UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-5785
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Colonial Investment Grade Municipal Trust
------------------------------------------------
(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Vincent Pietropaolo, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3698
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Date of fiscal year end: November 30, 2005
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Date of reporting period: November 30, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS
[GRAPHIC OMITTED]
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COLONIAL INVESTMENT GRADE MUNICIPAL TRUST ANNUAL REPORT
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NOVEMBER 30, 2005
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Not FDIC | May Lose Value
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Insured | No Bank Guarantee
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President's Message
The views expressed in the President's Letter and Portfolio Manager's Report
reflect current views of the respective parties. These views are not guarantees
of future performance and involve certain risks, uncertainties and assumptions
that are difficult to predict so actual outcomes and results may differ
significantly from the views expressed. These views are subject to change at any
time based upon economic, market or other conditions and the respective parties
disclaim any responsibility to update such views. These views may not be relied
on as investment advice and, because investment decisions for a Colonial Fund
are based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any particular Colonial Fund. References to specific company
securities should not be construed as a recommendation or investment advice.
Dear Shareholder:
The US financial markets withstood a host of unfavorable factors to deliver a
year of positive investment returns. Record energy prices took a significant
bite out of household budgets and raised operating costs for industry. Higher
short-term interest rates made borrowing more expensive. Two catastrophic
hurricanes exacted an enormous personal toll from Americans living in the Gulf
Coast: the storms claimed lives, disrupted energy flows and dealt a sharp blow
to local job markets. Yet, the US economy moved ahead at a healthy pace during
the 12-month period that began December 1, 2004 and ended November 30, 2005.
FIXED INCOME MARKETS DELIVERED MODEST GAINS
In this environment, the US fixed income markets delivered positive but modest
returns. Short-term interest rates rose steadily as the Federal Reserve Board
raised a key intrabank lending rate. Longer-term rates remained low during most
of the year. However, the yield on the 10-year US Treasury note, a bellwether
for the bond market edged up to 4.5% by the end of this reporting period. In
this environment, most domestic bond market sectors delivered low single-digit
returns. Generally, high-yield bonds continued to perform well despite a setback
in the spring, when bonds of certain high profile companies were downgraded.
However, municipal bonds generally performed better than high yield bonds--even
before accounting for their tax-exempt status--as state revenues increased and
budgets stabilized.
In the pages that follow, your fund's manager discusses key factors that
influenced performance. We urge you to read this report carefully and discuss
any questions you might have with your financial advisor.
As always, we thank you for choosing Colonial Funds.
Sincerely,
/s/ Christopher L. Wilson
Christopher L. Wilson
President, Columbia Funds
Christopher L. Wilson is Head of Mutual Funds for Columbia Management and
President of Columbia Funds, responsible for the day-to-day delivery of mutual
fund services to the firm's investors. With the exception of distribution, Chris
oversees all aspects of the mutual fund services operation, including treasury,
investment accounting and shareholder and broker services.
Chris joined Bank of America in August 2004.
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PORTFOLIO MANAGER'S REPORT
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For the 12-month period ended November 30, 2005, Colonial Investment Grade
Municipal Trust generated a total return of 10.68%, based on its market price.
The trust returned 6.19%, based on investment at net asset value. This was
slightly lower than the average return of the Lipper General Municipal Debt
Funds (Leveraged) Category, which was 6.61% for the same period. 1 The trust
benefited from its relatively shorter duration in the second half of the period,
which we believe made it less sensitive to interest rate changes than its peers.
Duration is a measure of interest rate sensitivity. An above-average stake in
lower quality, higher-yielding bonds also helped performance.
The trust lost some ground relative to its peer group because of a sizable
investment in non-callable bonds with lower yields. The trust also had less
exposure than many of its peers to airline and tobacco bonds, which hampered
returns as these sectors rallied even more than other high-yield sectors in the
first half of the period. Most of the trust's underperformance occurred in the
first half of the year. The trust made up some ground in the second half of the
year.
ECONOMIC GROWTH AIDED MUNI BOND MARKET
Municipal bonds benefited as an improving economy helped boost tax revenues.
Lower quality issues posted the biggest gains, as the yield difference between
lower quality and higher quality bonds continued to narrow--the yields on lower
quality bonds dropped more, so the prices rose more than higher quality bonds.
During the first half of the period, yields fell on municipal issues with
maturities of 10 years or longer, then climbed modestly in the second half of
the period, while yields on short-term municipal bonds rose sharply as the
Federal Reserve Board (the Fed) boosted the federal funds rate -- the overnight
rate at which banks lend each other money.
GAINS FROM LOWER QUALITY, HIGHER-YIELDING BONDS
High-yield bonds were among the trust's standouts, including US Airways, Inc.
bonds (0.4% of total investments) 2, which benefited as the airline emerged from
bankruptcy in September and merged with America West Airlines, Inc. (which was
not in the portfolio). In addition, hospital bonds helped performance in the
first half of the period, while housing bonds did well in the second half.
DISAPPOINTMENTS FROM LOWER COUPON ISSUES
The trust had above-average stakes in non-callable municipal bonds, which cannot
be redeemed by the issuer before their due date, and zero coupon municipal bonds
("zeros"), which are long-term bonds that make no periodic interest payment and
are bought at a deep discount to face value. Non-callable bonds fell from
investor favor during the first half of the period and detracted from
performance. Zeros trailed the market because they tend to be very sensitive to
interest rate changes and the market began anticipating higher rates. The more
sensitive a bond is to interest rate changes, the more its price will fall as
interest rates rise, or -- conversely -- rise as interest rates fall. We trimmed
the trust's stake in both non-callable bonds and zeros, but remained overweight
in each sector.
(Sidebar)
PRICE PER SHARE
AS OF 11/30/05 ($)
Market price 10.40
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Net asset value 11.16
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1-YEAR TOTAL RETURN
AS OF 11/30/05 (%)*
Market price 10.68
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Net asset value 6.19
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Lipper General Municipal
Debt Funds (Leveraged)
Category average 6.61
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All results shown assume reinvestment of distributions.
DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/01/04-11/30/05 ($)
0.66
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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 from their
original issue price. Some or all of this discount may be included in the
trust's ordinary income, and any market discount is taxable when distributed.
TOP 5 SECTORS
AS OF 11/30/05 (%)
Local general obligations 10.5
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Hospitals 9.8
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State appropriated 7.6
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Investor owned 7.2
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Multi-family 6.3
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QUALITY BREAKDOWN
AS OF 11/30/05 (%)
AAA 44.2
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AA 11.9
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A 8.4
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BBB 18.6
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BB 2.2
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B 0.7
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Non-rated 12.8
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Cash equivalents 1.2
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Sector and quality breakdowns are calculated as a percentage of total
investments and net assets, respectively. Ratings shown in the quality
breakdowns represent the rating assigned to a particular bond by one of the
following nationally recognized rating agencies: Standard & Poor's, a division
of The McGraw-Hill Companies, Inc., Moody's Investors Service, Inc. or Fitch
Ratings, Ltd. Ratings are relative and subjective and are not absolute standards
of quality. The trust's credit quality does not remove market risk. The majority
of the bonds that are non-rated are considered by the advisor to be of
non-investment grade quality.
Because the trust is actively managed, there is no guarantee that the trust will
continue to invest in these sectors or maintain these quality breakdowns in the
future.
_____________________
1 Lipper Inc., a widely respected data provider in the industry, calculates
an average total return (assuming reinvestment of distributions) for
mutual funds with investment objectives similar to those of the fund.
Lipper makes no adjustment for the effect of sales loads.
2 Holdings are discussed as of November 30, 2005, and are subject to
change.
* See page 23 for the long term returns based on market price.
| 1
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PORTFOLIO MANAGER'S REPORT (CONTINUED)
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MANAGING THE TRUST'S DIVIDEND YIELD
We continued to look for opportunities to improve the trust's income, which
aided performance as interest rates rose and bond prices fell during the second
half of the period. At the end of November 2005, about 19% of the trust's assets
were in BBB-rated securities, compared to 15% a year earlier. About 13% of the
trust's assets were in non-rated bonds at period end, compared to 11% a year
before. Bonds that are not rated by the credit ratings agencies tend to have
higher yields because they are often lower quality. However, the trust's
dividend yield declined over the 12-month period, as rising short-term interest
rates eroded some of the income the trust derives from leverage. The trust's
leverage comes from its preferred shares, which were issued in 1999 to allow the
trust to borrow against its underlying investments. We invest the proceeds from
the preferred shares in longer maturity, higher-yielding bonds, and then pay out
to preferred shareholders a short-term rate influenced by the federal funds
rate. As the federal funds rate climbed, the payout rate to preferred
shareholders rose, reducing the income available to the common shareholders. We
believe that the trust's leverage continued to give the common shareholders a
higher dividend payment than would have been available without it.
EXPECTATIONS FOR STABLE LONG-TERM YIELDS
With economic growth remaining strong at period end, we think the Fed is likely
to continue raising short-term interest rates. We believe that higher short-term
interest rates have the potential to mute inflation expectations, benefiting
longer-maturity bonds whose yields reflect an inflation premium. Yields on
long-term bonds have the potential to remain reasonably stable, while
higher-yielding bonds may continue to generate strong returns.
/s/ Maureen G. Newman
Maureen G. Newman has been the portfolio manager of Colonial Investment Grade
Municipal Trust since January 2002. Ms. Newman has managed various other
municipal funds for Columbia Management Advisors, LLC or its predecessors or
affiliate organizations since May 1996.
SHARES OF CLOSED-END FUNDS FREQUENTLY TRADE AT A DISCOUNT TO NET ASSET VALUE.
THE PRICE OF THE TRUST'S SHARES IS DETERMINED BY A NUMBER OF FACTORS, SEVERAL OF
WHICH ARE BEYOND THE CONTROL OF THE TRUST. THEREFORE, THE TRUST CANNOT PREDICT
WHETHER ITS SHARES WILL TRADE AT, BELOW OR ABOVE NET ASSET VALUE.
Investing in fixed-income securities may involve certain risks, including the
credit quality of individual issuers, possible prepayments, market or economic
developments and yield and share price fluctuations due to changes in interest
rates. When interest rates go up, bond prices typically drop, and vice versa.
Investing in high-yield or "junk" bonds offers the potential for higher income
than investments in investment-grade bonds, but also has a higher degree of
risk. Changes in economic conditions or other circumstances may adversely affect
a high-yield bond issuer's ability to make timely principal and interest
payments.
Tax-exempt investing offers current tax-exempt income, but it also involves
special risks. The value of the trust shares will be affected by interest rate
changes and the creditworthiness of issues held in the trust. Interest income
from certain tax-exempt bonds may be subject to certain state and local taxes
and, if applicable, the alternative minimum tax. Capital gains are not exempt
from income taxes.
2 |
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INVESTMENT PORTFOLIO
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November 30, 2005
MUNICIPAL BONDS - 141.9% PAR ($) VALUE ($)
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EDUCATION - 10.7%
EDUCATION - 7.1%
FL Broward County Educational
Facilities Authority,
Nova Southeastern University,
Series 2004 B,
5.500% 04/01/24 155,000 161,398
IL Chicago State University,
Series 1998,
Insured: MBIA
5.500% 12/01/23 1,085,000 1,238,191
MN University of Minnesota,
Series 1996 A:
5.500% 07/01/21 2,000,000 2,256,560
5.750% 07/01/14 500,000 568,095
PA Higher Education Facilities Authority,
Philadelphia University,
Series 2004 A,
5.125% 06/01/25 500,000 499,080
TN Metropolitan Government, Nashville
& Davidson County, Health &
Educational Facilities Board,
Meharry Medical College Project,
Refunding,
Series 1996,
Insured: AMBAC
6.000% 12/01/16 1,575,000 1,813,739
TX Texas Tech University,
Series 1999,
Insured: AMBAC
5.000% 02/15/29 2,500,000 2,566,850
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Education Total 9,103,913
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PREP SCHOOL - 1.1%
MA Industrial Finance Agency,
Tabor Academy,
Series 1998,
5.400% 12/01/28 1,000,000 1,021,860
NH Business Finance Authority,
Proctor Academy,
Series 1998 A,
5.400% 06/01/17 365,000 375,698
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Prep School Total 1,397,558
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STUDENT LOAN - 2.5%
CT Higher Education Supplemental
Loan Authority, Senior Family
Education Loan Program,
Series 2005 A, AMT,
Insured: MBIA
4.250% 11/15/19 1,700,000 1,664,895
PAR ($) VALUE ($)
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NE Nebhelp, Inc.,
Series 1993 A-6, AMT,
Insured: MBIA
6.450% 06/01/18 1,500,000 1,535,595
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Student Loan Total 3,200,490
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EDUCATION TOTAL 13,701,961
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HEALTH CARE - 25.2%
CONTINUING CARE RETIREMENT - 6.9%
CA La Verne,
Brethren Hillcrest Homes,
Series 2003 B,
6.625% 02/15/25 350,000 380,947
CO Health Facilities Authority,
Covenant Retirement Communities, Inc.,
Series 2005 B,
5.000% 12/01/16 860,000 880,537
CT Development Authority,
Elim Park Baptist Home, Inc.,
Series 2003,
5.750% 12/01/23 250,000 262,410
FL Capital Projects Finance Authority,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 500,000 554,660
FL Lee County Industrial Development
Authority, Shell Point Village Project,
Series 1999 A,
5.500% 11/15/29 175,000 176,320
GA Fulton County Residential
Care Facilities Authority, Canterbury
Court Project,
Series 2004 A,
6.125% 02/15/34 250,000 252,412
GA Savannah Economic Development
Authority, Marshes of Skidaway,
Series 2003 A,
7.400% 01/01/24 250,000 265,227
IL Health Facilities Authority:
Lutheran Senior Ministries, Inc.,
Series 2001 A,
7.375% 08/15/31 250,000 264,897
Washington & Jane Smith Community,
Series 2003 A,
7.000% 11/15/32 250,000 261,760
MD Westminster Economic Development
Authority, Carroll Lutheran Village, Inc.,
Series 2004 A,
5.875% 05/01/21 500,000 513,915
MO Cole County Industrial Development
Authority, Lutheran Senior Services,
Heisinger Project, Series 2004,
5.500% 02/01/35 500,000 516,460
NC Medical Care Commission,
United Methodist Retirement Home, Inc.,
Series 2005 C,
5.250% 10/01/24 250,000 250,308
See Accompanying Notes to Financial Statements. | 3
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INVESTMENT PORTFOLIO (CONTINUED)
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November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
CONTINUING CARE RETIREMENT (CONTINUED)
NJ Economic Development Authority:
Lions Gate,
Series 2005 A:
5.750% 01/01/25 310,000 315,574
5.875% 01/01/37 100,000 101,304
Winchester Gardens,
Series 2004 A:
5.750% 11/01/24 350,000 365,613
5.800% 11/01/31 250,000 258,350
PA Chartiers Valley Industrial &
Commercial Development Authority,
Friendship Village/South,
Series 2003 A,
5.250% 08/15/13 500,000 509,575
PA Delaware County Authority,
Dunwoody Village,
Series 2003 A,
5.375% 04/01/17 250,000 262,885
PA Montgomery County Industrial
Development Authority, Whitemarsh
Continuing Care Retirement Community,
Series 2005:
6.125% 02/01/28 200,000 208,820
6.250% 02/01/35 300,000 313,698
TN Johnson City Health & Educational
Facilities Authority, Appalachian Christian
Village Project,
Series 2004 A,
6.250% 02/15/32 250,000 251,945
TN Shelby County Health, Educational
& Housing Facilities Board,
Germantown Village,
Series 2003 A,
7.250% 12/01/34 150,000 157,119
TX Abilene Health Facilities
Development Corp., Sears Methodist
Retirement Center,
Series 2003 A,
7.000% 11/15/33 500,000 537,680
VA Virginia Beach Development Authority,
Westminster-Canterbury of Hampton,
Series 2005,
5.250% 11/01/26 300,000 303,447
VA Winchester Industrial Development
Authority, Westminster-Canterbury,
Series 2005 A,
5.300% 01/01/35 250,000 250,455
WI Health & Educational
Facilities Authority:
Eastcastle Place, Inc.,
Series 2004,
6.125% 12/01/34 150,000 151,985
Three Pillars Senior Living Communities,
Series 2003,
5.600% 08/15/23 300,000 307,476
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Continuing Care Retirement Total 8,875,779
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PAR ($) VALUE ($)
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HEALTH SERVICES - 0.4%
CO Health Facilities Authority,
National Jewish Medical & Research Center,
Series 1998 B,
5.375% 01/01/29 250,000 250,305
MA Health & Educational Facilities Authority,
Civic Investments, Inc.,
Series 2002 A,
9.000% 12/15/15 250,000 303,875
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Health Services Total 554,180
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HOSPITALS - 14.3%
AR Washington County,
Washington Regional Medical Center,
Series 2005 B,
5.000% 02/01/30 400,000 395,000
CA Health Facilities Financing Authority,
Catholic Healthcare West,
Series 2004 I,
4.950% 07/01/26 200,000 209,170
CA Rancho Mirage Joint Powers
Financing Authority,
Eisenhower Medical Center,
Series 2004,
5.625% 07/01/29 1,000,000 1,041,020
CA Statewide Communities Development
Authority, Kaiser Permanente,
Series 2004 I,
3.450% 04/01/35 250,000 242,275
CA Turlock Health Facility Revenue,
Emanuel Medical Center, Inc.,
Series 2004,
5.375% 10/15/34 500,000 504,460
CO Health Facilities Authority:
Evangelical Lutheran Good
Samaritan Foundation,
Series 2005,
5.000% 06/01/35 125,000 124,923
Parkview Medical Center,
Series 2004,
5.000% 09/01/25 250,000 251,738
Vail Valley Medical Center Project,
Series 2004,
5.000% 01/15/20 250,000 255,127
DE Health Facilities Authority,
Beebe Medical Center,
Series 2004 A,
5.000% 06/01/16 500,000 517,430
FL Orange County Health Facilities
Authority, Orlando Regional
Healthcare System:
Series 1996 C,
Insured: MBIA
6.250% 10/01/13 720,000 829,318
Series 1999 E,
6.000% 10/01/26 175,000 183,661
Series 2002,
5.750% 12/01/32 150,000 158,117
4 | See Accompanying Notes to Financial Statements.
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INVESTMENT PORTFOLIO (CONTINUED)
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November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
FL South Broward Hospital District,
Series 2002,
5.625% 05/01/32 1,000,000 1,060,550
IL Development Finance Authority,
Adventist Health System,
Series 1999,
5.500% 11/15/20 900,000 937,836
IL Southwestern Development Authority,
Anderson Hospital,
Series 1999,
5.375% 08/15/15 380,000 392,673
IN Health Facility Financing Authority,
Community Foundation of Northwest
Indiana, Inc.,
Series 2004 A,
6.000% 03/01/34 150,000 157,598
KS University Hospital Authority,
Kansas University Health System,
Series 2002,
5.625% 09/01/32 500,000 527,430
LA Public Facilities Authority,
Touro Infirmary,
Series 1999 A,
5.625% 08/15/29 500,000 484,375
MA Health & Educational Facilities
Authority:
Milford-Whitinsville
Regional Hospital,
Series 1998 C,
5.750% 07/15/13 500,000 517,660
South Shore Hospital,
Series 1999 F,
5.750% 07/01/29 1,000,000 1,061,740
MD Health & Higher Educational Facilities
Authority, Adventist Healthcare,
Series 2003 A:
5.000% 01/01/16 250,000 254,312
5.750% 01/01/25 250,000 262,332
MI Hospital Finance Authority,
Oakwood Obligated Group,
Series 2003,
5.500% 11/01/18 400,000 427,016
MN St. Paul Housing & Redevelopment
Authority, HealthEast, Inc.:
Series 1997 A,
5.700% 11/01/15 250,000 257,555
Series 2005,
5.150% 11/15/20 250,000 252,865
MT Facilities Finance Authority,
Montana's Children's Home
and Hospital,
Series 2005 B,
4.750% 01/01/24 250,000 250,540
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
NH Higher Educational &
Health Facilities Authority,
Catholic Medical Center,
Series 2002,
6.125% 07/01/32 500,000 528,335
NJ Health Care Facilities Authority,
Capital Health Systems, Inc.,
Series 2003 A,
5.750% 07/01/23 350,000 372,519
NV Henderson,
Catholic Healthcare West:
Series 1998,
5.375% 07/01/26 250,000 255,472
Series 1999 A,
6.750% 07/01/20 500,000 567,200
NY Dormitory Authority:
Mount Sinai Hospital, NYU
Medical Center,
Series 2000,
5.500% 07/01/26 200,000 202,656
Series 2000 C,
5.500% 07/01/26 300,000 303,999
North Shore - Long Island Jewish
Medical Center,
Series 2003,
5.500% 05/01/33 100,000 104,557
OH Lakewood Hospital Improvement,
Lakewood Hospital Association,
Series 2003,
5.500% 02/15/14 385,000 411,723
RI Health & Education Building Corp.,
Hospital Foundation, Lifespan
Obligated Group,
Series 2002,
6.375% 08/15/21 500,000 549,475
SC Jobs-Economic Development
Authority, Bon Secours - St. Francis
Medical Center, Inc.,
Series 2002 A,
5.500% 11/15/23 500,000 523,495
SC Lexington County Health Services
District, Lexington Medical Center Project,
Refunding,
Series 2003,
5.500% 11/01/23 500,000 525,165
SD Health & Educational Facilities
Authority, Sioux Valley Hospital &
Health System,
Series 2004 A,
5.250% 11/01/34 250,000 257,087
TX Comal County Health Facilities
Development Authority,
McKenna Memorial,
Series 2002 A,
6.250% 02/01/32 500,000 530,120
See Accompanying Notes to Financial Statements. | 5
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INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
VA Augusta County Industrial
Development Authority,
Augusta Health Care, Inc.,
Series 2003,
5.250% 09/01/19 1,000,000 1,071,970
WI Health & Educational Facilities
Authority, Aurora Health Care, Inc.,
Series 2003,
6.400% 04/15/33 175,000 190,755
Fort Healthcare, Inc.,
Series 2004,
5.375% 05/01/18 385,000 402,829
--------------
Hospitals Total 18,354,078
--------------
INTERMEDIATE CARE FACILITIES - 0.5%
IL Development Finance Authority,
Hoosier Care, Inc.,
Series 1999 A,
7.125% 06/01/34 460,000 421,581
MA Development Finance Agency,
Evergreen Center, Inc.,
Series 2005,
5.000% 01/01/24 250,000 244,460
--------------
Intermediate Care Facilities Total 666,041
--------------
NURSING HOMES - 3.1%
AK Juneau,
St. Ann's Care Center, Inc.,
Series 1999,
6.875% 12/01/25 500,000 487,400
CO Health Facilities Authority,
Pioneer Health Care,
Series 1989,
10.500% 05/01/19 1,540,000 1,237,066
DE Economic Development Authority,
Churchman Village Project,
Series 1991 A,
10.000% 03/01/21 865,000 878,719
PA Chester County Industrial
Development Authority,
Pennsylvania Nursing Home,
Series 2002,
8.500% 05/01/32 750,000 780,517
PA Delaware County Industrial
Development Authority,
Care Institute-Main Line LLC,
Series 2005,
9.000% 08/01/31 540,000 514,723
WI Health & Educational Facilities Authority,
Metro Health Foundation, Inc.,
Series 1993,
11.000% 11/01/22(a) 966,819 97
--------------
Nursing Homes Total 3,898,522
--------------
HEALTH CARE TOTAL 32,348,600
--------------
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
HOUSING - 11.9%
ASSISTED LIVING / SENIOR - 1.1%
NC Medical Care Commission
Health Care Facilities,
DePaul Community Facilities,
Series 1998,
6.125% 01/01/28 500,000 465,285
NY Suffolk County Industrial
Development Agency,
Gurwin-Jewish Phase II,
Series 2004,
6.700% 05/01/39 500,000 517,675
TX Bell County Health Facility
Development Corp.,
Care Institute, Inc.,
Series 1994,
9.000% 11/01/24 450,000 428,081
--------------
Assisted Living / Senior Total 1,411,041
--------------
MULTI - FAMILY - 7.8%
DC Housing Finance Agency,
Henson Ridge,
Series 2004 E, AMT,
Insured: FHA
5.100% 06/01/37 500,000 505,465
FL Broward County Housing
Finance Authority, Chaves
Lake Apartment Project,
Series 2000 A, AMT,
7.500% 07/01/40 500,000 501,110
FL Clay County Housing
Finance Authority,
Madison Commons Apartments,
Series 2000 A, AMT,
7.450% 07/01/40 250,000 251,265
MA Housing Finance Agency:
Series 2004 A, AMT,
Insured: FSA
5.250% 07/01/25 2,000,000 2,045,080
Series 2005 B,
5.000% 06/01/30 455,000 465,114
Series 2005 E, AMT,
5.000% 12/01/28 250,000 250,000
ME Housing Authority,
Series 2005 A-2, AMT,
4.950% 11/15/27 500,000 500,330
MN White Bear Lake,
Birch Lake Townhome Project:
Series 1989 A, AMT,
10.250% 07/15/19 775,000 736,250
Series 1989 B, AMT,
(b) 07/15/19 668,000 210,447
Munimae TE Bond Subsidiary LLC,
Series C-3, AMT,
5.500% 11/29/49 1,000,000 1,002,860
6 | See Accompanying Notes to Financial Statements.
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
HOUSING (CONTINUED)
MULTI - FAMILY (CONTINUED)
NC Medical Care Commission,
ARC Projects,
Series 2004 A,
5.800% 10/01/34 305,000 312,552
NJ Middlesex County
Improvement Authority,
Street Student Housing Project,
Series 2004 A,
5.000% 08/15/18 300,000 308,727
NM Mortgage Finance Authority,
Series 2005 E, AMT,
Insured: FHA
4.800% 09/01/40 500,000 482,520
NY New York City Housing
Development Corp.,
Series 2005 F-1,
4.650% 11/01/25 500,000 509,945
OH Montgomery County Multifamily;
Housing Revenue,
Series 2005,
4.950% 11/01/35 250,000 250,185
Resolution Trust Corp.,
Pass-Through Certificates,
Series 1993 A,
8.500% 12/01/16 227,741 223,345
TN Chattanooga Health, Educational
& Housing Facility Board,
CDFI Phase I LLC Project,
Series 2005 A,
5.000% 10/01/25 500,000 491,325
WA Tacoma Housing Authority,
Redwood,
Series 2005, AMT,
Insured: GNMA
5.050% 11/20/37 1,040,000 1,046,053
--------------
Multi - Family Total 10,092,573
--------------
SINGLE - FAMILY - 3.0%
CO Housing Finance Authority,
Series 2000 B-2, AMT,
7.250% 10/01/31 85,000 88,775
IL Chicago,
Series 2000 A, AMT,
Guarantor: FNMA
7.150% 09/01/31 35,000 35,535
MA Housing Finance Agency,
Series 2005 118, AMT,
4.850% 12/01/35 750,000 730,335
ME Housing Authority,
Series 2005 D-2, AMT,
4.800% 11/15/36 1,500,000 1,472,205
MT Board of Housing,
Series 2005 A, AMT,
5.000% 06/01/36 1,000,000 1,005,640
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
WI Housing & Economic
Development Authority,
Series 2005 C, AMT,
4.875% 03/01/36 500,000 487,755
--------------
Single - Family Total 3,820,245
--------------
HOUSING TOTAL 15,323,859
--------------
-------------------------------------------------------------------------------
INDUSTRIALS - 3.1%
FOOD PRODUCTS - 1.0%
MI Strategic Fund,
Michigan Sugar Co.,
Carrollton Project,
Series 1998 C, AMT,
6.550% 11/01/25 250,000 235,832
NE Washington County WasteWater
Facilities Authority,
Cargill, Inc.,
Series 2002, AMT,
5.900% 11/01/27 1,000,000 1,076,530
--------------
Food Products Total 1,312,362
--------------
FOREST PRODUCTS & PAPER - 1.1%
AL Camden Industrial
Development Board,
Weyerhaeuser Co.,
Series 2003 B, AMT,
6.375% 12/01/24 275,000 299,593
AR Camden Environmental
Improvement Authority,
International Paper Co.,
Series 2004 A, AMT,
5.000% 11/01/18 500,000 492,965
FL Escambia County Environmental
Improvement Revenue,
International Paper Co.,
Series 2003 A, AMT,
5.750% 11/01/27 250,000 256,050
MS Lowndes County,
Weyerhaeuser Co. Project,
Series 1992 B,
6.700% 04/01/22 325,000 387,247
--------------
Forest Products & Paper Total 1,435,855
--------------
MANUFACTURING - 0.2%
MO Development Finance Board,
Procter & Gamble Co.,
Series 1999, AMT,
5.200% 03/15/29 250,000 267,933
--------------
Manufacturing Total 267,933
--------------
OIL & GAS - 0.8%
NJ Middlesex County
Pollution Control Authority,
Amerada Hess Corp.,
Series 2004,
6.050% 09/15/34 175,000 184,293
See Accompanying Notes to Financial Statements. | 7
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
INDUSTRIALS (CONTINUED)
OIL & GAS (CONTINUED)
NV Clark County Industrial
Development Authority,
Southwest Gas Corp.,
Series 2003 E, AMT,
5.800% 03/01/38 250,000 267,112
TX Gulf Coast Industrial
Development Authority,
Citgo Petroleum,
Series 1998, AMT,
8.000% 04/01/28 250,000 281,020
VI Public Finance Authority,
Hovensa LLC,
Series 2003, AMT,
6.125% 07/01/22 200,000 218,488
--------------
Oil & Gas Total 950,913
--------------
INDUSTRIALS TOTAL 3,967,063
--------------
-------------------------------------------------------------------------------
OTHER - 9.6%
POOL / BOND BANK - 1.4%
KS Development Finance Authority,
Water Pollution Control,
Series 2001,
5.500% 11/01/17 1,125,000 1,271,160
OH Summit County Port Authority,
Seville Project,
Series 2005 A,
5.100% 05/15/25 500,000 498,765
--------------
Pool / Bond Bank Total 1,769,925
--------------
REFUNDED / ESCROWED (c) - 7.1%
CA Golden State Tobacco
Securitization Corp.,
Series 2003 B,
Pre-refunded 06/01/13,
5.500% 06/01/43 500,000 553,420
CO Highlands Ranch Metropolitan
District No. 2,
Series 1996,
Escrowed to Maturity,
Insured: FSA
6.500% 06/15/11 725,000 828,001
FL Orange County Health
Facilities Authority,
Orlando Regional Healthcare System,
Series 1996 C,
Escrowed to Maturity,
Insured: MBIA
6.250% 10/01/13 1,740,000 2,023,898
IL Health Facilities Authority,
Swedish American Hospital,
Series 2000,
Pre-refunded 05/15/10,
6.875% 11/15/30 500,000 563,890
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
MA Development Finance Agency,
Western New England College,
Series 2002,
Pre-refunded 12/01/12,
6.125% 12/01/32 315,000 360,678
MD Health & Higher Educational
Facilities Authority,
University of Maryland Medical System,
Series 2000,
Pre-refunded 07/01/10
6.750% 07/01/30 250,000 285,473
MI Garden City School District,
Series 2001,
Pre-refunded 05/01/11
Insured: Q-SBLF
5.500% 05/01/16 325,000 351,491
MO Health & Educational
Facilities Authority,
Central Institute for the Deaf,
Series 1999,
Pre-refunded 01/01/10
Insured: RAD
5.850% 01/01/22 600,000 650,994
NC Lincoln County,
Lincoln County Hospital,
Series 1991,
Escrowed to Maturity,
9.000% 05/01/07 45,000 47,097
NC Municipal Power Agency,
Catawba No. 1,
Series 1986,
Escrowed to Maturity,
5.000% 01/01/20 1,670,000 1,818,129
NY Convention Center Operating Corp.,
Yale Building Project,
Series 2003,
(b) 06/01/08 700,000 641,928
NY New York City,
Series 1996 A,
Pre-refunded 08/01/06,
7.000% 08/01/07 80,000 83,191
TN Shelby County Health,
Educational & Housing Facilities Board,
Open Arms Development Centers:
Series 1992 A,
Pre-refunded 08/01/07,
9.750% 08/01/19 390,000 443,551
Series 1992 C,
Pre-refunded 08/01/07,
9.750% 08/01/19 395,000 449,237
--------------
Refunded / Escrowed Total 9,100,978
--------------
8 | See Accompanying Notes to Financial Statements.
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
OTHER (CONTINUED)
TOBACCO - 1.1%
CA Golden State Tobacco
Securitization Corp.,
Series 2003 A-1,
6.250% 06/01/33 750,000 813,907
SC Tobacco Settlement
Financing Corp.,
Series 2001 B,
6.375% 05/15/28 400,000 421,016
WI Badger Tobacco Asset
Securitization Corp.,
Series 2002,
6.375% 06/01/32 250,000 265,905
--------------
Tobacco Total 1,500,828
--------------
OTHER TOTAL 12,371,731
--------------
-------------------------------------------------------------------------------
OTHER REVENUE - 2.6%
HOTELS - 0.6%
MA Boston Industrial Development
Finance Authority,
Crosstown Center Project,
Series 2002, AMT,
6.500% 09/01/35 285,000 283,210
NJ Middlesex County
Improvement Authority,
Heldrich Associates LLC,
Series 2005 B,
6.250% 01/01/37 500,000 492,645
--------------
Hotels Total 775,855
--------------
RECREATION - 1.2%
CA Cabazon Band Mission Indians,
Series 2004:
8.375% 10/01/15 105,000 107,148
8.750% 10/01/19 390,000 397,952
DC District of Columbia,
Smithsonian Institute,
Series 1997,
5.000% 02/01/28 1,000,000 1,011,900
--------------
Recreation Total 1,517,000
--------------
RETAIL - 0.8%
MN International Falls,
Boise Cascade Corp. Project,
Series 1999, AMT,
6.850% 12/01/29 500,000 536,960
NY New York City Industrial
Development Agency,
IAC/Interactive Corp.,
Series 2005,
5.000% 09/01/35 500,000 496,515
--------------
Retail Total 1,033,475
--------------
OTHER REVENUE TOTAL 3,326,330
--------------
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
RESOURCE RECOVERY - 3.0%
DISPOSAL - 1.2%
IL Development Finance Authority,
Waste Management, Inc.,
Series 1997, AMT,
5.050% 01/01/10 500,000 517,305
MI Strategic Fund,
Waste Management, Inc.,
Series 1995, AMT,
5.200% 04/01/10 500,000 520,910
OH Solid Waste,
Republic Services,
Series 2004, AMT,
4.250% 04/01/33 500,000 484,265
--------------
Disposal Total 1,522,480
--------------
RESOURCE RECOVERY - 1.8%
MA Industrial Finance Agency,
Ogden Haverhill Project,
Series 1998 A, AMT,
5.450% 12/01/12 1,250,000 1,272,138
PA Delaware County Industrial
Development Authority, BFI,
Series 1997 A,
6.100% 07/01/13 1,000,000 1,058,930
--------------
Resource Recovery Total 2,331,068
--------------
RESOURCE RECOVERY TOTAL 3,853,548
--------------
-------------------------------------------------------------------------------
TAX - BACKED - 47.9%
LOCAL APPROPRIATED - 5.0%
CA Compton,
Civic Center & Capital Improvements,
Series 1997 A,
5.500% 09/01/15 500,000 518,385
CA Los Angeles County,
Series 1999 A,
Insured: AMBAC
(b) 08/01/21 2,135,000 1,013,783
MN Andover Economic
Development Authority,
Andover Community Center,
Series 2004,
5.000% 02/01/19 600,000 620,280
MN Hibbing Economic
Development Authority,
Series 1997,
6.400% 02/01/12 335,000 339,385
MO St. Louis Industrial
Development Authority,
St. Louis Convention Center,
Series 2000,
Insured: AMBAC
(b) 07/15/18 300,000 169,368
See Accompanying Notes to Financial Statements. | 9
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
TAX - BACKED (CONTINUED)
LOCAL APPROPRIATED (CONTINUED)
SC Berkeley County School District,
Series 2003,
5.000% 12/01/28 500,000 502,290
SC Dorchester County School
District No. 2,
Series 2004,
5.250% 12/01/29 250,000 255,943
SC Lancaster Educational
Assistance Program,
Lancaster County School District,
Series 2004,
5.000% 12/01/26 550,000 551,182
SC Laurens County School
District No. 55,
Series 2005,
5.250% 12/01/30 350,000 355,996
SC Newberry County School
District Project,
Series 2005,
5.000% 12/01/30 350,000 349,010
TX Houston Independent School District,
Series 1998 A,
Insured: AMBAC
(b) 09/15/13 2,500,000 1,797,650
--------------
Local Appropriated Total 6,473,272
--------------
LOCAL GENERAL OBLIGATIONS - 15.3%
CA Modesto High School District,
Series 2002 A,
Insured: FGIC
(b) 08/01/19 1,350,000 718,268
CA Pomona Unified School District,
Series 2000 A,
Insured: MBIA
6.450% 08/01/22 1,000,000 1,246,800
CA Vallejo City Unified School District,
Series 2002 A,
Insured: MBIA
5.900% 08/01/25 2,000,000 2,351,960
CA West Contra Costa Unified
School District,
Series 2001 B,
Insured: MBIA
6.000% 08/01/24 250,000 301,985
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
CO Highlands Ranch Metropolitan
District No. 2,
Series 1996,
Insured: FGIC
6.500% 06/15/11 650,000 742,976
IL Chicago:
Series 1996 A-2,
Insured: AMBAC
6.250% 01/01/14 1,480,000 1,710,273
Series 1999,
Insured: FGIC
5.500% 01/01/23 1,000,000 1,136,290
Series 2001 A,
Insured: MBIA
(b) 01/01/15 3,000,000 2,016,540
IL Hoffman Estates Park District,
Series 2004,
5.000% 12/01/16 500,000 523,995
IL St. Clair County Public
Building Commission,
Series 1997 B,
Insured: FGIC
(b) 12/01/13 2,000,000 1,432,160
IL St. Clair County,
Series 1999,
Insured: FGIC
(b) 10/01/16 2,000,000 1,235,480
IL Will County School District No. 17,
Series 2001,
Insured: AMBAC
8.500% 12/01/15 1,400,000 1,905,736
MI St. John's Public School,
Series 1998,
Insured: FGIC
5.100% 05/01/25 1,000,000 1,093,480
NY New York City,
Series 2003 J,
5.500% 06/01/18 500,000 538,460
OH Kenston Local School District,
Series 2003,
Insured: MBIA
5.000% 12/01/23 1,000,000 1,049,860
TX Brenham,
Series 2001,
Insured: FSA
5.375% 08/15/16 1,040,000 1,119,414
TX Dallas County Flood
Control District,
Series 2002,
7.250% 04/01/32 500,000 531,330
--------------
Local General Obligations Total 19,655,007
--------------
10 | See Accompanying Notes to Financial Statements.
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
TAX - BACKED (CONTINUED)
SPECIAL NON - PROPERTY TAX - 6.4%
FL Tampa Sports Authority,
Tampa Bay Arena Project,
Series 1995,
Insured: MBIA
5.750% 10/01/25 1,000,000 1,183,230
KS Wyandotte County
Unified Government,
Series 2005 B,
5.000% 12/01/20 100,000 102,726
NJ Economic Development Authority,
Cigarette Tax,
Series 2004,
5.750% 06/15/29 500,000 524,030
NM Dona Ana County,
Series 1998,
Insured: AMBAC
5.500% 06/01/15 1,000,000 1,117,870
NY Local Government Assistance Corp.,
Series 1993 E,
5.000% 04/01/21 3,000,000 3,209,430
NY New York City Transitional
Finance Authority,
Series 1998 A,
5.000% 11/15/26 1,960,000 2,022,681
--------------
Special Non - Property Tax Total 8,159,967
--------------
SPECIAL PROPERTY TAX - 4.1%
CA Huntington Beach Community
Facilities District,
Grand Coast Resort,
Series 2001,
6.450% 09/01/31 300,000 311,229
CA Lincoln Community Facilities
District No. 2003-1,
Series 2004,
5.550% 09/01/18 500,000 522,525
CA Oakdale Public Financing Authority,
Central City Redevelopment Project,
Series 2004,
5.375% 06/01/33 500,000 501,860
FL Celebration Community
Development District,
Series 2003 A,
6.400% 05/01/34 245,000 257,706
FL Double Branch Community
Development District,
Series 2002 A,
6.700% 05/01/34 330,000 354,558
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
FL Seven Oaks Community
Development District:
Series 2004 A,
5.875% 05/01/35 500,000 502,595
Series 2004 B,
5.000% 05/01/09 245,000 244,716
GA Atlanta Tax Allocation,
Eastside Project,
Series 2005 A, AMT,
5.625% 01/01/16 400,000 406,720
IL Chicago,
Pilsen Redevelopment,
Series 2004 B,
6.750% 06/01/22 610,000 631,576
IL Lincolnshire Special Services Area No. 1,
Sedgebrook Project,
Series 2004,
6.250% 03/01/34 225,000 234,803
IL Plano Special Service Area
No. 4 Special Tax,
Series 2005 5-B,
6.000% 03/01/35 750,000 735,855
MO Riverside,
L-385 Levee Project,
Series 2004,
5.250% 05/01/20 500,000 509,655
--------------
Special Property Tax Total 5,213,798
--------------
STATE APPROPRIATED - 11.1%
IN Office Building Commission,
Women's Prison,
Series 1995 B,
Insured: AMBAC
6.250% 07/01/16 2,820,000 3,295,424
KY Property & Buildings Commission,
Series 2001,
5.500% 11/01/14 455,000 496,956
NY Dormitory Authority:
City University,
Series 1993 A,
5.750% 07/01/18 5,000,000 5,649,750
State University,
Series 2000 C,
Insured: FSA
5.750% 05/15/17 1,000,000 1,146,680
NY Urban Development Corp.,
Series 1995,
5.600% 04/01/15 1,000,000 1,107,130
UT Building Ownership Authority,
Facilities Master Lease,
Series 1998 C,
Insured: FSA
5.500% 05/15/19 1,750,000 1,976,257
See Accompanying Notes to Financial Statements. | 11
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
TAX - BACKED (CONTINUED)
STATE APPROPRIATED (CONTINUED)
WV Building Commission,
Series 1998 A,
Insured: AMBAC
5.375% 07/01/18 500,000 552,320
--------------
State Appropriated Total 14,224,517
--------------
STATE GENERAL OBLIGATIONS - 6.0%
CA State,
Series 1995,
5.750% 03/01/19 70,000 70,656
MA State,
Series 1998 C,
5.250% 08/01/17 1,000,000 1,100,870
PR Commonwealth of Puerto Rico
Aquaduct & Sewer Authority:
Series 1995,
Insured: MBIA:
6.250% 07/01/12 1,000,000 1,149,690
6.250% 07/01/13 750,000 871,162
Series 2001,
Insured: FSA
5.500% 07/01/17 1,000,000 1,132,010
Series 2004 A, GO,
5.000% 07/01/30 300,000 311,052
Public Improvement,
Series 2003 A,
5.000% 07/01/27 1,000,000 999,960
TX State,
Series 1999,
5.500% 08/01/35 2,000,000 2,111,800
--------------
State General Obligations Total 7,747,200
--------------
TAX - BACKED TOTAL 61,473,761
--------------
-------------------------------------------------------------------------------
TRANSPORTATION - 10.6%
AIR TRANSPORTATION - 2.9%
IN Indianapolis Airport Authority,
FedEx Corp.,
Series 2004, AMT,
5.100% 01/15/17 250,000 258,355
MN Minneapolis & St. Paul
Metropolitan Airports Commission,
Northwest Airlines, Inc.,
Series 2001 A, AMT,
7.000% 04/01/25(d) 350,000 219,768
NC Charlotte/Douglas
International Airport,
US Airways, Inc.:
Series 1998, AMT,
5.600% 07/01/27 500,000 333,565
Series 2000, AMT,
7.750% 02/01/28 500,000 438,875
NJ Economic Development Authority,
Continental Airlines, Inc.,
Series 1999, AMT,
6.250% 09/15/19 900,000 778,356
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
NY New York City
Industrial Development
Agency Special Facility Revenue,
Terminal One Group-JFK
International Airport,
Series 2005, AMT,
5.500% 01/01/21(e) 250,000 263,035
NY Port Authority of New York
& New Jersey,
JFK International Air Terminal,
Series 1997, AMT,
Insured: MBIA
6.250% 12/01/08 1,000,000 1,067,240
TX Houston Industrial
Development Corp.,
United Parcel Services,
Series 2002, AMT,
6.000% 03/01/23 375,000 386,479
--------------
Air Transportation Total 3,745,673
--------------
AIRPORTS - 0.9%
MA Port Authority,
Series 1999, IFRN,
Insured: FGIC
8.245% 07/01/29 1,000,000 1,181,100
--------------
Airports Total 1,181,100
--------------
TOLL FACILITIES - 4.4%
CA Foothill/Eastern Transportation
Corridor Agency,
Series 1995 A,
5.000% 01/01/35(f) 1,000,000 934,660
CA San Joaquin Hills Transportation
Corridor Agency,
Series 1997 A,
Insured: MBIA
(b) 01/15/15 2,000,000 1,343,160
CO Northwest Parkway Public
Highway Authority,
Series 2001 D,
7.125% 06/15/41 500,000 534,035
NH Turnpike Systems,
Series 1991 C, IFRN,
Insured: FGIC
10.940% 11/01/17 1,000,000 1,099,660
NY Thruway Authority,
Second General Highway
& Bridge Trust Fund,
Series 2005 B,
Insured: AMBAC
5.500% 04/01/20 1,540,000 1,759,265
--------------
Toll Facilities Total 5,670,780
--------------
12 | See Accompanying Notes to Financial Statements.
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
TRANSPORTATION (CONTINUED)
TRANSPORTATION - 2.4%
IL Regional Transportation Authority,
Series 1994 C,
Insured: FGIC
7.750% 06/01/20 1,000,000 1,364,180
NV Department of Business & Industry,
Las Vegas Monorail Project,
Series 2000:
7.375% 01/01/30 250,000 260,443
7.375% 01/01/40 250,000 259,175
OH Toledo-Lucas County Port Authority,
CSX Transportation, Inc.,
Series 1992,
6.450% 12/15/21 1,000,000 1,139,560
--------------
Transportation Total 3,023,358
--------------
TRANSPORTATION TOTAL 13,620,911
--------------
-------------------------------------------------------------------------------
UTILITIES - 17.3%
INDEPENDENT POWER PRODUCERS - 1.6%
MI Midland County Economic
Development Corp.,
Series 2000 A, AMT,
6.875% 07/23/09 600,000 594,846
NY Suffolk County Industrial
Development Authority,
Nissequogue Cogeneration
Partners Facilities,
Series 1998, AMT,
5.500% 01/01/23 550,000 539,825
PA Carbon City Industrial
Development Authority,
Panther Creek Partners Project,
Series 2000, AMT,
6.650% 05/01/10 125,000 133,776
PA Economic Development
Financing Authority,
Colver Project,
Series 2005 G, AMT,
5.125% 12/01/15 425,000 422,522
PR Commonwealth of Puerto
Rico Industrial, Tourist,
Educational, Medical & Environmental
Cogeneration Facilities,
AES Project,
Series 2000, AMT,
6.625% 06/01/26 320,000 343,831
--------------
Independent Power Producers Total 2,034,800
--------------
INVESTOR OWNED - 10.5%
CA Chula Vista Industrial
Development Authority,
San Diego Gas & Electric Co.,
Series 1996 B, AMT,
5.500% 12/01/21 625,000 658,656
PAR ($) VALUE ($)
-------------------------------------------------------------------------------
FL Polk County Industrial
Development Authority,
Tampa Electric Co. Project,
Series 1996, AMT,
5.850% 12/01/30 500,000 514,695
IN Petersburg,
Indiana Power & Light Co.,
Series 1993 B,
Insured: MBIA
5.400% 08/01/17 2,500,000 2,750,100
MI Strategic Fund,
Detroit Edison Co.,
Series 1998 A, AMT,
Insured: MBIA
5.550% 09/01/29 3,000,000 3,140,700
MS Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 04/01/22 1,000,000 1,012,400
MT Forsyth,
Portland General,
Series 1998 A,
5.200% 05/01/33 150,000 155,079
NV Clark County Industrial
Development Authority,
Nevada Power Co.:
Series 1995 B, AMT,
5.900% 10/01/30 250,000 250,063
Series 1997 A, AMT,
5.900% 11/01/32 250,000 250,067
OH Air Quality Development Authority,
Cleveland Electric Illuminating Co.,
Series 2002 A,
6.000% 12/01/13 650,000 680,238
PA Economic Development
Financing Authority,
Reliant Energy, Inc.,
Series 2001 A, AMT,
6.750% 12/01/36 200,000 213,058
TX Brazos River Authority:
TXU Electric Co.,
Series 1999 A, AMT,
7.700% 04/01/33 250,000 292,525
TXU Energy Co., LLC:
Series 2001 C, AMT,
5.750% 05/01/36 100,000 106,247
Series 2003 C, AMT,
6.750% 10/01/38 270,000 298,528
TX Matagorda County
Navigation District No. 1,
Houston Light & Power Co.,
Series 1997, AMT,
Insured: AMBAC
5.125% 11/01/28 2,000,000 2,097,960
See Accompanying Notes to Financial Statements. | 13
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
UTILITIES (CONTINUED)
INVESTOR OWNED (CONTINUED)
WY Campbell County,
Black Hills Power, Inc.,
Series 2004,
5.350% 10/01/24 500,000 513,455
WY Converse County,
PacifiCorp,
Series 1988,
3.900% 01/01/14 500,000 479,740
--------------
Investor Owned Total 13,413,511
--------------
JOINT POWER AUTHORITY - 3.7%
MA Municipal Wholesale Electric Co.
Power Supply System, Project 6-A,
Series 2001,
Insured: MBIA
5.250% 07/01/14 1,000,000 1,081,560
NC Eastern Municipal Power Agency,
Series 2003 F,
5.500% 01/01/16 285,000 304,970
NC Municipal Power Agency,
Catawba Electric No. 1:
Series 1998 A,
Insured: MBIA
5.500% 01/01/15 640,000 709,421
Series 2003 A,
Insured: MBIA
5.250% 01/01/18 2,500,000 2,670,400
--------------
Joint Power Authority Total 4,766,351
--------------
WATER & SEWER - 1.5%
MS V Lakes Utility District,
Series 1994,
8.250% 07/15/24 135,000 123,401
WA King County,
Series 1999,
Insured: FGIC
5.250% 01/01/30 1,750,000 1,830,885
--------------
Water & Sewer Total 1,954,286
--------------
UTILITIES TOTAL 22,168,948
--------------
TOTAL MUNICIPAL BONDS
(cost of $175,071,467) 182,156,712
--------------
MUNICIPAL PREFERRED STOCKS - 1.2%
-------------------------------------------------------------------------------
HOUSING - 1.2%
MULTI - FAMILY - 1.2%
Charter Mac Equity Issuer Trust, AMT,
6.300% 04/30/19(g) 500,000 539,750
7.600% 11/30/10(g) 500,000 559,995
GMAC Municipal Mortgage Trust, AMT,
5.600% 10/31/39(g) 500,000 505,315
--------------
Multi - Family Total 1,605,060
--------------
HOUSING TOTAL 1,605,060
--------------
TOTAL MUNICIPAL PREFERRED STOCKS
(cost of $1,500,000) 1,605,060
--------------
INVESTMENT COMPANY - 0.0% SHARES VALUE ($)
-------------------------------------------------------------------------------
Dreyfus Tax-Exempt Cash
Management Fund 200 200
--------------
TOTAL INVESTMENT COMPANY
(cost of $200) 200
--------------
SHORT-TERM OBLIGATIONS - 2.0% PAR ($)
--------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - 2.0% (h)
FL Pinellas County Health
Facility Authority,
Pooled Hospital Loan Program,
Series 1985,
LOC: Wachovia Bank N.A.
3.000% 12/01/15 500,000 500,000
IA Finance Authority,
Drake University,
Series 2001
LOC: Firstar Bank
3.080% 07/01/31 400,000 400,000
KY Breckinridge County,
Series 2002 A,
LOC: US Bank N.A.
3.000% 02/01/32 100,000 100,000
MA Water Resources Authority,
Series 2002 D,
LOC: Landesbank Baden-Wurtenburg
3.000% 08/01/17 100,000 100,000
MI Northern Michigan University,
Series 2001,
Insured: FGIC
3.030% 06/01/31 600,000 600,000
MN Higher Education
Facilities Authority,
St. Olaf College,
Series 2002,
LOC: Harris Trust and
Savings Bank
3.030% 10/01/20 500,000 500,000
MN Mankato,
Bethany Lutheran College, Inc.,
Series 2000 B,
LOC: Wells Fargo Bank
3.080% 11/01/15 100,000 100,000
MO Health & Educational
Facilities Authority,
Bethesda Health Group of St. Louis, Inc.,
Series 2001 A,
LOC: US Bank N.A.
3.080% 08/01/31 100,000 100,000
14 | See Accompanying Notes to Financial Statements.
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
SHORT-TERM OBLIGATIONS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (h) (CONTINUED)
MS Jackson County Pollution
Control Revenue,
Chevron Corp.,
Series 1993,
3.000% 06/01/23 200,000 200,000
--------------
VARIABLE RATE DEMAND NOTES TOTAL 2,600,000
--------------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $2,600,000) 2,600,000
--------------
TOTAL INVESTMENTS - 145.1%
(cost of $179,171,667)(i) 186,361,972
AUCTION PREFERRED SHARES PLUS
CUMULATIVE UNPAID DISTRIBUTIONS - (46.7)% (60,009,531)
OTHER ASSETS & LIABILITIES, NET - 1.6% 2,049,744
--------------
NET ASSETS - 100.0% 128,402,185
==============
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------------
(a) The issuer has filed for bankruptcy protection under Chapter 11, and is in
default of certain debt covenants. Income is not being accrued. At
November 30, 2005, the value of this security represents less than 0.1% of
net assets.
(b) Zero coupon bond.
(c) The Trust has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
principal and interest.
(d) The issuer has filed for bankruptcy protection under Chapter 11, and is in
default of certain debt covenants. Income is being accrued. At November
30, 2005, the value of this security represents 0.2% of net assets.
(e) Security purchased on a delayed delivery basis.
(f) A portion of this security with a market value of $897,274 is pledged as
collateral for open futures contracts.
(g) Security exempt from registration pursuant to Rule 144A under the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
November 30, 2005, these securities, which did not include any illiquid
securities, amounted to $1,605,060, which represents 1.3% of net assets.
(h) Variable rate demand notes. These securities are payable upon demand and
are secured by letters of credit or other credit support agreements from
banks. The interest rates change periodically and the interest rates shown
reflect the rates at November 30, 2005.
(i) Cost for federal income tax purposes is $178,878,631.
At November 30, 2005, the Trust held the following open short futures
contracts:
UNREALIZED
NUMBER OF AGGREGATE EXPIRATION APPRECIATION
TYPE CONTRACTS VALUE FACE VALUE DATE (DEPRECIATION)
--------------------------------------------------------------------------------------
10-Year U.S.
Treasury
Notes 176 $19,101,500 $19,092,282 Mar-06 $(9,218)
U.S. Treasury
Bonds 113 12,659,532 12,673,035 Mar-06 13,503
-------------
$ 4,285
-------------
--------------------------------------------------------------------------------
At November 30, 2005, the composition of the Trust by revenue source is as
follows:
% OF
HOLDINGS BY REVENUE SOURCE (UNAUDITED) NET ASSETS
--------------------------------------------------------------------------------
Tax-Backed 47.9
Health Care 25.2
Utilities 17.3
Housing 11.9
Education 10.7
Transportation 10.6
Other 9.6
Industrials 3.1
Resource Recovery 3.0
Other Revenue 2.6
Municipal Preferred Stocks 1.2
Investment Company 0.0*
Short-Term Obligations 2.0
Auction Preferred Shares (46.7)
Other Assets and Liabilities, Net 1.6
------
100.0%
------
* Rounds to less than 0.1%.
ACRONYM NAME
--------------------------------------------------------------------------------
AMBAC Ambac Assurance Corp.
AMT Alternative Minimum Tax
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
IFRN Inverse Floating Rate Note
LOC Letter of Credit
MBIA MBIA Insurance Corp.
Q-SBLF Qualified School Bond Loan Fund
RAD Radian Asset Assurance, Inc.
| 15
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
November 30, 2005
ASSETS:
Investments, at cost $ 179,171,667
----------------
Investments, at value $ 186,361,972
Cash 42,291
Receivable for:
Interest 2,943,368
Futures variation margin 41,977
Deferred Trustees' compensation plan 15,097
Other assets 5,214
----------------
Total Assets 189,409,919
----------------
LIABILITIES:
Payable for:
Investments purchased on a delayed
delivery basis 261,395
Distributions -- common shares 592,714
Distributions -- preferred shares 9,531
Investment advisory fee 95,013
Pricing and bookkeeping fees 1,676
Trustees' fees 1,469
Custody fee 386
Audit fee 25,176
Transfer agent fee 3,364
Preferred shares remarketing commissions 823
Chief compliance officer expenses 1,090
Deferred Trustees' fees 15,097
----------------
Total Liabilities 1,007,734
----------------
AUCTION PREFERRED SHARES (2,400 shares issued
and outstanding at $25,000 per share) $ 60,000,000
----------------
COMPOSITION OF NET ASSETS APPLICABLE
TO COMMON SHARES:
Paid-in capital -- common shares $ 126,993,092
Undistributed net investment income 381,969
Accumulated net realized loss (6,167,466)
Net unrealized appreciation on:
Investments 7,190,305
Futures contracts 4,285
----------------
Net assets at value applicable to 11,509,000
common shares of beneficial interest
outstanding $ 128,402,185
================
Net asset value per share $ 11.16
================
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Year Ended November 30, 2005
INVESTMENT INCOME:
Interest $ 10,296,235
Dividends 238
----------------
Total Investment Income 10,296,473
----------------
EXPENSES:
Investment advisory fee 1,233,136
Transfer agent fee 48,178
Pricing and bookkeeping fees 106,957
Trustees' fees 13,710
Preferred shares remarketing commissions 150,171
Custody fee 15,818
Chief compliance officer expenses 4,957
Other expenses 119,000
----------------
Total Expenses 1,691,927
Fees waived by Investment Advisor (3,086)
Custody earnings credit (1,341)
----------------
Net Expenses 1,687,500
----------------
Net Investment Income 8,608,973
----------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES CONTRACTS:
Net realized gain (loss) on:
Investments 1,854,304
Futures contracts (492,412)
----------------
Net realized gain 1,361,892
----------------
Net change in unrealized appreciation
(depreciation) on:
Investments (883,201)
Futures contracts 52,412
----------------
Net change in unrealized
appreciation (depreciation) (830,789)
----------------
Net Gain 531,103
----------------
Net Increase in Net Assets from Operations 9,140,076
----------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (1,333,536)
----------------
Net Increase in Net Assets from Operations
Applicable to Common Shares $ 7,806,540
----------------
16 | See Accompanying Notes to Financial Statements.
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED
NOVEMBER 30,
-------------------------------------
INCREASE (DECREASE) IN NET ASSETS: 2005 2004
---------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 8,608,973 $ 8,475,756
Net realized gain on investments and futures contracts 1,361,892 46,902
Net change in unrealized appreciation (depreciation) on investments and futures contracts (830,789) (3,871,849)
---------------- ----------------
Net Increase from Operations 9,140,076 4,650,809
---------------- ----------------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (1,333,536) (634,050)
---------------- ----------------
Increase in Net Assets from Operations Applicable to Common Shares 7,806,540 4,016,759
---------------- ----------------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (7,561,413) (7,826,122)
---------------- ----------------
Total Increase (Decrease) in Net Assets Applicable to Common Shares 245,127 (3,809,363)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 128,157,058 131,966,421
---------------- ----------------
End of period (including undistributed net investment income
of $381,969 and $727,733, respectively) $ 128,402,185 $ 128,157,058
================ ================
NUMBER OF TRUST SHARES:
Common Shares:
Outstanding at end of period 11,509,000 11,509,000
---------------- ----------------
Preferred Shares:
Outstanding at end of period 2,400 2,400
---------------- ----------------
See Accompanying Notes to Financial Statements. | 17
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
November 30, 2005
NOTE 1. ORGANIZATION
Colonial Investment Grade Municipal Trust (the "Trust") is a Massachusetts
business trust registered under the Investment Company Act of 1940 (the "Act"),
as amended, as a diversified, closed-end management investment company.
INVESTMENT GOAL
The Trust seeks as high a level of after-tax return as is consistent with
prudent risk, by pursuing current income generally exempt from ordinary federal
income tax and opportunities for long-term appreciation from a portfolio
primarily invested in investment grade municipal bonds.
TRUST SHARES
The Trust may issue an unlimited number of common shares. On August 26, 1999,
the Trust issued 2,400 Auction Preferred Shares ("APS").
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the 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 Trust in the preparation of its financial statements.
SECURITY VALUATION
Debt securities generally are valued by pricing services approved by the Trust's
Board of Trustees, based upon market transactions for normal, institutional-size
trading units of similar securities. The services may use various pricing
techniques which take into account appropriate factors such as yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other data, as
well as broker quotes. Debt securities for which quotations are readily
available are valued at an over-the-counter or exchange bid quotation. Certain
debt securities, which tend to be more thinly traded and of lesser quality, are
priced based on fundamental analysis of the financial condition of the issuer
and the estimated value of any collateral. Valuations developed through pricing
techniques may vary from the actual amounts realized upon sale of the
securities, and the potential variation may be greater for those securities
valued using fundamental analysis.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Investments in open-end investment companies are valued at net asset value.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Investments for which market quotations are not readily available, or have
quotations which management believes are not appropriate, are valued at fair
value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of Trustees. If a
security is valued at a "fair value", such value is likely to be different from
the last quoted market price for the security.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
FUTURES CONTRACTS
The Trust may invest in municipal and U.S. Treasury futures contracts. 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 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 differing trading hours, or the temporary absence of
a liquid market, for either the instrument or the underlying securities, or (3)
an inaccurate prediction by Columbia Management Advisors, LLC of the future
direction of interest rates. Any of these risks may involve amounts exceeding
the variation margin recorded in the Trust's Statement of Assets and Liabilities
at any given time.
Upon entering into a futures contract, the Trust deposits cash or securities
with the broker in an amount sufficient to meet the initial margin requirement.
Subsequent payments are made or received by the Trust equal to the daily change
in the contract value and are recorded as variation margin receivable or payable
and offset in unrealized gains or losses. The Trust also identifies portfolio
securities as segregated with the custodian in a separate account in an amount
equal to the futures contract. The Trust recognizes a realized gain or loss when
the contract is closed or expires.
DELAYED DELIVERY SECURITIES
The Trust may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. 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. The Trust identifies cash or
liquid portfolio securities as segregated with the custodian in an amount equal
to the delayed delivery commitment.
18 |
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Original issue discount is
accreted to interest income over the life of the security with a corresponding
increase in the cost basis. Premium and discount are amortized and accreted,
respectively, on all debt securities. Dividend income is recorded on ex-date.
FEDERAL INCOME TAX STATUS
The Trust intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its taxable income, if any, for its tax year, and as such
will not be subject to federal income taxes. In addition, the Trust intends to
distribute in each calendar year substantially all of its net investment income,
capital gains and certain other amounts, if any, such that the Trust should not
be subject to federal excise tax. Therefore, no federal income or excise tax
provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to common shareholders are recorded on the ex-date. Distributions
to Auction Preferred shareholders are recorded daily and payable at the end of
each dividend period. Each dividend payment period for the APS is generally
seven days. The applicable dividend rate for the APS on November 30, 2005, was
2.90%. For the year ended November 30, 2005, the Trust declared dividends to
Auction Preferred shareholders amounting to $1,333,536, representing an average
dividend rate of 2.24% per APS.
NOTE 3. FEDERAL TAX INFORMATION
The timing and character of income and capital gain distributions are determined
in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Trust's capital accounts for permanent tax
differences to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
For the year ended November 30, 2005, permanent book and tax basis differences
resulting primarily from differing treatments for discount accretion/premium
amortization on debt securities and market discount reclassifications were
identified and reclassified among the components of the Trust's net assets as
follows:
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT INCOME NET REALIZED LOSS PAID-IN CAPITAL
----------------------- ----------------------- ------------------
$(59,788) $59,790 $(2)
Net investment income and net realized gains (losses), as disclosed on the
Statement of Operations, and net assets were not affected by this
reclassification.
The tax character of distributions paid during the years ended November 30, 2005
and November 30, 2004 was as follows:
NOVEMBER 30, NOVEMBER 30,
2005 2004
------------------ ------------------
Distributions paid from:
Tax-Exempt Income $8,894,949 $8,451,630
Ordinary Income -- 8,542
Long-Term Capital Gains -- --
As of November 30, 2005, the components of distributable earnings on a tax basis
were as follows:
UNDISTRIBUTED UNDISTRIBUTED UNDISTRIBUTED
TAX-EXEMPT ORDINARY LONG-TERM NET UNREALIZED
INCOME INCOME CAPITAL GAINS APPRECIATION*
-------------- --------------- -------------- --------------
$683,420 $19,697 $-- $7,483,341
* The differences between book-basis and tax-basis net unrealized appreciation
are primarily due to discount accretion/premium amortization on debt securities.
Unrealized appreciation and depreciation at November 30, 2005, based on cost of
investments for federal income tax purposes, was:
Unrealized appreciation $ 12,557,585
Unrealized depreciation (5,074,244)
--------------
Net unrealized appreciation $ 7,483,341
--------------
The following capital loss carryforwards, determined as of November 30, 2005,
may be available to reduce taxable income arising from future net realized gains
on investments, if any, to the extent permitted by the Internal Revenue Code:
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
2008 $ 543,740
2010 1,238,884
------------
$ 1,782,624
------------
Capital loss carryforwards of $1,369,281 were utilized during the year ended
November 30, 2005 for the Trust.
| 19
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
INVESTMENT ADVISORY FEE
Columbia Management Advisors, LLC ("Columbia"), an indirect wholly owned
subsidiary of Bank of America Corporation ("BOA"), is the investment advisor to
the Trust and provides administrative and other services to the Trust. Prior to
September 30, 2005, Columbia Management Advisors, Inc. was the investment
advisor to the Trust under the same fee structure. On September 30, 2005,
Columbia Management Advisors, Inc. merged into Banc of America Capital
Management, LLC. At that time, the investment advisor was then renamed Columbia
Management Advisors, LLC. Columbia receives a monthly investment advisory fee at
the annual rate of 0.65% of the Trust's average weekly net assets, including
assets applicable to the APS. Effective November 1, 2005, Columbia has
voluntarily agreed to reduce the investment advisory fee by the annual rate of
0.02% of the Trust's average weekly net assets. This fee waiver can be removed
at any time.
PRICING AND BOOKKEEPING FEES
Columbia is responsible for providing pricing and bookkeeping services to the
Trust under a pricing and bookkeeping agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Corporation ("State Street"). As a result, the total fees payable under the
pricing and bookkeeping agreement are paid to State Street.
Under its pricing and bookkeeping agreement with the Trust, Columbia receives an
annual fee of $38,000 paid monthly plus an additional monthly fee based on the
level of average weekly net assets for the month; provided that during any
12-month period, the aggregate fee shall not exceed $140,000.
Prior to November 1, 2005, Columbia received from the Trust an annual fee of
$10,000 paid monthly, and in any month that the Trust's average weekly net
assets exceeded $50 million, an additional monthly fee, calculated by taking
into account the fees payable to State Street under the Outsourcing Agreement.
The Trust also reimburses Columbia and State Street for out-of pocket expenses
and charges, including fees payable to third parties for pricing the Trust's
portfolio securities and direct internal costs incurred by Columbia in
connection with providing Trust accounting oversight and monitoring and certain
other services. For the year ended November 30, 2005, the Trust's effective
pricing and bookkeeping rate, inclusive of out-of-pocket expenses, was 0.056%.
CUSTODY CREDITS
The Trust has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. These credits are recorded as a reduction of
total expenses on the Statement of Operations. The Trust could have invested a
portion of the assets utilized in connection with the expense offset arrangement
in an income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
All officers of the Trust, with the exception of the Trust's Chief Compliance
Officer, are employees of Columbia or its affiliates and receive no compensation
from the Trust. The Board of Trustees has appointed a Chief Compliance Officer
to the Trust in accordance with federal securities regulations. The Trust, along
with other affiliated funds, pays its pro-rata share of the expenses associated
with the Chief Compliance Officer. The Trust's expenses for the Chief Compliance
Officer will not exceed $15,000 per year.
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.
OTHER
Columbia provides certain services to the Trust related to Sarbanes-Oxley
compliance. For the year ended November 30, 2005, the Trust paid $1,629 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
NOTE 5. PORTFOLIO INFORMATION
For the year ended November 30, 2005, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $29,492,147 and
$32,217,904, respectively.
NOTE 6. PREFERRED SHARES
The Trust currently has outstanding 2,400 APS. The APS 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).
Under the Act, the Trust is required to maintain asset coverage of at least 200%
with respect to the APS as of the last business day of each month in which any
APS are outstanding. Additionally, the Trust is required to meet more stringent
asset coverage requirements under the terms of the APS Agreement and in
accordance with the guidelines prescribed by the APS' rating agencies. Should
these requirements not be met, or should dividends accrued on the APS not be
paid, the Trust may be restricted in its ability to declare dividends to common
shareholders or may be required to redeem certain APS. At November 30, 2005,
there were no such restrictions on the Trust.
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
CONCENTRATION OF CREDIT RISK
The Trust holds investments that are insured by private insurers who guarantee
the payment of principal and interest in the event of default or that are
supported by a letter of credit. Each of the
20 |
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
Trust's insurers is rated Aaa by Moody's Investor Services, Inc., except for
Radian Asset Assurance, Inc., which is rated Aa3. At November 30, 2005, private
insurers who insure greater than 5% of the total investments of the Trust were
as follows:
% OF TOTAL
INVESTMENTS
INSURER (UNAUDITED)
--------------------------------------------------------------------------------
MBIA Insurance Corp. 16.2%
Ambac Assurance Corp. 10.6
Financial Guaranty Insurance Co. 6.0
GEOGRAPHIC CONCENTRATION
The Trust has greater than 5% of its total investments at November 30, 2005
invested in debt obligations issued by the states of California, Florida,
Illinois, Massachusetts, New York and Texas and their respective political
subdivisions, agencies and public authorities. The Trust is more susceptible to
economic and political factors adversely affecting issuers of the specific
state's municipal securities than are municipal bond funds that are not
concentrated to the same extent in these issuers.
HIGH-YIELD SECURITIES
Investing in high-yield securities may involve greater credit risk and
considerations not typically associated with investing in U.S. government bonds
and other higher quality fixed income securities. These securities are
non-investment grade securities, often referred to as "junk" bonds. Economic
downturns may disrupt the high yield market and impair the ability of issuers to
repay principal and interest. Also, an increase in interest rates would likely
have an adverse impact on the value of such obligations. Moreover, high-yield
securities may be less liquid to the extent that there is no established
secondary market.
LEGAL PROCEEDINGS
On February 9, 2005, Columbia Management Advisors, Inc. (which has since merged
into Banc of America Capital Management, LLC (now named Columbia Management
Advisors, LLC)) ("Columbia") and Columbia Funds Distributor, Inc. (which has
been renamed Columbia Management Distributors, Inc.) (the "Distributor")
(collectively, the "Columbia Group") entered into an Assurance of Discontinuance
with the New York Attorney General ("NYAG") (the "NYAG Settlement") and
consented to the entry of a cease-and-desist order by the Securities and
Exchange Commission ("SEC") (the "SEC Order"). The SEC Order and the NYAG
Settlement are referred to collectively as the "Settlements". The Settlements
contain substantially the same terms and conditions as outlined in the
agreements in principle which Columbia Group entered into with the SEC and NYAG
in March 2004.
Under the terms of the SEC Order, the Columbia Group has agreed among other
things, to: pay $70 million in disgorgement and $70 million in civil money
penalties; cease and desist from violations of the antifraud provisions and
certain other provisions of the federal securities laws; maintain certain
compliance and ethics oversight structures; retain an independent consultant to
review the Columbia Group's applicable supervisory, compliance, control and
other policies and procedures; and retain an independent distribution consultant
(see below). The Columbia Funds have also voluntarily undertaken to implement
certain governance measures designed to maintain the independence of their
boards of trustees. The NYAG Settlement also, among other things, requires
Columbia and its affiliates to reduce certain Columbia Funds (including the
former Nations Funds) and other mutual funds management fees collectively by $32
million per year for five years, for a projected total of $160 million in
management fee reductions.
Pursuant to the procedures set forth in the SEC order, the $140 million in
settlement amounts described above will be distributed in accordance with a
distribution plan to be developed by an independent distribution consultant, who
is acceptable to the SEC staff and the Columbia Funds' independent trustees. The
distribution plan must be based on a methodology developed in consultation with
the Columbia Group and the funds' independent trustees and not unacceptable to
the staff of the SEC. At this time, the distribution plan is still under
development. As such, any gain to the funds or their shareholders cannot
currently be determined.
As a result of these matters or any adverse publicity or other developments
resulting from them, the market price of the shares could decline.
A copy of the SEC Order is available on the SEC website at http://www.sec.gov. A
copy of the NYAG Settlement is available as part of the Bank of America
Corporation Form 8-K filing on February 10, 2005.
In connection with the events described in detail above, various parties have
filed suit against certain funds, the Trustees of the Columbia Funds,
FleetBoston Financial Corporation and its affiliated entities and/or Bank of
America and its affiliated entities. More than 300 cases including those filed
against entities unaffiliated with the funds, their Boards, FleetBoston
Financial Corporation and its affiliated entities and/or Bank of America and its
affiliated entities have been transferred to the Federal District Court in
Maryland and consolidated in a multi-district proceeding (the "MDL").
The derivative cases purportedly brought on behalf of the Columbia Funds in the
MDL have been consolidated under the lead case. The fund derivative plaintiffs
allege that the funds were harmed by market timing and late trading activity and
seek, among other things, the removal of the trustees of the Columbia Funds,
removal of the Columbia Group, disgorgement of all management fees and monetary
damages.
| 21
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
November 30, 2005
On March 21, 2005, purported class action plaintiffs filed suit in Massachusetts
state court alleging that the conduct, including market timing, entitles Class B
shareholders in certain Columbia Funds to an exemption from contingent deferred
sales charges upon early redemption ("the CDSC Lawsuit"). The CDSC Lawsuit has
been removed to federal court in Massachusetts and the federal Judicial Panel
has transferred the CDSC Lawsuit to the MDL.
The MDL is ongoing. Accordingly, an estimate of the financial impact of this
litigation on any fund, if any, cannot currently be made.
In 2004, certain Columbia Funds, the Trustees of the Columbia Funds, advisers
and affiliated entities were named as defendants in certain purported
shareholder class and derivative actions making claims, including claims under
the Investment Company and the Investment Advisers Acts of 1940 and state law.
The suits allege, inter alia, that the fees and expenses paid by the funds are
excessive and that the advisers and their affiliates inappropriately used fund
assets to distribute the funds and for other improper purposes. On March 2,
2005, the actions were consolidated in the Massachusetts federal court as In re
Columbia Entities Litigation. The plaintiffs filed a consolidated amended
complaint on June 9, 2005. On November 30, 2005, the judge dismissed all claims
by plaintiffs and ordered that the case be closed. The plaintiffs filed a notice
of appeal on December 30, 2005.
22 |
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------------
2005 2004 2003 2002 2001
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.14 $ 11.47 $ 11.04 $ 11.06 $ 10.55
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.75 0.74 0.74 0.78(b) 0.75
Net realized and unrealized gain (loss) on investments
and futures contracts 0.05 (0.33) 0.42 (0.05)(b) 0.52
--------- --------- --------- --------- ---------
Total from Investment Operations 0.80 0.41 1.16 0.73 1.27
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (0.12) (0.06) (0.05) (0.08) (0.16)
--------- --------- --------- --------- ---------
Total from Investment Operations
Applicable to Common Shareholders 0.68 0.35 1.11 0.65 1.11
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO
COMMON SHAREHOLDERS:
From net investment income (0.66) (0.68) (0.68) (0.67) (0.60)
--------- --------- --------- --------- ---------
Total Distributions Declared to Common Shareholders (0.66) (0.68) (0.68) (0.67) (0.60)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 11.16 $ 11.14 $ 11.47 $ 11.04 $ 11.06
--------- --------- --------- --------- ---------
Market price per share -- common shares $ 10.40 $ 10.01 $ 10.63 $ 10.09 $ 10.87
--------- --------- --------- --------- ---------
Total return -- based on market value --
common shares (c) 10.68% 0.64% 12.48% (1.10)% 29.28%
--------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (d)(e) 1.30% 1.29% 1.31% 1.28% 1.28%
Net investment income before preferred stock dividend (d)(e) 6.64% 6.55% 6.57% 7.06%(b) 6.80%
Net investment income after preferred stock dividend (d)(e) 5.61% 6.06% 6.12% 6.38%(b) 5.38%
Waiver/reimbursement --%(f) -- -- -- --
Portfolio turnover rate 16% 15% 13% 10% 31%
Net assets, end of period (000's) -- common shares $ 128,402 $ 128,157 $ 131,966 $ 127,050 $ 127,273
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Effective December 1, 2001, the Trust adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began accreting
market discount on all debt securities. The effect of this change for the
year ended November 30, 2002, was to increase net investment income per
share by $0.01, increase net realized and unrealized loss per share by
$0.01, increase the ratio of net investment income to average net assets
from 6.98% to 7.06% and increase the ratio of net investment income
(adjusted for dividend payments to preferred shareholders) from 6.30% to
6.38%. Per share data and ratios for periods prior to November 30, 2002
have not been restated to reflect this change in presentation.
(c) Total return at market value assuming all distributions reinvested at
prices calculated in accordance with the Dividend Reinvestment Plan.
(d) The benefits derived from custody credits had an impact of less than
0.01%.
(e) Ratios reflect average net assets available to common shares only.
(f) Rounds to less than 0.01%.
| 23
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
YEAR ENDED PERIOD ENDED YEAR ENDED DECEMBER 31,
NOVEMBER 30, NOVEMBER 30, ------------------------------------------
2000 1999(a) 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.31 $ 11.49 $ 11.43 $ 10.87 $ 11.05 $ 9.93
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.81(b) 0.58 0.60 0.62 0.63 0.64
Net realized and unrealized gain (loss) on investments
and futures contracts 0.27 (1.12) 0.07 0.58 (0.19) 1.11
-------- -------- -------- -------- -------- --------
Total from Investment Operations 1.08 (0.54) 0.67 1.20 0.44 1.75
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (0.22) (0.05) -- -- -- --
-------- -------- -------- -------- -------- --------
Total from Investment Operations
Applicable to Common Shareholders 0.86 (0.59) 0.67 1.20 0.44 1.75
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO
COMMON SHAREHOLDERS:
From net investment income (0.60) (0.52) (0.61) (0.64) (0.62) (0.63)
In excess of net investment income -- -- --(c) -- -- --
-------- -------- -------- -------- -------- --------
Total Distributions Declared to Common Shareholders (0.60) (0.52) (0.61) (0.64) (0.62) (0.63)
-------- -------- -------- -------- -------- --------
LESS SHARE TRANACTIONS:
Commission and offering costs -- preferred shares (0.02) (0.07) -- -- -- --
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.55 $ 10.31 $ 11.49 $ 11.43 $ 10.87 $ 11.05
-------- -------- -------- -------- -------- --------
Market price per share -- common shares $ 8.92 $ 9.06 $ 11.19 $ 10.56 $ 10.13 $ 9.88
-------- -------- -------- -------- -------- --------
Total return -- based on market value --
common shares (d) 5.20% (14.64)%(e) 11.94% 10.76% 9.06% 13.87%
-------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (f) 1.31%(g) 1.03%(g)(h) 0.77% 0.83% 0.88% 1.08%
Net investment income before preferred
stock dividend (f) 7.91%(g) 5.75%(g)(h) 5.24% 5.63% 5.80% 6.08%
Net investment income after preferred
stock dividend (f) 5.80%(g) 5.26%(g)(h) -- -- -- --
Portfolio turnover rate 23% 25%(e) 24% 21% 20% 37%
Net assets, end of period (000's) -- common shares $121,366 $118,660 $132,242 $131,503 $125,125 $127,118
(a) The Trust changed its fiscal year end from December 31 to November 30.
(b) The per share net investment income amount does not reflect the period's
reclassification of differences between book and tax basis net investment
income.
(c) Rounds to less than $0.01 per share.
(d) Total return at market value assuming all distributions reinvested at
prices calculated in accordance with the Dividend Reinvestment Plan.
(e) Not annualized.
(f) The benefits derived from custody credits had an impact of less than
0.01%.
(g) Ratios reflect average net assets available to common shares only.
(h) Annualized.
24 |
--------------------------------------------------------------------------------
ASSET COVERAGE REQUIREMENTS
--------------------------------------------------------------------------------
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE* PER SHARE PER SHARE
-------------------------------------------------------------------------------
11/30/05 $ 60,000,000 $ 78,501 $ 25,004 $ 25,000
11/30/04 60,000,000 78,399 25,001 25,000
11/30/03 60,000,000 79,986 25,004 25,000
11/30/02 60,000,000 77,937 25,000 25,000
11/30/01 60,000,000 78,030 25,005 25,000
11/30/00 60,000,000 75,569 25,009 25,000
11/30/99** 60,000,000 74,444 25,003 25,000
* Calculated by substracting the Trust's total liabilities from the Trust's
total assets and dividing the amount by the number of APS outstanding.
** On August 26, 1999, the Trust began offering Auction Preferred Shares.
| 25
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
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, 2005, and the results of its operations, the
changes in its net assets and its financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and 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 the standards of the Public Company
Accounting Oversight Board (United States).Those standards 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 securities at
November 30, 2005 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 24, 2006
26 |
--------------------------------------------------------------------------------
UNAUDITED INFORMATION
--------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION
100.00% of distributions from net investment income will be treated as exempt
income for federal income tax purposes.
For the calendar year ended December 31, 2005, 12.97% of distributions from net
investment income is subject to the alternative minimum tax.
| 27
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
--------------------------------------------------------------------------------
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), all
shareholders whose shares are registered in their own names will have all
distributions reinvested automatically in additional shares of the Trust by
Computershare (the "Plan Agent") unless a shareholder elects to receive cash.
Shareholders whose shares are held in the name of a broker or nominee will have
distributions reinvested automatically by the broker or nominee in additional
shares under the Plan, unless the service is not provided by the broker or the
nominee or the shareholder elects to receive distributions in cash. If the
service is not available, such distributions will be paid in cash. Shareholders
whose shares are held in the name of a broker or nominee should contact the
broker or nominee for details. All distributions to shareholders who elect not
to participate in the Plan will be paid by check mailed directly to the
shareholder of record on the record date therefore by the Plan Agent as the
dividend disbursing agent.
Non-participants in the Plan will receive distributions in cash. Distributions
payable to participants in the Plan will be applied by the Plan Agent, acting as
agent for Plan participants, to the purchase of shares of the Trust. Such shares
will be purchased by the Plan Agent at the then current market price of such
shares in the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts.
Participants in the Plan may withdraw from the Plan upon written notice to the
Plan Agent. When a participant withdraws from the Plan or upon termination of
the Plan as provided below, certificates for whole shares credited to his
account under the Plan will be issued and a cash payment will be made for any
fraction of a share credited to such account. A shareholder's notice of election
to withdraw from the Plan must be received by the Plan Agent before the record
date for a dividend in order to be given effect with respect to that dividend.
In the case of shareholders such as banks, brokers or nominees holding shares
for others who are the beneficial owners of those shares, the Plan Agent will
administer the Plan on the basis of the number of shares certified from time to
time by the shareholder of record as representing the total amount registered in
such shareholder's name and held for the account of beneficial owners who are to
participate in the Plan.
There is no charge to Plan participants for reinvesting distributions. The Plan
Agent's fees for the handling of the reinvestment of distributions will be paid
by the Trust. Each participant in the Plan will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open market
purchases in connection with the reinvestment of distributions. Purchase orders
from the participants in the Plan may be combined with those of other
participants and the price paid by any particular participant may be the average
of the price paid on various orders executed on behalf of groups of participants
in the Plan.
The automatic reinvestment of distributions will not relieve participants of any
income tax that may be payable on such dividends or distributions.
The Plan may be amended or terminated on 30 days written notice to Plan
participants. All correspondence concerning the Plan should be directed to
Computershare by mail at P.O. Box 43010, Providence, RI 02940-3010, or by phone
at 1-800-730-6001.
28 |
--------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Funds in the Columbia
Funds Complex, the year each was first elected or appointed to office, their
principal business occupations during at least the last five years, the number
of portfolios overseen by each Trustee/Director and other directorships they
hold are shown below. Each officer listed below serves as an officer of each
Fund in the Columbia Funds Complex.
NAME, ADDRESS AND AGE,
POSITION WITH FUNDS,
YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN
APPOINTED TO OFFICE (1) COLUMBIA FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
DOUGLAS A. HACKER (Age 50) Executive Vice President-Strategy of United Airlines (airline) since December,
c/o Columbia Management 2002 (formerly President of UAL Loyalty Services (airline) from September, 2001
Advisors, LLC to December, 2002; Executive Vice President and Chief Financial Officer of
One Financial Center United Airlines from July, 1999 to September, 2001; Senior Vice
Boston, MA 02111 President-Finance from March, 1993 to July, 1999). Oversees 83, Nash Finch
Trustee (since 1996) Company (food distributor)
JANET LANGFORD KELLY (Age 48) Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP (law firm) since March, 2005;
c/o Columbia Management Adjunct Professor of Law, Northwestern University, since September, 2004 (formerly
Advisors, LLC Chief Administrative Officer and Senior Vice President, Kmart Holding Corporation
One Financial Center (consumer goods) from September, 2003 to March, 2004; Executive Vice
Boston, MA 02111 President-Corporate Development and Administration, General Counsel and Secretary,
Trustee (since 1996) Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior
Vice President, Secretary and General Counsel, Sara Lee Corporation (branded,
packaged, consumer-products manufacturer) from January, 1995 to September, 1999).
Oversees 83, None
RICHARD W. LOWRY (Age 69) Private Investor since August, 1987 (formerly Chairman and Chief Executive Officer,
c/o Columbia Management U.S. Plywood Corporation (building products manufacturer)). Oversees 89 (3), None
Advisors, LLC
One Financial Center
Boston, MA 02111
Trustee (since 1995)
CHARLES R. NELSON (Age 62) Professor of Economics, University of Washington, since January, 1976; Ford and
c/o Columbia Management Louisa Van Voorhis Professor of Political Economy, University of Washington, since
Advisors, LLC September, 1993 (formerly Director, Institute for Economic Research, University of
One Financial Center Washington from September, 2001 to June, 2003); Adjunct Professor of Statistics,
Boston, MA 02111 University of Washington, since September, 1980; Associate Editor, Journal of Money
Trustee (since 1981) Credit and Banking, since September, 1993; consultant on econometric and
statistical matters. Oversees 83, None
JOHN J. NEUHAUSER (Age 63) Academic Vice President and Dean of Faculties since August, 1999, Boston College
c/o Columbia Management (formerly Dean, Boston College School of Management from September, 1977 to August,
Advisors, LLC 1999). Oversees 89 (3), Saucony, Inc. (athletic footwear)
One Financial Center
Boston, MA 02111
Trustee (since 1985)
| 29
--------------------------------------------------------------------------------
TRUSTEES AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
NAME, ADDRESS AND AGE,
POSITION WITH FUNDS,
YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN
APPOINTED TO OFFICE (1) COLUMBIA FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES (continued)
PATRICK J. SIMPSON (Age 61) Partner, Perkins Coie LLP (law firm). Oversees 83, None
c/o Columbia Management
Advisors, LLC
One Financial Center
Boston, MA 02111
Trustee (since 2000)
THOMAS E. STITZEL (Age 69) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999,
c/o Columbia Management College of Business, Boise State University); Chartered Financial Analyst. Oversees
Advisors, LLC 83, None
One Financial Center
Boston, MA 02111
Trustee (since 1998)
THOMAS C. THEOBALD (Age 68) Partner and Senior Advisor, Chicago Growth Partners (private equity investing)
c/o Columbia Management since September, 2004 (formerly Managing Director, William Blair Capital Partners
Advisors, LLC (private equity investing) from September, 1994 to September, 2004). Oversees 83,
One Financial Center Anixter International (network support equipment distributor); Ventas, Inc. (real
Boston, MA 02111 estate investment trust); Jones Lang LaSalle (real estate management services) and
Trustee and Chairman of the Ambac Financial Group (financial guaranty insurance)
Board (4) (since 1996)
ANNE-LEE VERVILLE (Age 60) Retired since 1997 (formerly General Manager, Global Education Industry, IBM
c/o Columbia Management Corporation (computer and technology) from 1994 to 1997). Oversees 83, Chairman of
Advisors, LLC the Board of Directors, Enesco Group, Inc. (designer, importer and distributor of
One Financial Center giftware and collectibles)
Boston, MA 02111
Trustee (since 1998)
RICHARD L. WOOLWORTH (Age 64) Retired since December, 2003 (formerly Chairman and Chief Executive Officer, The
c/o Columbia Management Regence Group (regional health insurer); Chairman and Chief Executive Officer,
Advisors, LLC BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Young &
One Financial Center Company). Oversees 83, Northwest Natural Gas Co. (natural gas service provider)
Boston, MA 02111
Trustee (since 1991)
INTERESTED TRUSTEE
WILLIAM E. MAYER (2) (Age 65) Partner, Park Avenue Equity Partners (private equity) since February, 1999
c/o Columbia Management (formerly Partner, Development Capital LLC from November 1996, to February, 1999).
Advisors, LLC Oversees 89 (3), Lee Enterprises (print media), WR Hambrecht + Co. (financial
One Financial Center service provider); Reader's Digest (publishing); OPENFIELD Solutions (retail
Boston, MA 02111 industry technology provider)
Trustee (since 1994)
(1) In December 2000, the boards of each of the former Liberty Funds and
former Stein Roe Funds were combined into one board of trustees
responsible for the oversight of both fund groups (collectively, the
"Liberty Board"). In October 2003, the trustees on the Liberty Board were
elected to the boards of the Columbia Funds (the "Columbia Board") and of
the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that
election, Patrick J. Simpson and Richard L. Woolworth, who had been
directors on the Columbia Board and trustees on the CMG Funds Board, were
appointed to serve as trustees of the Liberty Board. The date shown is the
earliest date on which a trustee/director was elected or appointed to the
board of a Fund in the Columbia Funds Complex.
(2) Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co.
(3) Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the
Liberty All-Star Funds, currently consisting of 2 funds, which are advised
by an affiliate of the Advisor.
(4) Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003.
The Statement of Additional Information includes additional information about
the Trustees of the Funds and is available, without charge, upon request by
calling 800-426-3750.
30 |
--------------------------------------------------------------------------------
TRUSTEES AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
NAME, ADDRESS AND AGE,
POSITION WITH COLUMBIA FUNDS,
YEAR FIRST ELECTED OR
APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------------------------------------------------
OFFICERS
CHRISTOPHER L. WILSON (Age 48) Head of Mutual Funds since August, 2004 and Managing Director of the Advisor since
One Financial Center September, 2005; President of the Columbia Funds, Liberty Funds and Stein Roe Funds
Boston, MA 02111 since October, 2004; President and Chief Executive Officer of the Nations Funds
President (since 2004) since January, 2005; President of the Galaxy Funds since April, 2005; Director of
Bank of America Global Liquidity Funds, PLC since May, 2005; Director of Banc of
America Capital Management (Ireland), Limited since May, 2005; Director of FIM
Funding, Inc. since January, 2005; Senior Vice President of Columbia Management
Distributors, Inc. since January, 2005; Director of Columbia Management Services,
Inc. since January, 2005 (formerly Senior Vice President of Columbia Management
from January, 2005 to August, 2005; Senior Vice President of BACAP Distributors LLC
from January, 2005 to July, 2005; President and Chief Executive Officer, CDC IXIS
Asset Management Services, Inc. from September, 1998 to August, 2004).
J. KEVIN CONNAUGHTON (Age 41) Treasurer of the Columbia Funds since October, 2003 and of the Liberty Funds, Stein
One Financial Center Roe Funds and All-Star Funds since December, 2000; Managing Director of the Advisor
Boston, MA 02111 since September, 2005 (formerly Vice President of Columbia Management from April,
Treasurer (since 2000) 2003 to August, 2005; President of the Columbia Funds, Liberty Funds and Stein Roe
Funds from February, 2004 to October, 2004; Chief Accounting Officer and Controller
of the Liberty Funds and All-Star Funds from February, 1998 to October, 2000);
Treasurer of the Galaxy Funds from September, 2002 to November, 2005 (formerly
Treasurer from December, 2002 to December, 2004 and President from February, 2004
to December, 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice
President of Colonial Management Associates, Inc. from February, 1998 to October,
2000).
MARY JOAN HOENE (Age 56) Senior Vice President and Chief Compliance Officer of the Columbia Funds, Liberty
100 Federal Street Funds, Stein Roe Funds and All-Star Funds since August, 2004; Chief Compliance
Boston, MA 02110 Officer of the Columbia Management Multi-Strategy Hedge Fund, LLC since August
Senior Vice President and 2004; Chief Compliance Officer of the BACAP Alternative Multi-Strategy Hedge Fund
Chief Compliance Officer LLC since October 2004 (formerly Partner, Carter, Ledyard & Milburn LLP from
(since 2004) January, 2001 to August, 2004; Counsel, Carter, Ledyard & Milburn LLP from
November, 1999 to December, 2000; Vice President and Counsel, Equitable Life
Assurance Society of the United States from April, 1998 to November, 1999).
MICHAEL G. CLARKE (Age 36) Chief Accounting Officer of the Columbia Funds, Liberty Funds, Stein Roe Funds and
One Financial Center All-Star Funds since October, 2004; Managing Director of the Advisor since
Boston, MA 02111 September, 2005 (formerly Controller of the Columbia Funds, Liberty Funds, Stein
Chief Accounting Officer Roe Funds and All-Star Funds from May, 2004 to October, 2004; Assistant Treasurer
(since 2004) from June, 2002 to May, 2004; Vice President, Product Strategy & Development of the
Liberty Funds and Stein Roe Funds from February, 2001 to June, 2002; Assistant
Treasurer of the Liberty Funds, Stein Roe Funds and the All-Star Funds from August,
1999 to February, 2001; Audit Manager, Deloitte & Touche LLP from May, 1997 to
August, 1999).
JEFFREY R. COLEMAN (Age 36) Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds
One Financial Center since October, 2004 (formerly Vice President of CDC IXIS Asset Management Services,
Boston, MA 02111 Inc. and Deputy Treasurer of the CDC Nvest Funds and Loomis Sayles Funds from
Controller (since 2004) February, 2003 to September, 2004; Assistant Vice President of CDC IXIS Asset
Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from
August, 2000 to February, 2003; Tax Manager of PFPC, Inc. from November, 1996 to
August, 2000).
R. SCOTT HENDERSON (Age 46) Secretary of the Columbia Funds, Liberty Funds and Stein Roe Funds since December,
One Financial Center 2004 (formerly Of Counsel, Bingham McCutchen from April, 2001 to September, 2004;
Boston, MA 02111 Executive Director and General Counsel, Massachusetts Pension Reserves Investment
Secretary (since 2004) Management Board from September, 1997 to March, 2001).
| 31
--------------------------------------------------------------------------------
BOARD CONSIDERATION AND APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
--------------------------------------------------------------------------------
The Advisory Fees and Expenses Committee of the Board of Trustees meets one or
more times annually, usually in late summer, to review the advisory agreements
(collectively, the "Agreements") of the funds for which the Trustees serve as
trustees or directors (each a "fund") and determine whether to recommend that
the full Board approve the continuation of the Agreements for an additional
one-year period. After the Committee has made its recommendation, the full
Board, including the Independent Trustees, determines whether to approve the
continuation of the Agreements. In addition, the Board, including the
Independent Trustees, considers matters bearing on the Agreements at most of its
other meetings throughout the year and meets regularly with the heads of each
investment area within Columbia. The Trustees also meet with selected fund
portfolio managers at various times throughout the year. The Trustees receive
and review all materials that they, their legal counsel or Columbia, the funds'
investment adviser, believe to be reasonably necessary for the Trustees to
evaluate the Agreements and determine whether to approve the continuation of the
Agreements. Those materials generally include, among other items, (i)
information on the investment performance of each fund relative to the
performance of peer groups of mutual funds and the fund's performance
benchmarks, (ii) information on each fund's advisory fees and other expenses,
including information comparing the fund's expenses to those of peer groups of
mutual funds and information about any applicable expense caps and fee
"breakpoints," (iii) sales and redemption data, (iv) information about the
profitability of the Agreements to Columbia, and potential "fall-out" or
ancillary benefits that Columbia and its affiliates may receive as a result of
their relationships with the funds and (v) information obtained through
Columbia's response to a questionnaire prepared at the request of the Trustees
by counsel to the funds and independent legal counsel to the Independent
Trustees. The Trustees also consider other information such as (vi) Columbia's
financial results and financial condition, (vii) each fund's investment
objective and strategies and the size, education and experience of Columbia's
investment staffs and their use of technology, external research and trading
cost measurement tools, (viii) the allocation of the funds' brokerage, if any,
including allocations to brokers affiliated with Columbia and the use of "soft"
commission dollars to pay fund expenses and to pay for research products and
services, (ix) Columbia's resources devoted to, and its record of compliance
with, the funds' investment policies and restrictions, policies on personal
securities transactions and other compliance policies, (x) Columbia's response
to various legal and regulatory proceedings since 2003 and (xi) the economic
outlook generally and for the mutual fund industry in particular. In addition,
the Trustees confer with their independent fee consultant and review materials
relating to the Agreements that the independent fee consultant provides.
Throughout the process, the Trustees have the opportunity to ask questions of
and request additional materials from Columbia and to consult independent legal
counsel to the Independent Trustees.
The Board of Trustees most recently approved the continuation of the Agreements
at its October, 2005 meeting, following meetings of the Advisory Fees and
Expenses Committee held in August, September, and October, 2005. In considering
whether to approve the continuation of the Agreements, the Trustees, including
the Independent Trustees, did not identify any single factor as determinative,
and each weighed various factors as he or she deemed appropriate. The Trustees
considered the following matters in connection with their approval of the
continuation of the Agreements: THE NATURE, EXTENT AND QUALITY OF THE SERVICES
PROVIDED TO THE FUNDS UNDER THE AGREEMENTS. The Trustees considered the nature,
extent and quality of the services provided by Columbia and its affiliates to
the funds and the resources dedicated to the funds by Columbia and its
affiliates. Among other things, the Trustees considered (i) Columbia's ability,
including its resources, compensation programs for personnel involved in fund
management, reputation and other attributes, to attract and retain highly
qualified research, advisory and supervisory investment professionals; (ii) the
portfolio management services provided by those investment professionals; and
(iii) the trade execution services provided on behalf of the funds. For each
fund, the Trustees also considered the benefits to shareholders of investing in
a mutual fund that is part of a family of funds offering exposure to a variety
of asset classes and investment disciplines and providing for a variety of fund
and shareholder services. After reviewing those and related factors, the
Trustees concluded, within the context of their overall conclusions regarding
each of the Agreements, that the nature, extent and quality of services provided
supported the continuation of the Agreements. INVESTMENT PERFORMANCE OF THE
FUNDS AND COLUMBIA. The Trustees reviewed information about the performance of
each fund over various time periods, including information prepared by an
independent third party that compared the performance of each fund to the
performance of peer groups of mutual funds and performance benchmarks. The
Trustees also reviewed a description of the third party's methodology for
identifying each fund's peer group for purposes of performance and expense
comparisons. The Trustees also considered additional information that the
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BOARD CONSIDERATION AND APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (CONTINUED)
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Advisory Fees and Expenses Committee requested from Columbia relating to funds
that presented relatively weaker performance and/or relatively higher expenses.
In the case of each fund that had performance that lagged that of a relevant
peer group for certain (although not necessarily all) periods, the Trustees
concluded that other factors relevant to performance were sufficient, in light
of other considerations, to warrant continuation of the fund's Agreements. Those
factors varied from fund to fund, but included one or more of the following: (i)
that the fund's performance, although lagging in certain recent periods, was
stronger over the longer term; (ii) that the underperformance was attributable,
to a significant extent, to investment decisions that were reasonable and
consistent with the fund's investment strategy and policies and that the fund
was performing as expected, given market conditions and the fund's investment
strategy; (iii) that the fund's performance was competitive when compared to
other relevant performance benchmarks or peer groups; (iv) that Columbia had
taken or was taking steps designed to help improve the fund's investment
performance, including, but not limited to, replacing portfolio managers or
modifying investment strategies; (v) that the fund's advisory fee had recently
been, or was proposed to be, reduced, with the goal of helping the fund's net
return to shareholders become more competitive; and (vi) that other fund
expenses, such as transfer agency or fund accounting fees, have recently been
reduced, with the goal of helping the fund's net return to shareholders become
more competitive. The Trustees also considered Columbia's performance and
reputation generally, the funds' performance as a fund family generally, and
Columbia's historical responsiveness to Trustee concerns about performance and
Columbia's willingness to take steps intended to improve performance. After
reviewing those and related factors, the Trustees concluded, within the context
of their overall conclusions regarding each of the Agreements, that the
performance of each fund and Columbia was sufficient, in light of other
considerations, to warrant the continuation of the Agreements. THE COSTS OF THE
SERVICES PROVIDED AND PROFITS REALIZED BY COLUMBIA AND ITS AFFILIATES FROM THEIR
RELATIONSHIPS WITH THE FUNDS. The Trustees considered the fees charged to the
funds for advisory services as well as the total expense levels of the funds.
That information included comparisons (provided both by management and by an
independent third party) of the funds' advisory fees and total expense levels to
those of their peer groups and information about the advisory fees charged by
Columbia to comparable accounts. In considering the fees charged to comparable
accounts, the Trustees took into account, among other things, management's
representations about the differences between managing mutual funds as compared
to other types of accounts, including the additional resources required to
effectively manage mutual funds and distribute mutual fund shares. In evaluating
each fund's advisory fees, the Trustees also took into account the demands,
complexity and quality of the investment management of the fund. The Trustees
considered reductions in advisory fee rates, implementation of advisory fee
breakpoints, institution of advisory fee waivers, and changes to expense caps,
which benefited a number of the funds. Furthermore, the Trustees considered the
projected impact on expenses resulting from the overall cost reductions that
management anticipated would result from the shift to a common group of service
providers for transfer agency, fund accounting and custody services for mutual
funds advised by Bank of America affiliates. The Trustees also noted
management's stated justification for the fees charged to the funds, which
included information about the performance of the funds, the services provided
to the funds and management's view as to why it was appropriate that some funds
bear advisory fees or total expenses greater than their peer group medians. The
Trustees also considered the compensation directly or indirectly received by
Columbia and its affiliates from their relationships with the funds. The
Trustees reviewed information provided by management as to the profitability to
Columbia and its affiliates of their relationships with the funds, and
information about the allocation of expenses used to calculate profitability.
When reviewing profitability, the Trustees also considered court cases in which
adviser profitability was an issue in whole or in part, the performance of the
relevant funds, the expense levels of the funds, and whether Columbia had
implemented breakpoints and/or expense caps with respect to the funds.
After reviewing those and related factors, the Trustees concluded, within the
context of their overall conclusions regarding each of the Agreements, that the
advisory fees charged to each of the funds were fair and reasonable, and that
the costs of the advisory services generally, and the related profitability to
Columbia and its affiliates of their relationships with the funds, supported the
continuation of the Agreements.
ECONOMIES OF SCALE. The Trustees considered the existence of any economies of
scale in the provision of services by Columbia to each fund and whether those
economies were shared with the fund through breakpoints in the investment
advisory fees or other means, such as expense waivers. The Trustees noted that
many of the funds benefited from breakpoints, expense caps, or both. In
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BOARD CONSIDERATION AND APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (CONTINUED)
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considering those issues, the Trustees also took note of the costs of the
services provided (both on an absolute and a relative basis) and the
profitability to Columbia and its affiliates of their relationships with the
funds, as discussed above. After reviewing those and related factors, the
Trustees concluded, within the context of their overall conclusions regarding
each of the Agreements, that the extent to which economies of scale were shared
with the funds supported the continuation of the Agreements.
OTHER FACTORS. The Trustees also considered other factors, which included but
were not limited to the following:
o the extent to which each fund had operated in accordance with its
investment objective and its record of compliance with its investment
restrictions, and the compliance programs of the funds and Columbia. They
also considered the compliance-related resources that Columbia and its
affiliates were providing to the funds.
o the nature, quality, cost and extent of administrative and shareholder
services performed by Columbia and its affiliates, both under the
Agreements and under separate agreements for the provision of transfer
agency and administrative services.
o so-called "fall-out benefits" to Columbia, such as the engagement of its
affiliates to provide distribution, brokerage and transfer agency services
to the funds, and the benefits of research made available to Columbia by
reason of brokerage commissions generated by the funds' securities
transactions, as well as possible conflicts of interest associated with
those fall-out and other benefits, and the reporting, disclosure and other
processes in place to disclose and monitor those possible conflicts of
interest.
o the draft report provided by the independent fee consultant, which
included information about and analysis of the funds' fees, expenses and
performance.
Based on their evaluation of all factors that they deemed to be material,
including those factors described above, and assisted by the advice of
independent counsel and the independent fee consultant, the Trustees, including
the Independent Trustees, approved the continuance of each of the Agreements
through November 30, 2006.
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SUMMARY OF MANAGEMENT FEE EVALUATION BY INDEPENDENT FEE CONSULTANT
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PREPARED PURSUANT TO THE FEBRUARY 9, 2005
ASSURANCE OF DISCONTINUANCE
BETWEEN THE OFFICE OF
ATTORNEY GENERAL OF NEW YORK STATE AND
COLUMBIA MANAGEMENT ADVISORS, INC. AND
COLUMBIA FUNDS DISTRIBUTOR, INC.
OCTOBER 11, 2005
I. OVERVIEW
Columbia Management Advisors, Inc. ("CMA") and Columbia Funds Distributors, Inc.
("CFD") (CFD together with CMA referred to herein as Columbia Management Group
or "CMG1"), entered into an agreement with the New York Attorney General's
Office in the form of an Assurance of Discontinuance (the "AOD"). The AOD
stipulated that CMA would be permitted to manage or advise the Columbia Funds
only if the Independent Members (as such term is defined in the AOD) of the
Columbia Funds' Board of Trustees/Directors (collectively the "Trustees")
appointed a Senior Officer or an Independent Fee Consultant ("IFC") who, among
other things, is to manage the process by which management fees are negotiated.
On May 15, 2005, the Independent Members of the Board appointed me as the IFC
for the Columbia Funds. This report is the annual written evaluation of the
Columbia Funds for 2005 that I have prepared in my capacity as IFC, as required
by the AOD.
A. DUTIES OF THE INDEPENDENT FEE CONSULTANT
As part of the AOD, the Independent Members of the Columbia Funds' Board of
Trustees/Directors agreed to retain an independent fee consultant who was to
participate in the management fee negotiation process. The IFC is charged with
"... duties and responsibilities [that] include managing the process by which
proposed management fees (including, but not limited to, advisory fees) to be
charged the Columbia Fund[s] are negotiated so that they are negotiated in a
manner which is at arms length and reasonable and consistent with this Assurance
of Discontinuance." However, the IFC does not replace the Trustees in their role
of negotiating management and other fees with CMG and its affiliates. In
particular, the AOD states that "Columbia Advisors may manage or advise a
Columbia Fund only if the reasonableness of the proposed management fees is
determined by the Board of Trustees of the Columbia Fund using ... an annual
independent written evaluation prepared by or under the direction of the ...
Independent Fee Consultant...." This report, pursuant to the AOD, constitutes
the "annual independent written evaluation prepared by or under the direction of
the... Independent Fee Consultant."
The AOD requires the IFC report to consider at least the following:
a) Management fees (including any components thereof) charged by other mutual
fund companies for like services;
b) Management fees (including any components thereof) charged to institutional
and other clients of CMA for like services;
c) Costs to CMA and its affiliates of supplying services pursuant to the
management fee agreements, excluding any intra-corporate profit;
d) Profit margins of CMA and its affiliates from supplying such services;
e) Possible economies of scale as the CMA fund grows larger; and
f) The nature and quality of CMA services, including Columbia Funds'
performance.
This report is designed to assist the Board in evaluating the 2005 contract
renewal for Columbia Funds. In addition, this report points out areas where the
Board may deem additional information and analysis to be appropriate over time.
B. SOURCES OF INFORMATION USED IN MY EVALUATION
I have requested data from CMG and various third party industry data sources or
independent research companies that work in the mutual fund arena. The following
list generally describes the types of information I requested.
1. I collected data on performance, management fees, and expense ratios of both
Columbia Funds and comparable non-Columbia Funds. The sources of this
information were CMG, Lipper Inc. ("Lipper") and Morningstar Inc.
("Morningstar"). While Lipper and Morningstar each selected a different group of
peer funds it deemed appropriate against which to measure the relative
performance and fees of Columbia Funds, I conducted an independent review of the
appropriateness of each peer group.
2. I reviewed data on CMG's expense and profitability that I obtained from CMA
directly.
3. I have reviewed data on the organizational structure of CMG in general.
4. I collected information on profitability from Strategic Insight Mutual Fund
Research and Consulting, LLC ("Strategic Insight"). I used this third-party
independent research as an additional method to gauge the accuracy of the data
collected in (2) above.
1 Prior to the date of this report, CMA merged into an affiliated entity,
Banc of America Capital Management, LLC ("BACAP"), and BACAP then changed
its name to Columbia Management Advisors, LLC which carries on the
business of CMA, and CFD changed its name to Columbia Management
Distributors, Inc.
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5. I conducted interviews with various CMG staff, including members of the
senior management team, legal staff, heads of affiliates, portfolio managers,
and financial personnel.
6. I reviewed current 2005 Section 15(c) material provided to the Board and
material presented to the Board in the 2004 fee and performance evaluation.
7. I have reviewed various academic research papers, industry publications, and
other available literature dealing with mutual fund operations, profitability,
and other issues. In addition, I have reviewed SEC releases and studies of
mutual fund expenses.
8. I have reviewed documents pertaining to recent mutual fund litigation in
general and publicly available information about litigation where CMG has been
involved.
In addition, I have engaged NERA Economic Consulting ("NERA") and independent
consultant Dr. John Rea to assist me in data management and analysis. Both NERA
and Dr. Rea have extensive experience in the mutual fund industry through
consulting, government positions, or industry trade groups that provide unique
insights and special knowledge pertaining to my independent analysis of fees,
performance, and profitability. I have also retained Shearman & Sterling LLP as
outside counsel to advise me in connection with my review.
C. QUALIFICATIONS AND INDEPENDENCE
I am the Walter H. Carpenter Chair and Professor of Finance at Babson College.
Before this I was the Chief Economist of the U.S. Securities and Exchange
Commission. I have no material relationship with Bank of America or CMG aside
from acting as IFC, and am aware of no relationship with any of their
affiliates. [Resume omitted]
II. EVALUATION OF THE GENERAL PROCESS USED TO NEGOTIATE THE ADVISORY CONTRACT
A. GENERAL CONSIDERATIONS
My analysis considered all factors and information I reviewed on the finances
and operations of Columbia Funds. I gave each factor an appropriate weight in my
overall findings, and no single factor was in itself the sole criterion for a
finding or conclusion. My objective was to assess all of the information
provided and conduct a robust evaluation of Columbia Funds' operations, fees,
and performance.
My analysis and thought processes will and, I believe, should, differ in certain
ways from the processes used by Trustees in their evaluation of the management
agreements. In particular, because of my technical and quantitative background,
I may use techniques and data that Trustees have not previously felt would be
useful. I view this supplemental analysis as appropriate because my role is to
assist Trustees in their decisions, and to the extent that I bring new ideas or
analysis to the evaluation, I believe this improves the process by which
management fees for the Columbia Funds may be negotiated in accordance with the
AOD.
Finally, as part of my role as IFC, I have, from time to time, sent to Trustees
additional papers and reports produced by third parties that I felt had bearing
on the fee negotiation process. I viewed these materials as educational in
nature and felt they would aid Trustees in placing their work in context.
B. CMG MANAGEMENT INTERVIEWS
As a starting point of my analysis, I have met with members of CMG staff to gain
an understanding of the organizational structure and personnel involved in
running the Columbia fund family.
I have had general discussions and have received information about the
management structure of CMG. My conversations with management have been
informative. In addition, I have participated in Board meetings where Trustees
and management have discussed issues relating to management agreements and
performance of Columbia Funds. When I felt it was appropriate, I added my
opinions on particular matters, such as fund performance or fee levels, to the
discussion.
C. TRUSTEES' FEE AND PERFORMANCE EVALUATION PROCESS
After making initial requests for information, members of the Trustees of the
Columbia Funds met in advance of the October Section 15(c) contract approval
meeting to review certain fee, performance and other data for the Columbia Funds
and to ask questions and make requests of management. Trustees have developed a
process to evaluate the fee and expense levels and performance of Columbia
Funds. This process is used to highlight those funds that have been performing
poorly, may have had higher management fees or expense ratios, or both.
The process involves providing instructions to Lipper to prepare specific data
analyses tailored to the Trustees review framework. These instructions include
highlighting funds that hit one or more fee performance "screens." The six
screens the Trustees use are as follows:
a. 5th Lipper quintile in actual management fee;
b. 5th Lipper quintile in total expense ratio;
c. Three or more 5th Lipper quintile rankings in the 1-, 3-, 5- or 10-year
performance rankings;
d. Sum of the Lipper Quintile Rank (1-year performance) and the Lipper Quintile
Rank (actual management fee) totals a number equal to or higher than 8;
e. Sum of the Lipper Quintile Rank (1-year performance) and the Lipper Quintile
Rank (total expense ratio) totals a number equal to or higher than 8; and
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f. Sum of the Lipper Quintile Rank (3-year performance) and the Lipper Quintile
Rank (total expense ratio) totals a number equal to or higher than 8.
If a fund hits one or more of these screens, it is highlighted for additional
review by the Trustees. This method is only used as an aid for Trustees to
highlight funds and is not the sole test of whether the Board will determine to
take particular actions concerning fees or performance. Funds that have not been
flagged by this screen also may be singled out for fee and performance reasons,
and the Trustees may determine not to take action with respect to the fees or
performance of funds that have been flagged by the screen. These screens
contribute to the basis for discussions on Trustees' views on the Columbia
Funds.
III. FINDINGS
My findings based on my work as IFC are as follows:
1. The Trustees have the relevant information necessary to form an opinion on
the reasonableness of fees and evaluate the performance of the Columbia Funds.
The process the Trustees used in preparing to reach their determination has been
open and informative. In my view, the 2005 process by which the management fees
of the Columbia Funds have been negotiated thus far has been, to the extent
practicable, at arm's length and reasonable and consistent with the AOD.
2. Columbia Funds demonstrated a range of performance relative to their peers. I
find that across the fund complex, 54.26 percent of Columbia Funds have
performance higher than the median of their respective Lipper performance
universe, and 42.55 percent of Columbia Funds have performance higher than the
median of their respective Lipper performance group. In addition, Lipper
performance universe and group comparison showed that Columbia Funds were
distributed roughly evenly across these quintiles. The Trustees have worked with
management to address issues of funds that have demonstrated consistent or
significant underperformance.
3. Columbia Funds demonstrate a range of management fees and expense ratios
relative to their peers. I find that across the fund complex, 58.51 percent of
Columbia Funds have expenses below the median of their Lipper expense universe,
and 53.19 percent of Columbia Funds have expenses below the median of their
Lipper expense group. In addition, Lipper expense universe and group comparisons
show that Columbia Funds are distributed roughly evenly across these quintiles.
The Trustees have taken steps to limit shareholder expenses for certain funds
having management fees significantly above their peers, often though the use of
fee waivers to which CMG has agreed.
Consolidation of various funds and fund families managed by CMG has resulted in
substantial savings in non-advisory expenses.
4. Profitability to CMG of the individual funds ranges widely, but the overall
profitability to CMG of its relationship with the Columbia Funds appears to fall
within a reasonable range. The method of cost allocation to funds is addressed
in the material provided by CMG to the Trustees, but additional information may
be necessary to make a judgment on fund level profitability. My review of
profitability and cost allocation is ongoing, and I plan to continue to develop
my views with regard to fund level profitability.
5. Columbia Funds have instituted fee schedules with breakpoints designed to
enable investors to benefit from fund economies of scale, although 71% of the
funds have not yet reached their first breakpoint. My analysis of the
appropriateness of the breakpoint levels, which I expect will take into account
the cost and profitability of the individual funds, is ongoing.
My work is ongoing and my views may develop over time in light of new
information and analysis.
Respectfully submitted,
Erik R. Sirri
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Transfer Agent
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IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Investment Grade Municipal Trust is:
Computershare
P.O. Box 43010
Providence, RI 02940-3010
The trust mails one shareholder report to each shareholder address. Shareholders
can order additional reports by calling 800-730-6001. In addition,
representatives at that number can provide shareholders information about the
trust.
Financial advisors who want additional information about the trust may speak to
a representative at 800-426-3750.
A description of the trust's proxy voting policies and procedures is available
(i) at www.columbiamanagement.com; (ii) on the Securities and Exchange
Commission's website at www.sec.gov, and (iii) without charge, upon request, by
calling 800-730-6001. Information regarding how the trust voted proxies relating
to portfolio securities during the 12-month period ended June 30 is available
from the SEC's website. Information regarding how the trust voted proxies
relating to portfolio securities is also available at
www.columbiamanagement.com.
The trust files a complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The trust's Form N-Q
is available on the SEC's website at www.sec.gov and may be reviewed and copied
at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Annual Certifications -- As required, on June 13, 2005, the trust submitted to
the New York Stock Exchange ("NYSE") the annual certification of the trust's
Chief Executive Officer certifying that he is not aware of any violation of the
NYSE's Corporate Governance listing standards. The trust also has included the
certifications of the trust's Chief Executive Officer and Chief Financial
Officer required by Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to
the trust's Form N-CSR filed with the Securities and Exchange Commission for the
annual period.
This report has been prepared for shareholders of Colonial Investment Grade
Municipal Trust.
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COLONIAL INVESTMENT GRADE MUNICIPAL TRUST ANNUAL REPORT
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SHC-42/92699-1105(01/06)05/9247
ITEM 2. CODE OF ETHICS.
(a) The registrant has, as of the end of the period covered by this
report, adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers
or implicit waivers to a provision of the code of ethics adopted in
2(a) above.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas
E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members
of the registrant's Board of Trustees and Audit Committee, each qualify as an
audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr.
Woolworth are each independent trustees, as defined in paragraph (a)(2) of this
item's instructions and collectively constitute the entire Audit Committee.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Aggregate Audit Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2005 and November
30, 2004 are approximately as follows:
2005 2004
$25,000 $22,900
Audit Fees include amounts related to the audit of the registrant's annual
financial statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Aggregate Audit-Related Fees billed by the principal accountant for
professional services rendered during the fiscal years ended November 30, 2005
and November 30, 2004 are approximately as follows:
2005 2004
$8,400 $7,100
Audit-Related Fees include amounts for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported in Audit Fees
above. In both fiscal years 2005 and 2004, Audit-Related Fees include certain
agreed-upon procedures performed for semi-annual shareholder reports and a
rating agency review.
(c) Aggregate Tax Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2005 and November
30, 2004 are approximately as follows:
2005 2004
$3,100 $3,100
Tax Fees in both fiscal years 2005 and 2004 consist primarily of the review of
annual tax returns. Tax fees include amounts for professional services by the
principal accountant for tax compliance, tax advice and tax planning.
(d) Aggregate All Other Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2005 and November
30, 2004 are approximately as follows:
2005 2004
$0 $0
All Other Fees include amounts for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) above.
None of the amounts described in paragraphs (a) through (d) above were approved
pursuant to the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X.
(e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
I. GENERAL OVERVIEW
The Audit Committee of the registrant has adopted a formal policy (the "Policy")
which sets forth the procedures and the conditions pursuant to which the Audit
Committee will pre-approve (i) all audit and non-audit (including audit related,
tax and all other) services provided by the registrant's independent auditor to
the registrant and individual funds
(collectively "Fund Services"), and (ii) all non-audit services provided by the
registrant's independent auditor to the funds' adviser or a control affiliate of
the adviser, that relate directly to the funds' operations and financial
reporting (collectively "Fund-related Adviser Services"). A "control affiliate"
is an entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the funds, and the term "adviser" is
deemed to exclude any unaffiliated sub-adviser whose role is primarily portfolio
management and is sub-contracted or overseen by another investment adviser. The
adviser and control affiliates are collectively referred to as "Adviser
Entities."
The Audit Committee uses a combination of specific (on a case-by-case basis as
potential services are contemplated) and general (pre-determined list of
permitted services) pre-approvals. Unless a type of service has received general
pre-approval, it will require specific pre-approval by the Audit Committee if it
is to be provided by the independent auditor.
The Policy does not delegate the Audit Committee's responsibilities to
pre-approve services performed by the independent auditor to management.
II. GENERAL PROCEDURES
On an annual basis, the Fund Treasurer and/or Director of Trustee Administration
shall submit to the Audit Committee a schedule of the types of Fund Services and
Fund-related Adviser Services that are subject to general pre-approval.
These schedules will provide a description of each type of service that is
subject to general pre-approval and, where possible, will provide estimated fees
for each instance of providing each service. This general pre-approval and
related fees (where provided) will generally cover a one-year period (for
example, from June 1 through May 31 of the following year). The Audit Committee
will review and approve the types of services and review the projected fees for
the next one-year period and may add to, or subtract from, the list of general
pre-approved services from time to time, based on subsequent determinations.
This approval acknowledges that the Audit Committee is in agreement with the
specific types of services that the independent auditor will be permitted to
perform. The fee amounts will be updated to the extent necessary at other
regularly scheduled meetings of the Audit Committee.
In addition to the fees for each individual service, the Audit Committee has the
authority to implement a fee cap on the aggregate amount of non-audit services
provided to an individual fund.
If, subsequent to general pre-approval, a fund, its investment adviser or a
control affiliate determines that it would like to engage the independent
auditor to perform a service that requires pre-approval and that is not included
in the general pre-approval list, the specific pre-approval procedure shall be
as follows:
o A brief written request shall be prepared by management detailing the
proposed engagement with explanation as to why the work is proposed to
be performed by the independent auditor;
o The request should be addressed to the Audit Committee with copies to
the Fund Treasurer and/or Director of Trustee Administration;
o The Fund Treasurer and/or Director of Trustee Administration will
arrange for a discussion of the service to be included on the agenda
for the next regularly scheduled Audit Committee meeting, when the
Committee will discuss the proposed engagement and approve or deny the
request.
o If the timing of the project is critical and the project needs to
commence before the next regularly scheduled meeting, the Chairperson
of the Audit Committee may approve or deny the request on behalf of
the Audit Committee, or, in the Chairperson's discretion, determine to
call a special meeting of the Audit Committee for the purpose of
considering the proposal. Should the Chairperson of the Audit
Committee be unavailable, any other member of the Audit Committee may
serve as an alternate for the purpose of approving or denying the
request. Discussion with the Chairperson (or alternate, if necessary)
will be arranged by the Fund Treasurer and/or Director of Trustee
Administration. The independent auditor will not commence any such
project unless and until specific approval has been given.
III. CERTAIN OTHER SERVICES PROVIDED TO ADVISER ENTITIES
The Audit Committee recognizes that there are cases where services proposed to
be provided by the independent auditor to the adviser or control affiliates are
not Fund-related Adviser Services within the meaning of the Policy, but
nonetheless may be relevant to the Audit Committee's ongoing evaluation of the
auditor's independence and objectivity with respect to its audit services to the
funds. As a result, in all cases where an Adviser Entity engages the independent
auditor to provide audit or non-audit services that are not Fund Services or
Fund-related Adviser Services, were not subject to pre-approval by the Audit
Committee, and the projected fees for any such engagement (or the aggregate of
all such engagements during the period covered by the Policy) exceeds a
pre-determined threshold established by the Audit Committee; the independent
auditor, Fund Treasurer and/or Director of Trustee Administration will notify
the Audit Committee not later than its next meeting. Such notification shall
include a general description of the services provided, the entity that is to be
the recipient of such services, the timing of the engagement, the entity's
reasons for selecting the independent auditor, and the projected fees. Such
information will allow the Audit Committee to consider whether non-audit
services provided to the adviser and Adviser Entities, which were not subject to
Audit Committee pre-approval, are compatible with maintaining the auditor's
independence with respect to the Funds.
IV. REPORTING TO THE AUDIT COMMITTEE
The Fund Treasurer or Director of Trustee Administration shall report to the
Audit Committee at each of its regular meetings regarding all Fund Services or
Fund-related Adviser Services initiated since the last such report was rendered,
including:
o A general description of the services, and
o Actual billed and projected fees, and
o The means by which such Fund Services or Fund-related Adviser Services
were pre-approved by the Audit Committee.
In addition, the independent auditor shall report to the Audit Committee
annually, and no more than 90 days prior to the filing of audit reports with the
SEC, all non-audit services provided to entities in the funds' "investment
company complex," as defined by SEC rules, that did not require pre-approval
under the Policy.
V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE
The Policy may be amended from time to time by the Audit Committee. Prompt
notice of any amendments will be provided to the independent auditor, Fund
Treasurer and Director of Trustee Administration. The Policy shall be reviewed
and approved at least annually by the Audit Committee.
*****
(e)(2) The percentage of services described in paragraphs (b) through (d) of
this Item approved pursuant to the "de minimis" exception under paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X during both fiscal years ended
November 30, 2005 and November 30, 2004 was zero.
(f) Not applicable.
(g) All non-audit fees billed by the registrant's accountant for services
rendered to the registrant for the fiscal years ended November 30, 2005 and
November 30, 2004 are disclosed in (b) through (d) of this Item.
During the fiscal years ended November 30, 2005 and November 30, 2004, there
were no Audit-Related Fees, Tax Fees or All Other Fees that were approved for
services to the investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser) and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant under
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of Audit-Related Fees, Tax Fees and All Other Fees required to be
approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were
approved under the "de minimis" exception during both fiscal years ended
November 30, 2005 and November 30, 2004 was zero.
(h) The registrant's Audit Committee of the Board of Directors has considered
whether the provision of non-audit services that were rendered to the
registrant's adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X, is compatible with maintaining the principal accountant's
independence. The Audit Committee determined that the provision of such services
is compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C.
78c(a)(58)(A)). Douglas A. Hacker, Thomas E. Stitzel, Anne-Lee Verville and
Richard L. Woolworth are each independent trustees and collectively constitute
the entire Audit Committee.
ITEM 6. SCHEDULE OF INVESTMENTS
The registrant's "Schedule I - Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form
N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Fund has delegated to Columbia Management Advisors, LLC (the "Advisor") the
responsibility to vote proxies relating to portfolio securities held by the
Fund. In deciding to delegate this responsibility to the Advisor, the Board of
Trustees of the Trust reviewed and approved the policies and procedures adopted
by the Advisor. These included the procedures that the Advisor follows when a
vote presents a conflict between the interests of the Fund and its shareholders
and the Advisor, its affiliates, its other clients or other persons.
The Advisor's policy is to vote all proxies for Fund securities in a manner
considered by the Advisor to be in the best interest of the Fund and its
shareholders without regard to any benefit to the Advisor, its affiliates, its
other clients or other persons. The Advisor examines each proposal and votes
against the proposal, if, in its judgment, approval or adoption of the proposal
would be expected to impact adversely the current or potential market value of
the issuer's securities. The Advisor also examines each proposal and votes the
proxies against the proposal, if, in its judgment, the proposal would be
expected to affect adversely the best interest of the Fund. The Advisor
determines the best interest of the Fund in light of the potential economic
return on the Fund's investment.
The Advisor addresses potential material conflicts of interest by having
predetermined voting guidelines. For those proposals that require special
consideration or in instances where special circumstances may require varying
from the predetermined guideline, the Advisor's Proxy Committee determines the
vote in the best interest of the Fund, without consideration of any benefit to
the Advisor, its affiliates, its other clients or other persons. The Advisor's
Proxy Committee is composed of representatives of the Advisor's equity
investments, equity research, compliance, legal and fund administration
functions. In addition to the responsibilities described above, the Proxy
Committee has the responsibility to review, on a semi-annual basis, the
Advisor's proxy voting policies to ensure consistency with internal and
regulatory agency policies and to develop additional predetermined voting
guidelines to assist in the review of proxy proposals.
The Proxy Committee may vary from a predetermined guideline if it determines
that voting on the proposal according to the predetermined guideline would be
expected to impact adversely the current or potential market value of the
issuer's securities or to affect adversely the best interest of the client.
References to the best interest of a client refer to the interest of the client
in terms of the potential economic return on the client's investment. In
determining the vote on any proposal, the Proxy Committee does not consider any
benefit other than benefits to the owner of the securities to be voted. A member
of the Proxy Committee is prohibited from voting on any proposal for which he or
she has a conflict of interest by reason of a direct relationship with the
issuer or other party affected by a given proposal. Persons making
recommendations to the Proxy Committee or its members are required to disclose
to the Committee any relationship with a party making a proposal or other matter
known to the person that would create a potential conflict of interest.
The Advisor has retained Institutional Shareholder Services ("ISS"), a third
party vendor, to implement its proxy voting process. ISS provides proxy
analysis, record keeping services and vote disclosure services.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Registrant Purchases of Equity Securities*
(a) (b) (c) (d)
Total Number of Maximum Number of
Shares Purchased as Shares that May Yet
Period Total Number Average Price Part of Publically Be Purchased Under
of Shares Paid Per Share Announced Plans the Plans or Programs
--------------------------------------------------------------------------------------------------------------------------
06/01/05 through 06/30/05 7,060 $10.48 7,060 N/A
07/01/05 through 07/31/05 6,713 $10.62 6,713 N/A
08/01/05 through 08/31/05 6,613 $10.63 6,613 N/A
09/01/05 through 09/30/05 6,752 $10.40 6,752 N/A
10/01/05 through 10/31/05 6,718 $10.52 6,718 N/A
11/01/05 through 11/30/05 6,788 $10.43 6,788 N/A
--------------------------------------------------------------------------------------------------------------------------
Total 40,644 $10.51 40,644 N/A
--------------------------------------------------------------------------------------------------------------------------
* Includes shares purchased by the Dividend Reinvestment Agent pursuant to the
Registrant's Dividend Reinvestment Plan.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have not been any material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of directors, since those
procedures were last disclosed in response to requirements of Item
7(d)(2)(ii)(G) of Schedule 14A or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officers, based on their evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing of
this report, has concluded that such controls and procedures are
adequately designed to ensure that information required to be
disclosed by the registrant in Form N-CSR is accumulated and
communicated to the registrant's management, including the principal
executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR
attached hereto as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Colonial Investment Grade Municipal Trust
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By (Signature and Title) /S/ Christopher L. Wilson
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Christopher L. Wilson, President
Date January 25, 2006
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /S/ Christopher L. Wilson
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Christopher L. Wilson, President
Date January 25, 2006
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By (Signature and Title) /S/ J. Kevin Connaughton
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J. Kevin Connaughton, Treasurer
Date January 25, 2006
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