<PAGE>
[Graphic Omitted]
- --------------------------------------------------------
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST ANNUAL REPORT
- --------------------------------------------------------
NOVEMBER 30, 1999
<PAGE>
PRESIDENT'S MESSAGE
DEAR SHAREHOLDERS:
This is the first shareholder report for Colonial Investment Grade Municipal
Trust's new fiscal year, which has changed from December 31 To November 30. This
report will cover the 11-month period from December 31, 1998 to November 30,
1999.
The U.S. bond market continued to show negative returns during the past year, as
interest rates across the board rose steadily throughout the 11-month period.
The rise in bond yields over the past year has come primarily in response to
continued economic strength in the U.S. and a dramatic recovery in the economies
of Southeast Asia and Japan. This growth has caused concern among bond investors
that inflation could potentially begin to increase if the economy becomes
"overheated."
In the bond market, rising interest rates can hurt performance because as rates
rise, prices fall. However, in a declining bond market, municipal bonds usually
outperform their Treasury counterparts. This again occurred in 1999,
illustrating the attractiveness of municipals for investors seeking tax-free
income.
The Fund's performance was affected by the significant rise in interest rates,
posting negative returns for the 11-month period. Although steps were taken to
mitigate the impact of rising rates, the Fund's investment-grade holdings, which
are highly liquid, experienced price declines along with the rest of the market.
In the pages that follow, the Fund's portfolio manager will provide more
specific information about its performance and the strategies employed during
the fiscal year. As always, thank you for choosing Liberty Funds, and for giving
us the opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
January 12, 2000
- ---------------------------
Not FDIC May Lose Value
Insured -----------------
No Bank Guarantee
- ---------------------------
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
<PAGE>
HIGHLIGHTS
o MUNICIPALS OUTPERFORMED TREASURY BONDS DURING THE PERIOD
Municipal bonds were slightly undervalued at the start of the period, and
they gained value, relative to Treasury bonds, during the year. The yield on
the 30-year AAA-rated general obligation (GO) bond -- a benchmark of
municipal bond market performance -- rose from 4.86% on December 31, 1998 to
5.73% on November 30, 1999.
o RISING RATES MADE FOR A CHALLENGING YEAR IN THE BOND MARKET
During the period, short-, mid- and long-term interest rates rose
dramatically. These increases significantly affected bond performance in
every sector because bond prices move in the opposite direction of yields.
Municipal bonds were no exception, although their declines were mitigated
somewhat by a reduction in supply.
o PORTFOLIO MANAGERS' COMMENTARY
During the period, the Fund had a total return of negative 5.50%, based on
net asset value. The declines in the Fund and the Lehman Brothers Municipal
Bond Index reflect the difficult market conditions of the past year. In
addition, the Fund issued preferred shares during the period, which are
designed to enhance yield. By increasing the Fund's duration, preferred
shares can increase the portfolio's sensitivity to changes in interest rates
and, by paying a short-term variable rate to other investors, can increase
the potential for volatility in the dividend rate. However, we employ
certain hedging techniques that are designed to reduce these risks.
-- WILLIAM LORING AND BRIAN HARTFORD
TOTAL RETURNS FOR THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX, 12/31/98 - 11/30/99
Lehman Brothers
Municipal Bond Index
- --------------------------------------------------------------------------------
12/31/98 $10,000
1/99 10,119
2/99 10,074
3/99 10,088
4/99 10,113
5/99 10,055
6/99 9,910
7/99 9,946
8/99 9,866
9/99 9,870
10/99 9,763
11/30/99 9,867
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments and do not incur fees or expenses. It is not
possible to invest directly in an index.
TOTAL RETURN, ASSUMING REINVESTMENT
OF ALL DISTRIBUTIONS
(12/31/98 - 11/30/99):
NAV (5.50)%
- ------------------------------------
Market Price (14.64)%
- ------------------------------------
DISTRIBUTIONS DECLARED
PER COMMON SHARE
PRICE PER SHARE AS OF 11/30/99:
(1/1/99 - 11/30/99): $0.524(1)
NAV $10.31
- ------------------------------------
Market Price $ 9.06
- ------------------------------------
(1) A portion of the Fund's income may be subject to the alternative minimum
tax. The Fund may at times purchase tax-exempt securities at a discount.
Some or all of this discount may be included in the Fund's ordinary income,
and is taxable when distributed.
QUALITY BREAKDOWN AS OF
11/30/99
AAA 56.6%
- ------------------------------------
AA 17.6%
- ------------------------------------
A 11.1%
- ------------------------------------
BBB 4.7%
- ------------------------------------
Non-rated 9.8%
- ------------------------------------
Cash equivalents 0.2%
- ------------------------------------
TOP FIVE INDUSTRY SECTORS
AS OF 11/30/99
Local General Obligations 15.1%
- ------------------------------------
Hospitals 14.0%
- ------------------------------------
Education 7.4%
- ------------------------------------
State General Obligations 7.3%
- ------------------------------------
Water & Sewer 7.2%
- ------------------------------------
Quality and sector breakdowns are calculated as a percentage of total
investments, including short-term obligations. Ratings shown in the Quality
Breakdown represent the highest rating assigned to a particular bond by one of
the following respected ratings agencies: Standard & Poor's Corp., Moody's
Investor Service, Inc. or Fitch Investors Service.
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to maintain this quality breakdown 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.
<PAGE>
- --------------------
INVESTMENT PORTFOLIO
- --------------------
November 30, 1999
(In thousands)
MUNICIPAL BONDS - 98.9% PAR VALUE
- ---------------------------------------------------------------------------
EDUCATION - 8.2%
EDUCATION- 7.3%
CA State Educational Facilities Authority,
Santa Clara University, Series 1996,
5.000% 09/01/15 $ 800 $ 831
IL Chicago, State University Auxiliary Facilities,
Series 1998,
5.500% 12/01/23 1,085 1,013
MA State College Building Authority,
Series 1999-A,
(a) 05/01/23 (b) 2,710 653
MA State Industrial Finance Agency,
Tabor Academy, Series 1998,
5.400% 12/01/28 1,000 868
MN Univeristy of Minnesota:
Series 1996-A:
5.750% 07/01/14 500 513
5.500% 07/01/21 2,000 1,931
MO State Health & Educational Facilities
Authority Central Institute for the Deaf,
Series 1999,
5.850% 01/01/22 600 572
NY St. Lawrence County Industrial Development
Agency, St. Lawrence University, Series 1998-A,
5.500% 07/01/13 1,465 1,472
RI State Health & Educational Buildings Corp.,
Roger Williams University,
Series 1998,
5.125% 11/15/12 1,000 971
TX Texas Tech University, Series 1999,
5.000% 02/15/29 5,000 4,278
--------
13,102
--------
STUDENT LOAN - 0.9%
NE Nebhelp, Inc., Series 1993 A-6,
6.450% 06/01/18 (b) 1,500 1,520
--------
- --------------------------------------------------------------------------
HEALTHCARE - 17.6%
CONGREGATE CARE RETIREMENT - 0.3%
OR Clackamas County Hospital Facilities Authority,
Willamette View, Series 1999-A,
7.500% 11/01/29 (c) 600 581
--------
HOSPITAL - 13.9%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare, Series 1989,
11.000% 10/01/19 (d) 935 514
AZ Maricopa County Industrial Development Authority:
Clinic Hospital, Series 1998,
5.250% 11/15/37 3,000 2,605
National Health Facilities II Project,
5.100% 01/01/33 2,500 2,152
CA State Health Facilities Financing Authority,
Cedars-Sinai Medical Center, Series 1999-A,
6.125% 12/01/30 1,000 979
FL Orange County Health Facilities Authority,
Orlando Regional Healthcare System: Series 1999,
6.000% 10/01/26 400 386
Series 1996-C:
6.250% 10/01/13 2,460 2,662
IL Health Facility Authority, Seires 1992-B,IFRN
(variable rate)
9.821% 05/01/21 700 772
IL Southwestern Illinois Development Authority,
Anderson Hospital, Series 1999,
5.375% 08/15/15 380 329
IL State Development Finance Authority, Adventist
Health System, Series 1999,
5.500% 11/15/20 1,000 868
LA Jefferson Parish Hospital Service
District 2, Series 1998,
5.250% 07/01/12 1,000 975
MA State Health & Educational Facilities
Authority, South Shore Hospital, Series 1999-F,
5.750% 07/01/29 1,000 912
MN Rochester, Mayo Foundation, Series 1998-A,
5.500% 11/15/27 1,000 942
NC State Medical Care Commission, Gaston Health
Care, Series 1998,
5.000% 02/15/29 5,000 4,183
NH Higher Educational and Health Facilities
Catholic Medical Center, Series 1989,
6.000% 07/01/17 2,500 2,434
NV Henderson, Catholic Healthcare West,
Series 1999-A,
6.750% 07/01/20 (c) 500 499
TN Metropolitan Government, Nashville & Davidson
Counties, Meharry Medical College, Series 1996,
6.000% 12/01/16 1,575 1,633
UT Weber County, IHC Health Services, Inc.,
Series 1999,
5.000% 08/15/30 2,300 1,920
--------
24,765
--------
INTERMEDIATE CARE FACILITIES - 0.3%
IL State Development Finance Authority, Hoosier
Care, Inc., Series 1999-A,
7.125% 06/01/34 495 462
--------
NURSING HOME - 3.1%
CO Health Care Facilities Authority Pioneer Health
Care, Series 1989,
10.500% 05/01/19 1,710 1,723
DE State Economic Development Authority, Churchman
Village Project,
Series A, 10.000% 03/01/21 965 1,147
FL Escambia County, Beverly Enterprises-Florida,
Inc., Series 1985,
9.800% 06/01/11 175 183
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 (d) 1,204 903
PA Delaware County Authority, Main Line and
Haverford Nursing, Series 1992,
9.000% 08/01/22 590 642
WI State Health & Educational Facilities
Authority, Meto Health Foundation, Inc.,
Series 1993,
10.000% 11/01/22 (d) (e) 1,300 1,040
--------
5,638
--------
- --------------------------------------------------------------------------
HOUSING - 3.0%
ASSISTED LIVING/SENIOR - 0.3%
TX Bell County Health Facilities Development
Corp., Care Institutions, Inc.,
9.000% 11/01/24 500 548
--------
MULTI-FAMILY - 1.8%
MN White Bear Lake, Birch Lake Townhomes Project,
Series 1989-A
10.250% 07/15/19 775 775
Series 1989-B,
(a) 07/15/19 (f) 706 212
Resolution Trust Corp., Pass Through Certificates
Series 1993-A,
9.250% 12/01/16 2,124 2,142
--------
3,129
--------
SINGLE-FAMILY - 0.9%
IN State Housing Finance Authority Single Family
Mortgage-GNMA Series
1990-D, 7.800% 01/01/22 80 84
LA Louisiana Housing Finance Agency, Residual Lien
Mortgage, Series 1992,
7.375% 09/01/13 (f) 350 360
NE State Investment Finance Authority,
7.550% 03/15/22 100 102
OH State Housing Finance Agency,
Series B-4,
9.162% 03/31/31 1,065 1,133
--------
1,679
--------
- --------------------------------------------------------------------------
INDUSTRIAL - 1.2%
MANUFACTURING - 1.0%
MN Brooklyn Park, TL Systems Corp., Series 1991,
10.000% 09/01/16 885 1,018
MN Buffalo, Von Ruden Manufacturing, Inc.,
Series 1989,
10.500% 09/01/14 505 524
MO State Development Finance Board,
Procter & Gamble Co., Series 1999,
5.200% 03/15/29 250 218
--------
1,760
--------
METALS & MINING - 0.2%
VA Peninsula Ports Authority, Ziegler Coal
Project, Series 1997,
6.900% 05/02/22 500 440
--------
- ---------------------------------------------------------------------------
OTHER - 5.7%
OTHER - 0.5%
NY TSASC, Inc., Series 1999-1,
6.250% 07/15/34 1,000 970
--------
REFUNDED/ESCROWED - 5.2% (g)
CA California State, Series 1995,
5.750% 03/01/19 1,930 2,053
CA San Joaquin Hills Transportation Corridor
Agency, Series 1993,
(a) 01/01/23 (b) 5,250 1,323
CO Denver City and County Airport,
Series B,
7.250% 11/15/23 205 224
DC Hospital, Washington Hospital Center,
Series 1990-A,
8.750% 01/01/15 615 655
DE State Economic Development Authority, Riverside
Hospital, Series 1992-A,
9.500% 01/01/22 225 269
FL Clearwater Housing Authority, Hampton
Apartments, Series 1994,
8.250% 05/01/24 700 807
MI Wayne County Building Authority,
Series 1992-A,
8.000% 03/01/17 250 273
MN Mille Las Capital Improvement Authority, Mille
Las Band of Chippewa, Series 1992-A,
9.250% 11/01/12 235 271
NC Lincoln County, Lincoln County Hospital,
9.000% 05/01/07 145 165
TN Metropolitan Government, Nashville & Davidson
Counties,
6.150% 05/15/25 1,000 1,059
TN Shelby County, Health, Education, & Housing
Facilities Board, Open Arms Development Center:
Series 1992-A,
9.750% 08/01/19 445 578
Series 1992-C,
9.750% 08/01/19 445 578
TX Bexar Metropolitan Water District,
5.000% 05/01/19 1,000 941
--------
9,196
--------
- --------------------------------------------------------------------------
OTHER REVENUE - 0.5%
RECREATION
DC District of Columbia, Smithsonian Institute,
Series 1997,
5.000% 02/01/28 1,000 849
--------
- --------------------------------------------------------------------------
RESOURCE RECOVERY - 1.2%
DISPOSAL
IL Development Finance Authority, Waste
Management, Inc., Series 1997,
5.050% 01/01/10 500 425
MA State Industrial Finance Agency:
Peabody Monofill Associates, Inc., Ogden Hill
Project, Series 1995,
9.000% 09/01/05 195 205
Series 1998-A,
5.450% 12/01/12 1,250 1,162
MI State Strategic Fund, United Waste Systems,
Inc., Series 1995,
5.200% 04/01/10 500 437
--------
2,229
--------
- --------------------------------------------------------------------------
TAX-BACKED - 33.6%
LOCAL APPROPRIATED - 0.8%
MN Hibbing Economic Development Authority,
6.400% 02/01/12 335 333
TX Houston Independent School District Public
Facilities Corp., Series 1998-A,
(a) 09/15/13 (b) 2,500 1,133
--------
1,466
--------
LOCAL GENERAL OBLIGATIONS - 15.0%
AK Anchorage, Series 1999,
5.125% 12/01/13 1,000 959
CO El Paso County School District No. 11,
Series 1996,
7.125% 12/01/19 1,870 2,159
CO Highlands Ranch Metropolitan District,
Series 1996,
6.500% 06/15/11 1,375 1,530
IL Chicago:
Series 1995 A-2,
6.250% 01/01/14 1,480 1,585
Series 1999,
5.500% 01/01/23 1,000 952
IL Chicago Board of Education,
Series 1997-A,
5.250% 12/01/30 7,000 6,194
IL Cook County, Series 1997-A,
5.625% 11/15/22 2,100 2,002
IL St. Clair County Public Building Commission,
(a) 12/01/13 (b) 2,000 904
IL St. Clair County, Series 1999,
(a) 10/01/16 (b) 2,000 736
MI St. Johns Public School, Series 1998,
5.100% 05/01/25 1,000 888
MN Minneapolis-St. Paul Metropolitan Airports
Commission, Series 1998-13,
5.250% 01/01/13 1,000 982
NY New York City, Series 1997-A,
7.000% 08/01/07 2,000 2,221
NY Yonkers, Series 1999-A,
4.500% 12/01/17 1,000 833
OH Olmsted Falls School District,
Series 1999:
5.500% 12/01/00 340 344
5.500% 12/01/01 360 357
5.500% 12/01/02 380 375
PA Philadelphia School District Series B,
5.500% 09/01/18 2,000 1,910
TX La Joya Independent School District, Series 1998,
5.500% 02/15/12 1,000 1,006
WA King County, Series 1998-B,
5.000% 01/01/30 1,000 843
--------
26,780
--------
SPECIAL NON-PROPERTY TAX - 3.6%
FL Tampa Sports Authority, Tampa Bay Arena
Project, Series 1995,
5.750% 10/01/25 1,000 992
NM Dona Ana County, Series 1998,
5.500% 06/01/15 1,000 990
NY Metropolitan Transportation Authority,
Series 1998-A,
4.500% 04/01/18 1,000 833
NY State Local Government Assistance Corp.,
Series 1993-E,
5.000% 04/01/21 3,000 2,661
WV State Building Commission,
Series 1997-A,
5.250% 07/01/09 1,000 1,009
--------
6,485
--------
SPECIAL PROPERTY TAX - 0.9%
CA Capistrano Unified School District, Ladera
Community Facilities District No.98-2, Series
1999,
5.750% 09/01/29 345 307
CA Contra Costa County Public Financing Authority,
Series 1992-A,
7.100% 08/01/22 1,000 1,065
FL Lexington Oaks Community Development District,
Series 1998-B,
5.500% 05/01/05 190 185
--------
1,557
--------
STATE APPROPRIATED - 6.1%
IN State Office Building Commission, Women's Prison,
Series B,
6.250% 07/01/16 2,820 2,997
NY New York State Dormitory Authority
Consolidation City University, Series 1993-A,
5.750% 07/01/18 5,000 4,910
Mental Health Services, Series 1998-C,
5.000% 02/15/11 1,485 1,418
NY State Medical Care Facilities Finance Agency,
Mental Health Services Facilities Improvement,
Series 1991-A,
7.500% 02/15/21 100 105
NY State Urban Development Corp.,
5.600% 04/01/15 1,000 984
WV State Building Commission,
Series 1998-A,
5.375% 07/01/18 500 478
--------
10,892
--------
STATE GENERAL OBLIGATIONS - 7.2%
CA State, Series 1995,
5.750% 03/01/19 70 70
DC District of Columbia, Series 1999-A,
5.375% 06/01/18 1,250 1,159
PR Commonwealth of Puerto Rico Aqueduct & Sewer
Authority:
6.250% 07/01/12 1,000 1,096
6.250% 07/01/13 750 819
TX State, Series 1999-ABC:
5.500% 08/01/12 (b) 2,000 2,027
5.500% 08/01/35 2,000 1,849
WA State, Series 1999-B,
5.000% 01/01/24 (b) 6,750 5,880
--------
12,900
--------
- --------------------------------------------------------------------------
TRANSPORTATION - 12.3%
AIR TRANSPORTATION - 1.2%
IN Indianapolis Airport Authority, Federal Express
Corp., Series 1994,
7.100% 01/15/17 1,000 1,057
NY Port Authority of New York & New Jersey, JFK
International Air Terminal, Series 6,
6.250% 12/01/08 1,000 1,073
--------
2,130
--------
AIRPORT - 5.0%
CO Denver City & County Airport:
Series 1997-E,
5.250% 11/15/23 2,000 1,801
Series 1998-B,
5.000% 11/15/25 1,800 1,545
Series B,
7.250% 11/15/23 795 847
MA State Port Authority:
Series 1998-D,
5.000% 07/01/28 3,500 3,000
Series 1999,
7.250% 07/01/29 1,000 931
MI Wayne County, Detroit Metropolitan Airport,
Series 1998-A,
5.000% 12/01/22 (b) 1,000 851
--------
8,975
--------
TOLL FACILITIES - 4.9%
CA Foothill/Eastern Transportation Corridor
Agency, Series 1995-A,
5.000% 01/01/35 1,000 825
CA San Joaquin Hills Transportation Corridor
Agency, Series A,
(a) 01/15/15 (b) 2,000 847
CO State Public Highway Authority, E-470, Series B,
(a) 09/01/11 (b) 2,000 1,051
IL Chicago, Skyway Bridge, Series 1996,
5.375% 01/01/16 1,750 1,671
MA State Turnpike Authority, Series 1999-A,
5.000% 01/01/39 3,900 3,249
NH State Turnpike Systems,
Series 1991-C, IFRN (variable rate),
8.613% 11/01/17 1,000 1,156
--------
8,799
--------
TRANSPORTATION - 1.2%
CA San Mateo County Transportation District,
Series 1998-A,
4.500% 06/01/18 1,000 843
IL Regional Transportation Authority,
Series C,
7.750% 06/01/20 1,000 1,225
--------
2,068
--------
- --------------------------------------------------------------------------
UTILITY - 15.6%
INVESTOR OWNED - 3.5%
IN Petersburg Pollution Control, Indianapolis
Power & Light Company, Series 1993-B,
5.400% 08/01/17 (b) 3,000 2,876
MS State Business Finance Corp., Systems Energy
Resouces Project, Series 1998,
5.875% 04/01/22 1,000 883
WV Pleasant County, Western Pennsylvania Power
Co., Series 1999-E,
5.500% 04/01/29 (b) 2,750 2,515
--------
6,274
--------
JOINT POWER AUTHORITY - 2.5%
IN Indianapolis, Citizens Gas & Coke Utility,
Series 1998-A,
5.250% 08/15/11 1,000 993
IN State Municipal Power Agency, Series B,
6.000% 01/01/12 2,000 2,115
NC State Municipal Power Agency, Catawba Electric
No. 1, Series 1998-A,
5.500% 01/01/15 640 629
NE American Public Energy Agency, Public Gas
Agency-Western Project, Series 1999-A,
5.250% 06/01/11 750 736
--------
4,473
--------
MUNICIPAL ELECTRIC - 2.4%
CA Sacramento Municipal Utilities District, Series L,
5.125% 07/01/22 1,850 1,666
NC University of North Carolina at
Chapel Hill,
(a) 08/01/14 1,000 435
NE Public Power District, Series 1998-A,
5.250% 01/01/11 1,000 997
TN Metropolitan Government, Nashville & Davidson
Counties, Series 1996-A,
(a) 05/15/09 (b) 1,825 1,108
--------
4,206
--------
WATER & SEWER - 7.2% CT State Clean Water Fund,
Series 1999,
5.125% 09/01/14 1,000 963
FL Miami-Dade County, Series 1999-A,
5.000% 10/01/29 (b) 4,135 3,584
MA State Water Resources Authority:
Series 1997-D,
5.000% 08/01/24 3,000 2,606
Series 1998-B,
4.500% 08/01/22 (b) 3,000 2,418
MS V Lakes Utility District,
8.250% 07/15/24 140 112
PA Erie Sewer Authority,
5.625% 06/01/17 1,500 1,569
WA King County, Series 1999,
5.250% 01/01/30 1,750 1,546
--------
12,798
--------
TOTAL MUNICIPAL BONDS (cost of $180,555) (h) 176,671
--------
OPTIONS - 0.1% CONTRACTS VALUE
- --------------------------------------------------------------------------
March 2000 Treasury Bond Put Strike
price 91.875,
expiration 02/19/00 13,700 $ 86
March 2000 Treasury Bond Call Strike
price 98.000,
expiration 02/19/00 9,400 25
--------
TOTAL OPTIONS (cost of $310) 111
--------
TOTAL INVESTMENTS -- 99.0% (cost of $180,865) 176,782
--------
SHORT-TERM OBLIGATIONS - 0.2% PAR
- --------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (i)
IL Health Facilities Authority Central Dupage
Hospital Daily,
3.750% 11/01/20 100 100
IL State Development Finance Authority, Council
for Jewish Elderly, Series 1995,
3.900% 03/01/15 200 200
MI Farmington Hills Hospital Finance Authority,
Botsford General Hospital, Series 1991-B,
3.450% 02/15/16 100 100
--------
TOTAL SHORT-TERM OBLIGATIONS 400
--------
OTHER ASSETS - NET - 0.8% 1,484
- --------------------------------------------------------------------------
NET ASSETS - 100.0% $178,666
--------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------
(a) Zero coupon bond.
(b) These securities, or a portion thereof, with a total market value of
$26,963, are being used to collateralize the delayed delivery purchases
indicated in note (c) below and open futures contracts.
(c) This security has been purchased on a delayed delivery basis for settlement
at a future date beyond the customary settlement date.
(d) This issuer is in default of certain debt covenants. Income is not being
accrued.
(e) This is a restricted security which was acquired on February 25, 1996 at a
cost of $1,432. The security represents 0.8% of the Fund's net assets as of
November 30, 1999.
(f) Accrued interest accumulates in the value of the security and is payable at
redemption.
(g) 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
payment of principal and interest.
(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 November 30, 1999.
ACRONYM NAME
------- ----
IFRN Inverse Floating Rate Note
Short futures contracts open at November 30, 1999,
PAR VALUE UNREALIZED
COVERED BY EXPIRATION APPRECIATION
TYPE CONTRACTS MONTH AT 11/30/99
- ------------------------------------------------------------------------------
Treasury Bond $24,300 March $290
====
See note to financial statements.
<PAGE>
- -----------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------
November 30, 1999
(In thousands except for per share amount)
ASSETS
Investments at value (cost $180,865) $176,782
Short-term obligations 400
--------
177,182
Cash 52
Receivable for:
Interest $3,251
Investments sold 90
Other 2 3,395
------ --------
Total assets 180,577
--------
LIABILITIES
Payable for:
Investments purchased 1,084
Distributions -- common shares 558
Distributions -- preferred shares 6
Variation margin on futures 84
Accrued:
Management fee 98
Bookkeeping fee 4
Deferred Trustees fees 4
Other 73
------
Total liabilities 1,911
--------
NET ASSETS $178,666
--------
COMPOSITION OF NET ASSETS
Auction Preferred Shares (2 shares issued and
outstanding at $25,000 per share) $ 60,000
Capital paid in -- common shares 127,121
Undistributed net investment income 98
Accumulated net realized loss (4,760)
Net unrealized appreciation (depreciation) on:
Investments (4,083)
Open futures contracts 290
--------
$178,666
--------
NET ASSETS at value for 11,509 common shares of
beneficial interest outstanding $118,660
--------
Net asset value per common share $ 10.31
--------
NET ASSETS at value including undeclared dividends
for 2 preferred shares outstanding $ 60,006
--------
See notes to financial statements.
<PAGE>
- -----------------------
STATEMENT OF OPERATIONS
- -----------------------
For the Period Ended November 30, 1999(a)
(In thousands)
INVESTMENT INCOME
Interest $ 7,886
EXPENSES
Management fee $ 860
Transfer agent fee 43
Bookkeeping fee 37
Trustees fee 19
Custodian fee 3
Audit fee 57
Legal fee 6
Reports to shareholders 19
Preferred shares remarketing commissions 40
Other 109 1,193
-------- --------
Net Investment Income 6,693
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
PORTFOLIO POSITIONS
Net realized gain on:
Investments 322
Closed futures contracts 722
--------
Net realized gain 1,044
Net change in unrealized appreciation/depreciation
during the period on:
Investments (14,219)
Open futures contracts 310
--------
Net Change in Unrealized Appreciation/Depreciation (13,909)
--------
Net Loss (12,865)
--------
Decrease in net assets from operations $ (6,172)
--------
(a) The Fund changed its fiscal year end from December 31 to November 30.
See notes to financial statements.
<PAGE>
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
(In thousands)
PERIOD ENDED YEAR ENDED
NOVEMBER 30 DECEMBER 31
INCREASE (DECREASE) IN NET ASSETS 1999(a) 1998
- --------------------------------------------------------------------------------
OPERATIONS
Net investment income $ 6,693 $ 6,877
Net realized gain 1,044 2,131
Net change in unrealized appreciation/depreciation (13,909) (1,260)
--------- ---------
Net Increase (Decrease) from Operations (6,172) 7,748
DISTRIBUTIONS
From net investment income -- common shares (6,025) (6,984)
From net investment income -- preferred shares (570) --
In excess of net investment income -- common shares -- (25)
--------- ---------
(12,767) 739
Fund Share Transactions:
Preferred share offering (net of $809 offering costs) 59,191 --
--------- ---------
Total Increase (Decrease) (46,424) 739
NET ASSETS
Beginning of period 132,242 131,503
--------- ---------
End of period (including undistributed net investment
income of $98 and none, respectively) $ 178,666 $ 132,242
--------- ---------
NUMBER OF FUND SHARES
Common:
Outstanding 11,509 11,509
--------- ---------
Preferred:
Issued in initial offering 2 --
Outstanding at
Beginning of period -- --
--------- ---------
End of period 2 --
--------- ---------
(a) The Fund changed its fiscal year end from December 31 to November 30.
See notes to financial statements.
<PAGE>
- -----------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
November 30, 1999
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION
Colonial Investment Grade Municipal Trust (the Trust), is a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end, management investment company. The Trust'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 Trust authorized an
unlimited number of common 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 is a summary of
significant accounting policies that are consistently followed by the Trust 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.
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 (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The Trust 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 Trust to subsequently invest at less advantageous prices.
FEDERAL INCOME TAXES
Consistent with the Trust'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 common 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 Trust's capital
accounts to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
Distributions to preferred shareholders are recorded daily and are payable at
the end of each dividend period. Each dividend payment period for the Auction
Preferred Shares (APS) is generally seven days. The applicable dividend rate for
the Auction Preferred Shares on November 30, 1999 was 3.90%. For the period
ended November 30, 1999, the Trust paid dividends to Auction Preferred
shareholders amounting to $569,859 representing an average APS dividend rate for
such period of 3.59%.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Colonial Management Associates, Inc. (the Advisor) is the investment Advisor
of the Trust and furnishes accounting and other services and office facilities
for a monthly fee equal to 0.65% annually of the Trust's average weekly net
assets.
BOOKKEEPING FEE
The Advisor provides bookkeeping and pricing services for a monthly fee equal to
$18,000 annually, plus 0.0233% annually of the Trust's average net assets over
$50 million.
OTHER
The Trust pays no compensation to its officers, all of whom are employees of the
Advisor.
The Trust's Trustees may participate in a deferred compensation plan which may
be terminated at any time. Obligations of the plan will be paid solely out of
the Trust's assets.
NOTE 3: PREFERRED SHARE OFFERING
On August 26, 1999, the Trust offered and currently has outstanding 2,400
Auction Preferred Shares. The Auction Preferred Shares are redeemable at the
option of the Trust on any dividend payment date at the redemption price of
$25,000 per share, plus an amount equal to any dividends accumulated on a daily
basis unpaid through the redemption date (whether or not such dividends have
been declared). Total proceeds, net of commissions, of $59,250,000 were received
upon completion of the offering.
Cost incurred by the Trust in connection with the offerings of the Auction
Preferred Shares totalling $809,649 were recorded as a reduction of capital paid
in excess of par applicable to common shares.
Under the Investment Company Act of 1940, the Trust is required to maintain
asset coverage of at least 200% with respect to the Auction Preferred Shares as
of the last business day of each month in which any Auction Preferred Shares are
outstanding. Additionally, the Trust is required to meet more stringent asset
coverage requirements under the terms of the Auction Preferred Shares and in
accordance with the guidelines prescribed by the rating agencies. Should these
requirements not be met, or should dividends accrued on the Auction Preferred
Shares not be paid, the Trust may be restricted in its ability to declare
dividends to common shareholders or may be required to redeem certain of the
Auction Preferred Shares. At November 30, 1999 there were no such restrictions
on the Trust.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY
During the period ended November 30, 1999, purchases and sales of investments,
other than short-term obligations, were $95,942,953 and $35,712,961,
respectively.
Unrealized appreciation (depreciation) at November 30, 1999, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
Gross unrealized appreciation $ 4,506,000
Gross unrealized depreciation (8,589,000)
-----------
Net unrealized depreciation $(4,083,000)
===========
CAPITAL LOSS CARRYFORWARDS
At November 30, 1999, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
2002 $ 454,000
2003 2,611,000
2004 1,455,000
----------
$4,520,000
==========
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
OTHER
The Trust had greater than 10% of its net assets at November 30, 1999, invested
in Illinois, Massachusetts, New York and Texas.
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 Trust may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Trust may invest in municipal and Treasury bond futures contracts and
purchase and write options on futures. The Trust will invest in these
instruments to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and/or market
conditions, for duration management, or when the transactions are economically
appropriate to the reduction of risk inherent in the management of the Trust and
not for trading purposes. The use of futures contracts 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 Advisor of the future direction of interest
rates. Any of these risks may involve amounts exceeding the amount recognized in
the Trust's Statement of Assets and Liabilities at any given time.
<PAGE>
- --------------------
FINANCIAL HIGHLIGHTS
- --------------------
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30 YEAR ENDED DECEMBER 31
------------ -----------------------------------------------
1999(a) 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.490 $ 11.430 $ 10.870 $ 11.050 $ 9.930
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.583 0.600 0.620 0.630 0.644
Net realized and unrealized gain
(loss) (1.119) 0.069 0.575 (0.193) 1.111
Preferred share offering cost (0.070) -- -- -- --
-------- -------- -------- -------- --------
Total from Investment Operations (0.606) 0.669 1.195 0.437 1.755
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS
From net investment income -- common
shares (0.524) (0.607) (0.635) (0.617) (0.635)
From net investment income --
preferred shares (0.050) -- -- -- --
In excess of net investment income -- (0.002) -- -- --
-------- -------- -------- -------- --------
Total Distributions Declared to
Shareholders (0.574) (0.609) (0.635) (0.617) (0.635)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.310 $ 11.490 $ 11.430 $ 10.870 $ 11.050
-------- -------- -------- -------- --------
Market price per share -- common shares $ 9.062 $ 11.187 $ 10.560 $ 10.130 $ 9.880
-------- -------- -------- -------- --------
Total return based on market value --
common shares (b) (14.64)%(c) 11.94% 10.76% 9.06% 13.87%
-------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 1.03%(e)(f) 0.77% 0.83% 0.88% 1.08%
Net investment income (d) 5.26%(e)(f) 5.24% 5.63% 5.80% 6.08%
Portfolio turnover 25%(c) 24% 21% 20% 37%
Net assets at end of period (000) --
Total Fund $178,666 $132,242 $131,503 $125,125 $127,118
(a) The Fund changed its fiscal year end from December 31 to November 30.
(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) Ratios reflect net assets available to common shares only; net investment income ratio also reflects reduction
for dividend payments to preferred shareholders.
(f) Annualized.
</TABLE>
- --------------------------------------------------------------------------------
1999 FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income tax
purposes.
- --------------------------------------------------------------------------------
<PAGE>
- ---------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------
TO THE TRUSTEES AND THE SHAREHOLDERS OF COLONIAL INVESTMENT GRADE MUNICIPAL
TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Investment Grade Municipal
Trust (the "Trust") at November 30, 1999, 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 Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with 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 November 30, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 12, 2000
<PAGE>
DIVIDEND REINVESTMENT PLAN
As a shareholder in the Trust 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 Trust 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 BankBoston, NA, the Trust's dividend disbursing agent and administrator of
the Plan, at P.O. Box 1681, Boston, Massachusetts 02105, Attention: Dividend
Reinvestment Department.
<PAGE>
TRANSFER AGENT
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Investment Grade Municipal Trust is:
BankBoston, NA
100 Federal Street
Boston, MA 02110
1-800-730-6001
The 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.
<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 V. 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)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (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
Academic Vice President and Dean of Faculties, Boston College (former Dean,
Boston College School of Management)
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG 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)
- -------------------------------------------------------
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST ANNUAL REPORT
- -------------------------------------------------------
IG-02/316I-1199 (1/00) 00/8
