 31, 2004 (Unaudited)
NOTE 1. 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.
INVESTMENT GOAL
The Trust seeks as high a level of after-tax 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.
TRUST SHARES
The Trust may issue an unlimited number of common shares. On August 26, 1999,
the Trust issued 2,400 Auction Preferred Shares ("APS").
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the 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
Debt securities generally are valued by a pricing service approved by the
Trust's Board of Trustees, based upon market transactions for normal,
institutional-size trading units of similar securities. The 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. Debt securities for which quotations
are readily available are valued at an over-the-counter or exchange bid
quotation. Certain debt securities, which tend to be more thinly traded and of
lesser quality, are priced based on fundamental analysis of the financial
condition of the issuer and the estimated value of any collateral. Valuations
developed through pricing techniques may vary from the actual amounts realized
upon sale of the securities, and the potential variation may be greater for
those securities valued using fundamental analysis.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost
is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
FUTURES CONTRACTS
The Trust may invest in municipal and U.S. Treasury futures contracts. The Trust
may 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 differing 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 Management Advisors, Inc. of the future
direction of interest rates. Any of these risks may involve amounts exceeding
the variation margin recorded on the Trust's Statement of Assets and Liabilities
at any given time.
Upon entering into a futures contract, the Trust deposits cash or securities
with the broker 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 also identifies portfolio
securities as segregated with the custodian in a separate account in an amount
equal to the futures contract. The Trust recognizes a realized gain or loss when
the contract is closed or expires.
DELAYED DELIVERY SECURITIES
The Trust may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. 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. The Trust identifies cash or
liquid portfolio securities as segregated with the custodian in an amount equal
to the delayed delivery commitment.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Original issue discount is
accreted to interest income over the life of the security with a corresponding
increase in the cost basis. Premium and discount are amortized and accreted,
respectively, on all debt securities. Dividend income is recorded on ex-date.
14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2004 (Unaudited)
FEDERAL INCOME TAX STATUS
The Trust intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its taxable or tax-exempt income, if any, for its tax year,
and as such will not be subject to federal income taxes. In addition, the Trust
intends to distribute in each calendar year substantially all of its net
investment income, capital gains and certain other amounts, if any, such that
the Trust should not be subject to federal excise tax. Therefore, no federal
income or excise tax provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to common shareholders are recorded on ex-date. Distributions to
Auction Preferred shareholders are recorded daily and 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, 2004, was 1.07%. For
the six months ended May 31, 2004, the Trust declared dividends to Auction
Preferred shareholders amounting to $277,032, representing an average APS
dividend rate of 0.93%.
NOTE 3. FEDERAL TAX INFORMATION
The tax character of distributions paid during the year ended November 30, 2003
was as follows: Distributions paid from:
Tax-Exempt Income $8,411,303
Ordinary Income* 30,543
Long-Term Capital Gains --
* For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
Unrealized appreciation and depreciation at May 31, 2004, based on cost of
investments for federal income tax purposes was:
Unrealized appreciation $11,244,601
Unrealized depreciation (5,865,241)
-----------
Net unrealized appreciation $ 5,379,360
-----------
The following capital loss carryforwards, determined as of November 30, 2003,
may be 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
---------- ------------
2008 $2,403,657
2010 1,238,884
----------
$3,642,541
----------
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the
Trust. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary
of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004,
FleetBoston, including the Trust's investment advisor, was acquired by Bank of
America Corporation ("BOA"). The acquisition did not change the way the Trust is
managed, the investment personnel assigned to manage the Trust or the fees paid
by the Trust.
INVESTMENT ADVISORY FEE
Columbia provides administrative and other services to the Trust in addition to
investment advisory services. Columbia receives a monthly investment advisory
fee 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
Corporation ("State Street"). As a result, Columbia pays the total fees received
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 APS,
exceed $50 million, an additional monthly fee. The additional fee rate is
calculated by taking into account the fees payable to State Street under the
Outsourcing Agreement. This rate is applied to the average weekly net assets,
including assets applicable to APS, of the Trust for that month. The Trust also
pays additional fees for pricing services based on the number of securities held
by the Trust. For the six months ended May 31, 2004, the Trust's annualized
effective pricing and bookkeeping fee rate was 0.055%.
CUSTODY CREDITS
The Trust has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. 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.
FEES PAID TO OFFICERS AND TRUSTEES
The Trust pays no compensation to its officers, all of whom are employees of
Columbia or its affiliates. The Trust's 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.
OTHER
Columbia provides certain services to the Trust related to Sarbanes-Oxley
compliance. For the six months ended May 31, 2004, the Trust paid $744 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2004 (Unaudited)
NOTE 5. PORTFOLIO INFORMATION
For the six months ended May 31, 2004, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $14,925,849 and
$14,164,707, respectively.
NOTE 6. 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 APS. At May 31, 2004, there
were no such restrictions on the Trust.
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS
AND CONTINGENCIES
GEOGRAPHIC CONCENTRATION
The Trust has greater than 5% of its total investments at May 31, 2004 invested
in debt obligations issued by the states of California, Illinois, New York and
Texas and their respective political subdivisions, agencies and public
authorities. The Trust is more susceptible to economic and political factors
adversely affecting issuers of the specific state's municipal securities than
are municipal bond funds that are not concentrated to the same extent in these
issuers.
HIGH-YIELD SECURITIES
Investing in high-yield securities may involve greater credit risk and
considerations not typically associated with investing in U.S. Government bonds
and other higher quality fixed income securities. These securities are
non-investment grade securities, often referred to as "junk bonds." Economic
downturns may disrupt the high yield market and impair the ability of issuers to
repay principal and interest. Also, an increase in interest rates would likely
have an adverse impact on the value of such obligations. Moreover, high-yield
securities may be less liquid to the extent there is no established secondary
market.
INDUSTRY FOCUS
The Trust may focus its investments in certain industries, subjecting it to
greater risk than a trust that is more diversified.
LEGAL PROCEEDINGS
Columbia and Columbia Funds Distributor, Inc. ("CFDI"), and certain of their
affiliates (collectively, "the Columbia Group") have received information
requests and subpoenas from various regulatory and law enforcement authorities
in connection with their investigations of late trading and market timing in
mutual funds, as well as other industry wide issues. The Columbia Group has not
uncovered any instances where Columbia or CFDI were knowingly involved in late
trading of mutual fund shares.
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and CFDI, alleging that they had violated certain
provisions of the federal securities laws in connection with trading activity in
mutual fund shares. Also on February 24, 2004, the New York Attorney General
("NYAG") filed a civil complaint in New York Supreme Court, County of New York
against Columbia and CFDI alleging that Columbia and CFDI had violated certain
New York anti-fraud statutes. If either Columbia or CFDI is unsuccessful in its
defense of these proceedings, it could be barred from serving as an investment
advisor or distributor for any investment company registered under the
Investment Company Act of 1940, as amended (a "registered investment company").
Such results could prevent Columbia, CFDI or any company that is an affiliated
person of Columbia and CFDI from serving as an investment advisor or distributor
for any registered investment company, including your fund. Your fund has been
informed by Columbia and CFDI that, if these results occur, they will seek
exemptive relief from the SEC to permit them to continue to serve as your fund's
investment advisor and distributor. There is no assurance that such exemptive
relief will be granted. On March 15, 2004, Columbia and CFDI entered into
agreements in principle with the SEC Division of Enforcement and NYAG in
settlement of the charges. Under the agreements, Columbia and CFDI agreed, among
other things, to the following conditions: payment of $70 million in
disgorgement; payment of $70 million in civil penalties; an order requiring
Columbia and CFDI to cease and desist from violations of the antifraud
provisions and other provisions of the federal securities laws; governance
changes designed to maintain the independence of the mutual fund boards of
trustees and ensure compliance with securities laws and their fiduciary duties;
and retention of an independent consultant to review Columbia's and CFDI's
compliance policies and procedures. The agreement requires the final approval of
the SEC. In a separate agreement with the NYAG, the Columbia Group has agreed to
reduce mutual fund fees by $80 million over a five-year period.
As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of fund
shares, which could increase transaction costs or operating expenses, or have
other adverse consequences for the funds.
In connection with the events described in detail above, various parties have
filed suit against certain funds, their Boards and/or FleetBoston (and
affiliated entities). These suits and certain regulatory investigations are
ongoing. Accordingly, an estimate of the financial impact of this litigation on
any fund, if any, cannot currently be made.
16
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
MAY 31, ----------------------------------------------------- NOVEMBER 30,
2004 2003 2002 2001 2000 1999 (a)
---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.47 $ 11.04 $ 11.06 $ 10.55 $ 10.31 $ 11.49
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.36(b) 0.74(b) 0.78(b)(c) 0.75(b) 0.81(d) 0.58
Net realized and unrealized gain (loss) on
investments and futures contracts (0.56) 0.42 (0.05)(c) 0.52 0.27 (1.12)
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations (0.20) 1.16 0.73 1.27 1.08 (0.54)
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (0.02) (0.05) (0.08) (0.16) (0.22) (0.05)
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations
Applicable to Common Shareholders (0.22) 1.11 0.65 1.11 0.86 (0.59)
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO
COMMON SHAREHOLDERS:
From net investment income (0.34) (0.68) (0.67) (0.60) (0.60) (0.52)
---------- ---------- ---------- ---------- ---------- ----------
LESS SHARE TRANSACTIONS:
Commission and offering costs--
preferred shares -- -- -- -- (0.02) (0.07)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period $ 10.91 $ 11.47 $ 11.04 $ 11.06 $ 10.55 $ 10.31
========== ========== ========== ========== ========== ==========
Market price per share--common shares $ 9.69 $ 10.63 $ 10.09 $ 10.87 $ 8.92 $ 9.06
========== ========== ========== ========== ========== ==========
Total return--based on market
value--common shares (e) (5.83)%(f) 12.48% (1.10)% 29.28% 5.20% (14.64)%(f)
---------- ---------- ---------- ---------- ---------- ----------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (g)(h) 1.30%(i) 1.31% 1.28% 1.28% 1.31% 1.03%(i)
Net investment income before
preferred stock dividend (g)(h) 6.32%(i) 6.57% 7.06%(c) 6.80% 7.91% 5.75%(i)
Net investment income after
preferred stock dividend (g)(h) 5.89%(i) 6.12% 6.38%(c) 5.38% 5.80% 5.26%(i)
Portfolio turnover rate 8%(f) 13% 10% 31% 23% 25%(f)
Net assets, end of period (000's)--
common shares $ 125,568 $ 131,966 $ 127,050 $ 127,273 $ 121,366 $ 118,660
(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 the net investment income per
share by $0.01, increase the 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
reclassifications of differences between book and tax basis net investment
income.
(e)Total return at market value assuming all distributions reinvested at prices
calculated in accordance with the Dividend Reinvestment Plan.
(f)Not annualized.
(g)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h)Ratios reflect average net assets available to common shares only.
(i)Annualized.
17
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.43 $ 10.87 $ 11.05 $ 9.93 $ 11.05 $ 10.96
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.60 0.62 0.63 0.64 0.67 0.79
Net realized and unrealized gain (loss)
on investments and futures contracts 0.07 0.58 (0.19) 1.11 (1.12) 0.09
---------- ---------- ---------- ---------- ---------- ----------
Total Income from Investment Operations 0.67 1.20 0.44 1.75 (0.45) 0.88
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.61) (0.64) (0.62) (0.63) (0.67) (0.79)
In excess of net investment income --(a) -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions Declared to Shareholders (0.61) (0.64) (0.62) (0.63) (0.67) (0.79)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 11.49 $ 11.43 $ 10.87 $ 11.05 $ 9.93 $ 11.05
---------- ---------- ---------- ---------- ---------- ----------
Market price per share--common shares $ 11.19 $ 10.56 $ 10.13 $ 9.88 $ 9.25 $ 10.75
---------- ---------- ---------- ---------- ---------- ----------
Total return--based on market value--
common shares (b) 11.94% 10.76% 9.06% 13.87% (8.12)% (2.16)%
---------- ---------- ---------- ---------- ---------- ----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (c) 0.77% 0.83% 0.88% 1.08% 0.94% 0.87%
Net investment income (c) 5.24% 5.63% 5.80% 6.08% 6.46% 7.08%
Portfolio turnover rate 24% 21% 20% 37% 34% 35%
Net assets, end of period (000's)--common shares $ 132,242 $ 131,503 $ 125,125 $ 127,118 $ 114,260 $ 127,213
(a)Rounds to less than $0.01 per share.
(b)Total return at market value assuming all distributions reinvested at prices
calculated in accordance with the Dividend Reinvestment Plan.
(c)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE PER SHARE PER SHARE
-------------------------------------------------------------------------------------------------------------------
05/31/04* $60,000,000 $77,320 $25,005 $25,000
11/30/03 60,000,000 79,986 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.
18
SHAREHOLDER MEETING RESULTS
RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS
On May 26, 2004, the Annual Meeting of Shareholders of the Trust was held to
conduct a vote for or against the approval of the following Items listed on the
Trust's Proxy Statement for said Meeting. On March 10, 2004, 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 WITHHELD
------------------------------------------------------------------------------
William E. Mayer 10,181,502 339,171
John J. Neuhauser 10,339,419 181,253
Patrick J. Simpson 10,339,349 181,323
Thomas C. Theobald 10,329,315 191,358
Richard L. Woolworth 10,342,223 178,449
On March 10, 2004, the record date of the Meeting, the Trust had 2,400 preferred
shares outstanding. The votes cast were as follows:
PROPOSAL 2:
ELECTION OF TRUSTEES: FOR WITHHELD
------------------------------------------------------------------------------
Douglas A. Hacker 2,349 51
William E. Mayer 2,349 51
John J. Neuhauser 2,349 51
Patrick J. Simpson 2,349 51
Thomas E. Stitzel 2,349 51
Thomas C. Theobald 2,349 51
Richard L. Woolworth 2,349 51
19
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 (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 by mail at P.O. Box 43010, Providence, RI 02940-3010, or by phone at
1-800-730-6001.
20
TRANSFER AGENT
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Investment Grade Municipal Trust is:
EquiServe
P.O. Box 43010
Providence, RI 02940-3010
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.
A description of the policies and procedures that the trust uses to determine
how to vote proxies relating to its portfolio securities is available (i)
without charge, upon request, by calling 800-730-6001 and (ii) on the Securities
and Exchange Commission's website at http://www.sec.gov.
This report has been prepared for shareholders of Colonial Investment Grade
Municipal Trust.
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST SEMIANNUAL REPORT
130-03/058S-0504 (07/04) 04/1533
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. SCHEDULE OF INVESTMENTS
Not applicable at this time.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable at this time.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable at this time.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have not been any material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees/Directors since
those procedures were last disclosed in response to Item 7(d)(2)(ii)(G) of
Schedule 14A.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer, based on his evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing of
this report, has concluded that such controls and procedures are
adequately designed to ensure that information required to be
disclosed by the registrant in Form N-CSR is accumulated and
communicated to the registrant's management, including the principal
executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not
applicable at this time.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable at this time.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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/ J. Kevin Connaughton
------------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date August 3, 2004
--------------------------------------------------------------------------
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/ J. Kevin Connaughton
------------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date August 3, 2004
--------------------------------------------------------------------------