<PAGE>
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST Semiannual report
JUNE 30, 1998
[Photo -- Statehouse]
<PAGE>
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST HIGHLIGHTS
JANUARY 1, 1998 - JUNE 30, 1998
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.
PORTFOLIO MANAGER COMMENTARY: "Conditions for fixed-income investments improved
slightly during the period. By the end of the period, lower interest rates
helped push the prices of U.S. government and corporate bonds higher. Although
they followed a similar pattern, municipal bond prices did not rise as much as
other fixed-income securities because there was a greater supply than market
demand could easily absorb. The Fund's performance was affected by this
relatively flat rate environment and also by the significant underperformance of
one of its holdings."
-- William Loring
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST PERFORMANCE
Distributions declared per share(1) $0.306
<TABLE>
<CAPTION>
NAV MARKET PRICE
<S> <C> <C>
Six-month total return, assuming
reinvestment of all distributions 1.75% 4.07%
Price per share $11.31 $10.69
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SECTORS
(as of 6/30/98)
<S> <C>
General Obligation.............. 16.4%
Special Non-property Tax........ 9.5%
Turnpike........................ 9.4%
Hospital........................ 7.8%
State Appropriated.............. 7.7%
</TABLE>
[Pie Chart]
<TABLE>
<CAPTION>
QUALITY BREAKDOWN
(as of 6/30/98)
<S> <C>
SHORT-TERM OBLIGATIONS: 0.5%
AAA: 55.8%
A: 7.1%
BBB: 10.2%
AA: 12.1%
NON-RATED: 14.3%
</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.
Sector and quality breakdowns are calculated as a percent of total investments,
including short-term obligations. 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
[PHOTO OF STEPHEN E. GIBSON]
In June 1998, Harold Cogger retired as president of Colonial Investment Grade
Municipal Trust. I would like to take this opportunity to thank him for his
guidance over the past few years and wish him well. As the new president of the
Trust, I am pleased to present the semiannual report for the six months ended
June 30, 1998.
A variety of factors caused bond prices to seesaw during the period, as
different sectors of the economy provided mixed signals to fixed-income
investors. The economic turmoil in Southeast Asia, its potential to slow U.S.
economic growth and the possibility of interest rate increases by the Federal
Reserve Board were strong contributors to price volatility. By the end of the
period, fixed-income investors saw improving economic conditions. With hints
that growth might slow, investors' fear of inflation was reduced. As interest
rates dropped, bond prices finished on a positive note.
The tax-exempt market in which the Fund invests showed a similar pattern. In
addition to the trends mentioned above, supply and demand factors contributed
towards rising and declining prices during the period.
Municipal bond funds such as Colonial Investment Grade Municipal Trust offer
investors a number of benefits including attractive after-tax income and a means
to diversify your fixed-income portfolio.
Thank you for choosing Colonial Investment Grade Municipal Trust and for giving
us the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
August 11, 1998
Because market and economic conditions change, there can be no assurance that
the trends described above will continue.
3
<PAGE>
INVESTMENT PORTFOLIO
JUNE 30, 1998 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 97.6% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 4.9%
EDUCATION - 3.6%
CA State Educational Facilities
Authority, Santa Clara University,
Series 1996,
5.000% 09/01/15 $ 1,050 $ 1,043
MA State Industrial Finance Agency,
Tabor Academy,
Series 1998,
5.400% 12/01/28 1,000 995
MN University of Minnesota:
Series 1996 A,
5.750% 07/01/14 500 549
Series 1999 A,
5.500% 07/01/21 2,000 2,119
--------
4,706
--------
STUDENT LOAN - 1.3%
NE Higher Educational Loan Program,
Series 1993 A-6,
6.450% 06/01/18 1,500 1,667
--------
................................................................................
HEALTHCARE - 15.1%
HOSPITAL - 7.7%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare,
Series 1989,
11.000% 10/01/19 945 962
FL Orange County Health Facilities Authority,
Orlando Regional Healthcare System,
Series 1996 C,
6.250% 10/01/13 2,460 2,842
IL Health Facility Authority,
Series 1992 B, IFRN (variable rate),
9.770% 05/01/21 700 832
MN Rochester,
Mayo Foundation, Series 1998 A,
5.500% 11/15/27 1,000 1,032
NH Higher Educational and Health Facilities
Catholic Medical Center, Series 1989,
6.000% 07/01/17 2,500 2,528
TN Metropolitan Government,
Nashville & Davidson Counties,
Meharry Medical College,
Series 1996,
6.000% 12/01/16 1,575 1,771
--------
9,967
--------
</TABLE>
4
<PAGE>
Investment Portfolio/June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INTERMEDIATE CARE FACILITIES - 2.0%
IN Wabash First Mortgage,
Hoosier Care, Inc.,
Series 1989-A,
9.750% 08/01/19 $ 1,440 $ 1,525
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 465 553
Series 1992-C,
9.750% 08/01/19 465 553
--------
2,631
--------
NURSING HOME - 5.4%
CO Health Care Facilities Authority
Pioneer Health Care, Series 1989,
10.500% 05/01/19 1,710 1,804
DE State Economic Development Authority,
Churchman Village Project,
Series A,
10.000% 03/01/21 975 1,180
FL Escambia County,
Beverly Enterprises-Florida, Inc.,
Series 1985,
9.800% 06/01/11 185 203
KY Jefferson County Health Facilities
Beverly Enterprises, Inc.,
Series 1985-B,
9.750% 08/01/07 710 759
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc., 1st Mortgage,
Series 1989,
10.125% 05/01/19 1,204 1,108
PA Delaware County Authority,
Main Line and Haverford Nursing,
Series 1992,
9.000% 08/01/22 600 697
WI State Health & Educational Facilities
Authority, Metro Health Foundation, Inc.,
Series 1993,
10.000% 11/01/22 (a) 1,300 1,300
--------
7,051
--------
................................................................................
HOUSING - 5.1%
ASSISTED LIVING/SENIOR - 0.4%
TX Bell County Health Facilities
Development Corp., Care Institutions, Inc.
9.000% 11/01/24 500 578
--------
</TABLE>
5
<PAGE>
Investment Portfolio/June 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - 2.6%
FL State Housing Finance Agency,
Windsong Apartments,
Series 1993 C,
9.250% 01/01/19 $ 240 $ 192
MN White Bear Lake,
Birch Lake Townhomes Project:
Series 1989-A,
10.250% 07/15/19 775 789
Series 1989-B,
(b) 07/15/19 (c) 716 217
Resolution Trust Corp., Pass
Through Certificates, Series 1993-A,
8.500% 12/01/16 (d) 2,124 2,206
--------
3,404
--------
SINGLE FAMILY - 2.1%
IN State Housing Finance Authority
Single Family Mortgage-GNMA
Series 1990-D,
7.800% 01/01/22 135 141
LA Louisiana Housing Finance Agency,
Residual Lien Mortgage, Series 1992,
7.375% 09/01/13 (b) 650 690
MA State Housing Finance Agency,
Series 1988 B,
8.100% 08/01/23 110 114
NE State Investment Finance Authority,
7.550% 03/15/22 100 105
OH State Housing Finance Agency,
Series B-4, IFRN (variable rate),
9.740% 03/31/31 1,465 1,645
--------
2,695
--------
................................................................................
OTHER - 5.8%
REFUNDED/ESCROWED (e)
CA San Joaquin Hills Transportation
Corridor Agency,
Series 1993,
(f) 01/01/23 5,250 1,510
CO Denver City and County Airport:
Series A,
8.500% 11/15/23 175 196
Series B,
7.250% 11/15/23 205 234
DC Hospital Revenue,
Washington Hospital Center Corp.,
Series 1990 A,
8.750% 01/01/15 615 694
</TABLE>
6
<PAGE>
Investment Portfolio/June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
DE State Economic Development Authority,
Riverside Hospital,
Series 1992 A,
9.500% 01/01/22 $ 230 $ 291
FL Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 05/01/24 700 859
FL Pinellas County Health Facilities
SunCoast Health System,
Sun Coast Hospital,
Series 1990-A,
8.500% 03/01/20 840 918
MI Wayne County Building Authority,
Series 1992 A,
8.000% 03/01/17 250 286
MN Mille Lacs Capital Improvement Authority,
Mille Lacs Band of Chippewa,
Series 1992 A,
9.250% 11/01/12 255 312
NC Lincoln County,
Lincoln County Hospital,
9.000% 05/01/07 160 192
TN Metropolitan Government, Nashville &
Davidson Counties,
6.150% 05/15/25 1,000 1,089
TX Bexar Metropolitan Water District,
5.000% 05/01/19 1,000 1,016
--------
7,597
--------
................................................................................
OTHER REVENUE - 1.6%
HOTELS - 0.3%
MN Minneapolis,
Holiday Inn Metrodome Project,
6.000% 12/01/01 350 353
--------
INDUSTRIAL - 1.3%
MN Brooklyn Park,
TL Systems Corp.,
Series 1991,
10.000% 09/01/16 925 1,134
MN Buffalo,
Von Ruden Manufacturing, Inc.,
Series 1989,
10.500% 09/01/14 535 575
--------
1,709
--------
</TABLE>
7
<PAGE>
Investment Portfolio/June 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
RESOURCE RECOVERY - 0.2%
DISPOSAL
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 $ 240 $ 267
--------
................................................................................
TAX-BACKED - 35.4%
LOCAL APPROPRIATED - 1.7%
CA San Diego County,
Central Jail Project,
5.000% 10/01/25 1,000 974
TX Houston Independent School District
Public Facilities Corp.,
Series 1998 A,
(f) 09/15/13 2,500 1,167
--------
2,141
--------
LOCAL GENERAL OBLIGATIONS - 11.4%
CO El Paso County School District No. 11,
Series 1996,
7.125% 12/01/19 1,870 2,392
CO Highlands Ranch Metropolitan District,
Series 1996,
6.500% 06/15/11 1,375 1,616
IL Chicago,
Series 1995 A-2,
6.250% 01/01/14 1,480 1,700
IL St. Clair County Public
Building Commission,
(f) 12/01/13 2,000 923
MI Grand Ledge Public School District,
Series 1995,
5.375% 05/01/24 1,750 1,780
MI St. Johns Public Schools,
5.100% 05/01/25 1,000 1,010
NY New York City,
Series 1997 A,
7.000% 08/01/07 2,000 2,324
PA Philadelphia School District,
Series B,
5.500% 09/01/18 2,000 2,048
TX La Joya Independent School District,
Series 1998,
5.500% 02/15/12 1,000 1,048
--------
14,841
--------
</TABLE>
8
<PAGE>
Investment Portfolio/June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SPECIAL NON-PROPERTY TAX - 9.3%
FL Tampa Sports Authority,
Tampa Bay Arena Project,
Series 1995,
5.750% 10/01/25 $ 1,000 $ 1,111
NM Dona Ana County,
Series 1998,
5.500% 06/01/15 1,000 1,067
NY New York City Transitional
Finance Authority:
Series A,
5.125% 08/15/21 1,000 986
Series 1998 C,
4.750% 05/01/23 1,000 940
NY State Local Government Assistance Corp.,
Series 1993 E,
5.000% 04/01/21 3,000 2,992
PR Commonwealth of Puerto Rico
Infrastructure Financing Authority,
Series A,
5.000% 07/01/21 4,000 3,946
WV State Building Commission,
Series 1997 A,
5.250% 07/01/09 1,000 1,051
--------
12,093
--------
SPECIAL PROPERTY TAX - 0.8%
CA Contra Costa County
Public Financing Authority,
Series 1992 A,
7.100% 08/01/22 1,000 1,097
--------
STATE APPROPRIATED - 7.5%
IN State Office Building Commission,
Women's Prison,
Series B,
6.250% 07/01/16 (g) 2,820 3,238
NY New York State Dormitory Authority,
Consolidation City University,
Series 1993-A,
5.750% 07/01/18 5,000 5,411
NY State Medical Care Facilities
Finance Agency, Mental Health Services
Facilities Improvement, Series 1991-A,
7.500% 02/15/21 100 109
NY State Urban Development Corp.,
5.600% 04/01/15 1,000 1,055
--------
9,813
--------
</TABLE>
9
<PAGE>
Investment Portfolio/June 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
TAX-BACKED - CONT.
STATE GENERAL OBLIGATIONS - 4.7%
CA State,
5.750% 03/01/19 $ 2,000 $ 2,087
CT State,
Series 1996 C,
5.400% 11/01/14 1,000 1,041
MA Massachusetts Bay Transportation
Authority, Series A,
5.000% 03/01/19 1,000 979
PR Commonwealth of Puerto Rico
Aqueduct & Sewer Authority:
6.250% 07/01/12 1,000 1,155
6.250% 07/01/13 750 869
--------
6,131
--------
................................................................................
TRANSPORTATION - 13.0%
AIR TRANSPORTATION - 1.7%
IN Indianapolis Airport Authority,
Federal Express Corp.,
Series 1994,
7.100% 01/15/17 1,000 1,126
NY Port Authority of New York & New Jersey,
JFK International Air Terminal, Series 6,
6.250% 12/01/08 1,000 1,132
--------
2,258
--------
AIRPORT - 1.1%
CO Denver City and County Airport,
Series B,
7.250% 11/15/23 795 884
MN Minneapolis & St. Paul
Metropolitan Airport,
5.000% 01/01/22 500 490
--------
1,374
--------
TOLL FACILITIES - 9.2%
CA Foothill/Eastern Transportation
Corridor Agency,
Series 1995 A,
5.000% 01/01/35 1,000 952
CA San Joaquin Hills Transportation
Corridor Agency, Series A,
(f) 01/15/15 2,000 865
CO State Public Highway Authority,
Arapahoe Co., E-470, Series B,
(f) 09/01/11 2,000 1,059
FL Orlando & Orange County
Expressway Authority,
5.000% 07/01/21 5,000 4,900
</TABLE>
10
<PAGE>
Investment Portfolio/June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
IL Chicago,
Skyway Bridge,
Series 1996,
5.375% 01/01/16 $ 1,750 $ 1,787
MA State Turnpike Authority,
Series C,
(f) 01/01/18 3,000 1,104
NH State Turnpike Systems,
Series 1991-C, IFRN (variable rate),
9.627% 11/01/17 1,000 1,321
--------
11,988
--------
TRANSPORTATION - 1.0%
IL Regional Transportation Authority,
Series C,
7.750% 06/01/20 1,000 1,359
--------
................................................................................
UTILITY - 16.5%
INDIVIDUAL POWER PRODUCER - 0.9%
FL Martin County Industrial
Development Authority,
Indiantown Cogeneration Project,
Series 1994 A,
7.875% 12/15/25 1,000 1,173
--------
INVESTOR OWNED - 2.4%
IN Petersburg Pollution Control,
Indianapolis Power & Light Co.,
Series 1993-B,
5.400% 08/01/17 3,000 3,128
--------
JOINT POWER AUTHORITY - 2.4%
IN State Municipal Power Agency,
Series B,
6.000% 01/01/12 2,000 2,245
MN Southern Minnesota
Municipal Power Agency,
Series A,
5.000% 01/01/16 150 148
NC State Municipal Power Agency,
Catawba Electric No. 1,
Series 1998 A,
5.500% 01/01/15 640 684
--------
3,077
--------
MUNICIPAL ELECTRIC - 5.3%
CA Sacramento Municipal Utilities District,
Series L,
5.125% 07/01/22 1,850 1,829
</TABLE>
11
<PAGE>
Investment Portfolio/June 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITY - CONT.
MUNICIPAL ELECTRIC - CONT.
NC University of North Carolina at
Chapel Hill,
(f) 08/01/14 $ 1,000 $ 456
NE Nebraska Public Power District,
5.250% 01/01/11 1,000 1,040
NY Long Island Power Authority,
5.000% 12/01/18 1,500 1,468
OH Cleveland,
Series 1996 1,
5.000% 11/15/24 1,000 976
TN Metropolitan Government,
Nashville & Davidson Counties,
Series 1996 A,
(f) 05/15/09 1,825 1,109
--------
6,878
--------
WATER & SEWER - 5.5%
MA State Water Resources Authority,
Series 1993-B,
5.000% 03/01/22 1,000 966
MS V Lakes Utility District,
8.250% 07/15/24 140 112
PA Erie Sewer Authority,
5.625% 06/01/17 1,500 1,568
SC Chester Metropolitan Water District,
5.000% 03/01/15 1,000 995
TX Houston Water & Sewer System,
Series D,
5.000% 12/01/17 2,000 1,961
TX Nueces River Authority,
Corpus Christi Lake Texana Project,
5.250% 07/15/17 1,500 1,516
--------
7,118
--------
TOTAL MUNICIPAL BONDS (cost of $118,324) 127,094
--------
<CAPTION>
OPTIONS - 0.1% CONTRACTS
- --------------------------------------------------------------------------------
<S> <C> <C>
September 1998 Treasury Bond Put:
Strike Price 120, expiration 08/22/98
(cost $69) 6,000 20
September 1998 Treasury Bond Call:
Strike Price 124, expiration 08/22/98
(cost $56) 7,000 88
--------
108
--------
TOTAL INVESTMENTS - 97.7% (cost of $118,449)(h) 127,202
--------
</TABLE>
12
<PAGE>
Investment Portfolio/June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM OBLIGATIONS - 0.5% PAR
- --------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES (i)
MS Perry County,
Leaf River Forest Project,
3.800% 03/01/02 $ 700 $ 700
--------
OTHER ASSETS & LIABILITIES, NET - 1.8%
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $130,207
--------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) This is a restricted security which was acquired on February 25, 1996 at a
cost of $1,432. This security represents 1.0% of the Fund's net assets as of
June 30, 1998.
(b) Accrued interest accumulates in the value of the security and is payable at
redemption.
(c) The value of this security represents fair value as determined under
procedures approved by the Trustees.
(d) Securities 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, 1998,
the value of these securities amounted to $2,206 or 1.7% of net assets.
(e) 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 the
principal and interest.
(f) Zero coupon bond.
(g) These securities, or a portion thereof, with a total market value of $3,238
are being used to collateralize the September 1998 Treasury Bond Call
option.
(h) Cost for federal income tax purposes is $118,450.
(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 June 30, 1998.
Acronym Name
------- ----
IFRN Inverse Floating Rate Note
See notes to financial statements.
13
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except for per share amount)
<S> <C> <C>
ASSETS
Investments at value (cost $118,449) $127,202
Short-term obligations 700
---------
127,902
Cash $ 42
Receivable for:
Interest 2,278
Investments sold 35
Other 2 2,357
------- ---------
Total Assets 130,259
LIABILITIES
Accrued:
Deferred Trustees fees 4
Other 48
-------
Total Liabilities 52
---------
NET ASSETS at value for 11,509
shares of beneficial interest outstanding $130,207
=========
Net asset value per share $ 11.31
=========
COMPOSITION OF NET ASSETS
Capital paid in $127,931
Undistributed net investment income 119
Accumulated net realized loss (6,596)
Net unrealized appreciation 8,753
---------
$130,207
=========
</TABLE>
See notes to financial statements.
14
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $4,017
EXPENSES
Management fee $ 426
Transfer agent 8
Bookkeeping fee 18
Trustees fee (a)
Custodian fee 1
Audit fee 11
Legal fee 4
Reports to shareholders 6
Other 33 507
-------- -------
Net Investment Income 3,510
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 1,441
Closed futures contracts (102)
--------
Net Realized Gain 1,339
Net unrealized appreciation (depreciation) during the period on:
Investments (2,663)
Open futures contracts 40
--------
Net Unrealized
Depreciation (2,623)
-------
Net Loss (1,284)
-------
Increase in Net Assets from Operations $2,226
=======
</TABLE>
(a) Rounds to less than one.
See notes to financial statements.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months Year
ended ended
(in thousands) June 30 December 31
INCREASE (DECREASE) IN NET ASSETS ---- ----
1998 1997
<S> <C> <C>
Operations:
Net investment income $ 3,510 $ 7,113
Net realized gain 1,339 1,650
Net unrealized appreciation (depreciation) (2,623) 4,917
--------- ---------
Net Increase from Operations 2,226 13,680
Distributions:
From net investment income (3,522) (7,302)
--------- ---------
Total Increase (Decrease) (1,296) 6,378
NET ASSETS
Beginning of period 131,503 125,125
--------- ---------
End of period (including undistributed net
investment income of $119 and $107,
respectively) $130,207 $131,503
========= =========
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, 1998 (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, 1998, 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.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
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.
17
<PAGE>
Notes to Financial Statements/June 30, 1998
- --------------------------------------------------------------------------------
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, 1998, purchases and
sales of investments, other than short-term obligations, were $19,184,168 and
$18,085,610, respectively.
Unrealized appreciation (depreciation) at June 30, 1998, based on cost of
investments for federal income tax purposes was:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $ 10,716,142
Gross unrealized depreciation (1,964,325)
------------
Net unrealized appreciation $ 8,751,817
============
</TABLE>
18
<PAGE>
Notes to Financial Statements/June 30, 1998
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS: At December 31, 1997, 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>
2001 $1,615,000
2002 2,046,000
2003 2,611,000
2004 1,454,000
----------
$7,726,000
==========
</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, 1998, 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 the value of portfolio securities due
to anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the 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, 1998
- --------------------------------------------------------------------------------
NOTE 5. RESULTS OF ANNUAL SHAREHOLDER MEETING
...............................................................................
On May 27, 1998, the Annual Meeting of Shareholders of the Fund was held to
elect two Trustees and to ratify the selection of Price Waterhouse LLP as
independent accountants for the fiscal year ending December 31, 1998. On March
2, 1998, the record date of the Meeting, the Fund had outstanding 11,513,223
shares of beneficial interest. The votes cast at the Meeting were as follows:
Election of two Trustees:
<TABLE>
<CAPTION>
AUTHORITY
FOR WITHHELD
--- --------
<S> <C> <C>
Richard W. Lowry 10,473,262 182,185
Robert L. Sullivan 10,471,711 183,736
</TABLE>
The Board of Trustees also consists of Robert J. Birnhaum, Lora S. Collins, Tom
Bleasdale, James E. Grinnell, William E. Mayer, James L. Moody, Jr. and John J.
Neuhauser.
Ratification of the selection of Price Waterhouse LLP as independent
accountants:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
10,410,231 29,340 215,876
</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
June 30 Year ended December 31
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 11.430 $ 10.870 $ 11.050
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.307 0.620 0.630
Net realized and
unrealized gain (loss) (0.121) 0.575 (0.193)
--------- --------- ---------
Total from Investment
Operations 0.186 1.195 0.437
--------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.306) (0.635) (0.617)
--------- --------- ---------
Net asset value -
End of period $ 11.310 $ 11.430 $ 10.870
--------- --------- ---------
Market price per share $ 10.687 $ 10.560 $ 10.130
--------- --------- ---------
Total return - based on
net asset value (a) 1.75%(c) 11.61% 4.60%
--------- --------- ---------
Total return - based on market
value (b) 4.07%(c) 10.76% 9.06%
--------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 0.77%(e) 0.83% 0.88%
Net investment income (d) 5.37%(e) 5.63% 5.80%
Portfolio turnover 14%(c) 21% 20%
Net assets at end
of period (000) $ 130,207 $131,503 $125,125
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested.
(b) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(c) Not annualized.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(e) Annualized.
21
<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
---- ---- ----
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 9.930 $ 11.050 $ 10.960
---------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.644 0.673 0.788
Net realized and
unrealized gain (loss) 1.111 (1.121) 0.090
---------- ---------- ---------
Total from Investment
Operations 1.755 (0.448) 0.878
---------- ---------- ---------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.635) (0.672) (0.788)
---------- ---------- ---------
Net asset value -
End of period $ 11.050 $ 9.930 $ 11.050
========== ========== =========
Market price per share $ 9.880 $ 9.250 $ 10.750
========== ========== =========
Total return - based on net
asset value (a) 18.63% (4.08)% 7.75%
========== ========== =========
Total return - based on market
value (b) 13.87% (8.12)% (2.16)%
========== ========== =========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.08%(c) 0.94% 0.87%
Net investment income 6.08%(c) 6.46% 7.08%
Portfolio turnover 37% 34% 35%
Net assets at end
of period (000) $ 127,118 $ 114,260 $ 127,213
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested.
(b) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(c) 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 and net short-term capital
gains monthly and net long-term 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 will be mailed by check directly to the record holder by the
dividend paying agent.
If the market price of Fund shares on the distribution payment date is equal to
or greater than the net asset value, Plan participants will be issued shares at
the higher of net asset value or 95% of the market price. However, if the market
price of shares is less than the net asset value, shares will be bought as soon
as practicable (but no more than 30 days after the distribution, except as may
be required to comply with federal securities laws) in the open market for the
accounts of Plan participants. If, during this purchase period, the market price
surpasses the net asset value, the average per share price paid may exceed the
net asset value of the shares, resulting in the acquisition of fewer shares than
if the distribution had been in newly-issued shares. The aggregate market value
of the shares may constitute taxable income to shareholders for federal income
tax purposes.
All Plan accounts receive monthly written confirmations of all transactions.
Shares purchased under the Plan ordinarily are held in uncertificated form,
although each participant has the right to receive certificates for whole shares
owned by the participant. 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.
There is no charge to Plan participants for reinvesting distributions. Fees and
expenses of the Plan other than brokerage charges are paid by the Trust.
Participants bear a pro-rata share of brokerage charges incurred on open market
purchases of shares issued under the Plan.
A shareholder may elect not to participate or terminate his or her participation
in the Plan by written notice to the Plan administrator. Such notice must be
received by the Plan administrator before the dividend record date in order to
be effective with respect to that dividend. The Plan may be amended or
terminated on 30 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 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>
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24
<PAGE>
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25
<PAGE>
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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
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>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President - Operations, The Rockport
Company)
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, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
ROBERT L. SULLIVAN
Retired Partner, KPMG Peat Marwick LLP (formerly Management Consultant, Saatchi
and Saatchi Consulting Ltd. and Principal and International Practice Director,
Management Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
IG-03/614F-0698 M (8/98) 98/801
