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: 11/30/2004
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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. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST ANNUAL REPORT
NOVEMBER 30, 2004
[photo of colonial-style building]
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
PRESIDENT'S MESSAGE
Dear Shareholder:
In 2004, Colonial Funds became part of the Bank of America family, one of the
largest, most respected financial institutions in the United States. As a direct
result of this merger, a number of changes are in the works that we believe
offer significant potential benefits for our shareholders. First, some funds may
be merged in order to eliminate redundancies, others may be liquidated and fund
management teams will be aligned to maximize performance potential. You will
receive more detailed information about these changes if your fund is affected
and you may be asked to vote on certain fund changes. In this matter, your
timely response will enable us to implement the changes in 2005.
As a result of these changes, we believe we will offer shareholders an even
stronger lineup of investment options. What will not change as we enter this
next phase of consolidation is our commitment to the highest standards of
performance and our dedication to superior service. Change for the good has
another name: it's called improvement. It helps move us forward, and we believe
that it represents progress for all our shareholders in their quest for
long-term financial success.
In the pages that follow, you'll find a detailed report from the fund's manager
or managers on key factors that influenced your fund's performance. We hope that
you will read the manager reports carefully and discuss any questions you might
have with your financial advisor.
As always, we thank you for choosing Colonial Funds. We appreciate your
continued confidence. And, we look forward to helping you keep your long-term
financial goals on target in the years to come.
Sincerely,
/s/ Christopher L. Wilson
Christopher L. Wilson
Head of Mutual Funds, Columbia Management
Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible
for the day-to-day delivery of mutual fund services to the firm's investors.
With the exception of distribution, Chris oversees all aspects of the mutual
fund services operation, including treasury, investment accounting and
shareholder and broker services. Chris serves as Columbia Management's liaison
to the mutual fund boards of trustees.
Chris joined Bank of America in August 2004.
Economic and market conditions change frequently. There is no assurance that
trends described in this report will continue or commence.
PORTFOLIO MANAGER'S REPORT
PRICE PER SHARE
AS OF 11/30/04 ($)
Net asset value 11.14
-----------------------------
Market price 10.01
-----------------------------
1-YEAR TOTAL RETURN AS
OF 11/30/04 (%)
Net asset value 3.19
-----------------------------
Market price 0.64
-----------------------------
Lipper General Municipal
Debt Funds (Leveraged)
Category average 5.69
-----------------------------
All results shown assume reinvestment of distributions.
DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/01/03-11/30/04 ($)
0.68
-----------------------------
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 11/30/04 (%)
Local general obligations 16.3
-------------------------------
Hospitals 10.7
-------------------------------
State appropriated 8.6
-------------------------------
Investor owned 7.2
-------------------------------
State general obligations 6.0
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QUALITY BREAKDOWN
AS OF 11/30/04 (%)
AAA 49.1
-----------------------------
AA 12.9
-----------------------------
A 9.0
-----------------------------
BBB 15.3
-----------------------------
BB 1.3
-----------------------------
B 0.3
-----------------------------
CC 0.1
-----------------------------
Non-rated 11.1
-----------------------------
Cash equivalents 0.9
-----------------------------
Sector and quality breakdowns are calculated as a percentage of total
investments. Ratings shown in the quality breakdown represent the lowest rating
assigned to a particular bond by one of the following nationally-recognized
rating agencies: Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., Moody's Investors Service, Inc. or Fitch Ratings Ltd. The majority of the
bonds that are non-rated are considered by the advisor to be of non-investment
grade quality.
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 12-month period ended November 30, 2004, Colonial Investment Grade
Municipal Trust generated a total return of 0.64%, based on its market price.
Changes in the market price of the trust's shares reflect investor demand and
are not necessarily linked directly to changes in the trust's net asset value.
The trust returned 3.19%, based on investment at net asset value. The trust's
return fell short of the Lipper General Municipal Debt Funds (Leveraged)
Category average, which returned 5.69% for the same period.1 We believe that the
trust's sizeable position in Treasury futures and an above-average stake in zero
coupon and noncallable bonds hampered its return.
POSITIONED FOR RISING INTEREST RATES
Municipal bond prices alternately rose and fell as expectations for the economy
and interest rates changed over the course of the year. We positioned the trust
with the expectation that yields would move higher, pulling bond prices down.
While the trust benefited when bond prices declined, it lost ground during the
market's rallies. In particular, our use of Treasury futures contracts to manage
the trust's overall sensitivity to interest rate changes detracted from
performance. Treasury futures are agreements to buy or sell Treasury notes or
bonds at a set time in the future. During the first four months of the period,
the market rallied and long-term (10- and 30-year) Treasuries were among the
best performers. Since the trust was short the sector, the value of those
futures contracts declined, hurting the trust's performance. As the year
progressed, we slightly reduced the trust's reliance on Treasury futures as we
repositioned the bonds in the portfolio.
NONCALLABLES FALTER IN SIDEWAYS MARKET
The trust's above-average stake in zero coupon ("zeros") and other noncallable
municipal bonds also hampered returns. Noncallable bonds often have higher
durations because they cannot be called--or redeemed--before their due dates.
Zeros carry no coupon and are bought at a steep discount to face value. Zeros
and other noncallables typically do well when interest rates are declining.
However, they did not rally when interest rates fell during this reporting
period because investors were not convinced that the rally would continue. In
addition, there was a glut of zero coupon bonds in the market. We began paring
back on zeros and other noncallables, but still had an above-average stake at
period end. To help replace the yield lost from these sales, we bought
higher-yielding BBB and non-rated municipal bonds.
--------------
1 Lipper Inc., a widely respected data provider in the industry, calculates
an average total return based on net asset value for mutual funds with
similar investment objectives as those of the trust.
1
PORTFOLIO MANAGER'S REPORT (CONTINUED)
HIGHER-YIELDING BONDS BENEFIT FROM INCREASED DEMAND
Riskier, lower quality, higher-yielding issues were strong contributors to
performance. Among the trust's top gainers were investor owned electric
utilities, such as Cleveland Electric Illuminating Co. and Systems Energy
Resources Project (0.4% and 0.5% of total investments, respectively), which
performed well as concerns that had lingered since the Enron scandal finally
began to dissipate.2 In addition, health care bonds continued to help
performance, as did multi-family housing bond pools. Finally, continuing care
retirement bonds rallied with the best gains coming from new facilities, such as
Kahala Nui Project (0.3% of total investments), which neared completion. Returns
from airline bonds were mixed as USAirways filed for bankruptcy and others
negotiated labor concessions to help them avoid bankruptcy.
POTENTIAL FOR MODERATE ECONOMIC GROWTH, HIGHER YIELDS
Looking ahead, we expect to see economic growth continue and yields drift
higher. We plan to keep the trust positioned for modestly rising yields,
boosting its stake in higher-yielding bonds and reducing its investments in zero
coupon and other noncallable bonds. As we accomplish this repositioning, we
expect to rely less on futures contracts.
/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 or
affiliate organizations since May 1996.
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results.
The values of fixed-income securities generally move inversely with changes in
interest rates such that when interest rates rise, bond values fall and vice
versa. 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. Please see Federal Income Tax Information.
-----------
2 Holdings are disclosed as of November 30, 2004.
2
INVESTMENT PORTFOLIO
November 30, 2004
MUNICIPAL BONDS - 142.8% PAR ($) VALUE ($)
-----------------------------------------------------------
EDUCATION - 11.1%
EDUCATION - 8.2%
AL University of South Alabama,
Series 1999,
Insured: AMBAC
(a) 11/15/18 2,500,000 1,323,275
FL Broward County Educational Facilities
Authority, Nova Southeastern,
Series 2004 B,
5.500% 04/01/24 155,000 159,896
IL Chicago State University Auxiliary
Facilities, Series 1998,
Insured: MBIA
5.500% 12/01/23 1,085,000 1,234,600
MA State Development Finance Agency,
Western New England College,
6.125% 12/01/32 315,000 329,285
MN University of Minnesota:
Series 1996 A,
5.750% 07/01/14 500,000 577,050
Series 1999 A,
5.500% 07/01/21 2,000,000 2,287,580
NY St. Lawrence County Industrial
Development Agency,
St. Lawrence University, Series 1998 A,
Insured: MBIA
5.500% 07/01/13 1,465,000 1,623,425
PA State Higher Education Facilities
Authority, Philadelphia University,
Series 2004 A,
5.125% 06/01/25 500,000 486,700
TX Texas Tech University,
Series 1999,
Insured: AMBAC
5.000% 02/15/29 2,500,000 2,518,675
-----------
Education Total 10,540,486
-----------
PREP SCHOOL - 1.6%
MA State Industrial Finance Agency,
Tabor Academy, Series 1998,
5.400% 12/01/28 1,000,000 1,014,000
MO State Health & Educational
Facilities Authority, Central Institute
for the Deaf, Series 1999,
Insured: RAD
5.850% 01/01/22 600,000 649,458
NH State Business Finance Authority,
Proctor Academy,
Series 1998 A,
5.400% 06/01/17 390,000 404,134
-----------
Prep School Total 2,067,592
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PAR ($) VALUE ($)
-----------------------------------------------------------
STUDENT LOAN - 1.3%
NE Nebhelp, Inc., Series 1993 A-6, AMT,
Insured: MBIA
6.450% 06/01/18 1,500,000 1,591,080
-----------
Student Loan Total 1,591,080
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EDUCATION TOTAL 14,199,158
-----------
-----------------------------------------------------------
HEALTH CARE - 23.7%
CONTINUING CARE RETIREMENT - 4.6%
CA La Verne Certificates of Participation,
Brethren Hillcrest Home,
Series 2003 B,
6.625% 02/15/25 350,000 354,617
CT State Development Authority,
Elim Park Baptist, Inc.,
Series 2003,
5.750% 12/01/23 250,000 258,170
FL Capital Projects Finance Authority,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 500,000 517,570
GA Fulton County Residential Care
Facilities, Canterbury Court,
Series 2004 A,
6.125% 02/15/34 250,000 250,948
HI State Department of Budget &
Finance, Kahala Nui Project,
Series 2003 A:
7.875% 11/15/23 250,000 266,293
8.000% 11/15/33 250,000 266,740
IL State Health Facilities Authority,
Washington and Jane Smith Community,
Series 2003 A,
7.000% 11/15/32 250,000 251,522
MD Westminster Economic Development,
Carroll Lutheran Village,
Series 2004 A,
5.875% 05/01/21 500,000 507,575
MO Cole County Industrial Development,
Lutheran Senior Services-Heisinger,
Series 2004,
5.500% 02/01/35 500,000 510,790
NJ Economic Development Authority,
First Mortgage, Winchester Gardens,
Series 2004 A:
5.750% 11/01/24 350,000 359,349
5.800% 11/01/31 250,000 254,020
PA Chartiers Valley Industrial &
Commercial Development Authority,
Friendship Village/South,
Series 2003 A,
5.250% 08/15/13 500,000 508,310
PA Delaware County Authority,
Dunwoody Village, Inc.,
Series 2003 A,
5.375% 04/01/17 250,000 264,160
See Accompanying Notes to Financial Statements.
3
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
CONTINUING CARE RETIREMENT (CONTINUED)
TN Johnson County, Health & Education
Facilities, Appalachian Christian Village,
Series 2004 A,
6.250% 02/15/32 250,000 247,505
TN Shelby County, Health, Education
& Housing Facilities Board,
Germantown Village,
Series 2003 A,
7.250% 12/01/34 150,000 154,722
TX Abilene Health Facilities Development
Corp., Sears Methodist Retirement
Obligation Group,
Series 2003 A,
7.000% 11/15/33 500,000 519,810
WI State Health & Educational Facilities
Authority, Three Pillars Senior
Communities, Series 2003,
5.600% 08/15/23 300,000 302,439
-----------
Continuing Care Retirement Total 5,794,540
-----------
HEALTH SERVICES - 0.4%
CO Health Facilities Authority,
National Jewish Medical & Research
Center, Series 1998 B,
5.375% 01/01/29 250,000 235,825
MA State Health & Educational
Facilities Authority,
Civic Investments, Inc., Series 2002 A,
9.000% 12/15/15 250,000 285,062
-----------
Health Services Total 520,887
-----------
HOSPITALS - 15.5%
CA Health Facilities Financing,
Catholic Healthcare West,
Series 2004 I,
4.950% 07/01/26 200,000 206,938
CA Rancho Mirage Joint Powers,
Eisenhower Medical Center,
5.625% 07/01/29 1,000,000 1,034,770
CA Statewide Communities
Development Authority,
Kaiser Permanente,
Series 2004 I,
3.450% 04/01/35 250,000 244,382
CO Health Facilities Authority:
Parkview Medical Center,
Series 2004,
5.000% 09/01/25 250,000 245,640
Vail Valley Medical Center,
Series 2004,
5.000% 01/15/20 (g) 250,000 252,143
PAR ($) VALUE ($)
-----------------------------------------------------------
DE State Health Facilities Authority,
Beebe Medical Center,
Series 2004 A,
5.000% 06/01/16 500,000 512,005
FL Orange County Health Facilities
Authority, Orlando Regional
Healthcare System:
Series 1996 C,
Insured: MBIA
6.250% 10/01/13 720,000 852,494
Series 1999 E,
6.000% 10/01/26 175,000 183,585
Series 2002,
5.750% 12/01/32 150,000 157,759
FL South Broward Hospital District,
Series 2002,
5.625% 05/01/32 1,000,000 1,048,080
GA Coffee County Hospital Authority,
Coffee Regional Medical Center, Inc.,
Series 2004,
5.000% 12/01/26 350,000 340,932
IL Southwestern Illinois
Development Authority,
Anderson Hospital, Series 1999,
5.375% 08/15/15 380,000 388,288
IL State Development Finance Authority,
Adventist Health System, Series 1999,
5.500% 11/15/20 900,000 942,426
IL State Health Facilities Authority,
Swedish American Hospital, Series 2000,
6.875% 11/15/30 500,000 549,990
IN Health Facilities Financing Authority
Hospital, Community Foundation
Northwest, Series 2004 A,
6.000% 03/01/34 150,000 148,149
KS University Hospital Authority,
Kansas University Health System,
Series 2002,
5.625% 09/01/32 500,000 508,680
LA State Public Facilities Authority,
Touro Infirmary, Series 1999 A,
5.625% 08/15/29 500,000 504,685
MA State Health & Educational
Facilities Authority:
Milford-Whitinsville Regional,
Series 1998 C,
5.750% 07/15/13 500,000 517,985
South Shore Hospital,
Series 1999 F,
5.750% 07/01/29 1,000,000 1,029,620
MD State Health & Higher Educational
Facilities Authority:
Adventist Healthcare,
Series 2003 A:
5.000% 01/01/16 250,000 254,557
5.750% 01/01/25 250,000 259,110
See Accompanying Notes to Financial Statements.
4
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
Lifebridge Health,
Series 2004 A,
5.125% 07/01/34 500,000 500,315
University of Maryland Medical System,
Series 2000,
6.750% 07/01/30 250,000 281,030
MI State Hospital Finance Authority,
Oakwood Obligated Group,
Series 2003,
5.500% 11/01/18 400,000 424,576
MN St. Paul Housing &
Redevelopment Authority,
HealthEast, Inc.:
Series 1993 B,
6.625% 11/01/17 230,000 231,948
Series 1997 A,
5.700% 11/01/15 250,000 246,962
NH Health & Educational
Facilities Authority,
Catholic Medical Center,
Series 1989 A,
6.125% 07/01/32 500,000 513,085
NJ Health Care Facilities,
Capital Health System, Inc.,
Series 2003 A,
5.750% 07/01/23 350,000 369,750
NV Henderson, Catholic Healthcare West:
Series 1998,
5.375% 07/01/26 250,000 251,363
Series 1999 A,
6.750% 07/01/20 500,000 546,210
NY New York State Dormitory Authority:
North Shore Long Island Jewish
Medical Center, Series 2003,
5.500% 05/01/33 100,000 102,844
OH Lakewood Hospital Improvement,
Lakewood Hospital Association,
Series 2003,
5.500% 02/15/14 385,000 412,928
RI State Health & Educational Building
Corp., Hospital Financing,
Lifespan Obligation Group,
6.375% 08/15/21 500,000 535,560
SC Jobs Economic Development Authority,
Bon Secours Health Systems, Inc.,
Series 2002 A,
5.500% 11/15/23 500,000 511,000
SC Lexington County Health Services
District, Inc., Hospital Revenue,
5.500% 11/01/23 500,000 520,055
SD State Health & Educational Facilities,
Sioux Valley Hospitals & Health
Systems, Series 2004 A,
5.250% 11/01/34 250,000 249,127
PAR ($) VALUE ($)
-----------------------------------------------------------
TN Metropolitan Government, Nashville
& Davidson Counties, Meharry Medical
College, Series 1996,
Insured: AMBAC
6.000% 12/01/16 1,575,000 1,840,136
TX Comal County Health Facilities
Development, McKenna Memorial,
Series 2002 A,
6.250% 02/01/32 500,000 512,435
VA Augusta County Industrial Development
Authority, Augusta Health Care, Inc.,
Series 2003,
5.250% 09/01/19 1,000,000 1,076,790
WI State Health & Educational Facilities
Authority:
Aurora Health Care, Inc.,
Series 2003,
6.400% 04/15/33 175,000 185,588
Fort Healthcare, Inc.,
5.375% 05/01/18 385,000 391,526
-----------
Hospitals Total 19,885,446
-----------
INTERMEDIATE CARE FACILITIES - 0.3%
IL State Development Finance Authority,
Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 465,000 395,069
-----------
Intermediate Care Facilities Total 395,069
-----------
NURSING HOMES - 2.9%
AK Juneau, St. Ann's Care Center,
Series 1999,
6.875% 12/01/25 500,000 501,635
CO Health Care Facilities Authority,
Pioneer Health Care, Series 1989,
10.500% 05/01/19 1,540,000 1,237,683
DE State Economic Development
Authority, Churchman Village Project,
Series 1991 A,
10.000% 03/01/21 885,000 890,071
PA Chester County Industrial Development
Authority, RHA/Pennsylvania Nursing
Home, Series 2002,
8.500% 05/01/32 755,000 733,505
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) 1,074,038 41,887
-----------
Nursing Homes Total 3,743,781
-----------
HEALTH CARE TOTAL 30,339,723
-----------
See Accompanying Notes to Financial Statements.
5
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HOUSING - 5.2%
ASSISTED LIVING/SENIOR - 1.1%
NC Medical Care Community Health Care
Facilities, De Paul Community Facilities,
Series 1998,
6.125% 01/01/28 500,000 445,330
NY Suffolk County Industrial
Development Agency,
Civic Facility, Gurwin Jewish Phase II,
Series 2004,
6.700% 05/01/39 500,000 507,085
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
Series 1994,
9.000% 11/01/24 460,000 422,395
-----------
Assisted Living/Senior Total 1,374,810
-----------
MULTI-FAMILY - 4.0%
AZ Maricopa County Industrial
Development Authority,
National Health Facilities II Project,
Insured: FSA
5.100% 01/01/33 2,500,000 2,502,725
FL Broward County Housing Finance
Authority, Chaves Lake Apartment
Project, Series 2000, AMT,
7.500% 07/01/40 500,000 494,630
FL Clay County Housing Finance
Authority, Madison Commons
Apartments, Series 2000 A, AMT,
7.450% 07/01/40 250,000 248,845
MN White Bear Lake, Birch Lake
Townhome Project:
Series 1989 A, AMT,
10.250% 07/15/19 775,000 775,636
Series 1989 B,
(a) 07/15/19 668,000 307,240
NC Medical Care Community,
Health Care Housing,
Series 2004 A,
5.800% 10/01/34 305,000 301,474
NJ Middlesex County Improvement Authority,
Street Student Housing Project,
Series 2004 A,
5.000% 08/15/18 300,000 308,580
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993 A,
8.500% 12/01/16 (c) 227,741 221,154
-----------
Multi-Family Total 5,160,284
-----------
SINGLE FAMILY - 0.1%
CO State Housing Finance Authority,
Series 2000 B-2, AMT,
7.250% 10/01/31 110,000 113,169
PAR ($) VALUE ($)
-----------------------------------------------------------
IL Chicago, Series 2000 A, AMT,
Guarantor: FNMA
7.150% 09/01/31 55,000 55,457
-----------
Single Family Total 168,626
-----------
HOUSING TOTAL 6,703,720
-----------
-----------------------------------------------------------
INDUSTRIAL - 3.3%
FOOD PRODUCTS - 0.8%
NE Washington County Waste Water
Facilities, Cargill, Inc.,
Series 2002, AMT,
5.900% 11/01/27 1,000,000 1,063,790
-----------
Food Products Total 1,063,790
-----------
FOREST PRODUCTS - 1.5%
AL Camden Industrial Development
Board, Weyerhaeuser Co.,
Series 2003 B, AMT,
6.375% 12/01/24 275,000 295,237
AR Camden Environmental
Improvement Project,
International Paper Co.,
Series 2004 A, AMT,
5.000% 11/01/18 500,000 495,285
FL Escambia County Environmental
Improvement,
International Paper,
Series 2003 A, AMT,
5.750% 11/01/27 250,000 252,765
MN International Falls, Boise Cascade
Corp., Series 1999, AMT,
6.850% 12/01/29 500,000 527,700
MS Lowndes County Solid Waste
Disposal & Pollution Control,
Weyerhaeuser Co.,
Series 1992 B,
6.700% 04/01/22 325,000 382,067
-----------
Forest Products Total 1,953,054
-----------
MANUFACTURING - 0.2%
MO State Development Finance
Board, Procter & Gamble Co.,
Series 1999, AMT,
5.200% 03/15/29 250,000 258,397
-----------
Manufacturing Total 258,397
-----------
OIL & GAS - 0.8%
NJ Middlesex County, Pollution
Control Authority,
Amerada Hess Corp.,
Series 2004,
6.050% 09/15/34 175,000 182,562
NV Clark County Industrial Development,
Southwest Gas Corp.,
Series 2003 E, AMT,
5.800% 03/01/38 250,000 267,113
See Accompanying Notes to Financial Statements.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
INDUSTRIAL (CONTINUED)
OIL & GAS (CONTINUED)
TX Gulf Coast Industrial Development
Authority, Citgo Petroleum,
Series 1998, AMT,
8.000% 04/01/28 250,000 276,298
VI Public Finance Authority,
Hovensa Refinery, AMT,
6.125% 07/01/22 200,000 213,162
-----------
Oil & Gas Total 939,135
-----------
INDUSTRIAL TOTAL 4,214,376
-----------
-----------------------------------------------------------
OTHER - 7.0%
OTHER - 0.5%
NY Convention Center,
Yale Building Project, Series 2003,
(a) 06/01/08 700,000 600,005
-----------
Other Total 600,005
-----------
POOL/BOND BANK - 1.2%
FL State Municipal Loan Council,
Series 2000 A,
Insured: MBIA
(a) 04/01/21 520,000 235,206
KS State Development Finance Authority,
Water Pollution Control,
5.500% 11/01/17 1,125,000 1,286,584
-----------
Pool/Bond Bank Total 1,521,790
-----------
REFUNDED/ESCROWED (d) - 3.9%
FL Orange County Health Facilities
Authority, Orlando Regional Healthcare
System, Series 1996 C,
Insured: MBIA
6.250% 10/01/13 1,740,000 2,084,781
NC Lincoln County, Lincoln County
Hospital, Series 1991,
9.000% 05/01/07 65,000 70,669
NC State Municipal Power Agency,
Catawba No. 1, Series 1986,
5.000% 01/02/20 1,670,000 1,816,526
NY New York,
Series 1996 A,
7.000% 08/01/07 80,000 87,400
TN Shelby County, Health, Education
& Housing Facilities Board,
Open Arms Development Center:
Series 1992 A,
9.750% 08/01/19 405,000 489,268
Series 1992 C,
9.750% 08/01/19 405,000 489,268
-----------
Refunded/Escrowed Total 5,037,912
-----------
PAR ($) VALUE ($)
-----------------------------------------------------------
TOBACCO - 1.4%
CA Golden State Tobacco
Securitization Authority:
Series 2003 A-1,
6.250% 06/01/33 750,000 730,073
Series 2003 B,
5.500% 06/01/43 500,000 517,845
SC Tobacco Settlement Revenue
Management Authority, Series 2001 B,
6.375% 05/15/28 400,000 384,488
WI Badger Tobacco Asset Securitization
Corp., Series 2002,
6.375% 06/01/32 250,000 237,600
-----------
Tobacco Total 1,870,006
-----------
OTHER TOTAL 9,029,713
-----------
-----------------------------------------------------------
OTHER REVENUE - 1.7%
RECREATION - 1.7%
CA Cabazon Band Mission Indians,
Series 2004:
8.375% 10/01/15 (c) 110,000 109,781
8.750% 10/01/19 (c) 390,000 389,212
DC District of Columbia,
Smithsonian Institute, Series 1997,
5.000% 02/01/28 1,000,000 1,004,930
FL Capital Trust Agency,
Seminole Tribe Convention Center,
Series 2002 A,
10.000% 10/01/33 (c) 500,000 612,685
-----------
Recreation Total 2,116,608
-----------
OTHER REVENUE TOTAL 2,116,608
-----------
-----------------------------------------------------------
RESOURCE RECOVERY - 3.1%
DISPOSAL - 1.3%
IL Development Finance Authority,
Waste Management, Inc.,
Series 1997, AMT,
5.050% 01/01/10 500,000 520,890
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 80,000 81,434
MI State Strategic Fund, Waste
Management, Series 1995, AMT,
5.200% 04/01/10 500,000 525,115
OH State Solid Waste,
Republic Services, AMT,
4.250% 04/01/33 500,000 482,945
-----------
Disposal Total 1,610,384
-----------
RESOURCE RECOVERY - 1.8%
MA State Industrial Finance Agency,
Ogden Haverhill Project,
Series 1998 A, AMT,
5.450% 12/01/12 1,250,000 1,261,513
See Accompanying Notes to Financial Statements.
7
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
RESOURCE RECOVERY (CONTINUED)
RESOURCE RECOVERY (CONTINUED)
PA Delaware County Industrial Development
Authority BFI, Series 1997 A,
6.100% 07/01/13 1,000,000 1,074,540
-----------
Resource Recovery Total 2,336,053
-----------
RESOURCE RECOVERY TOTAL 3,946,437
-----------
-----------------------------------------------------------
TAX-BACKED - 58.2%
LOCAL APPROPRIATED - 4.4%
CA Compton Certificates of Participation,
Civic Center & Capital Improvement,
Series 1997 A,
5.500% 09/01/15 500,000 523,345
CA Los Angeles County, Series 1999 A,
Insured: AMBAC
(a) 08/01/21 2,135,000 923,686
MN Andover Economic
Development Authority,
Andover Community Center,
5.000% 02/01/19 600,000 614,592
MN Hibbing Economic Development
Authority, Series 1997,
6.400% 02/01/12 335,000 342,745
MO Development Finance Board,
St. Louis Convention Center,
Series 2000 C,
Insured: AMBAC
(a) 07/15/18 300,000 157,407
SC Berkeley County School District,
Series 2003,
5.000% 12/01/28 500,000 494,830
SC Dorchester County School District
No. 002, Growth Remedy Opportunity,
Series 2004,
5.250% 12/01/29 250,000 251,740
SC Lancaster Educational
Assistance Program,
Lancaster County School District,
Series 2004,
5.000% 12/01/26 550,000 535,684
TX Houston Independent School District,
Public Facilities Corp., Series 1998 A,
Insured: AMBAC
(a) 09/15/13 2,500,000 1,726,550
-----------
Local Appropriated Total 5,570,579
-----------
LOCAL GENERAL OBLIGATIONS - 23.7%
AK North Slope Borough, Series 2001 A,
Insured: MBIA
(a) 06/30/12 2,000,000 1,474,540
CA Las Virgenes Unified School District,
Series 2001 C,
Insured: FGIC
(a) 11/01/22 1,210,000 489,046
PAR ($) VALUE ($)
-----------------------------------------------------------
CA Modesto High School District,
Stanislaus County, Capital Appreciation,
Series 2002 A,
Insured: FGIC
(a) 08/01/19 1,350,000 664,578
CA Pomona Unified School District,
Series 2000 A,
Insured: MBIA
6.450% 08/01/22 1,000,000 1,247,360
CA Vallejo City Unified School District,
Series 2002 A,
Insured: MBIA
5.900% 08/01/25 2,000,000 2,325,400
CA West Contra Costa Unified School
District, Series 2001 B,
Insured: MBIA
6.000% 08/01/24 250,000 298,588
CO Highlands Ranch Metropolitan
District, Series 1996,
Insured: FSA
6.500% 06/15/11 1,375,000 1,627,876
IL Chicago:
Series 1995 A-2,
Insured: AMBAC
6.250% 01/01/14 1,480,000 1,752,601
Series 1999,
Insured: FGIC
5.500% 01/01/23 1,000,000 1,133,480
Series 2001 A,
Insured: MBIA
(a) 01/01/15 3,000,000 1,917,000
IL Chicago Board of Education,
Series 1998 B-1:
Insured: FGIC
(a) 12/01/11 1,000,000 760,920
(a) 12/01/21 2,000,000 857,980
IL Hoffman Estates Park District,
Debt Certificates,
5.000% 12/01/16 500,000 525,305
IL St. Clair County,
Series 1999,
Insured: FGIC
(a) 10/01/16 2,000,000 1,164,780
IL St. Clair County Public Building
Commission, Series 1997 B,
Insured: FGIC
(a) 12/01/13 2,000,000 1,373,260
IL Will County School District No. 17,
Series 2001,
Insured: AMBAC
8.500% 12/01/15 1,400,000 1,947,960
MI Garden City School District,
Series 2001,
Insured: QSBLF
5.500% 05/01/16 325,000 358,732
See Accompanying Notes to Financial Statements.
8
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
LOCAL GENERAL OBLIGATIONS (CONTINUED)
MI St. John's Public School, Series 1998,
Insured: FGIC
5.100% 05/01/25 1,000,000 1,069,840
NY New York City,
Series 2003 J,
5.500% 06/01/18 500,000 543,095
OH Kenston Local School District,
Series 2003,
Insured: MBIA
5.000% 12/01/23 1,000,000 1,039,300
TX Brenham, Certificates of Obligation,
Series 2001,
Insured: FSA
5.375% 08/15/16 1,040,000 1,139,996
TX Dallas County Flood Control
District, Series 2002,
7.250% 04/01/32 500,000 518,280
TX Houston Independent School District,
Series 1999 A,
Insured: PSFG
4.750% 02/15/22 5,000,000 5,024,250
TX La Joya Independent School District,
Series 1998,
Insured: PSFG
5.500% 02/15/12 1,000,000 1,081,290
-----------
Local General Obligations Total 30,335,457
-----------
SPECIAL NON-PROPERTY TAX - 6.2%
FL Tampa Sports Authority,
Tampa Bay Arena Project, Series 1995,
Insured: MBIA
5.750% 10/01/25 1,000,000 1,157,420
NJ Economic Development Authority,
Cigarette Tax, Series 2004,
5.750% 06/15/29 500,000 510,660
NM Dona Ana County, Series 1998,
Insured: AMBAC
5.500% 06/01/15 1,000,000 1,138,660
NY New York City Transitional
Finance Authority,
Series 1998 A,
5.000% 11/15/26 1,960,000 1,986,930
NY State Local Government
Assistance Corp.,
Series 1993 E,
5.000% 04/01/21 3,000,000 3,204,360
-----------
Special Non-Property Tax Total 7,998,030
-----------
SPECIAL PROPERTY TAX - 2.7%
CA Huntington Beach Community
Facilities District,
Grand Coast Resort, Series 2001,
6.450% 09/01/31 300,000 309,663
PAR ($) VALUE ($)
-----------------------------------------------------------
CA Lincoln Community Facilities
District No. 2003-1,
Series 2004,
5.550% 09/01/18 500,000 494,745
CA Oakdale Public Financing Authority
Tax Allocation,
Central Redevelopment Project,
5.375% 06/01/33 500,000 497,470
FL Celebration Community Development
District, Special Assessment,
Series 2003 A,
6.400% 05/01/34 250,000 258,452
FL Double Branch Community
Development District,
Series 2002 A,
6.700% 05/01/34 335,000 357,525
FL Seven Oaks Community
Development District:
Series 2004 A,
5.875% 05/01/35 500,000 495,910
Series 2004 B,
5.000% 05/01/09 250,000 250,248
IL Chicago Tax Increment,
Jr. Lien, Pilsen Redevelopment,
Series 2004 B,
6.750% 06/01/22 610,000 620,425
IL Lincolnshire Special Service Area No. 1,
Sedgebrook Project,
Series 2004,
Insured: AMBAC
6.250% 03/01/34 225,000 222,885
-----------
Special Property Tax Total 3,507,323
-----------
STATE APPROPRIATED - 12.5%
IN State Office Building Commission,
Women's Prison, Series 1995 B,
Insured: AMBAC
6.250% 07/01/16 2,820,000 3,379,262
KY State Property & Buildings Commission,
Project No. 73, Series 2001,
5.500% 11/01/14 455,000 508,408
NY State Dormitory Authority:
City University, Series 1993 A,
5.750% 07/01/18 5,000,000 5,768,150
Mental Health Services,
Series 1998 C,
5.000% 02/15/11 1,485,000 1,577,605
State University,
Series 2000 C,
Insured: FSA
5.750% 05/15/17 1,000,000 1,168,220
NY State Urban Development Corp.,
5.600% 04/01/15 1,000,000 1,128,480
See Accompanying Notes to Financial Statements.
9
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
STATE APPROPRIATED (CONTINUED)
UT State Building Ownership Authority,
Facilities Master Lease,
Series 1998 C,
Insured: FSA
5.500% 05/15/19 1,750,000 1,990,555
WV State Building Commission,
Series 1998 A,
Insured: AMBAC
5.375% 07/01/18 500,000 557,585
-----------
State Appropriated Total 16,078,265
-----------
STATE GENERAL OBLIGATIONS - 8.7%
CA State:
Series 1995,
5.750% 03/01/19 70,000 71,193
Series 2004,
5.000% 02/01/21 1,000,000 1,039,450
DC District of Columbia,
Series 1999 A,
Insured: FSA
5.375% 06/01/18 890,000 967,225
MA State, Series 1998 C,
5.250% 08/01/17 1,000,000 1,102,290
NJ State,
Series 2001,
Insured: MBIA
5.250% 07/01/16 2,000,000 2,241,760
PR Commonwealth of Puerto Rico:
Series 2004 A,
5.000% 07/01/30 300,000 319,554
Aqueduct & Sewer Authority:
Series 1995:
Insurer MBIA:
6.250% 07/01/12 1,000,000 1,188,390
6.250% 07/01/13 750,000 898,102
Series 2001,
Insured: FSA
5.500% 07/01/17 1,000,000 1,150,380
TX State, Series 1999 ABC,
5.500% 08/01/35 2,000,000 2,136,200
-----------
State General Obligations Total 11,114,544
-----------
TAX-BACKED TOTAL 74,604,198
-----------
-----------------------------------------------------------
TRANSPORTATION - 10.1%
AIR TRANSPORTATION - 2.6%
CA Los Angeles Regional Airport
Improvement Corp.,
American Airlines, Inc.,
Series 2000 C, AMT,
7.500% 12/01/24 375,000 363,127
IL Chicago O'Hare International Airport,
United Airlines, Inc.,
Series 2000 A, AMT,
6.750% 11/01/11 (b) 800,000 280,488
PAR ($) VALUE ($)
-----------------------------------------------------------
IN Indianapolis Airport Authority,
Fed Ex Corp.,
Series 2004, AMT,
5.100% 01/15/17 250,000 258,985
KY Kenton County Airport Board,
Delta Air Lines, Inc.,
Series 1992 A, AMT,
7.500% 02/01/12 250,000 204,830
MN Minneapolis & St. Paul Metropolitan
Airport Commission, Northwest
Airlines, Series 2001 A, AMT,
7.000% 04/01/25 350,000 299,873
NC Charlotte, US Airways, Inc.:
Series 1998, AMT,
5.600% 07/01/27 (e) 500,000 230,930
Series 2000, AMT,
7.750% 02/01/28 (e) 500,000 244,470
NY Port Authority of New York &
New Jersey, JFK International
Air Terminal,
Series 1997, AMT,
Insured: MBIA
6.250% 12/01/08 1,000,000 1,107,120
TX Houston Industrial
Development Corp.,
Air Cargo, Perot Development,
Series 2002, AMT,
6.000% 03/01/23 390,018 398,618
-----------
Air Transportation Total 3,388,441
-----------
AIRPORTS - 0.9%
MA State Port Authority,
Series 1999, IFRN,
Insured: FGIC
9.610% 07/01/29 (c)(f) 1,000,000 1,161,310
-----------
Airports Total 1,161,310
-----------
TOLL FACILITIES - 4.2%
CA Foothill/Eastern Transportation
Corridor Agency, Series 1995 A,
5.000% 01/01/35 1,000,000 889,300
CA San Joaquin Hills Transportation
Corridor Agency, Series 1997 A,
Insured: MBIA
(a) 01/15/15 2,000,000 1,272,000
CO E-470 Public Highway Authority,
Series 1997 B,
Insured: MBIA
(a) 09/01/11 2,000,000 1,541,440
CO Northwest Parkway Public Highway
Authority, First Tier,
Series 2001 D,
7.125% 06/15/41 500,000 526,315
See Accompanying Notes to Financial Statements.
10
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TRANSPORTATION (CONTINUED)
TOLL FACILITIES (CONTINUED)
NH State Turnpike Systems,
Series 1991 C, IFRN,
Insured: FGIC
11.450% 11/01/17 (f) 1,000,000 1,194,120
-----------
Toll Facilities Total 5,423,175
-----------
TRANSPORTATION - 2.4%
IL Regional Transportation Authority,
Series 1994 C,
Insured: FGIC
7.750% 06/01/20 1,000,000 1,387,460
NV State Department of
Business & Industry,
Las Vegas Monorail Project,
Series 2000:
7.375% 01/01/30 250,000 254,797
7.375% 01/01/40 250,000 253,557
OH Toledo-Lucas County Port Authority,
CSX Transportation, Inc., Series 1992,
6.450% 12/15/21 1,000,000 1,116,230
-----------
Transportation Total 3,012,044
-----------
TRANSPORTATION TOTAL 12,984,970
-----------
-----------------------------------------------------------
UTILITIES - 19.4%
INDEPENDENT POWER PRODUCERS - 1.4%
MI Midland County Economic
Development Corp.,
Series 2000, AMT,
6.875% 07/23/09 600,000 623,520
NY New York City Industrial
Development Agency,
Brooklyn Navy Yard Partners,
Series 1997, AMT,
5.650% 10/01/28 200,000 185,412
NY Suffolk County Industrial
Development Agency,
Nissequogue Cogen Partners Facility,
Series 1998,
5.500% 01/01/23 550,000 523,754
PA Carbon County Industrial Development
Authority, Panther Creek Partners,
Series 2000, AMT,
6.650% 05/01/10 140,000 150,896
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical &
Environmental Cogeneration
Facilities, AES Project,
Series 2000, AMT,
6.625% 06/01/26 320,000 344,867
-----------
Independent Power Producers Total 1,828,449
-----------
PAR ($) VALUE ($)
-----------------------------------------------------------
INVESTOR OWNED - 10.5%
AZ Maricopa County Pollution
Control Revenue,
El Paso Electric Co.,
Series 2002 A,
6.250% 05/01/37 500,000 511,830
CA Chula Vista Industrial Development
Authority, San Diego Gas & Electric,
Series 1996 B, AMT,
5.500% 12/01/21 625,000 652,088
FL Polk County Industrial Development
Authority, Tampa Electric Co.,
Series 1996, AMT,
5.850% 12/01/30 500,000 509,820
IN Petersburg, Indiana Power & Light Co.,
Series 1993 B,
Insured: MBIA
5.400% 08/01/17 2,500,000 2,779,250
MI State Strategic Fund, Detroit
Edison Co.,
Series 1998 A, AMT,
Insured: MBIA
5.550% 09/01/29 3,000,000 3,111,930
MS State Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 04/01/22 1,000,000 1,005,150
MT Forsyth Pollution Control,
Portland General, Series 1998 A,
5.200% 05/01/33 150,000 158,202
NV Clark County Industrial
Development,
Nevada Power Co.,
Series 1995 B, AMT,
5.900% 10/01/30 250,000 244,482
OH State Air Quality
Development Authority,
Cleveland Electric
Illuminating Co.,
Series 2002 A,
6.000% 12/01/13 650,000 688,903
TX Brazos River Authority,
Pollution Control,
TXU Electric Co.:
Series 1999, AMT,
7.700% 04/01/33 250,000 295,030
Series 2001, AMT,
5.750% 05/01/36 100,000 107,937
Series 2003 C, AMT,
6.750% 10/01/38 270,000 292,159
TX Matagorda County Navigation
District No.1,
Houston Light & Power Co.,
Series 1997, AMT,
Insured: AMBAC
5.125% 11/01/28 2,000,000 2,046,960
See Accompanying Notes to Financial Statements.
11
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
UTILITIES (CONTINUED)
INVESTOR OWNED (CONTINUED)
WY Campbell County, Pollution Control,
Black Hills Power, Inc., Series 2004,
5.350% 10/01/24 500,000 497,300
WY Converse County Pollution Control,
Pacificorp, Series 1988,
3.900% 01/01/14 500,000 481,555
-----------
Investor Owned Total 13,382,596
-----------
JOINT POWER AUTHORITY - 3.7%
MA Municipal Wholesale Electric Co.,
Power Supply System, Project 6-A,
Insured: MBIA
5.250% 07/01/14 1,000,000 1,097,910
NC Eastern Municipal Power Agency,
Series 2003,
5.500% 01/01/16 285,000 304,326
NC State Municipal Power Agency,
Catawba Electric No. 1:
Series 1998 A,
Insured: MBIA
5.500% 01/01/15 640,000 717,882
Series 2003 A,
Insured: MBIA
5.250% 01/01/18 2,500,000 2,683,625
-----------
Joint Power Authority Total 4,803,743
-----------
MUNICIPAL ELECTRIC - 1.4%
CA State Water Resources Authority,
Series 2002 A,
Insured: AMBAC
5.500% 05/01/14 1,000,000 1,129,710
NC University of North Carolina at
Chapel Hill, Series 1997,
(a) 08/01/14 1,000,000 666,570
-----------
Municipal Electric Total 1,796,280
-----------
WATER & SEWER - 2.4%
GA Atlanta, Series 1993,
Insured: FGIC
5.500% 11/01/22 (h) 1,000,000 1,136,690
MS V Lakes Utility District,
8.250% 07/15/24 140,000 137,231
WA King County, Series 1999,
Insured: FGIC
5.250% 01/01/30 1,750,000 1,804,442
-----------
Water & Sewer Total 3,078,363
-----------
UTILITIES TOTAL 24,889,431
-----------
TOTAL MUNICIPAL BONDS
(cost of $175,063,923) 183,028,334
-----------
MUNICIPAL PREFERRED STOCKS - 1.3% PAR ($) VALUE ($)
-----------------------------------------------------------
HOUSING - 1.3%
MULTI-FAMILY - 1.3%
Charter Municipal Mortgage
Acceptance Co.
6.300% 04/30/19 (c) 500,000 533,425
AMT:
7.600% 11/30/10 (c) 500,000 577,690
GMAC Municipal Mortgage Trust,
5.600% 10/31/39 (c) 500,000 497,980
-----------
Multi-Family Total 1,609,095
-----------
HOUSING TOTAL 1,609,095
-----------
TOTAL MUNICIPAL PREFERRED STOCKS
(cost of $1,500,000) 1,609,095
-----------
SHORT-TERM OBLIGATIONS - 1.2%
-----------------------------------------------------------
VARIABLE RATE DEMAND NOTES (I) - 1.2%
FL Alachua County Health Facilities
Authority, Oak Hammock University,
Series 2002,
1.670% 10/01/32 800,000 800,000
IL Health Facilities Authority,
OSF Healthcare System,
1.700% 11/15/27 200,000 200,000
MO State Health & Educational Facilities,
Authority, Washington University,
Series 1996 D,
1.680% 09/01/30 300,000 300,000
MN State Higher Education Facilities,
St. Olaf College,
Series 2002 5-M1,
1.670% 10/01/32 100,000 100,000
MS Jackson County Pollution Control,
Chevron USA, Inc.,
Series 1992,
1.680% 12/01/16 200,000 200,000
-----------
VARIABLE RATE DEMAND NOTES TOTAL 1,600,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $1,600,000) 1,600,000
-----------
TOTAL INVESTMENTS - 145.3%
(cost of $178,163,923)(j) 186,237,429
AUCTION PREFERRED SHARES PLUS
CUMULATIVE UNPAID DISTRIBUTIONS - (46.8)% (60,002,547)
OTHER ASSETS & LIABILITIES, NET - 1.5% 1,922,176
-----------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS - 100.0% 128,157,058
===========
See Accompanying Notes to Financial Statements.
12
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------------
(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
November 30, 2004, the value of these securities amounted to $661,375, which
represents 0.5% 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 November 30,
2004, these securities amounted to $4,103,237, which represents 3.2% 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) The issuer has filed for bankruptcy protection under Chapter 11. Income is
being accrued. As of November 30, 2004, the value of these securities
amounted to $475,400, which represents 0.4% of net assets.
(f) Variable rate security. The interest rate shown reflects the rate as of
November 30, 2004.
(g) Security purchased on a delayed delivery basis.
(h) A portion of this security with a market value of $1,091,222 is pledged as
collateral for open futures contracts.
(i) Variable rate demand note. 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 November 30, 2004.
(j) Cost for federal income tax purposes is $177,854,419.
At November 30, 2004, the Trust held the following open short futures contracts:
UNREALIZED
AGGREGATE EXPIRATION APPRECIATION
TYPE CONTRACTS VALUE FACE VALUE DATE (DEPRECIATION)
--------------------------------------------------------------------------------
U.S. Treasury
Notes
10-Year 288 $31,896,000 $31,840,177 Mar-2005 $(55,823)
U.S. Treasury
Notes
10-Year 135 14,866,874 14,874,570 Mar-2005 7,696
--------
$(48,127)
--------
ACRONYM NAME
--------------------------------------------------------------------------------
AMBAC Ambac Assurance Corp.
AMT Alternative Minimum Tax
FGIC Financial Guaranty Insurance Co.
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
IFRN Inverse Floating Rate Note
MBIA MBIA Insurance Corp.
PSFG Permanent School Fund Guaranteed
QSBLF Qualified School Bond Loan Fund
RAD Radian Asset Assurance, Inc.
At November 30, 2004, the Trust held investments in the following sectors:
% OF
HOLDINGS BY REVENUE SOURCE (UNAUDITED) NET ASSETS
--------------------------------------------------------------
Tax-Backed 58.2
Health Care 23.7
Utilities 19.4
Education 11.1
Transportation 10.1
Other 7.0
Housing 6.5
Industrial 3.3
Resource Recovery 3.1
Other Revenue 1.7
Short-Term Obligations 1.2
Auction Preferred Shares (46.8)
Other Assets & Liabilities, Net 1.5
-----
100.0
-----
See Accompanying Notes to Financial Statements.
13
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2004
ASSETS:
Investments, at cost $178,163,923
------------
Investments, at value $186,237,429
Cash 97,328
Receivable for:
Interest 2,848,874
Futures variation margin 41,233
Deferred Trustees' compensation plan 9,865
------------
Assets 189,234,729
------------
LIABILITIES:
Payable for:
Investments purchased on a delayed
delivery basis 253,348
Distributions-- common shares 656,013
Distributions-- preferred shares 2,547
Investment advisory fee 98,370
Pricing and bookkeeping fees 12,611
Trustees' fees 150
Custody fee 1,288
Preferred shares remarketing commissions 411
Deferred Trustees' fees 9,865
Other liabilities 43,068
------------
Total Liabilities 1,077,671
------------
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 727,733
Accumulated net realized loss (7,589,148)
Net unrealized appreciation/depreciation on:
Investments 8,073,506
Futures contracts (48,127)
------------
Net assets at value applicable to 11,509,000
common shares of beneficial interest
outstanding $128,157,058
============
Net asset value per share $ 11.14
============
STATEMENT OF OPERATIONS
For the Year Ended November 30, 2004
INVESTMENT INCOME:
Interest $ 10,146,365
Dividends 351
------------
Total Investment Income 10,146,716
------------
EXPENSES:
Investment advisory fee 1,231,501
Transfer agent fee 46,574
Pricing and bookkeeping fees 99,168
Trustees' fees 10,023
Preferred shares remarketing commissions 150,584
Custody fee 14,853
Other expenses 118,896
------------
Total Expenses 1,671,599
Custody earnings credit (639)
------------
Net Expenses 1,670,960
------------
Net Investment Income 8,475,756
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES CONTRACTS:
Net realized gain (loss) on:
Investments 2,472,922
Futures contracts (2,426,020)
------------
Net realized gain 46,902
Net change in unrealized depreciation on:
Investments (3,758,899)
Futures contracts (112,950)
------------
Net change in unrealized depreciation (3,871,849)
------------
Net Loss (3,824,947)
------------
Net Increase in Net Assets from Operations 4,650,809
------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (634,050)
------------
Net Increase in Net Assets from
Operations Applicable to Common Shares $ 4,016,759
------------
See Accompanying Notes to Financial Statements.
14
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED
NOVEMBER 30,
--------------------------------
INCREASE (DECREASE) IN NET ASSETS: 2004 2003
------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 8,475,756 $ 8,560,489
Net realized gain on investments and futures contracts 46,902 998,519
Net change in unrealized appreciation/depreciation on investments and futures contracts (3,871,849) 3,799,175
------------ ------------
Net Increase from Operations 4,650,809 13,358,183
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (634,050) (586,950)
------------ ------------
Increase in Net Assets from Operations Applicable to Common Shares 4,016,759 12,771,233
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (7,826,122) (7,854,896)
------------ ------------
Total Increase (Decrease) in Net Assets Applicable to Common Shares (3,809,363) 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 $727,733 and $732,461, respectively) $128,157,058 $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 Accompanying Notes to Financial Statements.
15
NOTES TO FINANCIAL STATEMENTS
November 30, 2004
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 pricing services 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
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 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 in 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 receivable or payable
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.
16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
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 tax-exempt or taxable 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 the 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 November 30, 2004, was
1.55%. For the year ended November 30, 2004, the Trust declared dividends to
Auction Preferred shareholders amounting to $634,050, representing an average
dividend rate of 1.06% per APS.
NOTE 3. FEDERAL TAX INFORMATION
The timing and character of income and capital gain distributions are determined
in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Trust's capital accounts for permanent tax
differences to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
For the year ended November 30, 2004, permanent book and tax basis differences
resulting primarily from differing treatments for discount accretion/premium
amortization on debt securities and market discount reclassifications were
identified and reclassified among the components of the Trust's net assets as
follows:
UNDISTRIBUTED
NET INVESTMENT ACCUMULATED
INCOME NET REALIZED LOSS PAID-IN CAPITAL
------------------- -------------- -----------
$(20,312) $20,312 $--
Net investment income and net realized gains (losses), as disclosed on the
Statement of Operations, and net assets were not affected by this
reclassification.
The tax character of distributions paid during the years ended November 30, 2004
and November 30, 2003 was as follows:
NOVEMBER 30, 2004 NOVEMBER 30, 2003
---------------- ----------------
Distributions paid from:
Tax-Exempt Income $8,451,630 $8,411,303
Ordinary Income 8,542 30,543
Long-Term Capital Gains -- --
As of November 30, 2004, the components of distributable earnings on a tax basis
were as follows:
UNDISTRIBUTED UNDISTRIBUTED
UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED
TAX-EXEMPT INCOME INCOME CAPITAL GAINS APPRECIATION*
---------------- --------- ------------ -------------
$1,084,842 $-- $-- $8,383,010
* The differences between book-basis and tax-basis net unrealized
appreciation are primarily due to discount accretion/premium amortization
on debt securities.
Unrealized appreciation and depreciation at November 30, 2004, based on cost of
investments for federal income tax purposes was:
Unrealized appreciation $13,963,491
Unrealized depreciation (5,580,481)
-----------
Net unrealized appreciation $ 8,383,010
-----------
The following capital loss carryforwards, determined as of November 30, 2004,
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 $1,913,022
2010 1,238,884
----------
$3,151,906
----------
Capital loss carryforwards of $490,635 were utilized during the year ended
November 30, 2004 for the Trust.
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
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 year ended November 30, 2004, the Trust's effective
pricing and bookkeeping fee rate, inclusive of out-of-pocket expenses, was
0.052% of the Trust's average weekly net assets, including assets applicable to
APS.
CUSTODY CREDITS
The Trust has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. These credits are recorded as a reduction of
total expenses on the Statement of Operations. 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
With the exception of one officer, all officers of the Trust are employees of
Columbia or its affiliates and receive no compensation from the Trust. Effective
August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to
the Trust in accordance with federal securities regulations. The Trust, along
with other affiliated trusts, will pay its pro-rata share of the expenses
associated with the Office of the Chief Compliance Officer.
The Trust's fee will not exceed $15,000 per year. 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 year ended November 30, 2004, the Trust paid $1,489 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
NOTE 5. PORTFOLIO INFORMATION
For the year ended November 30, 2004, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $27,371,224 and
$28,178,088, 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 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 November 30, 2004, there were no such restrictions on the Trust.
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS
AND CONTINGENCIES
CONCENTRATION OF CREDIT RISK
The Trust holds investments that are insured by private insurers who guarantee
the payment of principal and interest in the event of default or that are
supported by a letter of credit. Each of the Trust's insurers is rated AAA by
Moody's Investors Service, Inc., except for Radian Asset Assurance, Inc., which
is rated AA by Standard and Poor's. At November 30, 2004, investments supported
by private insurers that represent greater than 5% of the total investments of
the Trust were as follows:
% OF TOTAL
INSURER INVESTMENTS
-------------------------------------------
MBIA Insurance Corp. 19.2%
Ambac Assurance Corp. 11.1
Financial Guaranty Insurance Co. 7.6
18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
GEOGRAPHIC CONCENTRATION
The Trust has greater than 5% of its total investments at November 30, 2004
invested in debt obligations issued by the states of California, Florida,
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 these 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 and industry events 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.
LEGAL PROCEEDINGS
Columbia, 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 and its
affiliate Banc of America Capital Management, LLC have agreed to collectively
reduce mutual fund fees by $160 million over a five-year period.
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). More than 300 cases (including those filed against
entities unaffiliated with the funds, their Boards and/or FleetBoston and its
affiliated entities) have been consolidated in a multi-district proceeding and
transferred to the Federal District Court in Maryland. Recently, certain
Columbia funds and affiliated entities have been named as defendants in several
derivative actions under various sections of the Investment Company Act of 1940,
as amended, alleging, among other things, that the fees and expenses paid by
those funds are excessive. The funds and the other defendants to these actions,
including Columbia and various of its affiliates, certain other mutual funds
advised by Columbia and its affiliates, and various directors of such funds,
have denied these allegations and are contesting the plaintiffs' claims. These
suits and certain regulatory investigations are ongoing, however, based on
currently available information, Columbia believes that these lawsuits are
without merit, that the likelihood they will have a material adverse impact on
any fund is remote, and that the lawsuits are not likely to materially affect
its ability to provide investment management services to its clients, including
the funds.
19
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
PERIOD YEAR
YEAR ENDED NOVEMBER 30, ENDED ENDED
----------------------------------------------------------------- NOVEMBER 30, DECEMBER 31,
2004 2003 2002 2001 2000 1999 (a) 1998
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.47 $ 11.04 $ 11.06 $ 10.55 $ 10.31 $ 11.49 $ 11.43
----------- ----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.74(b) 0.74(b) 0.78(b)(c) 0.75(b) 0.81(d) 0.58 0.60
Net realized and unrealized gain
(loss) on investments
and futures contracts (0.33) 0.42 (0.05)(c) 0.52 0.27 (1.12) 0.07
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total from Investment Operations 0.41 1.16 0.73 1.27 1.08 (0.54) 0.67
----------- ----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (0.06) (0.05) (0.08) (0.16) (0.22) (0.05) --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total from Investment Operations
Applicable to Common
Shareholders 0.35 1.11 0.65 1.11 0.86 (0.59) 0.67
----------- ----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO
COMMON SHAREHOLDERS:
From net investment income (0.68) (0.68) (0.67) (0.60) (0.60) (0.52) (0.61)
In excess of net investment income -- -- -- -- -- -- --(e)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Distributions Declared to
Common Shareholders (0.68) (0.68) (0.67) (0.60) (0.60) (0.52) (0.61)
----------- ----------- ----------- ----------- ----------- ----------- -----------
LESS SHARE TRANSACTIONS:
Commission and offering costs --
preferred shares -- -- -- -- (0.02) (0.07) --
----------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.14 $ 11.47 $ 11.04 $ 11.06 $ 10.55 $ 10.31 $ 11.49
----------- ----------- ----------- ----------- ----------- ----------- -----------
Market price per share --
common shares $ 10.01 $ 10.63 $ 10.09 $ 10.87 $ 8.92 $ 9.06 $ 11.19
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total return -- based on market
value -- common shares (f) 0.64% 12.48% (1.10)% 29.28% 5.20% (14.64)%(g) 11.94%
----------- ----------- ----------- ----------- ----------- ----------- -----------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (h)(i) 1.29% 1.31% 1.28% 1.28% 1.31% 1.03%(j) 0.77%
Net investment income before
preferred stock dividend (h)(i) 6.55% 6.57% 7.06%(c) 6.80% 7.91% 5.75%(j) 5.24%
Net investment income after
preferred stock dividend (h)(i) 6.06% 6.12% 6.38%(c) 5.38% 5.80% 5.26%(j) 5.24%
Portfolio turnover rate 15% 13% 10% 31% 23% 25%(g) 24%
Net assets, end of period (000's) --
common shares $ 128,157 $ 131,966 $ 127,050 $ 127,273 $ 121,366 $ 118,660 $ 132,242
(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.
20
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994
-------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.87 $ 11.05 $ 9.93 $ 11.05
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.62 0.63 0.64 0.67
Net realized and unrealized gain (loss) on investments
and futures contracts 0.58 (0.19) 1.11 (1.12)
----------- ----------- ----------- -----------
Total Income from Investment Operations 1.20 0.44 1.75 (0.45)
----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.64) (0.62) (0.63) (0.67)
----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.43 $ 10.87 $ 11.05 $ 9.93
----------- ----------- ----------- -----------
Market price per share - common shares $ 10.56 $ 10.13 $ 9.88 $ 9.25
----------- ----------- ----------- -----------
Total return -- based on market value -- common shares (a) 10.76% 9.06% 13.87% (8.12)%
----------- ----------- ----------- -----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (b) 0.83% 0.88% 1.08% 0.94%
Net investment income (b) 5.63% 5.80% 6.08% 6.46%
Portfolio turnover rate 21% 20% 37% 34%
Net assets, end of period (000's) -- common shares $ 131,503 $ 125,125 $ 127,118 $ 114,260
(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%.
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE* PER SHARE PER SHARE
-----------------------------------------------------------------------------------------------------------------
11/30/04 $60,000,000 $78,399 $25,001 $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
* Calculated by subtracting the Trust's total liabilities from the Trust's
total assets and dividing the amount by the number of APS outstanding.
** On August 26, 1999, the Trust began offering Auction Preferred Shares.
21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE TRUSTEES AND THE SHAREHOLDERS OF COLONIAL INVESTMENT GRADE MUNICIPAL
TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Investment Grade Municipal
Trust (the "Trust") at November 30, 2004, and the results of its operations, the
changes in its net assets and its financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States), which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 2004 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 19, 2005
22
UNAUDITED INFORMATION
FEDERAL INCOME TAX INFORMATION
99.90% of distributions from net investment income will be treated as exempt
income for federal income tax purposes.
--------------------------------------------------------------------------------
As of December 31, 2004, 12.81% of distributions from net investment income is
subject to the alternative minimum tax.
23
>
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 Trust Company, N.A. by mail at P.O. Box 43010, Providence, RI
02940-3010, or by phone at 1-800-730-6001.
24
TRUSTEES AND OFFICERS
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Trusts in the Columbia
Funds Complex, the year each was first elected or appointed to office, their
principal business occupations during at least the last five years, the number
of portfolios overseen by each Trustee/Director and other directorships they
hold are shown below. Each officer listed below serves as an officer of each
Trust in the Columbia Funds Complex.
NAME, ADDRESS AND AGE,
POSITION WITH FUNDS,
YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS
APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
DOUGLAS A. HACKER (age 49) Executive Vice President-Strategy of United Airlines (airline) since December 2002 (formerly
P.O. Box 66100 President of UAL Loyalty Services (airline) from September 2001 to December 2002; Executive Vice
Chicago, IL 60666 President and Chief Financial Officer of United Airlines from March 1999 to September 2001; Senior
Trustee (since 1996) Vice President-Finance from March 1993 to July 1999). Oversees 118, None
JANET LANGFORD KELLY (age 47) Adjunct Professor of Law, Northwestern University, since September 2004; Private Investor since
9534 W. Gull Lake Drive March 2004 (formerly Chief Administrative Officer and Senior Vice President, Kmart Holding
Richland, MI 49083-8530 Corporation (consumer goods), from September 2003 to March 2004; Executive Vice President-Corporate
Trustee (since 1996) Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer),
from September 1999 to August 2003; Senior Vice President, Secretary and General Counsel, Sara Lee
Corporation (branded, packaged, consumer-products manufacturer) from January 1995 to September
1999). Oversees 118, None
RICHARD W. LOWRY (age 68) Private Investor since August 1987 (formerly Chairman and Chief Executive Officer, U. S. Plywood
10701 Charleston Drive Corporation (building products manufacturer)). Oversees 120(3), None
Vero Beach, FL 32963
Trustee (since 1995)
CHARLES R. NELSON (age 62) Professor of Economics, University of Washington, since January 1976; Ford and Louisa Van Voorhis
Department of Economics Professor of Political Economy, University of Washington, since September 1993 (formerly Director,
University of Washington Institute for Economic Research, University of Washington from September 2001 to June 2003) Adjunct
Seattle, WA 98195 Professor of Statistics, University of Washington, since September 1980; Associate Editor, Journal
Trustee (since 1981) of Money Credit and Banking, since September 1993; consultant on econometric and statistical
matters. Oversees 118, None
JOHN J. NEUHAUSER (age 61) Academic Vice President and Dean of Faculties since August 1999, Boston College (formerly Dean,
84 College Road Boston College School of Management from September 1977 to September 1999). Oversees 121(3), (4),
Chestnut Hill, MA 02467-3838 Saucony, Inc. (athletic footwear)
Trustee (since 1985)
PATRICK J. SIMPSON (age 60) Partner, Perkins Coie LLP (law firm). Oversees 118, None
1120 N.W. Couch Street
Tenth Floor
Portland, OR 97209-4128
Trustee (since 2000)
25
TRUSTEES AND OFFICERS (CONTINUED)
NAME, ADDRESS AND AGE,
POSITION WITH FUNDS,
YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS
APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES (continued)
THOMAS E. STITZEL (age 68) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, College of
2208 Tawny Woods Place Business, Boise State University); Chartered Financial Analyst. Oversees 118, None.
Boise, ID 83706
Trustee (since 1998)
THOMAS C. THEOBALD (age 67) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) since September 2004
303 W. Madison (formerly Managing Director, William Blair Capital Partners (private equity investing) from
Suite 2500 September 1994 to September 2004). Oversees 118, Anixter International (network support equipment
Chicago, IL 60606 distributor); Ventas, Inc. (real estate investment trust); Jones Lang LaSalle (real estate
Trustee and Chairman management services) and Ambac Financial Group (financial guaranty insurance)
of the Board(5)
(since 1996)
ANNE-LEE VERVILLE (age 59) Retired since 1997 (formerly General Manager, Global Education Industry, IBM Corporation (computer
359 Stickney Hill Road and technology) from 1994 to 1997). Oversees 119(4), Chairman of the Board of Directors, Enesco
Hopkinton, NH 03229 Group, Inc. (designer, importer and distributor of giftware and collectibles)
Trustee (since 1998)
RICHARD L. WOOLWORTH (age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, The Regence Group
100 S.W. Market Street #1500 (regional health insurer); Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon;
Portland, OR 97207 Certified Public Accountant, Arthur Young & Company). Oversees 118, Northwest Natural Gas Co.
Trustee (since 1991) (natural gas service provider)
INTERESTED TRUSTEE
WILLIAM E. MAYER(2) (age 64) Partner, Park Avenue Equity Partners (private equity) since February 1999 (formerly Partner,
399 Park Avenue Development Capital LLC from November 1996 to February 1999). Oversees 120(3), Lee Enterprises
Suite 3204 (print media), WR Hambrecht + Co. (financial service provider); First Health (healthcare); Reader's
New York, NY 10022 Digest (publishing); OPENFIELD Solutions (retail industry technology provider)
Trustee (since 1994)
(1) In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds Complex.
(2) Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co.
(3) Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the
Liberty All-Star Funds, currently consisting of 2 funds, which are advised
by an affiliate of the Advisor.
(4) Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
(5) Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003.
26
TRUSTEES AND OFFICERS (CONTINUED)
NAME, ADDRESS AND AGE,
POSITION WITH COLUMBIA FUNDS,
YEAR FIRST ELECTED OR
APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
-------------------------------------------------------------------------------------------------------------------
OFFICERS
CHRISTOPHER L. WILSON (age 47) Head of Mutual Funds for the Advisor since August 2004; President of the Columbia Funds since
One Financial Center October 2004 (formerly President and Chief Executive Officer, CDC IXIS Asset Management Services,
Boston, MA 02111 Inc. from September 1998 to August 2004).
President (since 2004)
J. KEVIN CONNAUGHTON (age 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December 2000; Vice
One Financial Center President of the Advisor since April 2003 (formerly President of the Columbia Funds from February
Boston, MA 02111 2004 to October 2004; Chief Accounting Officer and Controller of the Liberty Funds and of the
Treasurer (since 2000) Liberty All-Star Funds from February 1998 to October 2000); Treasurer of the Galaxy Funds since
September 2002; (formerly Treasurer from December 2002 to December 2004 and President from February
2004 to December 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of
Colonial Management Associates, Inc. from February 1998 to October 2000).
MARY JOAN HOENE (age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds and of the Liberty All-Star
40 West 57th Street Funds since August 2004 (formerly Partner, Carter, Ledyard & Milburn LLP from January 2001 to August
New York, NY 10019 2004; Counsel, Carter, Ledyard & Milburn LLP from November 1999 to December 2000; Vice President and
Chief Compliance Officer Counsel, Equitable Life Assurance Society of the United States Senior Vice President and from April
(since 2004) 1998 to November 1999).
MICHAEL G. CLARKE (age 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star Funds since October 2004
One Financial Center (formerly Controller of the Columbia Funds and of the Liberty All-Star Funds from May 2004 to
Boston, MA 02111 October 2004; Assistant Treasurer from June, 2002 to May 2004; Vice President, Product Strategy &
Chief Accounting Officer Development of the Liberty Funds Group from February 2001 to June 2002; Assistant Treasurer of the
(since 2004) Liberty Funds and of the Liberty All-Star Funds from August 1999 to February 2001; Audit Manager,
Deloitte & Touche LLP from May 1997 to August 1999).
JEFFREY R. COLEMAN (age 35) Controller of the Columbia Funds and of the Liberty All-Star Funds since October 2004 (formerly Vice
One Financial Center President of CDC IXIS Asset Management Services, Inc. and Deputy Treasurer of the CDC Nvest Funds
Boston, MA 02111 and Loomis Sayles Funds from February 2003 to September 2004; Assistant Vice President of CDC IXIS
Controller (since 2004) Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to
February 2003; Tax Manager of PFPC Inc. from November 1996 to August 2000).
R. SCOTT HENDERSON (age 45) Secretary of the Columbia Funds since December 2004 (formerly Of Counsel, Bingham McCutchen from
One Financial Center April 2001 to September 2004; Executive Director and General Counsel, Massachusetts Pension Reserves
Boston, MA 02111 Investment Management Board from September 1997 to March 2001).
Secretary (since 2004)
27
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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.
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 trust's proxy voting policies and procedures is available
(i) at www.columbiamanagement.com; (ii) on the Securities and Exchange
Commission's website at www.sec.gov, and (iii) without charge, upon request, by
calling 800-730-6001. regarding how the trust voted proxies relating to
portfolio securities during the 12-month period ended June 30, 2004 is available
from the SEC's website. Information regarding how the trust voted proxies
relating to portfolio securities is also available at
www.columbiamanagement.com.
The trust files a complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The trust's Form N-Q
is available on the SEC's website at www.sec.gov and may be reviewed and copied
at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
This report has been prepared for shareholders of Colonial Investment Grade
Municipal Trust.
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST ANNUAL REPORT
130-02/741T-1104 (01/05) 05/3935
ITEM 2. CODE OF ETHICS.
(a) The registrant has, as of the end of the period covered by this
report, adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers
or implicit waivers to a provision of the code of ethics adopted in
2(a) above.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas
E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members
of the registrant's Board of Trustees and Audit Committee, each qualify as an
audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr.
Woolworth are each independent trustees, as defined in paragraph (a)(2) of this
Item's instructions and collectively constitute the entire Audit Committee.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Aggregate Audit Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are approximately as follows:
2004 2003
$22,900 $24,490
Audit Fees include amounts related to the audit of the registrant's annual
financial statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Aggregate Audit-Related Fees billed by the principal accountant for
professional services rendered during the fiscal years ended November 30, 2004
and November 30, 2003 are approximately as follows:
2004 2003
$7,100 $7,400
Audit-Related Fees include amounts for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported in Audit Fees
above. In both fiscal years 2004 and 2003, Audit-Related Fees include certain
agreed-upon procedures performed for semi-annual shareholder reports.
(c) Aggregate Tax Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are approximately as follows:
2004 2003
$3,110 $3,071
Tax Fees in both fiscal years 2004 and 2003 consist primarily of the review of
annual tax returns and include amounts for professional services by the
principal accountant for tax compliance, tax advice and tax planning.
(d) Aggregate All Other Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are as follows:
2004 2003
$0 $0
All Other Fees include amounts for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) above.
None of the amounts described in paragraphs (a) through (d) above were approved
pursuant to the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X.
(e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
I. GENERAL OVERVIEW
The Audit Committee of the registrant has adopted a formal policy (the "Policy")
which sets forth the procedures and the conditions pursuant to which the Audit
Committee will pre-approve (i) all audit and non-audit (including audit related,
tax and all other) services
provided by the registrant's independent auditor to the registrant and
individual funds (collectively "Fund Services"), and (ii) all non-audit services
provided by the registrant's independent auditor to the funds' adviser or a
control affiliate of the adviser, that relate directly to the funds' operations
and financial reporting (collectively "Fund-related Adviser Services"). A
"control affiliate" is an entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the funds, and the
term "adviser" is deemed to exclude any unaffiliated sub-adviser whose role is
primarily portfolio management and is sub-contracted or overseen by another
investment adviser. The adviser and control affiliates are collectively referred
to as "Adviser Entities."
The Audit Committee uses a combination of specific (on a case-by-case basis as
potential services are contemplated) and general (pre-determined list of
permitted services) pre-approvals. Unless a type of service has received general
pre-approval, it will require specific pre-approval by the Audit Committee if it
is to be provided by the independent auditor.
The Policy does not delegate the Audit Committee's responsibilities to
pre-approve services performed by the independent auditor to management.
II. GENERAL PROCEDURES
On an annual basis, the Fund Treasurer and/or Director of Trustee Administration
shall submit to the Audit Committee a schedule of the types of Fund Services and
Fund-related Adviser Services that are subject to general pre-approval.
These schedules will provide a description of each type of service that is
subject to general pre-approval and, where possible, will provide estimated fees
for each instance of providing each service. This general pre-approval and
related fees (where provided) will generally cover a one-year period (for
example, from June 1 through May 31 of the following year). The Audit
Committee will review and approve the types of services and review the projected
fees for the next one-year period and may add to, or subtract from, the list of
general pre-approved services from time to time, based on subsequent
determinations. This approval acknowledges that the Audit Committee is in
agreement with the specific types of services that the independent auditor will
be permitted to perform. The fee amounts will be updated to the extent necessary
at other regularly scheduled meetings of the Audit Committee.
In addition to the fees for each individual service, the Audit Committee has the
authority to implement a fee cap on the aggregate amount of non-audit services
provided to an individual fund.
If, subsequent to general pre-approval, a fund, its investment adviser or a
control affiliate determines that it would like to engage the independent
auditor to perform a service that requires pre-approval and that is not included
in the general pre-approval list, the specific pre-approval procedure shall be
as follows:
o A brief written request shall be prepared by management detailing the
proposed engagement with explanation as to why the work is proposed to
be performed by the independent auditor;
o The request should be addressed to the Audit Committee with copies to
the Fund Treasurer and/or Director of Trustee Administration;
o The Fund Treasurer and/or Director of Trustee Administration will
arrange for a discussion of the service to be included on the agenda
for the next regularly scheduled Audit Committee meeting, when the
Committee will discuss the proposed engagement and approve or deny the
request.
o If the timing of the project is critical and the project needs to
commence before the next regularly scheduled meeting, the Chairperson
of the Audit Committee may approve or deny the request on behalf of
the Audit Committee, or, in the Chairperson's discretion, determine to
call a special meeting of the Audit Committee for the purpose of
considering the proposal. Should the Chairperson of the Audit
Committee be unavailable, any other member of the Audit Committee may
serve as an alternate for the purpose of approving or denying the
request. Discussion with the Chairperson (or alternate, if necessary)
will be arranged by the Fund Treasurer and/or Director of Trustee
Administration. The independent auditor will not commence any such
project unless and until specific approval has been given.
III. CERTAIN OTHER SERVICES PROVIDED TO ADVISER ENTITIES
The Audit Committee recognizes that there are cases where services proposed to
be provided by the independent auditor to the adviser or control affiliates are
not Fund-related Adviser Services within the meaning of the Policy, but
nonetheless may be relevant to the Audit Committee's ongoing evaluation of the
auditor's independence and objectivity with respect to its audit services to the
funds. As a result, in all cases where an Adviser Entity engages the independent
auditor to provide audit or non-audit services that are not Fund Services or
Fund-related Adviser Services, were not subject to pre-approval by the Audit
Committee, and the projected fees for any such engagement (or the aggregate of
all such engagements during the period covered by the Policy) exceeds a
pre-determined threshold established by the Audit Committee; the independent
auditor, Fund Treasurer and/or Director of Trustee Administration will notify
the Audit Committee not later than its next meeting. Such notification shall
include a general description of the services provided, the entity that is to be
the recipient of such services, the timing of the engagement, the entity's
reasons for selecting the independent auditor, and the projected fees. Such
information will allow the Audit Committee to consider whether non-audit
services provided to the adviser and Adviser Entities, which were not subject to
Audit Committee pre-approval, are compatible with maintaining the auditor's
independence with respect to the Funds.
IV. REPORTING TO THE AUDIT COMMITTEE
The Fund Treasurer or Director of Trustee Administration shall report to the
Audit Committee at each of its regular meetings regarding all Fund Services or
Fund-related Adviser Services initiated since the last such report was rendered,
including:
o A general description of the services, and
o Actual billed and projected fees, and
o The means by which such Fund Services or Fund-related Adviser Services
were pre-approved by the Audit Committee.
In addition, the independent auditor shall report to the Audit Committee
annually, and no more than 90 days prior to the filing of audit reports with the
SEC, all non-audit services provided to entities in the funds' "investment
company complex," as defined by SEC rules, that did not require pre-approval
under the Policy.
V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE
The Policy may be amended from time to time by the Audit Committee. Prompt
notice of any amendments will be provided to the independent auditor, Fund
Treasurer and Director of Trustee Administration. The Policy shall be reviewed
and approved at least annually by the Audit Committee.
*****
(e)(2) The percentage of services described in paragraphs (b) through (d) of
this Item approved pursuant to the "de minimis" exception under paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X during both fiscal years ended
November 30, 2004 and November 30, 2003 was zero.
(f) Not applicable.
(g) All non-audit fees billed by the registrant's accountant for services
rendered to the registrant for the fiscal years ended November 30, 2004 and
November 30, 2003 are disclosed in (b) through (d) of this Item.
During the fiscal years ended November 30, 2004 and November 30, 2003, there
were no Audit-Related Fees, Tax Fees or All Other Fees that were approved for
services to the investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser) and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant under
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of Audit-Related Fees, Tax Fees and All Other Fees required to be
approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were
approved under the "de minimis" exception during both fiscal years ended
November 30, 2004 and November 30, 2003 was zero.
(h) The registrant's Audit Committee of the Board of Directors has considered
whether the provision of non-audit services that were rendered to the
registrant's adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X, is compatible with maintaining the principal accountant's
independence. The Audit Committee determined that the provision of such services
is compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C.
78c(a)(58)(A)). Douglas A. Hacker, Thomas E. Stitzel, Anne-Lee Verville and
Richard L. Woolworth are each independent trustees and collectively constitute
the entire Audit Committee.
ITEM 6. SCHEDULE OF INVESTMENTS
The registrant's "Schedule I - Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form
N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Fund has delegated to Columbia Management Advisors, Inc. (the "Advisor") the
responsibility to vote proxies relating to portfolio securities held by the
Fund. In deciding to delegate this responsibility to the Advisor, the Board of
Trustees of the Trust reviewed and approved the policies and procedures adopted
by the Advisor. These included the procedures that the Advisor follows when a
vote presents a conflict between the interests of the Fund and its shareholders
and the Advisor, its affiliates, its other clients or other persons.
The Advisor's policy is to vote all proxies for Fund securities in a manner
considered by the Advisor to be in the best interest of the Fund and its
shareholders without regard to any benefit to the Advisor, its affiliates, its
other clients or other persons. The Advisor examines each proposal and votes
against the proposal, if, in its judgment, approval or adoption of the proposal
would be expected to impact adversely the current or potential market value of
the issuer's securities. The Advisor also examines each proposal and votes the
proxies against the proposal, if, in its judgment, the proposal would be
expected to affect adversely the best interest of the Fund. The Advisor
determines the best interest of the Fund in light of the potential economic
return on the Fund's investment.
The Advisor addresses potential material conflicts of interest by having
predetermined voting guidelines. For those proposals that require special
consideration or in instances where special circumstances may require varying
from the predetermined guideline, the Advisor's Proxy Committee determines the
vote in the best interest of the Fund, without consideration of any
benefit to the Advisor, its affiliates, its other clients or other persons. The
Advisor's Proxy Committee is composed of representatives of the Advisor's equity
investments, equity research, compliance, legal and fund administration
functions. In addition to the responsibilities described above, the Proxy
Committee has the responsibility to review, on a semi-annual basis, the
Advisor's proxy voting policies to ensure consistency with internal policies and
regulatory agency policies and to develop additional voting guidelines to assist
in the review of proxy proposals.
The Proxy Committee may vary from the predetermined guideline if it determines
that voting on the proposal according to the predetermined guideline would be
expected to impact adversely the current or potential market value of the
issuer's securities or to affect adversely the best interest of the client.
References to the best interest of a client refer to the interest of the client
in terms of the potential economic return on the client's investment. In
determining the vote on any proposal, the Proxy Committee does not consider any
benefit other than benefits to the owner of the securities to be voted. A member
of the Proxy Committee is prohibited from voting on any proposal for which he or
she has a conflict of interest by reason of a direct relationship with the
issuer or other party affected by a given proposal. Persons making
recommendations to the Proxy Committee or its members are required to disclose
to the Committee any relationship with a party making a proposal or other matter
known to the person that would create a potential conflict of interest.
The Advisor has retained Institutional Shareholder Services ("ISS"), a third
party vendor, to implement its proxy voting process. ISS provides proxy
analysis, record keeping services and vote disclosure services.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Registrant Purchases of Equity Securities*
(a) (b) (c) (d)
Total Number of Maximum Number of
Shares Purchased as Shares that May Yet
Period Total Number Average Price Part of Publically Be Purchased Under
of Shares Paid Per Share Announced Plans the Plans or Programs
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06/01/04 through 06/30/04 8,631 $9.72 8,631 N/A
07/01/04 through 07/31/04 8,667 $9.67 8,667 N/A
08/01/04 through 08/31/04 8,602 $9.83 8,602 N/A
09/01/04 through 09/30/04 8,580 $10.06 8,580 N/A
10/01/04 through 10/31/04 8,484 $10.26 8,484 N/A
11/01/04 through 11/30/04 8,516 $10.34 8,516 N/A
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Total 51,480 $9.98 51,480 N/A
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* Includes shares purchased by the Dividend Reinvestment Agent pursuant to
the Registrant's Dividend Reinvestment Plan.
ITEM 10. 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 directors, since those
procedures were last disclosed in response to the requirements of Item
7(d)(2)(ii)(G) of Schedule 14A or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officers, based on their evaluation of the registrant's disclosure
controls and procedures as of a
date within 90 days of the filing of this report, have 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 second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR
attached hereto as Exhibit 99.CODE ETH.
(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.
(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
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By (Signature and Title) /S/ Christopher L. Wilson
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Christopher L. Wilson, President
Date January 26, 2005
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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/ Christopher L. Wilson
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Christopher L. Wilson, President
Date January 26, 2005
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By (Signature and Title) /S/ J. Kevin Connaughton
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J. Kevin Connaughton, Treasurer
Date January 26, 2005
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