<PAGE>
LETTER FROM THE PRESIDENT
- -------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present Colonial Investment Grade Municipal Trust's annual
report for the 12 months ended December 31, 1994. During the fiscal year, your
Fund met its objective of providing investors with an attractive level of
tax-exempt income, primarily through investments in investment-grade municipal
bonds.
<TABLE>
<CAPTION>
FUND PERFORMANCE (1/1/94 - 12/31/94)
<S> <C>
Distributions declared
per share(1) $0.672
- ---------------------------------------------------
Annualized distribution rate on
12/31/94, based on market price 7.01%
- ---------------------------------------------------
Taxable-equivalent distribution
rate on 12/31/94, based on
market price(2) 11.61%
- ---------------------------------------------------
12-month total return, based on 12/31/94
NAV and assuming reinvestment
of all distributions -4.08%
- ---------------------------------------------------
12-month total return, based on 12/31/94
market price and assuming reinvestment
of all distributions -8.12%
- ---------------------------------------------------
Net asset value per share
on 12/31/94 $9.93
- ---------------------------------------------------
Market price per share
on 12/31/94 $9.25
- ---------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
The U.S. economy expanded at a robust pace during 1994, as indicated by the
preliminary 12-month GDP of 4.0%. Although this was a welcome development after
several years of often lackadaisical growth, the new found economic vigor also
rekindled the Federal Reserve Board's concerns about inflation. The Fed,
determined to keep a tight rein on inflation, raised short-term interest rates
six times during the fiscal year. As a result, yields moved higher across the
bond market.
As was the case for most fixed-income securities, prices for investment-grade
municipal bonds declined as interest rates increased. However, because of the
tax-exempt income these securities provide, they remained more popular with
investors than their taxable counterparts. This helped support prices in the
municipal market.
SUPPLY AND DEMAND
As interest rates moved higher, the refinancing activity that had generated
record volumes of municipal securities in 1992 and 1993 subsided. During 1994
new issue supply was down 44% nationally. Colonial management believes this
trend will continue in 1995 -- supply is expected to drop to $135 billion, down
from $291 billion in 1993. Low supply should be complemented by strong demand
for tax-exempt securities. The combination of coupon payments and maturing bonds
will generate more than $200 billion that will likely be reinvested in the
municipal market. This supply/demand dynamic should have a favorable impact on
prices.
[John A. McNeice, Jr./President Photo]
INVESTMENT STRATEGY
During the fiscal year management remained fully invested at all times, with
assets allocated in a diverse selection of municipal bonds issued by states and
local municipalities. On December 31, the Fund owned 107 individual issues in 13
public sectors. Almost 75% of the securities in the portfolio were rated
investment grade, with approximately 28% rated Aaa, the highest quality rating
available. Nonrated bonds accounted for approximately 25% of investments.
One way that management mitigated the impact of interest rate volatility was
with investments in higher coupon securities, such as housing bonds and some
carefully selected non-rated bonds. Because of their comparatively shorter
durations, these bonds are not as sensitive to fluctuating interest rates as
some other municipal securities. Other steps that management took to support the
Fund's net asset value included the sale of Treasury bond future contracts.
This action hedged the Fund against unfavorable interest rate movements.
The Fund benefited from its Massachusetts investments, due to an economic
recovery in the state. Massachusetts investments that have provided especially
strong returns for the Fund include state general obligation bonds and bonds
issued by the Massachusetts Bay Transportation Authority.
Prior to the close of the Fund's fiscal year, Orange County, California filed
for bankruptcy. Please be assured that because of the Fund's diversification
strategy, exposure to the affected municipal bonds is minimal.
Sincerely,
/S/ JOHN A. McNEICE, JR.
- ------------------------
John A. McNeice, Jr.
President
February 10, 1995
(1)A portion of the Fund's income may be subject to the alternative minimum tax.
(2)Taxable-equivalent distribution rate is based on the maximum federal income
tax rate of 39.6%.
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO (IN THOUSANDS) DECEMBER 31, 1994
- ------------------------------------------------------------------------------
MUNICIPAL BONDS - 97.2% PAR VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS - 2.7%
CO Mesa County Industrial Development,
Joy Technologies Inc.,
Series 1992,
8.500% 09/15/06. . . . . . . . $ 1,000 $ 1,015
MN Brooklyn Park Industrial Development,
TL Systems Corp., Series 1991,
10.000% 09/01/16. . . . . . . . 980 947
MN Buffalo Individual,
Von Ruden Manufacturing, Inc.,
10.500% 09/01/14. . . . . . . . 1,155 1,185
---------
3,147
- ------------------------------------------------------------------------------
EDUCATION - 7.4%
IL Education Facilities Authority Revenue,
5.700% 12/01/25. . . . . . . . 1,000 845
NE Higher Educational Loan Program,
Series 1993, Subseries A-6,
6.450% 06/01/18. . . . . . . . 1,000 914
NH Higher Education,
Dartmouth College,
5.375% 06/01/23. . . . . . . . 2,000 1,622
NY New York State Dormitory Authority,
City University:
Series 1990-A,
7.625% 07/01/20. . . . . . . . 750 832
Series 1993-A,
5.750% 07/01/18. . . . . . . . 5,000 4,200
---------
8,413
- ------------------------------------------------------------------------------
ELECTRIC - 5.0%
CA Los Angeles Department Water
& Power Electric Plant, Series 1994,
5.300% 02/15/25. . . . . . . . 2,000 1,570
FL Jacksonville Electric Authority,
Series 1993-A,
5.250% 10/01/28. . . . . . . . 1,000 814
FL Martin County Industrial Development
Revenue, Indiantown Project A,
7.875% 12/15/25. . . . . . . . 1,000 1,006
FL Orlando Utilities Water & Electric,
5.000% 10/01/23. . . . . . . . 1,000 785
NY State Energy Research & Development,
Electric Facility Revenue Bonds,
Long Island Lighting Company,
Series 1990-A,
7.150% 06/01/20. . . . . . . . 800 723
UT Intermountain Power Agency,
Series 1993-A,
5.000% 07/01/23. . . . . . . . 1,000 765
---------
5,663
- ------------------------------------------------------------------------------
GENERAL OBLIGATIONS - 15.3%
DC District of Columbia
General Obligation, Series 1993-E,
6.000% 06/01/12. . . . . . . . 1,000 886
MA General Obligation Bonds,
Consolidated Loan, Series 1991-A,
6.000% 06/01/11. . . . . . . . 1,000 932
ME Municipal Bond Bank,
Series A,
5.800% 11/01/20. . . . . . . . 1,000 879
MI Wayne County Limited Tax General
Obligation Building Authority,
Series 1992-A,
8.000% 03/01/17. . . . . . . . 250 283
NY General Obligation Bonds:
Series 1991-B,
8.250% 06/01/05. . . . . . . . 1,000 1,109
Series 1991-F,
3.000% 11/15/00. . . . . . . . 3,000 2,587
Series 1994-D,
5.750% 08/15/14. . . . . . . . 5,000 4,206
PR Commonwealth:
5.500% 07/01/08(a) . . . . . . 4,720 4,219
Series 1993,
3.260% 07/01/08(b) . . . . . . 4,360(c) 1,602
TX Harris County,
5.125% 10/01/14. . . . . . . . 1,000 822
---------
17,525
- ------------------------------------------------------------------------------
HOSPITALS & HEALTH CARE - 10.8%
AL Special Care Facilities Authority,
Montgomery Health Care, Series 1989,
11.000% 10/01/19. . . . . . . . 1,245 1,217
CA San Bernardino County,
Medical Center Financing,
5.500% 08/01/22. . . . . . . . 1,000 755
DC District of Columbia Hospital,
Washington Hospital Center
Corp., Series 1990 A,
8.750% 01/01/15. . . . . . . . 615 708
DE State Economic Development,
Riverside Hospital, Series 1992 A,
9.500% 01/01/22. . . . . . . . 245 264
DE Wilmington, Riverside Hospital,
Series 1988A,
10.000% 10/01/03. . . . . . . . 50 59
FL Pinellas County Health Facilities,
Sun Coast Hospital, Series 1990-A,
8.500% 03/01/20. . . . . . . . 840 959
IL Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 07/01/24. . . . . . . . 315 297
</TABLE>
See notes to investment portfolio.
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO - CONTINUED
- ------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
HOSPITALS & HEALTH CARE - CONT.
IL Health Facility Authority,
RIB (variable rate), Series 1992-B,
9.111% 05/01/21. . . . . . . . $ 700 $ 699
MO Hannibal Industrial Development,
Medical Systems of Northeast
Missouri, Series 1992,
9.500% 03/01/22. . . . . . . . 500 563
NC Lincoln County, Hospital Revenue,
9.000% 05/01/07. . . . . . . . 190 200
NH Higher Educational and Health Facilities,
Catholic Medical Center, Series 1989,
6.000% 07/01/17. . . . . . . . 2,500 2,037
NY State Medical Care Facilities
Finance Agency, Mental Health Services:
Series 1991-A,
7.500% 02/15/21. . . . . . . . 1,000 1,084
Series 1993-F,
5.250% 02/15/19. . . . . . . . 1,000 767
PA Erie County Hospital Authority,
Metro Health Center, Series 1992,
7.375% 07/01/22. . . . . . . . 1,250 1,167
PA Montgomery County Higher Education
& Health Authority, United Hospitals
Inc., Project, Series 1989-B,
8.375% 11/01/11. . . . . . . . 1,000 1,011
TX Bell County Health Facility Elder Care,
9.000% 11/01/24. . . . . . . . 500 502
-------
12,289
- ------------------------------------------------------------------------------
HOUSING - 19.9%
FL Clearwater Housing Authority,
Hampton Apartments,
8.250% 05/01/24. . . . . . . . 700 704
FL Dade County Housing Finance Authority,
Multi-family, Arena Square,
Series 1989,
10.250% 05/01/19(d) . . . . . . 2,500 375
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21. . . . . . . . 500 501
FL Housing Finance Authority,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19. . . . . . . . 240 231
FL Palm Beach County Housing Development
Multi-family Housing, Riviera Beach,
Series 1988-A,
9.750% 07/15/18(d)(e). . . . . 1,500 525
FL West Palm Beach Housing Inc.,
Multi-family Housing, Cypress Run,
10.500% 03/15/19(d)(e). . . . . 2,000 700
IN State Housing Finance Authority,
Single-family Mortgage GNMA,
Series 1990-D,
7.800% 01/01/22. . . . . . . . 165 170
LA Housing Financing Agency:
Series 1988,
8.300% 11/01/20. . . . . . . . 1,500 1,528
Series 1992, stepped coupon
(7.500% 03/01/95)
09/01/13 (f) . . . . . . 1,250 1,211
MA Housing Finance Agency,
Series 1988-B,
8.100% 08/01/23. . . . . . . . 255 260
MN White Bear Lake Multi-family Housing
Revenue, Birch Lake Townhomes Project:
Series 1989-A,
10.250% 07/15/19. . . . . . . . 775 789
Series 1989-B,
10.250% 07/15/19(g) . . . . . . 780 1,081
NC Durham Urban Development Authority,
Durham Hosiery Mill Project,
7.500% 08/01/29. . . . . . . . 1,175 1,196
NE State Single-family Mortgage Revenue,
RIB (variable rate),
7.550% 03/15/22. . . . . . . . 7,400 7,585
NY New York State Mortgage Agency,
8.000% 10/01/17. . . . . . . . 365 378
OH Housing Finance Agency, Single-
family Mortgage Revenue,
RIB (variable rate), Series B-4,
9.213% 03/31/31. . . . . . . . 2,150 2,059
Pass Through Certificates,
Series 1993-A,
8.500% 12/01/16(h) . . . . . . 2,124 2,076
TN Shelby County, Health, Education
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19. . . . . . . . 490 524
Series 1992-C,
9.750% 08/01/19. . . . . . . . 490 527
VA Roanoke Redevelopment & Housing
Authority, First Mortgage,
Mountain Ridge,
9.250% 11/01/22. . . . . . . . 300 292
-------
22,712
- ------------------------------------------------------------------------------
NURSING HOMES - 11.3%
CO Health Care Facilities Authority:
Denver Health Care,
10.500% 05/01/19(d) . . . . . . 1,400 1,260
Pioneer Health Care, Series 1989,
10.500% 05/01/19. . . . . . . . 1,710 1,539
</TABLE>
See notes to investment portfolio.
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO - CONTINUED
- ------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
NURSING HOMES - CONT.
DE State Economic Development,
Health Care Facility,
10.000% 03/01/21. . . . . . . $ 1,000 $ 1,011
FL Broward County
Industrial Development,
Beverly Enterprises,
9.800% 11/01/10. . . . . . . 265 288
FL Escambia County Industrial
Development, Beverly Enterprises,
Series 1985-I,
9.800% 06/01/11. . . . . . . 220 238
FL Leon County Industrial Development,
Series 1985,
9.800% 06/01/11. . . . . . . 25 27
IA Finance Authority Health Care Facility,
Mercy Health Initiatives, Series 1989,
9.950% 07/01/19. . . . . . . 2,500 2,450
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989-A,
9.750% 08/01/19. . . . . . . 1,500 1,530
KY Jefferson County Health Facilities
Beverly Enterprises, Inc., Series 1985-B,
9.750% 08/01/07. . . . . . . 800 866
PA Berkshire County Industrial Development
Authority, Lehigh & Berkshire Manors,
Series 1993-A,
4.270% 05/01/23. . . . . . . 500 499
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19. . . . . . . 1,250 1,256
PA Delaware County Development Authority,
Main Line and Haverford Nursing Home,
Series 1992,
9.000% 08/01/22. . . . . . . 600 610
WI State Health and Educational Facilities,
Metro Health Foundation Inc.,
10.000% 11/01/22. . . . . . . 1,300 1,329
-------
12,903
- ------------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 0.7%
IN Petersburg Pollution Control,
Indianapolis Power & Light Company,
Series 1993-B,
5.400% 08/01/17. . . . . . . 1,000 819
- ------------------------------------------------------------------------------
PUBLIC FACILITY & IMPROVEMENT - 2.5%
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 . . . . . . . 285 301
OH Cuyahoga County Industrial
Development Authority,
Joy Technologies, Inc.,
8.750% 09/15/07 . . . . . . . 650 670
TN Metropolitan Government, Nashville
& Davidson County,
6.150% 05/15/25 . . . . . . . 1,000 924
TX Harris County Cultural Education
Facilities, Finance Corp.,
Space Center Houston Project,
Series 1991,
9.250% 08/15/15 . . . . . . . 1,000 900
-------
2,795
- ------------------------------------------------------------------------------
REDEVELOPMENT AGENCIES & TAX ALLOCATION - 3.6%
CA Contra Costa County Public
Financing Authority, Series 1992-A,
7.100% 08/01/22 . . . . . . . 1,000 951
CA State Public Works,
Regents of the University of California,
Series 1993-A,
5.500% 06/01/10 . . . . . . . 1,000 857
NY State Local Government Assistance
Corp., Series 1993-E,
5.000% 04/01/21 . . . . . . . 3,000 2,333
-------
4,141
- ------------------------------------------------------------------------------
TRANSPORTATION - 10.2%
CA Los Angeles County Transportation
Authority, Proposition A, Series 1993 A,
5.000% 07/01/21 . . . . . . . 1,000 768
CA San Joaquin Hills Transportation,
Corridor Agency Toll, Senior Lien Road:
Series 1993, CABS
(i) 01/01/23 . . . . . . . 5,250 486
Series 1993
6.750% 01/01/32 . . . . . . . 500 414
CO Denver City and County Airport,
Stapleton International Airport:
Series 1990 A,
8.500% 11/15/23 . . . . . . . 2,000 2,015
Series 1992 B,
7.250% 11/15/23 . . . . . . . 1,000 899
IL Regional Transportation Authority,
7.750% 06/01/20 . . . . . . . 1,000 1,123
IN Airport Authority,
7.100% 01/15/17 . . . . . . . 1,000 951
NH State Turnpike Systems,
RIB (variable rate), Series 1991-C,
9.292% 11/01/17 . . . . . . . 1,000 1,023
PR Commonwealth, Highway &
Transportation Authority:
3.515% 07/01/09(b) . . . . . 1,450(c) 562
5.500% 07/01/09 . . . . . . . 2,900 2,541
</TABLE>
See notes to investment portfolio.
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO - CONTINUED
- ----------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - CONT.
TX Harris County, Series 1994,
5.375% 08/15/20. . . . . . . . $ 1,000 $ 826
----------
11,608
- ----------------------------------------------------------------------------
WASTE DISPOSAL - 3.1%
MA Industrial Finance Agency:
Peabody Landfill,
9.000% 11/01/05. . . . . . . . 250 250
Refusetech Series 1993-A,
6.300% 07/01/05. . . . . . . . 500 482
SC Charleston County Recovery,
Foster Wheeler, Series 1987-A,
9.250% 01/01/10. . . . . . . . 2,640 2,868
----------
3,600
- ----------------------------------------------------------------------------
WATER & SEWER - 4.7%
CA Los Angeles Wastewater Systems,
Series 1993-D,
5.200% 11/01/21. . . . . . . . 1,000 790
CA Sacramento Finance Authority,
5.500% 08/01/24. . . . . . . . 2,000 1,648
CA San Diego Sewer,
Series 1993,
5.250% 05/15/20. . . . . . . . 1,000 800
MA State Water Resources Authority:
Series 1992-B
5.500% 11/01/15. . . . . . . . 1,000 848
Series 1993-B,
5.000% 03/01/22. . . . . . . . 1,000 765
MD Northeast Maryland Waste Disposal
Authority, Solid Waste, Montgomery
County Resource Recovery Project,
Series 1993-A,
6.300% 07/01/16. . . . . . . . 500 443
MS Five Lakes Utility District,
8.250% 07/15/24. . . . . . . . 140 132
----------
5,426
- ----------------------------------------------------------------------------
Total investments (cost $119,411)(j) 111,041
- ----------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 2.2%
- ----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (K)
NC Halifax County Industrial Facilities
& Pollution Control Authority,
Westmoreland Coal Co.,
5.900% 12/01/19. . . . . . . . 400 400
NY New York City, General Obligation,
4.600% 10/01/20. . . . . . . . 200 200
NY New York City Water and Sewer,
Series G,
6.150% 06/15/24. . . . . . . . 100 100
NY Niagara Mohawk 87B,
5.000% 07/01/27. . . . . . . . 1,800 1,800
- ----------------------------------------------------------------------------
Total short-term obligations 2,500
- ----------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.6% $ 719
- ----------------------------------------------------------------------------
NET ASSETS - 100.0% $ 114,260
- ----------------------------------------------------------------------------
</TABLE>
Notes to investment portfolio:
(a) This security, or a portion thereof, with a total market value of
$3,495 is being used to collateralize open futures contracts.
(b) This security is a variable rate instrument; on July 1, 1998 it will
change to a fixed rate instrument. Interest income is accrued daily on
the notional amount and applicable interest rates.
(c) Notional amount.
(d) Non-income producing.
(e) Subsequent to December 31, 1994 this issuer filed under Chapter 11 of the
Federal Bankruptcy code.
(f) Currently zero coupon. Shown parenthetically is the next interest rate to
be paid and the date the Fund will begin accruing this rate.
(g) Accrued interest accumulates in the value of the security and is
payable at redemption.
(h) This is a restricted security which was acquired on August 27, 1993 at a
cost of $2,168. This security represents 1.8% of the Fund's net assets at
December 31, 1994.
(i) Zero coupon bond.
(j) Cost for federal income tax purposes is the same.
(k) Variable rate demand notes are considered short-term obligations.
Interest rates change periodically on specified dates. These securities
are payable on demand and are secured by either letters of credit or
other credit support agreements from banks. The rates listed are as of
December 31, 1994.
Short futures contracts open at December 31, 1994:
<TABLE>
<CAPTION>
PAR VALUE UNREALIZED
COVERED EXPIRATION DEPRECIATION
TYPE BY CONTRACTS MONTH AT 12/31/94
- ------------------------------------------------------------------
<S> <C> <C> <C>
Treasury bond $2,800 March $ 37
</TABLE>
ACRONYM NAME
------- ----
RIB Residual Interest Bonds
CABS Capital Appreciation Bonds
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
December 31, 1994
(in thousands except for per share amount)
- -------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at value (cost $119,411).................. $ 111,041
Short-term obligations................................ 2,500
-----------
113,541
Receivable for:
Interest........................ $2,415
Investments sold................ 286
Other........................... 9 2,710
------ -----------
Total assets................................. 116,251
LIABILITIES
Payable for investments purchased.. 1,725
Payable to custodian bank.......... 192
Accrued:
Deferred Trustees fees.......... 23
Other........................... 51
------
Total liabilities............................ 1,991
-----------
NET ASSETS at value for 11,509
shares of beneficial interest outstanding......... $ 114,260
-----------
Net asset value per share............................. $9.93
-----------
COMPOSITION OF NET ASSETS
Capital paid in.................................... $ 127,938
Undistributed net investment income................ 27
Accumulated net realized loss...................... (5,298)
Net unrealized depreciation on:
Investments.................................... (8,370)
Open futures contracts......................... (37)
-----------
$ 114,260
===========
</TABLE>
STATEMENT OF OPERATIONS
Year ended December 31, 1994
(in thousands)
- -------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest.............................................. $ 8,874
EXPENSES
Management fee..................... $ 779
Transfer agent..................... 55
Bookkeeping fee.................... 34
Trustees fees...................... 18
Custodian fee...................... 3
Audit fee.......................... 41
Legal fee.......................... 135
Reports to shareholders............ 8
NYSE fee........................... 24
Other.............................. 34 1,131
-------- -----------
Net investment income........................ 7,743
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments...................... (2,107)
Closed futures contracts......... 99
--------
Net realized loss............................ (2,008)
Net unrealized depreciation
during the period on:
Investments...................... (10,917)
Open futures contracts........... (37)
--------
Net unrealized depreciation.................. (10,954)
-----------
Net loss................................... (12,962)
-----------
Net decrease in net assets from
operations......................................... $ (5,219)
===========
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1994 1993
-------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 7,743 $ 9,062
Net realized loss......................................... (2,008) (2,042)
Net unrealized appreciation (depreciation)................ (10,954) 3,093
-------- --------
Net increase (decrease) from operations............. (5,219) 10,113
Distributions
From net investment income................................ (7,734) (9,069)
-------- --------
Total increase (decrease)..................... (12,953) 1,044
NET ASSETS
Beginning of period....................................... 127,213 126,169
-------- --------
End of period (including undistributed
net investment income of $27 and $19, respectively)...... $114,260 $127,213
======== ========
NUMBER OF FUND SHARES
Outstanding at end of period........................... 11,509 11,509
======== ========
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
Colonial Investment Grade Municipal Trust (the Fund), is a Massachusetts
business trust, registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end, management investment company. The Fund may issue
an unlimited number of shares. The following significant accounting policies are
consistently followed by the Fund in the preparation of its financial statements
and conform to generally accepted accounting principles.
- --------------------------------------------------------------------------------
SECURITY VALUATION AND TRANSACTIONS
Debt securities generally are valued by a pricing service based upon
market transactions for normal, institutional-size trading units of similar
securities. When management deems it appropriate, an over-the-counter or
exchange bid quotation is used.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued
at fair value under procedures approved by the Trustees.
Futures contracts are valued based on the difference between the last
sale price and the opening price of the contract.
Security transactions are accounted for on the date the securities are
purchased or sold.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This
may increase the risk if the other party to the transaction fails to deliver
and causes the Fund to subsequently invest at less advantageous prices.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
Consistent with the Fund's policy to qualify as a regulated investment
company and to distribute all of its taxable and tax-exempt income no federal
income tax has been accrued.
- --------------------------------------------------------------------------------
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM
Interest income is recorded on the accrual basis. Original issue discount
is accreted to interest income over the life of a security with a
corresponding increase in the cost basis; market discount is not accreted.
Premium is amortized against interest income with a corresponding decrease in
the cost basis.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-date.
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Colonial Management Associates, Inc. (the Adviser) is the investment
adviser of the Fund and furnishes accounting and other services and office
facilities for a monthly fee equal to 0.65% annually of the Fund's average
weekly net assets.
- --------------------------------------------------------------------------------
BOOKKEEPING FEE
The Adviser provides bookkeeping and pricing services for $18,000 per
year plus 0.0233% of the Fund's average net assets over $50 million.
- --------------------------------------------------------------------------------
OTHER
The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund'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 Fund's assets.
- --------------------------------------------------------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the year ended December 31, 1994, purchases and sales of investments,
other than short-term obligations, were $40,608,159 and $38,890,790,
respectively.
Unrealized appreciation (depreciation) at December 31, 1994, based on
cost of investments for both financial statement and federal income tax
purposes was approximately:
<TABLE>
<S> <C>
Gross unrealized appreciation....................$ 2,042,000
Gross unrealized depreciation.................... (10,412,000)
------------
Net unrealized depreciation...................$ (8,370,000)
============
</TABLE>
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS
At December 31, 1994, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
---------- --------------
<S> <C>
1998 $ 629,000
2000 611,000
2001 2,041,000
2002 2,046,000
--------------
$ 5,327,000
==============
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction
of capital paid in.
To the extent loss carryforwards are used to offset any future realized
gains, it is unlikely that such gains would be distributed since they may be
taxable to shareholders as ordinary income.
- --------------------------------------------------------------------------------
OTHER
The Fund has greater than 10% of its net assets at December 31, 1994
invested in New York.
There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
The Fund sells Municipal and Treasury bond futures contracts to manage
overall portfolio interest rate exposure and not for trading purposes. The use
of futures contracts involves certain risks, which include (1) imperfect
correlation between the price movement of the contracts and the underlying
securities, (2) inability to close out positions due to different trading
hours, or the temporary absence of a liquid market, for either the contract or
the underlying securities, or (3) an inaccurate prediction by the Adviser of
the future direction of interest rates. Any of these risks may involve amounts
exceeding the initial or variation margin recorded in the Fund's Statement of
Assets and Liabilities at any given time.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout
each period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period........ $ 11.050 $ 10.960 $ 11.090 $ 10.850 $ 11.020
-------- -------- -------- -------- --------
Income/loss from investment operations:
Net investment income ................. 0.673 0.788 0.848 0.886 0.942 (a)
Net realized and unrealized gain
(loss) on investments................. (1.121) 0.090 (0.132) 0.248 (0.167)
-------- -------- -------- -------- --------
Total from investment operations..... (0.448) 0.878 0.716 1.134 0.775
-------- -------- -------- -------- --------
Less distributions declared to shareholders:
From net investment income ............ (0.672) (0.788) (0.846) (0.894) (0.945)
-------- -------- -------- -------- --------
Net asset value - End of period.............. $ 9.930 $ 11.050 $ 10.960 $ 11.090 $ 10.850
======== ======== ======== ======== ========
Total return based on net asset value (b).... (4.08)% 7.85% 6.17% 10.12% 6.83%
======== ======== ======== ======== ========
Total return based on market value........... (8.12)% (2.16)% 7.43% 12.55% 2.83%
======== ======== ======== ======== ========
Ratios to average net assets
Expenses .................................. 0.94% 0.87% 0.86% 0.87% 0.45% (a)
Net investment income ..................... 6.46% 7.08% 7.76% 8.11% 8.66% (a)
Portfolio turnover........................... 34% 35% 18% 15% 22%
Net assets at end of period (000)............ $114,260 $127,213 $126,169 $127,589 $124,871
</TABLE>
(a) Net of fees and expenses waived or borne by the adviser which amounted to
$0.046 and 0.43%.
(b) Total return at net asset value assuming all distributions reinvested.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income
tax purposes.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
-------------------------------------------------------------------------------------
DECEMBER 31, 1994 SEPTEMBER 30, 1994 JUNE 30, 1994 MARCH 31, 1994
------------------ ------------------- -------------------- --------------------
(000) PER SHARE (000) PER SHARE (000) PER SHARE (000) PER SHARE
------- --------- ------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Total investment income............... $ 2,126 $ 0.185 $ 2,173 $ 0.189 $ 2,235 $ 0.194 $ 2,340 $ 0.203
Net investment income................. $ 1,789 $ 0.155 $ 1,912 $ 0.166 $ 1,974 $ 0.172 $ 2,068 $ 0.180
Net realized and
unrealized loss.................... $(3,672) $(0.318) $(1,324) $(0.114) $(1,100) $(0.094) $(6,866) $(0.595)
Market value per share:
High...................................... $10.250 $10.625 $10.500 $11.625
Low....................................... $ 8.625 $ 9.500 $ 9.625 $10.250
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------
DECEMBER 31, 1994 SEPTEMBER 30, 1994 JUNE 30, 1994 MARCH 31, 1994
------------------ ------------------- -------------------- --------------------
(000) PER SHARE (000) PER SHARE (000) PER SHARE (000) PER SHARE
------- --------- ------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Total investment income............... $ 2,447 $ 0.213 $2,415 $ 0.210 $2,660 $ 0.231 $2,659 $ 0.231
Net investment income................. $ 2,199 $ 0.192 $2,110 $ 0.183 $2,366 $ 0.206 $2,387 $ 0.207
Net realized and
unrealized gain (loss)............. $(2,061) $(0.182) $ 587 $ 0.051 $1,073 $ 0.094 $1,452 $ 0.127
Market value per share:
High...................................... $12.000 $12.625 $12.250 $12.500
Low....................................... $10.250 $11.750 $11.625 $11.750
</TABLE>
At December 31, 1994 there were 2,667 shareholder accounts.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND TRUSTEES 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 at December 31, 1994, the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
the financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund'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 generally accepted
auditing standards 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 portfolio positions at December 31, 1994
by correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 10, 1995
<PAGE>
DIVIDEND REINVESTMENT PLAN (UNAUDITED)
- --------------------------------------------------------------------------------
The Trust generally distributes net investment income monthly and capital
gains annually. Under the Trust's Dividend Reinvestment Plan (the "Plan") all
distributions are reinvested automatically in additional shares of the Trust,
unless the shareholder elects to receive cash or the shares are held in broker
or nominee name and a reinvestment service is not provided by the broker or
nominee.
All cash distributions are by check mailed directly to the record holder by
the dividend paying agent.
Distributions payable to Plan participants will be applied as soon as
practicable by the dividend paying agent to the purchase of Trust shares in the
open market for Plan participants' accounts.
All Plan accounts receive monthly written confirmations of all transactions.
Shares purchased under the Plan are ordinarily held in uncertificated form,
although participants have the right to receive certificates for whole shares
held in their account.
Each shareholder's proxy includes shares purchased pursuant to the Plan. The
automatic reinvestment of distributions does not relieve participants of any
income tax payable on the distributions. Participants may recognize capital gain
or ordinary income for federal income tax purposes in an amount equal to the
market value of shares received under the Plan.
Fees and expenses of the Plan other than brokerage charges will be paid by
the Trust. Participants will bear a pro-rata share of brokerage charges incurred
on open market purchases.
A Plan participant may terminate his or her participation by written notice
to the Plan administrator. The Plan may be amended or terminated on 90 days
written notice to the Plan participants. Upon withdrawal by any participant or
any termination of the Plan, certificates for whole shares will be issued and
cash payments will be made for any fractional shares. All correspondence
concerning the Plan, including requests for information, should be directed to
The First National Bank of Boston, the Trust's dividend disbursing agent and
administrator of the Plan, at P.O. Box 1681, Boston, Massachusetts 02105,
Attention: Dividend Reinvestment Department.
13
<PAGE>
TRUSTEES
- --------------------------------------------------------------------------------
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive
Officer, Shore Bank & Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England - Worcester)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly Dean,
Simon Graduate School of Business, University of Rochester; Chairman and Chief
Executive Officer, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JOHN A. MCNEICE, JR.
Chairman of the Board, Chief Executive Officer and Director, The Colonial Group,
Inc. and Colonial Management Associates, Inc.
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed &Barton Corporation
14
<PAGE>
ABOUT OUR COVER...
- --------------------------------------------------------------------------------
The symbol on the cover of this Report represents the Fund's primary investment
focus on municipal bonds.
- --------------------------------------------------------------------------------
Colonial Investment Grade Municipal Trust mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
TRANSFER AGENT, REGISTRAR AND
DIVIDEND DISBURSING AGENT
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
1-617-575-2900
CUSTODIAN
United Missouri Bank, N.A.
928 Grand Avenue
Kansas City, MO 64106
1-816-860-7000
15
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
COLONIAL
INVESTMENT GRADE
MUNICIPAL TRUST
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1994
[COLONIAL MUTUAL FUNDS LOGO]
One Financial Center, Boston, Massachusetts 02111-2621
Printed on recycled paper
IG-02/621A-1294
