[LOGO]
COLONIAL
INVESTMENT
GRADE MUNICIPAL
TRUST
SEMIANNUAL REPORT
JUNE 30, 1997
<PAGE>
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST HIGHLIGHTS
JANUARY 1, 1997 - JUNE 30, 1997
INVESTMENT OBJECTIVE: Seeks as high a level of after-tax total return as is
consistent with prudent risk, by pursuing current income exempt from
ordinary federal income tax and opportunities for long-term appreciation from
a portfolio primarily invested in investment grade municipal bonds.
THE FUND IS DESIGNED TO OFFER:
- Tax-free income
- Professional management
- Expert credit analysis
PORTFOLIO MANAGER COMMENTARY: "Rising interest rates in the first quarter of
1997 had a negative effect on all fixed-income investments during the period.
However, municipal bonds fared better than Treasurys primarily due to low supply
and high demand in a relatively low interest rate environment. Looking forward,
as economic growth slows, we believe the trend will be for lower interest rates.
If this comes to pass, it will be beneficial for investors with a long-term
perspective."
-- William Loring
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST PERFORMANCE
<TABLE>
<S> <C> <C> <C>
Distributions declared per share(1) $0.321
<CAPTION>
NAV MARKET PRICE
<S> <C> <C> <C>
Six-month total return, assuming
reinvestment of all distributions 3.60% 7.55%
Price per share $10.92 $10.56
</TABLE>
(1) 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, and some or
all of this discount may be included in the Trust's ordinary income which will
be taxable when distributed.
<TABLE>
<CAPTION>
TOP FIVE SECTORS
(as of 6/30/97)
- -------------------------------------------------------------------
<S> <C>
General Obligation ........................ 14.8%
Housing ................................... 12.1%
Turnpike .................................. 9.9%
Education ................................. 8.1%
State Appropriated ........................ 7.6%
</TABLE>
QUALITY BREAKDOWN
(as of 6/30/97)
(Pie Chart)
<TABLE>
<S> <C>
Non-rated: 15.4%
BBB: 15.3%
AAA: 53.3%
A: 10.4%
AA: 5.6%
</TABLE>
Sector and quality breakdowns are calculated as a percent of total net
assets. Because the Trust is actively managed, there can be no guarantee the
Trust will continue to maintain these quality weightings or invest in these
sectors in the future. Industry sectors in the following financial
statements are based upon the standard industrial classifications (SIC)
published by the U.S. Office of Management and Budget. The sector
classifications used on this page are based upon Colonial's defined criteria
as used in the investment process.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
During the six months covered in this report -- January 1,
1997 through June 30, 1997 -- the bond market experienced [PHOTO OF
volatility. Your Fund was managed against a backdrop of HAROLD W. COGGER]
fluctuating interest rates. The economy was strong,
corporate profits continued to grow, unemployment was at a
25-year low, and inflation remained low. For investors in
the stock market, the environment couldn't have been much
better.
But people who invest in bonds saw it differently. They saw stronger-than-
expected economic growth in the first part of 1997, creating fears of renewed
inflation. They saw the Federal Reserve Board raising short-term interest
rates in an attempt to slow down the economy.
Between January 1 and June 30, yields on the 20-year U.S. Treasury bond rose
from 6.73% to 6.84% while yields on municipal bonds stayed the same at 5.33%,
resulting in their outperforming Treasurys. By the end of the period, the
economy was slowing, inflation was still low and the Federal Reserve Board
decided against raising short-term rates at their May meeting.
Interest rates were slightly higher on June 30, 1997 compared to January 1,
1997. That means that the prices of fixed-income securities already in your
portfolio declined somewhat.
Remember, however, that one of the primary attractions of municipal bond
investing is tax-free income. The good news is that your tax-exempt income
remains strong, particularly when compared to inflation.
As always, we thank you for the opportunity to help you meet your investment
goals.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
August 15, 1997
Because market conditions change frequently, there can be no assurance that
the trends described here will continue.
3
<PAGE>
INFORMATION ABOUT YOUR FUND'S
INVESTMENT POLICIES
We wanted to inform you about some recent changes in your Colonial Investment
Grade Municipal Trust investment.
At their meeting April 18, 1997, your Trustees approved a change to the Trust's
investment objective. Previously, the investment objective was to "provide
current income, generally exempt from federal income taxes, by investing
primarily in investment grade bonds and notes." Under the restated objective,
the Trust will "seek as high a level of after-tax total return as is consistent
with prudent risk, by pursuing current income exempt from ordinary federal
income tax and opportunities for long-term appreciation from a portfolio
primarily invested in investment grade municipal bonds."
The Trustees also approved several changes to the Trust's investment policies,
which will:
Allow the Trust to invest, under ordinary conditions, 65% of its assets in
securities rated BBB or higher by Standard & Poor's, or comparably rated by
another national rating service, or unrated but considered comparable by the
Adviser. The Trust will not invest more than 35% of its assets in any
combination of lower-rated and unrated bonds (excluding prerefunded bonds), nor
more than 25% of its assets in unrated bonds (also excluding prerefunded bonds).
Previously, the Trust had been required to invest at least 80% of its assets in
securities rated BBB or higher.
Allow the Trust to sell covered call and put options and buy call and put
options on debt securities, including options not traded on national securities
exchanges. For hedging purposes, the Trust may buy or sell interest rate and tax
exempt bond index futures contracts, and put and call options on such contracts
and indices. The Trust may not buy or sell futures contracts or buy related
options if immediately afterwards the sum of the amount of deposits on futures
contracts and related options positions would exceed 5% of the market value of
the Trust's assets.
Allow the Trust to invest in debt securities of any maturity with any
interest payment method.
Allow the Trust to make temporary cash investments in additional types of
money market securities, including short-term, tax-exempt debt securities.
Allow the Trust to acquire securities without limit on a "when issued" or
"delayed delivery" basis.
The changes in the Trust's investment policies parallel those that have been
made over time for similar Colonial open-end funds. The Trustees believe these
changes are in the best interests of shareholders.
4
<PAGE>
INVESTMENT PORTFOLIO
JUNE 30, 1997 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 98.2% PAR VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EDUCATION - 19.1%
EDUCATION - 7.8%
CA State Educational Facilities
Authority, Santa Clara University,
Series 1996,
5.000% 09/01/15 $ 1,050 $ 988
MA State Health & Educational
Facilities Authority, Harvard University,
Series N,
6.250% 04/01/20 4,000 4,455
MN University of Minnesota, Series 1996 A,
5.750% 07/01/14 500 523
NH State Higher Educational & Health
Facilities Authority, Dartmouth College,
5.375% 06/01/23 4,000 3,880
------
9,846
------
GENERAL OBLIGATIONS - 10.5%
CO El Paso County School District No. 11,
Series 1996,
7.125% 12/01/19 1,870 2,286
CO Highlands Ranch Metropolitan District 2,
Series 1996,
6.500% 06/15/11 1,375 1,554
IL Chicago, Series 1995 A-2,
6.250% 01/01/14 1,480 1,613
IL St. Clair County Public Building Commission,
(a) 12/01/13 2,000 780
MI Grand Ledge Public School District,
Series 1995,
5.375% 05/01/24 1,750 1,678
NY New York City, Series 1997 A,
7.000% 08/01/07 2,000 2,243
PA Philadelphia, Series B,
5.500% 09/01/18 2,000 1,987
TN Metropolitan Government, Nashville &
Davidson Counties,
6.150% 05/15/25 1,000 1,044
------
13,185
------
STUDENT LOAN - 0.8%
NE Higher Educational Loan Program,
Series 1993 A,
6.450% 06/01/18 1,000 1,035
------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1997
- --------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HEALTHCARE - 15.0%
HOSPITALS - 7.2%
AL Special Care Facilities Authority,
Montgomery Health Care,
Series 1989,
11.000% 10/01/19 $ 1,045 $ 1,066
DE State Economic Development Authority,
Riverside Hospital, Series 1992 A,
9.500% 01/01/22 235 305
FL Orange County Health Facilities Authority,
Orlando Regional Healthcare System,
Series 1996 C,
6.250% 10/01/13 2,460 2,746
IL Health Facility Authority,
RIB (variable rate), Series 1992 B,
9.628% 05/01/21 700 808
NH Higher Educational and Health Facilities,
Catholic Medical Center, Series 1989,
6.000% 07/01/17 2,500 2,462
TN Metropolitan Government, Nashville
& Davidson Counties, Meharry Medical
College, Series 1996,
6.000% 12/01/16 1,575 1,666
-----
9,053
-----
INTERMEDIATE CARE FACILITIES - 2.1%
IN Wabash First Mortgage, Hoosier
Care, Inc., Series 1989 A,
9.750% 08/01/19 1,460 1,566
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992 A,
9.750% 08/01/19 475 550
Series 1992 C,
9.750% 08/01/19 475 550
-----
2,666
-----
NURSING HOMES - 5.7%
CO Health Care Facilities Authority,
Pioneer Health Care, Series 1989,
10.500% 05/01/19 1,710 1,746
DE State Economic Development Authority,
Churchman Village Project, Series A,
10.000% 03/01/21 990 1,175
FL Broward County Industrial Development,
Beverly Enterprises, Inc.,
9.800% 11/01/10 265 292
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FL Escambia County Industrial Development,
Beverly Enterprises, Series 1985,
9.800% 06/01/11 $ 190 $ 208
FL Leon County Industrial Development,
Beverly Enterprises, Inc., Series 1985,
9.800% 06/01/11 15 17
KY Jefferson County Health Facilities,
Beverly Enterprises, Inc., Series 1985-B,
9.750% 08/01/07 710 766
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc., Series 1989,
10.125% 05/01/19 1,221 1,184
PA Delaware County Authority,
Main Line and Haverford Nursing Home,
Series 1992,
9.000% 08/01/22 600 664
WI State Health & Educational Facilities,
Metro Health Foundation, Inc., Series 1993,
10.000% 11/01/22(b) 1,300 1,170
-----
7,222
-----
- ----------------------------------------------------------------------------------------------------------------------------
HOUSING - 12.8%
Assisted Living/Senior - 1.0%
FL Clearwater Housing Authority,
Hampton Apartments, Series 1994,
8.250% 05/01/24 700 736
TX Bell County Health Facilities
Development Corp., Care Institute Inc.,
9.000% 11/01/24 500 548
-----
1,284
-----
Multi-family - 4.0%
FL Hialeah Housing Authority, Series 1991,
9.500% 11/01/21 500 475
FL State Housing Finance Agency,
Windsong Apartments, Series 1993 C,
9.250% 01/01/19 240 243
MN White Bear Lake, Multi-family Housing
Revenue, Birch Lake Townhomes Project:
Series 1989 A,
10.250% 07/15/19 775 775
Series 1989 B,
(c) 07/15/19 728 1,366
Resolution Trust Corp., Pass Through
Certificates, Series 1993 A,
8.500% 12/01/16(b) 2,124 2,212
-----
5,071
-----
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1997
- --------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - CONT
Single Family - 7.8%
IN State Housing Finance Authority
Single Family Mortgage GNMA,
Series 1990 D,
7.800% 01/01/22 $ 165 $ 171
LA Louisiana Housing Finance Agency,
Residual Lien Mortgage:
Series 1988,
8.300% 11/01/20 1,035 1,069
Series 1992,
7.375% 09/01/13 890 918
MA State Housing Finance Agency,
Series 1988 B,
8.100% 08/01/23 255 266
NE State Investment Finance Authority,
7.550% 03/15/22 5,100 5,348
NY State Mortgage Agency, Series F,
8.000% 10/01/17 55 57
OH Housing Finance Agency, Single-family
Mortgage Revenue, RIB (variable rate),
Series B-4,
9.578% 03/31/31 1,765 1,933
-----
9,762
-----
- ---------------------------------------------------------------------------------------------------------------------------
OTHER - 5.7%
Local Appropriated - 1.2%
CA San Francisco Building Authority,
San Francisco Civic Center Complex,
Series 1996 A,
5.250% 12/01/16 1,500 1,453
-----
Refunded/Escrow/Special Obligations (d) - 4.5%
DC District of Columbia Hospital,
Washington Hospital Center Corp.,
Series 1990 A,
8.750% 01/01/15 615 705
DE Wilmington, Riverside Hospital,
Series 1988 A,
10.000% 10/01/03 50 54
FL Pinellas County Health Facilities,
Sun Coast Hospital, Series 1990 A,
8.500% 03/01/20 840 943
MI Wayne County Building Authority,
Series 1992 A,
8.000% 03/01/17 250 290
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MN Mille Lacs Capital Improvement Authority,
Mille Lacs Bond of Chippewa,
Series 1992 A,
9.250% 11/01/12 $ 265 $ 329
MO Hannibal Industrial Development Authority,
Regional Healthcare Systems,
Series 1992,
9.500% 03/01/22 250 308
NC Lincoln County, Lincoln County Hospital,
9.000% 05/01/07 170 202
NY State Dormitory Authority,
City University, Series 1990 A,
7.625% 07/01/20 750 831
NY State Medical Care Facilities
Finance Agency, Mental Health Services,
Series 1991 A,
7.500% 02/15/21 900 1,007
TX Bexar Metropolitan Water District,
5.000% 05/01/19 1,000 940
-----
5,609
-----
- -------------------------------------------------------------------------------------------------------------------------------
OTHER REVENUE - 8.8%
Manufacturing - 1.4%
MN Brooklyn Park, Industrial Development,
TL Systems Corp., Series 1991,
10.000% 09/01/16 945 1,161
MN Buffalo, Von Ruden Manufacturing Inc.,
Series 1989,
10.500% 09/01/14 550 605
-----
1,766
-----
State Appropriated - 7.4%
IN State Office Building Commission,
Women's Prison, Series B,
6.250% 07/01/16 2,820 3,077
NY State Dormitory Authority,
City University, Series 1993 A,
5.750% 07/01/18 5,000 5,081
NY State Medical Care Facilities
Finance Agency, Mental Health Services
Series 1991 A,
7.500% 02/15/21 100 110
NY State Urban Development Corp.,
5.600% 04/01/15 1,000 993
-----
9,261
-----
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RESOURCE RECOVERY - 2.4%
Miscellaneous Disposal - 0.2%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 $ 240 $ 262
-----
Resource Recovery - 2.2%
SC Charleston County Recovery,
Foster Wheeler Charleston, Series 1987 A,
9.250% 01/01/10 2,640 2,773
-----
- -----------------------------------------------------------------------------------------------------------------------------
TAX-BACKED - 8.6%
Sales & Exise Tax- 3.9%
FL Tampa Sports Authority, Tampa
Bay Arena Project, Series 1995,
5.750% 10/01/25 1,000 1,041
NY State Local Government Assistance Corp.,
Series 1993 E,
5.000% 04/01/21 3,000 2,801
WV State Building Commission,
Series 1997 A,
5.250% 07/01/09 1,000 1,003
-----
4,845
-----
State General Obligations - 3.9%
CA State,
5.750% 03/01/19 2,000 2,025
MA Bay Transportation Authority,
5.000% 03/01/19 1,000 933
PR Commonwealth Aqueduct & Sewer:
6.250% 07/01/12 1,000 1,110
6.250% 07/01/13 750 832
-----
4,900
-----
Tax Allocation - 0.8%
Ca Contra Costa County Public Financing
Authority, Series 1992 A,
7.100% 08/01/22 1,000 1,073
-----
TRANSPORTATION - 15.0%
Air Transportation - 1.7%
IN Indianapolis Airport Authority,
Federal Express Project, Series 1994,
7.100% 01/15/17 1,000 1,096
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NY Port Authority NY/NJ JFK International
Airport,
6.250% 12/01/08 $ 1,000 $ 1,095
------
2,191
------
Airport - 2.7%
CO Denver City and County Airport,
Stapleton International Airport:
Series 1990 A,
8.500% 11/15/23 2,000 2,253
Series 1992 B,
7.250% 11/15/23 1,000 1,105
------
3,358
------
Transportation - 1.0%
IL Regional Transportation Authority,
Series C,
7.750% 06/01/20 1,000 1,289
------
Turnpikes/Tollroads/Bridges - 9.6%
CA Foothill/Eastern Transportation
Corridor Agency, Series 1995 A,
5.000% 01/01/35 1,000 860
CA San Joaquin Hills Transportation
Corridor Agency, Senior Lien Toll Road
Series 1993:
(a) 01/01/23 5,250 1,122
6.750% 01/01/32 500 528
FL Orlando & Orange County Expressway,
Series A,
5.125% 07/01/20 5,000 4,675
IL Chicago, Skyway Bridge, Series 1996,
5.375% 01/01/16 1,750 1,702
NH State Turnpike Systems,
RIB (variable rate), Series 1991C,
9.546% 11/01/17 1,000 1,230
NY State Thruway Authority,
Highway & Bridging Trust Fund,
Series 1995 B,
5.125% 04/01/15 2,000 1,920
------
12,037
------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1997
- ----------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITY - 10.8%
Individual Power Producer - 0.9%
FL Martin County Industrial
Development Authority,
Indiantown Co-Generation Project,
Series 1994 A,
7.875% 12/15/25 $ 1,000 $1,133
-----
Investor Owned - 3.2%
IN Petersburg Pollution Control,
Indianapolis Power & Light Co., Series 1993 B,
5.400% 08/01/17 3,000 2,944
NY State Energy Research & Development
Authority, Consolidated Edison Co.,
Series 1991 A,
7.500% 01/01/26 1,000 1,075
-----
4,019
-----
Joint Power Authority - 3.2%
IN State Municipal Power Agency,
Series B,
6.000% 01/01/12 2,000 2,138
MN Southern Minnesota Municipal Power
Agency, Series A,
5.000% 01/01/16 1,000 931
UT Intermountain Power Agency,
State Power Supply, Series A,
5.000% 07/01/23 1,000 907
-----
3,976
-----
Municipal Electric - 1.5%
OH Cleveland Public Power System,
Series 1996 1,
5.000% 11/15/24 1,000 921
TN Metropolitan Government, Nashville
& Davidson Counties,
Series 1996 A,
(a) 05/15/09 1,825 983
-----
1,904
-----
Water & Sewer - 2.0%
MA State Water Resources Authority,
Series 1993 B,
5.000% 03/01/22 1,000 908
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/June 30, 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MS V Lakes Utility District,
8.250% 07/15/24 $ 140 $ 138
TX Nueces River Authority,
Corpus Christi Lake Texana Project,
5.250% 07/15/17 1,500 1,451
--------
2,497
--------
TOTAL MUNICIPAL BONDS (cost of $116,300)(e) 123,470
--------
OTHER ASSETS & LIABILITIES, NET - 1.8% 2,217
--------
NET ASSETS - 100% $125,687
--------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
June 30, 1997, the value of these securities amounted to $3,382 or 2.7% of
net assets.
(c) Accrued interest accumulates in the value of the security and is payable
at redemption.
(d) The Fund has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
interest and principal.
(e) Cost for federal income tax purposes is the same.
Acronym Name
- ------- -------
RIB Residual Interest Bond
See notes to financial statements.
13
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except for per share amount)
ASSETS
<S> <C> <C>
Investments at value (cost $116,300) $123,470
Receivable for:
Interest $2,317
Investments sold 166
Other 2 2,485
------ ----------
Total Assets 125,955
LIABILITIES
Payable to custodian bank 247
Accrued:
Deferred Trustees fees 3
Other 18
------
Total Liabilities 268
----------
NET ASSETS at value for 11,509
shares of beneficial interest outstanding $125,687
----------
Net asset value per share $10.92
----------
COMPOSITION OF NET ASSETS
Capital paid in $127,933
Undistributed net investment income 173
Accumulated net realized loss (9,589)
Net unrealized appreciation 7,170
----------
$125,687
----------
</TABLE>
See notes to financial statements.
14
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
INVESTMENT INCOME
<S> <C> <C>
Interest $ 4,113
EXPENSES
Management fee $404
Transfer agent 40
Bookkeeping fee 18
Trustees fee 13
Custodian fee 2
Audit fee 19
Legal fee 7
Reports to shareholders 5
Other 21 529
------ -------
Net Investment Income 3,584
-------
NET REALIZED & UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized loss (39)
Net unrealized appreciation during
the period 711
------
Net Gain 672
-------
Net Increase in Net Assets from Operations $ 4,256
-------
</TABLE>
See notes to financial statements.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months
ended Year ended
(in thousands) June 30 December 31
---------------- -------------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
<S> <C> <C>
Operations:
Net investment income $ 3,584 $ 7,153
Net realized loss (39) (1,473)
Net unrealized appreciation (depreciation) 711 (578)
--------- ---------
Net Increase from Operations 4,256 5,102
Distributions:
From net investment income (3,694) (7,095)
--------- ---------
Total Increase (Decrease) 562 (1,993)
NET ASSETS
Beginning of period 125,125 127,118
--------- ---------
End of period (including undistributed net
investment income of $173 and $277, respectively) $ 125,687 $ 125,125
========= =========
NUMBER OF FUND SHARES
Outstanding at end of period 11,509 11,509
========= =========
</TABLE>
See notes to financial statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Colonial Investment Grade Municipal Trust
(the Fund), the accompanying financial statements contain all normal and
recurring adjustments necessary for the fair presentation of the financial
position of the Fund at June 30, 1997, and the results of its operations,
the changes in its net assets and the financial highlights for the six
months then ended.
NOTE 2. ACCOUNTING POLICIES
ORGANIZATION: 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 investment objective
is to seek as high a level of after-tax total return as is consistent with
prudent risk, by pursuing current income exempt from ordinary federal
income tax and opportunities for long-term appreciation from a portfolio
primarily invested in investment grade municipal bonds. The Fund
authorized 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 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 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.
17
<PAGE>
Notes to Financial Statements/June 30, 1997
NOTE 2. ACCOUNTING POLICIES - CONT.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify
as a regulated investment company and to distribute all of its taxable
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. 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 3. 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.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY: During the six months ended June 30, 1997,
purchases and sales of investments, other than short-term obligations,
were $8,516,618 and $6,333,960, respectively.
Unrealized appreciation (depreciation) at June 30, 1997, based on cost
of investments for both financial statement and federal income tax
purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $7,893,388
Gross unrealized depreciation (722,989)
----------
Net unrealized appreciation $7,170,399
==========
</TABLE>
18
<PAGE>
Notes to Financial Statements/June 30, 1997
CAPITAL LOSS CARRYFORWARDS: At December 31, 1996, 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> <C>
1998 $ 629,000
2000 611,000
2001 2,041,000
2002 2,046,000
2003 2,611,000
2004 1,454,000
----------
$9,392,000
==========
</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: At June 30, 1997, the Fund had greater than 10% of its net assets
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 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 eco-
nomically 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.
19
<PAGE>
Notes to Financial Statements/June 30, 1997
NOTE 5. RESULTS OF ANNUAL SHAREHOLDER MEETING
On May 30, 1997, the Annual Meeting of Shareholders of the Fund was held
to elect four Trustees and to ratify the selection of Price Waterhouse LLP
as independent accountants for the fiscal year ending December 31, 1997.
On March 3, 1997, the record date of the Meeting, the Fund had outstanding
11,509,000 shares of beneficial interest. The votes cast at the Meeting
were as follows:
Election of four Trustees:
<TABLE>
<CAPTION>
AUTHORITY
FOR WITHHELD
--- --------
<S> <C> <C>
Tom Bleasdale 10,300,536 185,483
William E. Mayer 10,302,540 183,479
James L. Moody, Jr. 10,295,022 190,997
John J. Neuhauser 10,307,273 178,746
</TABLE>
The Board of Trustees also consists of Robert J. Birnhaum, Lora S.
Collins, James E. Grinnell, William D. Ireland, Richard W. Lowry, George
L. Shinn, Robert L. Sullivan and Sinclair Weeks, Jr.
Ratification of the selection of Price Waterhouse LLP as independent
accountants:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
10,259,752 29,360 196,907
</TABLE>
20
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data
throughout each period are as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months
ended Year ended
June 30 December 31
------- -----------
1997 1996
---- ----
<S> <C> <C>
Net asset value -
Beginning of period $ 10.870 $ 11.050
-------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.312 0.630
Net realized and
unrealized gain (loss) 0.059 (0.193)
-------- ---------
Total from Investment
Operations 0.371 0.437
-------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.321) (0.617)
-------- ---------
Net asset value -
End of period $ 10.920 $ 10.870
-------- ---------
Market price per share $ 10.562 $ 10.125
-------- ---------
Total return based on
market value (a) 7.55% (b) 9.06%
-------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses (c) 0.85% (d) 0.88%
Net investment income (c) 5.77% (d) 5.80%
Portfolio turnover 5% (b) 20%
Net assets at end
of period (000) $125,687 $ 125,125
</TABLE>
(a) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(b) Not annualized.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(d) Annualized.
21
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
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
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 9.930 $ 11.050 $ 10.960 $ 11.090
-------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.644 0.673 0.788 0.848
Net realized and
unrealized gain (loss) 1.111 (1.121) 0.090 (0.132)
-------- ---------- ---------- ----------
Total from Investment
Operations 1.755 (0.448) 0.878 0.716
-------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.635) (0.672) (0.788) (0.846)
-------- ---------- ---------- ----------
Net asset value-
End of period $11.050 $ 9.930 $ 11.050 $ 10.960
-------- ---------- ---------- ----------
Market price per share $ 9.875 $ 9.250 $ 10.750 $ 11.750
-------- ---------- ---------- ----------
Total return based on
market value (a) 13.87% (8.12)% (2.16)% 7.43%
-------- ---------- ---------- ----------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.08% (b) 0.94% 0.87% 0.86%
Net investment income 6.08% (b) 6.46% 7.08% 7.76%
Portfolio turnover 37% 34% 35% 18%
Net assets at end
of period (000) $127,118 $ 114,260 $ 127,213 $ 126,169
</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 years' ratios are net of benefits
received, if any.
22
<PAGE>
DIVIDEND REINVESTMENT PLAN
As a shareholder in the Fund you are eligible to participate in the 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.
23
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
24
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
25
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
26
<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
1-617-575-3120
1-800-730-6001
Colonial Investment Grade Municipal Trust mails one shareholder report to
each shareholder address. If you would like more than one report, please
call Colonial at 1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Investment Grade
Municipal Trust.
27
<PAGE>
[LOGO] COLONIAL
MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (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
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First
Boston Merchant Bank; and President and Chief Executive Officer, The First
Boston Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board and 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
Retired Partner, Peat Marwick Main & Co. (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
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1997
A Liberty Financial Company (NYSE:L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
IG-03/946D-0697 M (8/97)
