<PAGE>
[COLONIAL LOGO]
COLONIAL
INVESTMENT
GRADE MUNICIPAL
TRUST
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE>
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST HIGHLIGHTS
JANUARY 1, 1995 - DECEMBER 31, 1995
INVESTMENT OBJECTIVE: Colonial Investment Grade Municipal Trust seeks to provide
current income, generally exempt from federal income taxes, by investing
primarily in investment-grade municipal securities.
POLICY CHANGE: At a meeting held on February 17, 1995, the Trustees approved a
policy change to allow the segregation of high-quality debt securities, in
addition to cash and cash equivalents, for futures trading. Subject to Trustee
approval on February 16, 1996, the Trust's 5% limit on investing in zero coupon
tax-exempt bonds will be eliminated.
The Fund is Designed to Offer:
- Tax-free income
- Professional management
- Expert credit analysis
PORTFOLIO MANAGER COMMENTARY: "Declining interest rates during the Fund's fiscal
year had a favorable impact on performance. Your Fund, which maintains a
relatively high quality portfolio, especially benefited as interest rates moved
lower."
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST PERFORMANCE
<TABLE>
<S> <C>
Distributions declared per share $0.6345
12-month total return, assuming
reinvestment of all distributions
- NAV 18.63%
- Market Price 13.87%
Price per share
- NAV $ 11.05
- Market Price $ 9.875
</TABLE>
<TABLE>
<CAPTION>
QUALITY BREAKDOWN
(as of 12/31/95)
<S> <C>
AAA ...................... 46.8%
AA ....................... 4.2%
A ........................ 12.2%
BBB ...................... 15.3%
BB ....................... 0.9%
B ........................ 0.0%
Non-rated ................ 19.6%
Other .................... 1.0%
</TABLE>
[CHART]
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to hold or maintain these quality weightings in the future.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF JOHN A. McNEICE]
As your Fund's fiscal year ends, it is a good time to examine some facts that
contributed to a memorable year for most mutual fund investors.
In general, equity investors were rewarded with unexpectedly strong corporate
earnings that sent the stock market to new highs in 1995. 1996 is likely to be a
good year as well, although a more modest one.
Conditions in the fixed-income and municipal markets were also favorable. Those
investors who stayed the course through 1994's difficult environment were amply
rewarded.
Falling interest rates and controlled inflation helped the economy to grow at a
comfortable pace -- a positive environment for financial markets. We expect this
rate of growth and low inflation to continue into 1996. It is likely that
further reductions in interest rates will take place in the first half of this
year as the Federal Reserve keeps a watchful eye on inflation.
We do expect some sluggishness in the economy in the first half of the year,
with some pick up in the second half of 1996. This will reflect several factors.
Housing should benefit from lower interest rates and excess inventories of
consumer and manufactured goods should be liquidated. Secondly, the pace of
exports is likely to improve due to anticipated economic growth in Europe and
Japan.
In foreign markets, we continue to find that the Pacific Rim offers the best
combination of value and continued good earnings. In general, foreign markets
lagged the U.S. market last year. In 1996, we could see that gap narrow.
This year, investors will pay close attention to the 1996 Presidential election.
Usually, during an election year, incumbents will try to stimulate economic
growth, although this familiar pattern may be altered by the current budget
controversy.
Please remember that bull markets are a normal part of investing, but so are
bear markets. By leaving your money invested over the long term and following a
regular investment plan, you can avoid the difficulties of trying to predict
short-term market movements.
With this update, I encourage you to read the following report on your Fund. We
appreciate the opportunity to help you meet your investment goals.
Respectfully,
/s/ John A. McNeice, Jr.
- ------------------------
John A. McNeice, Jr.
President
February 9, 1996
Because market conditions change frequently, there can be no assurance that the
trends described here will continue.
3
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 100.3% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 13.0%
IL State Educational Facilities Authority,
University of Chicago,
5.700% 12/01/25 $1,000 $ 1,020
MA Health and Educational Facilities,
Harvard University,
6.250% 04/01/20 4,000 4,600
NE Higher Educational Loan Program,
Series 1993-A,
6.450% 06/01/18 1,000 1,073
NH State Higher Educational & Health
Facilities Authority, Dartmouth College,
5.375% 06/01/23 4,000 3,960
NY New York State Dormitory
Authority, City University:
Series 1990-A,
7.625% 07/01/20 750 868
Series 1993-A,
5.750% 07/01/18 5,000 5,025
-------
16,546
-------
- --------------------------------------------------------------------------------
GENERAL OBLIGATIONS - 8.6%
CA State of California,
5.750% 03/01/19 2,000 2,037
CO Highlands Ranch, Metropolitan District 2,
6.500% 06/15/11(a) 1,375 1,519
IL Chicago, Series A-2,
6.250% 01/01/14(a) 1,480 1,619
MA State Bonds, Consolidated Loan,
Series 1991-A,
6.000% 06/01/11 1,000 1,034
MI Grand Ledge Public School District,
5.375% 05/01/24 1,750 1,722
PA Philadelphia, Series B,
5.500% 09/01/18 2,000 2,000
TN Metropolitan Government, Nashville &
Davidson County,
6.150% 05/15/25 1,000 1,043
-------
10,974
-------
- --------------------------------------------------------------------------------
HEALTH - 16.3%
HOSPITALS - 5.5%
AL Special Care Facilities Authority,
Montgomery Health Care, Series 1989,
11.000% 10/01/19 1,145 1,128
</TABLE>
4
<PAGE>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
DE State Economic Development Authority,
Riverside Hospital, Series 1992-A,
9.500% 01/01/22 $ 240 $ 290
IL Health Facilities Authority,
Edgewater Medical Center:
Series A,
9.250% 07/01/24 315 333
RIB (variable rate), Series 1992-B,
9.467% 05/01/21 700 835
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 500 585
NC Lincoln County,
Lincoln County Hospital Project,
9.000% 05/01/07 190 239
NH Higher Educational and Health Facilities,
Catholic Medical Center, Series 1989,
6.000% 07/01/17 2,500 2,487
PA Erie County Hospital Authority,
Metro Health Center, Series 1992,
7.375% 07/01/22 1,095 1,110
------
7,007
------
HUMAN SERVICES PROVIDERS - 2.4%
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989-A,
9.750% 08/01/19 1,480 1,591
NY State Medical Care Facilities
Finance Agency, Mental Health Services
Facilities Improvement, Series 1991-A,
7.500% 02/15/21 270 306
TN Shelby County, Health, Education
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 485 569
Series 1992-C,
9.750% 08/01/19 485 568
------
3,034
------
NURSING HOMES - 8.4%
CO Health Care Facilities Authority:
Denver Health Care,
10.500% 05/01/19(b) 1,400 964
Pioneer Health Care, Series 1989,
10.500% 05/01/19 1,710 1,659
</TABLE>
5
<PAGE>
Investment Portfolio/December 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
NURSING HOMES - CONT.
DE State Economic Development Authority,
Churchman Village Project, Series A,
10.000% 03/01/21 $1,000 $ 1,179
FL Broward County Industrial
Development, Beverly Enterprises,
9.800% 11/01/10 265 297
FL Escambia County Industrial
Development, Beverly Enterprises,
Series 1985-I,
9.800% 06/01/11 210 234
FL Leon County Industrial Development,
Beverly Enterprises, Series 1985,
9.800% 06/01/11 25 28
IA Finance Authority Health Care Facility,
Mercy Health Initiatives, Series 1989,
9.950% 07/01/19 2,500 2,550
KY Jefferson County Health Facilities,
Beverly Enterprises, Inc., Series 1985-B,
9.750% 08/01/07 775 856
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 1,250 1,301
PA Delaware County Development
Authority, Main Line and Haverford
Nursing Home, Series 1992,
9.000% 08/01/22 600 652
WI State Health and Educational Facilities,
Metro Health Foundation, Inc.,
10.000% 11/01/22(c) 1,300 910
-------
10,630
-------
- --------------------------------------------------------------------------------
HOUSING - 17.5%
ASSISTED LIVING/SENIOR - 0.4%
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
9.000% 11/01/24 500 536
-------
MULTI-FAMILY - 7.1%
FL Clearwater Housing Authority,
Hampton Apartments,
8.250% 05/01/24 700 746
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 500 526
</TABLE>
6
<PAGE>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FL Palm Beach County Housing Development,
Multi-family Housing, Riviera Beach,
Series 1988-A,
9.750% 07/15/18(c) $1,500 $ 720
FL State Housing Finance Agency,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19 240 245
FL West Palm Beach Housing, Inc.,
Multi-family Housing, Cypress Run,
10.500% 03/15/19(c) 2,000 960
MN White Bear Lake Multi-family Housing
Revenue, Birch Lake Townhomes Project:
Series 1989-A,
10.250% 07/15/19 775 786
Series 1989-B,
(d) 07/15/19 780 1,284
NC Durham Urban Development Authority,
Durham Hosiery Mill Project,
7.500% 08/01/29 1,175 1,291
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993-A,
8.500% 12/01/16(e) 2,124 2,198
VA Roanoke Redevelopment & Housing
Authority, First Mortgage, Mountain
Ridge,
9.250% 11/01/22 300 310
------
9,066
------
SINGLE-FAMILY - 10.0%
IN State Housing Finance Authority,
Single-family Mortgage GNMA,
Series 1990-D,
7.800% 01/01/22 165 173
LA Housing Financing Agency:
Residual Lien Mortgage, Series 1992,
7.375% 09/01/13 1,230 1,279
Series 1988,
8.300% 11/01/20 1,260 1,320
MA State Housing Finance Agency,
Series 1988-B,
8.100% 08/01/23 255 268
NE State Single-family Mortgage Revenue,
RIB (variable rate),
7.550% 03/15/22(f) 6,500 6,996
</TABLE>
7
<PAGE>
Investment Portfolio/December 31, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
SINGLE-FAMILY - CONT.
NY State Mortgage Agency, Series F,
8.000% 10/01/17 $ 365 $ 389
OH Housing Finance Agency, Single-family
Mortgage Revenue, RIB (variable rate),
Series B-4,
9.477% 03/31/31 2,065 2,246
-------
12,671
-------
- -----------------------------------------------------------------------------------
MANUFACTURING - 1.4%
MEASURING & ANALYZING INSTRUMENTS - 0.9%
MN Brooklyn Park Industrial Development,
TL Systems Corp., Series 1991,
10.000% 09/01/16 965 1,150
-------
TRANSPORTATION EQUIPMENT - 0.5%
MN Buffalo,
Von Ruden Manufacturing, Inc.,
10.500% 09/01/14 565 609
-------
- -----------------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 2.4%
IN Petersburg Pollution Control,
Indianapolis Power & Light Co.,
Series 1993-B,
5.400% 08/01/17 3,000 3,004
-------
- -----------------------------------------------------------------------------------
PUBLIC FACILITIES & IMPROVEMENT - 2.2%
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 275 313
NY State Urban Development Corp.,
5.600% 04/01/15 1,000 1,006
SC State Public Service Authority,
Series C,
5.000% 01/01/18 1,500 1,442
-------
2,761
-------
- -----------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 13.6%
AIRPORTS - 4.6%
CO Denver City and County Airport,
Stapleton International Airport:
Series 1990-A,
8.500% 11/15/23 2,000 2,280
Series 1992-B,
7.250% 11/15/23 1,000 1,081
</TABLE>
8
<PAGE>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
IL Regional Transportation Authority,
Series C,
7.750% 06/01/20 $1,000 $ 1,326
IN Indianapolis Airport Authority,
Federal Express Project,
7.100% 01/15/17 1,000 1,094
-------
5,781
-------
TURNPIKES/TOLL ROADS/BRIDGES - 9.0%
CA Foothill Eastern Transportation
Corridor Agency, State Toll Road,
Senior Lien, Series A,
5.000% 01/01/35 1,000 847
CA San Joaquin Hills Transportation
Agency, Senior Lien Toll Road,
Series 1993, Capital Appreciation Bonds:
(d) 01/01/23 5,250 991
6.750% 01/01/32 500 524
FL Orlando & Orange County Expressway,
Series A,
5.125% 07/01/20 5,000 4,831
NH State Turnpike Systems,
RIB (variable rate), Series 1991-C,
9.526% 11/01/17 1,000 1,276
PR Commonwealth,
Highway & Transportation Authority,
5.500% 07/01/09 2,900 2,987
-------
11,456
-------
- -----------------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATIONS (g) - 2.3%
DC District Of Columbia Hospital,
Washington Hospital Center
Corp., Series 1990-A,
8.750% 01/01/15 615 736
DE Wilmington, Riverside Hospital,
Series 1988-A,
10.000% 10/01/03 50 58
FL Pinellas County Health Facilities,
Sun Coast Hospital, Series 1990-A,
8.500% 03/01/20 840 990
MI Wayne County, Limited Tax General
Obligation Building Authority,
Series 1992-A,
8.000% 03/01/17 250 300
NY State Medical Care Facilities,
Finance Agency, Mental Health
Services, Series 1991-A
7.500% 02/15/21 730 850
-------
2,934
-------
</TABLE>
9
<PAGE>
Investment Portfolio/December 31, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C>
SALES & EXCISE TAX - 0.8%
FL Tampa Sports Authority,
Tampa Bay Arena Project,
5.750% 10/01/25 $1,000 $1,065
------
- ----------------------------------------------------------------------------------
SOLID WASTE - 2.9%
LAND FILL - 0.2%
MA State Industrial Finance Agency,
Peabody Landfill,
9.000% 09/01/05 250 268
------
RESOURCE RECOVERY - 2.7%
MA State Industrial Finance Agency,
Refusetech, Series 1993-A,
6.300% 07/01/05 500 530
SC Charleston County Recovery,
Foster Wheeler, Series 1987-A,
9.250% 01/01/10 2,640 2,907
------
3,437
------
- ----------------------------------------------------------------------------------
STATE & COMMUNITY LEASE - 2.5%
IN State Office Building Commission,
Women's Prison, Series B,
6.250% 07/01/16 2,820 3,116
------
- ----------------------------------------------------------------------------------
TAX ALLOCATION - 3.1%
CA Contra Costa County Public Financing
Authority, Series 1992-A,
7.100% 08/01/22 1,000 1,058
NY State Local Government Assistance
Corp., Series 1993-E,
5.000% 04/01/21 3,000 2,827
------
3,885
------
- ----------------------------------------------------------------------------------
UTILITY - 5.3%
CO-GENERATION - 0.9%
FL Martin County Industrial
Development Authority, Indiantown
Co-Generation Project,
7.875% 12/15/25 1,000 1,149
------
MUNICIPAL ELECTRIC - 4.4%
FL Jacksonville Electric Authority,
Series 1993-A,
5.250% 10/01/28 1,000 976
IN State Municipal Power Agency,
Series B,
6.000% 01/01/12 2,000 2,140
SC State Public Service Authority,
Series A,
6.250% 01/01/22 1,500 1,592
</TABLE>
10
<PAGE>
Investment Portfolio/December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
UT Intermountain Power Agency,
Series 1993-A,
5.000% 07/01/23 $ 1,000 $ 945
--------
5,653
--------
.......................................................................................
WATER & SEWER - 8.4%
CA West Sacramento Finance Authority,
Water System Improvement Project,
5.500% 08/01/24 2,000 2,008
FL Dade County Water & Sewer System:
5.500% 10/01/15 1,000 1,012
5.500% 10/01/25 1,500 1,513
MA State Water Resources Authority:
Series 1992-B,
5.500% 11/01/15 1,000 986
Series 1993-B,
5.000% 03/01/22 1,000 940
MD Northeast Maryland Waste Disposal
Authority, Solid Waste, Montgomery
County Resource Recovery Project,
Series 1993-A,
6.300% 07/01/16 500 517
MS Five Lakes Utility District,
8.250% 07/15/24 140 146
PR Commonwealth,
Aqueduct & Sewer Authority,
Series 1995:
6.250% 07/01/12 1,000 1,090
6.250% 07/01/13 750 814
TX Bexar Metropolitan Water District,
5.000% 05/01/19 1,775 1,708
--------
10,734
--------
TOTAL MUNICIPAL BONDS (cost of $120,429) (h) 127,466
--------
SHORT-TERM OBLIGATIONS - 1.0%
- ---------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (i)
AZ Pinal County,
5.950% 12/01/09 1,000 1,000
OH Twinsburg,
United Stationers Supply Co.,
6.250% 12/01/11 300 300
--------
TOTAL SHORT-TERM OBLIGATIONS 1,300
--------
OTHER ASSETS & LIABILITIES, NET - (1.3)% (1,648)
- ---------------------------------------------------------------------------------------
NET ASSETS - 100% $127,118
--------
</TABLE>
11
<PAGE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) These securities have been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time.
(b) The Fund and the other bondholders caused foreclosure on the underlying
assets. A portion of the proceeds of the foreclosure were received prior to
December 31, 1995, and were applied against the interest receivable on the
bonds, with the remainder credited to an other liability account. Once final
proceeds of the foreclosure are received, the bond will be removed from the
portfolio, a loss representing the cost less the total non-interest proceeds
received will be recorded, and the other liability will be reversed at that
time.
(c) This issuer is in default of certain debt covenants. Income is not being
accrued.
(d) Accrued interest accumulates in the value of the security and is payable at
redemption.
(e) This security is exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At year end, the
value of this security amounted to $2,198 or 1.7% of net assets.
(f) A portion of this security is being used to collateralize the delayed
delivery purchases indicated in note (a) above.
(g) The Fund has been informed that the issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of the
interest and principal.
(h) Cost for federal income tax purposes is the same.
(i) 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, 1995.
Acronym Name
--------- -------------------------
RIB Residual Interest Bonds
See notes to financial statements.
12
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
(in thousands except for per share amount)
<S> <C> <C>
ASSETS
Investments at value (cost $120,429) $127,466
Short-term obligations 1,300
--------
128,766
Receivable for:
Interest $ 2,295
Investments sold 25
Other 73 2,393
--------- --------
Total Assets 131,159
LIABILITIES
Payable for investments purchased 3,101
Accrued:
Deferred Trustees fees 1
Other 939
---------
Total Liabilities 4,041
--------
NET ASSETS at value for 11,509
shares of beneficial interest outstanding $127,118
--------
Net asset value per share $ 11.05
--------
COMPOSITION OF NET ASSETS
Capital paid in $127,938
Undistributed net investment income 125
Accumulated net realized loss (7,982)
Net unrealized appreciation 7,037
--------
$127,118
--------
</TABLE>
See notes to financial statements.
13
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 8,681
EXPENSES
Management fee $ 788
Transfer agent 61
Bookkeeping fee 35
Trustees fee 19
Custodian fee 7
Audit fee 40
Legal fee 295
Reports to shareholders 11
Other 50 1,306
-------- --------
Net Investment Income 7,375
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss on:
Investments (2,328)
Closed futures contracts (331)
--------
Net Realized Loss (2,659)
Net unrealized appreciation during
the period on:
Investments 15,407
Open futures contracts 37
--------
Net Unrealized Appreciation 15,444
--------
Net Gain 12,785
--------
Net Increase in Net Assets from Operations $ 20,160
--------
</TABLE>
See notes to financial statements.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) December 31
-----------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
<S> <C> <C>
Operations:
Net investment income $ 7,375 $ 7,743
Net realized loss (2,659) (2,008)
Net unrealized appreciation (depreciation) 15,444 (10,954)
--------- ---------
Net Increase (Decrease) from Operations 20,160 (5,219)
Distributions:
From net investment income (7,302) (7,734)
--------- ---------
Total Increase (Decrease) 12,858 (12,953)
NET ASSETS
Beginning of period 114,260 127,213
--------- ---------
End of period (including undistributed net
investment income of $125 and $27, respectively) $ 127,118 $ 114,260
--------- ---------
NUMBER OF FUND SHARES
Outstanding at end of period 11,509 11,509
--------- ---------
</TABLE>
See notes to financial statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: 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's objective is to provide current income, generally exempt from Federal
income taxes, by investing primarily in investment grade bonds and notes issued
by or on behalf of state and local governmental units whose interest is exempt
from Federal income tax. The Fund may issue an unlimited number of shares.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following significant
accounting policies are consistently followed by the Fund in the preparation of
its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Debt securities generally are valued by a
pricing service based upon market transactions for normal, institutional-size
trading units of similar securities. 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, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The 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.
16
<PAGE>
Notes to Financial Statements/December 31, 1995
- --------------------------------------------------------------------------------
The character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the Fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryforwards) under income tax regulations.
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
the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended December 31, 1995, purchases and
sales of investments, other than short-term obligations, were $47,389,378 and
$44,270,403, respectively.
Unrealized appreciation (depreciation) at December 31, 1995, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
<TABLE>
<S> <C>
Gross unrealized appreciation $10,465,559
Gross unrealized depreciation (3,428,641)
-----------
Net unrealized appreciation $ 7,036,918
-----------
</TABLE>
CAPITAL LOSS CARRYFORWARDS: At December 31, 1995, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
<TABLE>
Year of Capital loss
expiration carryforward
------------ ------------
<S> <C>
1998 $ 629,000
2000 611,000
2001 2,041,000
2002 2,046,000
2003 2,611,000
----------
$7,938,000
----------
</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.
17
<PAGE>
Notes to Financial Statements/December 31, 1995
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
- --------------------------------------------------------------------------------
OTHER: At December 31, 1995, the Fund had greater than 10% of its net assets
invested in Florida.
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 may invest in municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in 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 Fund and not for trading
purposes. The use of futures contracts and options involves certain risks, which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out positions due to
different trading hours, or the temporary absence of a liquid market, for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Adviser of the future direction of interest rates. Any of these risks may
involve amounts exceeding the amount recognized in the Fund's Statement of
Assets and Liabilities at any given time.
18
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows:
<TABLE>
<CAPTION>
Year ended December 31
--------------------------------------------------------------------------------
1995 1994 1993 1992 1991
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 9.930 $ 11.050 $ 10.960 $ 11.090 $ 10.850
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.644 0.673 0.788 0.848 0.886
Net realized and
unrealized gain (loss) 1.111 (1.121) 0.090 (0.132) 0.248
------------ ------------ ------------ ------------ ------------
Total from Investment
Operations 1.755 (0.448) 0.878 0.716 1.134
------------ ------------ ------------ ------------ ------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.635) (0.672) (0.788) (0.846) (0.894)
------------ ------------ ------------ ------------ ------------
Net asset value -
End of period $ 11.050 $ 9.930 $ 11.050 $ 10.960 $ 11.090
------------ ------------ ------------ ------------ ------------
Market price per share $ 9.875 $ 9.250 $ 10.750 $ 11.750 $ 11.750
------------ ------------ ------------ ------------ ------------
Total return - based on market
value (a) 13.87% (8.12)% (2.16%) 7.43% 12.55%
------------ ------------ ------------ ------------ ------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.08%(b) 0.94% 0.87% 0.86% 0.87%
Net investment income 6.08%(b) 6.46% 7.08% 7.76% 8.11%
Portfolio turnover 37% 34% 35% 18% 15%
Net assets at end
of period (000) $ 127,118 $ 114,260 $ 127,213 $ 126,169 $ 127,589
</TABLE>
(a) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
All of the distributions will be treated as exempt income for federal income tax
purposes.
- --------------------------------------------------------------------------------
19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 THE TRUSTEES AND 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
Fund at December 31, 1995, 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, 1995
by correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 9, 1996
20
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------
DECEMBER 31, 1995 SEPTEMBER 30, 1995 JUNE 30, 1995 MARCH 31, 1995
(000) Per share (000) Per share (000) Per share (000) Per share
------ --------- ------- --------- -------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income $2,080 $ 0.181 $2,067 $ 0.179 $ 2,443 $ 0.212 $2,091 $ 0.182
Net investment income $1,573 $ 0.138 $1,786 $ 0.157 $ 2,173 $ 0.189 $1,843 $ 0.160
Net realized and
unrealized gain (loss) $5,245 $ 0.456 $1,775 $ 0.154 ($ 455) ($0.039) $6,220 $ 0.540
Market value per share:
High $10.125 $10.250 $10.125 $10.125
Low $ 9.500 $ 9.500 $ 9.375 $ 9.375
</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> <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>
At December 31, 1995 there were 2,391 shareholder accounts.
21
<PAGE>
DIVIDEND REINVESTMENT PLAN
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 paid by check and 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 the 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.
22
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Investment Grade Municipal Trust is:
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
1-617-575-2900
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.
This report has been prepared for shareholders of Colonial Investment Grade
Municipal Trust.
23
<PAGE>
[COLONIAL LOGO]
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
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
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President - Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England - Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
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)
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 (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
---------------------------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
---------------------------------
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
IG-02/711B-1295 (2/96)
[GRAPHIC] Printed on recycled paper
