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
Colonial Investment Grade Municipal Trust
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(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)
James R. Bordewick, Jr., Esq.
Columbia Management Advisors, LLC
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-426-3750
Date of fiscal year end: November 30, 2006
Date of reporting period: May 31, 2006
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. Section 3507.
Item 1. Reports to Stockholders
[PHOTO]
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
Semiannual Report
May 31, 2006
[LOGO] Not FDIC Insured May Lose Value
No Bank Guarantee
[GRAPHIC]
Dear Shareholder:
The US stock and bond markets delivered positive, but modest, returns during
the six month period ended May 31, 2006. After a weak fourth quarter, economic
growth turned sharply higher in 2006 and job growth was steady, although
somewhat slower at the end of the period. Confident consumers continued to pump
dollars into US retail markets, despite higher energy prices, which boosted
inflation. The housing market continued to cool as mortgage rates moved higher,
but housing-market indicators--such as housing starts, sales of existing homes,
and house prices--remained strong by historical measures.
In this environment, the US fixed income markets faced the challenge of rising
interest rates, especially within the short-and intermediate-maturity ranges
and was generally flat for the period. The Federal Reserve Board, in an effort
to balance economic growth and the forces of inflation, raised short-term
interest rates by one full percentage point during the reporting period. The
yield on the 10-year US Treasury note, a bellwether for the bond market, moved
up from 4.5% to 5.1%. Lower quality bonds did better than higher quality bonds.
In fact, high-yield bonds did better than either stocks or investment-grade
bonds. A strong economy favored corporate high-yield bonds, as default rates
remained low and corporate profits surprised investors with
better-than-expected results. However, that trend showed signs of shifting near
the end of the six-month period. The municipal sector generated respectable
gains as economic growth helped buoy revenues and stabilize budgets in many
states and municipalities. Within the municipal market, high-yield also
outperformed high-grade bonds for the period.
In the pages that follow, your fund's manager discusses key factors that
influenced performance during this six-month reporting period. We urge you to
read this report carefully and to discuss any questions you might have with
your financial advisor.
As always, we thank you for choosing Colonial Funds. We look forward to
continuing to help you build toward your financial goals.
Sincerely,
/s/ Christopher L. Wilson
Christopher L. Wilson
President, Columbia Funds
Past performance is no guarantee of future results.
Investments in high-yield or "junk" bonds offer the potential for higher income
than investments in investment-grade bonds, but also have a higher degree of
risk. Changes in economic conditions or other circumstances may adversely
effect a high-yield bond issuer's ability to make timely principal and interest
payments.
The views expressed in the President's Message and Portfolio Manager's Report
reflect the 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 for specific company securities should not be construed as a
recommendation or investment advice.
[GRAPHIC]
[GRAPHIC]
PORTFOLIO MANAGER'S REPORT
Summary
.. For the six-month period ended May 31, 2006, Colonial Investment Grade
Municipal Trust generated a total return of 1.89%, based on its market
price. During the period, the trust returned 2.73%, based on investment at
net asset value. By comparison, the average return of the Lipper General
Municipal Debt Funds (Leveraged) Category was 2.65% for the same period./1/
The trust benefited from having slightly more exposure to long-term bonds
than many of its peers, as well as an above-average stake in non-rated
bonds. The trust's dividend yield dropped as rising short-term interest
rates reduced some of the income derived from leverage. However, we believe
that the trust's leverage continued to give the common shareholders a
higher dividend payment than would have been available without it.
.. Airline bonds, which are higher-yielding issues, did especially well for
the trust. Non-rated bonds, which accounted for approximately 14% of total
investments at the end of the period, were also top gainers. Bonds that are
not rated by national credit rating agencies tend to have higher yields
because they are often of lower quality. The trust's short position in
Treasury futures contracts, which shortens duration (and reduces the
trust's price volatility), also did well. Duration is a measure of interest
rate sensitivity. Bonds issued by Northwest Parkway (0.4% of total
investments)/2/, a toll road northwest of Denver, detracted from
performance, as did Northwest Airlines bonds, which we sold at a loss.
.. Although the Federal Reserve Board appears to be committed to keeping
inflation in check, we believe it may be nearly finished hiking short-term
interest rates. If interest rates stabilize, we believe that long-term
bonds, whose yields reflect inflation expectations, could do well. At the
end of the period, we believe that the trust had greater exposure than its
peers to long-term bonds.
Portfolio Management
Maureen G. Newman has been the portfolio manager of Colonial Investment Grade
Municipal Trust since January 2002.
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.
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results.
-----------
/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 May 31, 2006, and are subject to change.
*See page 19 for the long term returns based on market price.
Price per share as of 05/31/06 ($)
Market price 10.30
---------------------
Net asset value 11.16
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6-month (cumulative) total return as of 05/31/06 (%)*
Market price 1.89
----------------------------------
Net asset value 2.73
----------------------------------
Lipper General Municipal Debt
Funds (Leveraged) Category
average 2.65
----------------------------------
PERFORMANCE IS HISTORICAL, ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS, AND DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL
VALUE FLUCTUATE WITH CHANGING MARKET CONDITIONS SO THAT, WHEN SOLD, SHARES MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE MAY BE
LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. PLEASE CALL 800-730-6001 FOR
THE TRUST'S MOST RECENT PERFORMANCE. TOTAL RETURN BASED ON NET ASSET VALUE
REFLECTS CHANGES IN THE TRUST'S NET ASSET VALUE DURING EACH PERIOD. TOTAL
RETURN BASED ON MARKET VALUE REFLECTS CHANGES IN MARKET VALUE. THESE FIGURES
WILL DIFFER DEPENDING ON THE LEVEL OF ANY DISCOUNT FROM OR PREMIUM TO DURING
THE PERIOD.
Distributions declared per common share 12/01/05-05/31/06 ($)
0.30
--------
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 05/31/06 (%)
Local general obligations 9.3
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Hospitals 9.1
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Refunded/escrowed 8.4
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State appropriated 7.4
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Investor owned 7.4
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Quality breakdown as of 05/31/06 (%)
AAA 45.4
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AA 9.6
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A 10.1
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BBB 17.9
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BB 1.3
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B 1.0
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Non-rated 14.2
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Cash equivalents 0.5
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Sector and quality breakdowns are calculated as a percentage of total
investments. Ratings shown in the quality breakdown 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
[GRAPHIC]
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 they also have 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 fund will be affected by interest rate changes
and the creditworthiness of issues held in the fund. 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
[GRAPHIC]
PORTFOLIO MANAGER'S REPORT (continued)
[GRAPHIC]
INVESTMENT PORTFOLIO
May 31, 2006 (Unaudited)
MUNICIPAL BONDS - 143.7% PAR ($) VALUE ($)
---------------------------------------------------------
EDUCATION - 6.8%
EDUCATION - 2.8%
FL Broward County Educational
Facilities Authority,
Nova Southeastern University,
Series 2004 B,
5.500% 04/01/24 155,000 160,856
IL Chicago State University,
Series 1998, Insured: MBIA
5.500% 12/01/23 1,085,000 1,226,755
PA Higher Education Facilities
Authority, Philadelphia University,
Series 2004 A,
5.125% 06/01/25 500,000 505,395
TN Metropolitan Government,
Nashville & Davidson County,
Health & Educational Facilities
Board, Meharry Medical College,
Series 1996, Insured: AMBAC
6.000% 12/01/16 1,575,000 1,788,066
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Education Total 3,681,072
---------
PREP SCHOOL - 1.5%
KY Louisville & Jefferson County
Metropolitan Government,
Sisters of Mercy, Series 2006,
5.000% 10/01/35 500,000 500,485
MA Industrial Finance Agency,
Tabor Academy, Series 1998,
5.400% 12/01/28 1,000,000 1,045,880
NH Business Finance Authority,
Proctor Academy, Series 1998 A,
5.400% 06/01/17 365,000 373,556
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Prep School Total 1,919,921
---------
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 1,651,567
NE Nebhelp, Inc.,
Series 1993 A-6, AMT,
Insured: MBIA
6.450% 06/01/18 1,500,000 1,516,530
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Student Loan Total 3,168,097
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EDUCATION TOTAL 8,769,090
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HEALTH CARE - 26.6%
CONTINUING CARE RETIREMENT - 8.5%
CA La Verne, Brethren Hillcrest
Homes, Series 2003 B,
6.625% 02/15/25 350,000 378,913
PAR ($) VALUE ($)
----------------------------------------------------------
CO Health Facilities Authority,
Covenant Retirement
Communities, Inc., Series 2005 B,
5.000% 12/01/16 860,000 871,885
CT Development Authority, Elim Park
Baptist Home, Inc., Series 2003,
5.750% 12/01/23 250,000 260,513
FL Capital Projects Finance Authority,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 500,000 551,860
FL Lee County Industrial Development
Authority, Shell Point Village
Project, Series 1999 A,
5.500% 11/15/29 175,000 175,894
GA Fulton County, Canterbury Court
Project, Series 2004 A,
6.125% 02/15/34 250,000 258,463
GA Savannah Economic Development
Authority, Marshes of Skidaway,
Series 2003 A,
7.400% 01/01/24 250,000 271,100
IL Finance Authority, Washington &
Jane Smith Community,
Series 2005 A,
6.250% 11/15/35 500,000 516,015
IL Health Facilities Authority:
Lutheran Senior Ministries,
Series 2001,
7.375% 08/15/31 250,000 271,572
Washington & Jane Smith
Community,
Series 2003 A,
7.000% 11/15/32 250,000 268,072
IN Health & Educational Facilities
Financing Authority, Baptist Homes
of Indiana Inc., Series 2005,
5.250% 11/15/35 500,000 498,575
MA Development Finance Agency,
Loomis Communities, Series 1999 A,
5.625% 07/01/15 200,000 203,942
MD Westminster Economic
Development Authority, Carroll
Lutheran Village, Inc., Series 2004 A,
5.875% 05/01/21 500,000 510,610
MO Cole County Industrial
Development Authority, Lutheran
Senior Services, Series 2004,
5.500% 02/01/35 500,000 514,725
NC Medical Care Commission, United
Methodist Retirement Home, Inc.,
Series 2005 C,
5.250% 10/01/24 250,000 251,005
See Accompanying Notes to Financial Statements.
3
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
------------------------------------------------------
HEALTH CARE (CONTINUED)
CONTINUING CARE RETIREMENT (CONTINUED)
NJ Economic Development Authority:
Cranes Mill, Series 2005 A,
5.100% 06/01/27 250,000 244,578
Lions Gate, Series 2005 A:
5.750% 01/01/25 310,000 315,726
5.875% 01/01/37 100,000 101,849
Winchester Gardens, Series 2004 A,
5.750% 11/01/24 350,000 368,868
PA Bucks County Industrial
Development Authority, Ann's
Choice, Inc., Series 2005 A,
6.125% 01/01/25 500,000 510,410
PA Chartiers Valley Industrial &
Commercial Development Authority,
Friendship Village/South,
Series 2003 A,
5.250% 08/15/13 500,000 505,385
PA Delaware County Authority,
Dunwoody Village, Series 2003 A,
5.375% 04/01/17 250,000 261,130
PA Montgomery County Industrial
Development Authority, Whitemarsh
Continuing Care Retirement
Community,
Series 2005:
6.125% 02/01/28 200,000 209,828
6.250% 02/01/35 300,000 315,717
TN Johnson City Health & Educational
Facilities Authority, Appalachian
Christian Village, Series 2004 A,
6.250% 02/15/32 250,000 256,455
TN Shelby County Health Educational
& Housing Facilities Board,
Germantown Village, Series 2003 A,
7.250% 12/01/34 150,000 159,222
TX Abilene Health Facilities
Development Corp., Sears Methodist
Retirement Center, Series 2003 A,
7.000% 11/15/33 500,000 535,785
TX Tarrant County Cultural Education
Facilities, Northwest Senior
Housing-Edgemere, Series 2006 A,
6.000% 11/15/36 250,000 259,640
VA Virginia Beach Development
Authority, Westminster-Canterbury
of Hampton, Series 2005,
5.250% 11/01/26 300,000 301,449
VA Winchester Industrial Development
Authority, Westminster-Canterbury,
Series 2005 A,
5.300% 01/01/35 250,000 249,878
PAR ($) VALUE ($)
----------------------------------------------------------
WI Health & Educational Facilities
Authority:
Eastcastle Place, Inc.,
Series 2004,
6.125% 12/01/34 150,000 151,326
Three Pillars Senior Living
Communities, Series 2003,
5.600% 08/15/23 300,000 305,703
----------
Continuing Care Retirement Total 10,856,093
----------
HEALTH SERVICES - 1.2%
CO Health Facilities Authority,
National Jewish Medical &
Research Center, Series 1998 B,
5.375% 01/01/29 250,000 249,663
LA Public Facilities Authority,
Pennington Medical Foundation
Project, Series 2006,
5.000% 07/01/21 1,000,000 1,017,400
MA Health & Educational Facilities
Authority, Civic Investments, Inc.,
Series 2002 A,
9.000% 12/15/15 250,000 300,937
----------
Health Services Total 1,568,000
----------
HOSPITALS - 13.4%
AL Health Care Authority, Baptist
Health, Series 2006 B,
5.000% 11/15/21 850,000 855,261
AR Washington County, Washington
Regional Medical Center,
Series 2005 B,
5.000% 02/01/30 400,000 393,432
CA Health Facilities Financing
Authority, Catholic Healthcare
West, Series 2004 I,
4.950% 07/01/26 200,000 206,514
CA Rancho Mirage Joint Powers
Financing Authority, Eisenhower
Medical Center, Series 2004,
5.625% 07/01/29 1,000,000 1,058,470
CA Statewide Communities
Development Authority, Kaiser
Permanente, Series 2004 I,
3.450% 04/01/35 250,000 239,970
CA Turlock, Emanuel Medical
Center, Inc., Series 2004,
5.375% 10/15/34 500,000 510,505
CO Health Facilities Authority:
Parkview Medical Center,
Series 2004,
5.000% 09/01/25 250,000 250,328
Vail Valley Medical Center,
Series 2004,
5.000% 01/15/20 250,000 254,703
See Accompanying Notes to Financial Statements.
4
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
---------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
DE Health Facilities Authority, Beebe
Medical Center, Series 2004 A,
5.000% 06/01/16 500,000 513,700
FL Orange County Health Facilities
Authority, Orlando Regional
Healthcare System:
Series 1996 C, Insured: MBIA
6.250% 10/01/13 720,000 816,163
Series 1999 E,
6.000% 10/01/26 170,000 178,796
FL South Broward Hospital District,
Series 2002,
5.625% 05/01/32 1,000,000 1,057,060
IL Southwestern Development
Authority, Anderson Hospital,
Series 1999,
5.375% 08/15/15 380,000 389,713
IN Health & Educational Facility
Financing Authority, Schneck
Memorial Hospital Project,
Series 2006 A,
5.250% 02/15/36(a) 350,000 359,072
IN Health Facility Financing
Authority, Community Foundation
of Northwest Indiana, Inc.,
Series 2004 A,
6.000% 03/01/34 150,000 157,374
KS University Hospital Authority,
Kansas University Health System,
Series 2002,
5.625% 09/01/32 500,000 526,055
LA Public Facilities Authority, Touro
Infirmary, Series 1999 A,
5.625% 08/15/29 500,000 480,860
MA Health & Educational Facilities
Authority:
Milford-Whitinsville Regional
Hospital, Series 1998 C,
5.750% 07/15/13 500,000 512,715
South Shore Hospital,
Series 1999 F,
5.750% 07/01/29 1,000,000 1,052,550
MD Health & Higher Educational
Facilities Authority, Adventist
Healthcare,
Series 2003 A:
5.000% 01/01/16 250,000 253,930
5.750% 01/01/25 250,000 263,312
MI Hospital Finance Authority,
Oakwood Obligated Group,
Series 2003,
5.500% 11/01/18 400,000 425,360
PAR ($) VALUE ($)
--------------------------------------------------------
MN St. Paul Housing &
Redevelopment Authority,
HealthEast, Inc.:
Series 2001 A,
5.700% 11/01/15 250,000 257,692
Series 2005,
5.150% 11/15/20 250,000 255,188
MO Saline County Industrial
Development Authority, John
Fitzgibbon Memorial Hospital,
Series 2005,
5.625% 12/01/35 500,000 496,750
MT Facilities Finance Authority,
Montana's Children's Home and
Hospital, Series 2005 B,
4.750% 01/01/24 250,000 249,990
NH Higher Educational & Health
Facilities Authority, Catholic
Medical Center,
Series 2002,
6.125% 07/01/32 500,000 532,465
NJ Health Care Facilities Financing
Authority, Capital Health Systems,
Inc., Series 2003 A,
5.750% 07/01/23 350,000 368,784
NV Henderson:
Catholic Healthcare West,
Series 1999 A,
6.750% 07/01/20 60,000 65,330
St. Rose Dominican Hospital,
Series 1998 A,
5.375% 07/01/26 195,000 198,598
NY Dormitory Authority:
Mt Sinai - NYU Medical Center:
Series 2000,
5.500% 07/01/26 200,000 202,802
Series 2000 C,
5.500% 07/01/26 300,000 304,203
North Shore - Long Island Jewish
Medical Center, Series 2003,
5.500% 05/01/33 100,000 105,258
OH Lakewood, Lakewood Hospital
Association, Series 2003,
5.500% 02/15/14 385,000 405,771
RI Health & Educational Building
Corp., Hospital Foundation, Lifespan
Obligated Group, Series 2002,
6.375% 08/15/21 65,000 70,607
SC Jobs Economic Development
Authority, Bon Secours-St. Francis
Medical Center, Series 2002,
5.500% 11/15/23 500,000 522,065
See Accompanying Notes to Financial Statements.
5
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
---------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
SC Lexington County Health Services
District Revenue, Lexington
Medical Center Project, Refunding,
Series 2003,
5.500% 11/01/23 500,000 519,770
SD Health & Educational Facilities
Authority, Sioux Valley Hospital &
Health System, Series 2004 A,
5.250% 11/01/34 250,000 256,363
VA Augusta County Industrial
Development Authority, Augusta
Health Care, Inc., Series 2003,
5.250% 09/01/19 1,000,000 1,058,780
WI Health & Educational Facilities
Authority:
Aurora Health Care, Inc.,
Series 2003,
6.400% 04/15/33 175,000 191,343
Fort Healthcare, Inc., Series 2004,
5.375% 05/01/18 385,000 402,775
----------
Hospitals Total 17,220,377
----------
INTERMEDIATE CARE FACILITIES - 0.5%
IL Development Finance Authority,
Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 455,000 440,203
MA Development Finance Agency,
Evergreen Center, Inc.,
Series 2005,
5.000% 01/01/24 250,000 237,365
----------
Intermediate Care Facilities Total 677,568
----------
NURSING HOMES - 3.0%
AK Juneau, St. Ann's Care
Center, Inc., Series 1999,
6.875% 12/01/25 485,000 480,441
CO Health Facilities Authority:
Evangelical Lutheran Good
Samaritan Foundation, Series 2005,
5.000% 06/01/35 125,000 124,299
Pioneer Health Care, Series 1989,
10.500% 05/01/19 1,490,000 1,197,841
DE Economic Development
Authority, Churchman Village
Project, Series 1991 A,
10.000% 03/01/21 840,000 849,677
PA Chester County Industrial
Development Authority,
Pennsylvania Nursing Home,
Series 2002,
8.500% 05/01/32 740,000 759,329
PAR ($) VALUE ($)
---------------------------------------------------------
PA Delaware County Industrial
Development Authority, Care
Institute-Main Line LLC,
Series 2005,
9.000% 08/01/31 540,000 459,524
WI Health & Educational Facilities
Authority, Metro Health
Foundation, Inc., Series 1993,
11.000% 11/01/22(b) 966,819 10,876
----------
Nursing Homes Total 3,881,987
----------
HEALTH CARE TOTAL 34,204,025
----------
---------------------------------------------------------
HOUSING - 14.0%
ASSISTED LIVING/SENIOR - 1.5%
NC Medical Care Commission,
DePaul Community Facilities,
Series 1998,
6.125% 01/01/28 500,000 461,880
NY Suffolk County Industrial
Development Agency,
Gurwin-Jewish Phase II,
Series 2004,
6.700% 05/01/39 500,000 536,165
OR Clackamas County Hospital
Facility Authority, Robison Jewish
Home, Series 2005,
5.250% 10/01/27 500,000 489,280
TX Bell County Health Facility
Development Corp.,
Care Institute, Inc., Series 1994,
9.000% 11/01/24 450,000 439,335
----------
Assisted Living/Senior Total 1,926,660
----------
MULTI-FAMILY - 7.5%
DC Housing Finance Agency, Henson
Ridge, Series 2004 E, AMT,
Insured: FHA
5.100% 06/01/37 500,000 504,360
FL Broward County Housing Finance
Authority, Chaves Lake Apartment
Project, Series 2000 A, AMT,
7.500% 07/01/40 500,000 514,885
FL Capital Trust Agency, Atlantic
Housing Foundation, Inc.,
Series 2005 C,
5.875% 01/01/28 375,000 372,484
FL Clay County Housing Finance
Authority, Madison Commons
Apartments, Series 2000 A, AMT,
7.450% 07/01/40 245,000 251,938
MA Housing Finance Agency:
Series 2004 A, AMT, Insured: FSA
5.250% 07/01/25 2,000,000 2,053,420
Series 2005 E, AMT,
5.000% 12/01/28 250,000 250,688
See Accompanying Notes to Financial Statements.
6
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
--------------------------------------------------------
HOUSING (CONTINUED)
MULTI-FAMILY (CONTINUED)
ME Housing Authority,
Series 2005 A-2, AMT,
4.950% 11/15/27 500,000 498,940
MN Minneapolis Student Housing,
Riverton Community Housing,
Inc., Series 2006 A,
5.700% 08/01/40 250,000 241,685
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,
(c) 07/15/19 668,000 207,080
NC Medical Care Commission, ARC
Projects, Series 2004 A,
5.800% 10/01/34 655,000 689,656
NJ Middlesex County Improvement
Authority, George Street Student
Housing, Series 2004 A,
5.000% 08/15/18 300,000 305,190
NM Mortgage Finance Authority,
Series 2005 E, AMT,
Insured: FHA
4.800% 09/01/40 500,000 480,560
NY New York City Housing
Development Corp.,
Series 2005 F-1,
4.650% 11/01/25 500,000 499,345
OH Montgomery County, Series 2005,
AMT, Insured: FHLMC
4.950% 11/01/35 250,000 248,260
Resolution Trust Corp., Pass-Through
Certificates, Series 1993 A,
8.500% 12/01/16(d) 227,741 221,685
WA Seattle Housing Authority, High
Rise Rehabilitation Phase I LP,
Series 2005, AMT, Insured: FSA
5.000% 11/01/25 500,000 502,215
WA Tacoma Housing Authority,
Redwood, Series 2005, AMT,
Insured: GNMA
5.050% 11/20/37 1,040,000 1,043,848
---------
Multi-Family Total 9,622,489
---------
SINGLE-FAMILY - 5.0%
CO Housing Finance Authority,
Series 2000 B-2, AMT,
7.250% 10/01/31 75,000 77,090
IL Chicago, Series 2000 A, AMT,
Insured: FNMA
7.150% 09/01/31 30,000 30,810
PAR ($) VALUE ($)
-------------------------------------------------------
MA Housing Finance Agency:
Series 2005 118, AMT,
4.850% 12/01/35 750,000 725,557
Series 2005 B,
5.000% 06/01/30 455,000 464,623
ME Housing Authority,
Series 2005 D-2, AMT,
4.800% 11/15/36 1,500,000 1,467,300
MN Minneapolis/St. Paul Housing
Finance Board, Series 2006, AMT,
5.000% 12/01/38(a) 500,000 499,520
MT Board of Housing,
Series 2005 A, AMT,
5.000% 06/01/36 1,000,000 1,003,400
ND Housing Finance Agency,
Series 2006 A, AMT,
4.850% 07/01/21(a) 500,000 504,255
OK Housing Finance Agency,
Series 2006 C, AMT,
4.900% 09/01/21(a) 705,000 713,213
PA Pittsburgh Urban Redevelopment
Authority, Series 2006 C,
Insured: GNMA
4.800% 04/01/28 500,000 492,650
WI Housing & Economic
Development Authority,
Series 2005 C, AMT,
4.875% 03/01/36 495,000 485,585
----------
Single-Family Total 6,464,003
----------
HOUSING TOTAL 18,013,152
----------
-------------------------------------------------------
INDUSTRIALS - 3.1%
FOOD PRODUCTS - 1.0%
MI Strategic Fund,
Imperial Holly Corp.,
Series 1998 C, AMT,
6.550% 11/01/25 250,000 247,457
NE Washington County
WasteWater Facilities
Authority, Cargill, Inc.,
Series 2002, AMT,
5.900% 11/01/27 1,000,000 1,071,350
----------
Food Products Total 1,318,807
----------
FOREST PRODUCTS & PAPER - 1.1%
AL Camden Industrial
Development Board,
Weyerhaeuser Co.,
Series 2003 B, AMT,
6.375% 12/01/24 275,000 298,678
AR Camden Environmental
Improvement Authority,
International Paper Co.,
Series 2004 A, AMT,
5.000% 11/01/18 500,000 494,065
See Accompanying Notes to Financial Statements.
7
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
--------------------------------------------------
INDUSTRIALS (CONTINUED)
FOREST PRODUCTS & PAPER (CONTINUED)
FL Escambia County
Environmental Improvement
Revenue, International Paper
Co., Series 2003 A, AMT,
5.750% 11/01/27 250,000 259,450
MS Lowndes County,
Weyerhaeuser Co. Project,
Series 1992 B,
6.700% 04/01/22 325,000 382,557
---------
Forest Products & Paper Total 1,434,750
---------
MANUFACTURING - 0.2%
MO Development Finance
Board, Procter & Gamble Co.,
Series 1999, AMT,
5.200% 03/15/29 250,000 265,540
---------
Manufacturing Total 265,540
---------
OIL & GAS - 0.8%
NJ Middlesex County Pollution
Control Authority, Amerada
Hess Corp., Series 2004,
6.050% 09/15/34 175,000 188,650
NV Clark County Industrial
Development Authority,
Southwest Gas Corp.,
Series 2003 E, AMT,
5.800% 03/01/38 250,000 265,433
TX Gulf Coast Industrial
Development Authority, Citgo
Petroleum, Series 1998, AMT,
8.000% 04/01/28 250,000 281,715
VI Virgin Islands Public Finance
Authority, Hovensa LLC,
Series 2003, AMT,
6.125% 07/01/22 200,000 219,264
---------
Oil & Gas Total 955,062
---------
INDUSTRIALS TOTAL 3,974,159
---------
--------------------------------------------------
OTHER - 16.6%
OTHER - 0.7%
NY Convention Center Operating
Corp., Yale Building Project,
Series 2003,
(c) 06/01/08 700,000 648,998
PR Commonwealth of Puerto Rico
Government Development Bank,
Series 2006 B,
5.000% 12/01/15 250,000 258,658
---------
Other Total 907,656
---------
PAR ($) VALUE ($)
----------------------------------------------------------
POOL/BOND BANK - 1.4%
KS Development Finance Authority,
Water Pollution Control,
Series 2001,
5.500% 11/01/17 1,125,000 1,256,738
OH Summit County Port Authority,
Seville Project, Series 2005 A,
5.100% 05/15/25 495,000 495,267
---------
Pool/Bond Bank Total 1,752,005
---------
REFUNDED/ESCROWED(E) - 12.4%
CA Golden State Tobacco
Securitization Corp., Series 2003 B,
Pre-refunded 06/01/13,
5.500% 06/01/43 500,000 549,335
CO Highlands Ranch Metropolitan
District No. 2, Series 1996,
Escrowed to Maturity,
Insured:CGIC
6.500% 06/15/11 725,000 814,762
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 1,994,927
Series 1999 E, Pre-refunded
10/01/09,
6.000% 10/01/26 5,000 5,393
Series 2002, Pre-refunded 12/01/12,
5.750% 12/01/32 150,000 165,554
IL Development Finance Authority,
Adventist Health System,
Series 1999,
Pre-refunded 11/15/09,
5.500% 11/15/20 900,000 958,806
IL Health Facilities Authority,
Swedish American Hospital,
Series 2000,
Pre-refunded 05/15/10,
6.875% 11/15/30 500,000 554,035
MA Development Finance Agency,
Western New England College,
Series 2002,
Pre-refunded 12/01/12,
6.125% 12/01/32 315,000 356,829
MD Health & Higher Educational
Facilities Authority, University of
Maryland Medical System,
Series 2000,
Pre-refunded 07/01/10,
6.750% 07/01/30 250,000 280,390
See Accompanying Notes to Financial Statements.
8
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
----------------------------------------------------------
OTHER (CONTINUED)
REFUNDED/ESCROWED(E) (CONTINUED)
MI Garden City School District,
Series 2001, Pre-refunded
05/01/11, Insured: QSBLF
5.500% 05/01/16 325,000 350,113
MN University of Minnesota,
Series 1996 A, Escrowed to
Maturity:
5.500% 07/01/21 2,000,000 2,238,860
5.750% 07/01/14 500,000 559,540
MO Health & Educational Facilities
Authority, Central Institute for the
Deaf, Series 1999,
Pre-refunded 01/01/10,
Insured: RAD
5.850% 01/01/22 600,000 641,568
NC Lincoln County, Lincoln
County Hospital, Series 1991,
Escrowed to Maturity,
9.000% 05/01/07 25,000 26,152
NC Municipal Power Agency,
Catawba No. 1, Series 1986,
Escrowed to Maturity,
5.000% 01/01/20 1,670,000 1,802,581
NV Henderson:
Catholic Healthcare West,
Series 1999 A,
Pre-refunded 07/01/10,
6.750% 07/01/20 440,000 491,889
St. Rose Dominican Hospital,
Series 1998 A,
Pre-refunded 07/01/08,
5.375% 07/01/26 55,000 56,968
NY New York City, Series 1997 A,
Pre-refunded 08/01/06,
7.000% 08/01/07 80,000 81,643
RI State Health & Educational
Building, Hospital Financing
Lifespan, Series 2002,
Pre-refunded 05/15/12,
6.375% 08/15/21 435,000 493,673
TN Shelby County Health,
Educational & Housing Facilities
Board, Open Arms Development
Centers:
Series 1992 A,
Pre-refunded 08/01/07,
9.750% 08/01/19 390,000 432,132
Series 1992 C,
Pre-refunded 08/01/12,
9.750% 08/01/19 395,000 437,672
PAR ($) VALUE ($)
----------------------------------------------------------
TX Texas Tech University, Series
1999, Pre-refunded 02/15/09,
Insured: AMBAC
5.000% 02/15/29 2,500,000 2,582,475
----------
Refunded/Escrowed Total 15,875,297
----------
TOBACCO - 2.1%
CA Golden State Tobacco
Securitization Corp.,
Series 2003 A-1,
6.250% 06/01/33 750,000 811,695
CA Tobacco Securitization Authority,
Series 2006,
(c) 06/01/46 6,000,000 513,300
NY Tsasc, Inc., Series 2006 1,
5.125% 06/01/42 750,000 727,830
SC Tobacco Settlement Financing
Corp., Series 2001 B,
6.375% 05/15/28 400,000 426,456
WI Badger Tobacco Asset
Securitization Corp., Series 2002,
6.375% 06/01/32 250,000 267,497
----------
Tobacco Total 2,746,778
----------
OTHER TOTAL 21,281,736
----------
----------------------------------------------------------
OTHER REVENUE - 2.2%
HOTELS - 0.6%
MA Boston Industrial Development
Finance Authority, Crosstown
Center Project, Series 2002, AMT,
6.500% 09/01/35 285,000 289,703
NJ Middlesex County Improvement
Authority, Heldrich Associates
LLC, Series 2005 B,
6.250% 01/01/37 500,000 506,670
----------
Hotels Total 796,373
----------
RECREATION - 1.2%
CA Cabazon Band Mission Indians,
Series 2004:
8.375% 10/01/15(d) 105,000 106,308
8.750% 10/01/19(d) 360,000 365,897
DC District of Columbia, Smithsonian
Institute, Series 1997,
5.000% 02/01/28 1,000,000 1,008,870
----------
Recreation Total 1,481,075
----------
RETAIL - 0.4%
NY New York City Industrial
Development Agency,
IAC/Interactive Corp., Series 2005,
5.000% 09/01/35 500,000 501,430
----------
Retail Total 501,430
----------
OTHER REVENUE TOTAL 2,778,878
----------
----------------------------------------------------------
See Accompanying Notes to Financial Statements.
9
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------
RESOURCE RECOVERY - 3.4%
DISPOSAL - 1.6%
FL Lee County Solid Waste Systems,
Series 2006 A, AMT,
Insured: AMBAC
5.000% 10/01/17 1,500,000 1,563,870
OH Solid Waste, Republic Services,
Series 2004, AMT,
4.250% 04/01/33 500,000 480,615
---------
Disposal Total 2,044,485
---------
RESOURCE RECOVERY - 1.8%
MA Industrial Finance Agency, Ogden
Haverhill Project,
Series 1998 A, AMT,
5.450% 12/01/12 1,250,000 1,296,862
PA Delaware County Industrial
Development Authority, BFI,
Series 1997 A,
6.100% 07/01/13 1,000,000 1,042,630
---------
Resource Recovery Total 2,339,492
---------
RESOURCE RECOVERY TOTAL 4,383,977
---------
-------------------------------------------------------
TAX-BACKED - 43.6%
LOCAL APPROPRIATED - 3.7%
CA Compton, Civic Center & Capital
Improvements,
Series 1997 A,
5.500% 09/01/15 500,000 517,230
CA Los Angeles County,
Series 1999 A,
Insured: AMBAC
(c) 08/01/21 2,135,000 1,024,544
MN Andover Economic
Development Authority,
Andover Community Center,
Series 2004,
5.000% 02/01/19 600,000 618,372
MN Hibbing Economic
Development Authority,
Series 1997,
6.400% 02/01/12 335,000 337,184
MO St. Louis Industrial Development
Authority, St. Louis Convention
Center, Series 2000,
Insured: AMBAC
(c) 07/15/18 300,000 171,534
SC Berkeley County School
District, Series 2003,
5.000% 12/01/28 500,000 502,485
SC Dorchester County School
District No. 2, Series 2004,
5.250% 12/01/29 250,000 256,740
PAR ($) VALUE ($)
----------------------------------------------------------
SC Lancaster Educational Assistance
Program, Lancaster County School
District, Series 2004,
5.000% 12/01/26 550,000 552,684
SC Laurens County School
District No. 55, Series 2005,
5.250% 12/01/30 350,000 357,112
SC Newberry County School
District, Series 2005,
5.000% 12/01/30 350,000 348,530
---------
Local Appropriated Total 4,686,415
---------
LOCAL GENERAL OBLIGATIONS - 13.6%
CA Modesto High School District,
Series 2002 A, Insured: FGIC
(c) 08/01/19 1,350,000 727,596
CA Pomona Unified School District,
Series 2000 A, Insured: MBIA
6.450% 08/01/22 1,000,000 1,233,460
CA Vallejo City Unified School
District, Series 2002 A,
Insured: MBIA
5.900% 08/01/25 2,000,000 2,337,380
CA West Contra Costa Unified School
District, Series 2001 B,
Insured: MBIA
6.000% 08/01/24 250,000 298,960
CO Highlands Ranch Metropolitan
District No. 2, Series 1996,
Insured: CGIC
6.500% 06/15/11 650,000 729,846
IL Chicago:
Series 1995 A-2,
Insured: AMBAC
6.250% 01/01/14 1,480,000 1,685,542
Series 1999, Insured: FGIC
5.500% 01/01/23 1,000,000 1,125,960
IL Hoffman Estates Park District,
Debt Certificates,
Series 2004,
5.000% 12/01/16 500,000 517,570
IL St. Clair County, Public Building
Commission:
Series 1997 B,
Insured: FGIC
(c) 12/01/13 2,000,000 1,456,080
Series 1999, Insured: FGIC
(c) 10/01/16 2,000,000 1,258,300
IL Will County School District No. 17,
Series 2001, Insured: AMBAC
8.500% 12/01/15 1,400,000 1,866,690
MI St. John's Public School,
Series 1998, Insured: FGIC
5.100% 05/01/25 1,000,000 1,083,570
See Accompanying Notes to Financial Statements.
10
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
--------------------------------------------------------
TAX-BACKED (CONTINUED)
LOCAL GENERAL OBLIGATIONS (CONTINUED)
NY New York City, Series 2003 J,
5.500% 06/01/18 500,000 536,565
OH Kenston Local School District,
Series 2003, Insured: MBIA
5.000% 12/01/23 1,000,000 1,036,730
TX Brenham, Series 2001,
Insured: FSA
5.375% 08/15/16 1,040,000 1,112,488
TX Dallas County Flood Control
District, Series 2002,
7.250% 04/01/32 500,000 526,965
----------
Local General Obligations Total 17,533,702
----------
SPECIAL NON-PROPERTY TAX - 6.5%
FL Tampa Sports Authority, Tampa
Bay Arena Project, Series 1995,
Insured: MBIA
5.750% 10/01/25 1,000,000 1,158,970
IL Bolingbrook, Sales Tax Revenue,
Series 2005,
(f) 01/01/24
(6.250% 01/01/08) 250,000 224,342
KS Wyandotte County, Series 2005,
5.000% 12/01/20 100,000 102,355
NJ Economic Development Authority,
Cigarette Tax, Series 2004,
5.750% 06/15/29 500,000 530,675
NM Dona Ana County, Series 1998,
Insured: AMBAC
5.500% 06/01/15 1,000,000 1,104,720
NY Local Government Assistance
Corp., Series 1993 E,
5.000% 04/01/21 3,000,000 3,184,920
NY New York City Transitional
Finance Authority, Series 1998 A,
5.000% 11/15/26 1,960,000 2,031,442
----------
Special Non-Property Tax Total 8,337,424
----------
SPECIAL PROPERTY TAX - 5.3%
CA Huntington Beach Community
Facilities District, Grand Coast
Resort, Series 2001-1,
6.450% 09/01/31 300,000 320,067
CA Lincoln Community Facilities
District No. 2003-1, Series 2004,
5.550% 09/01/18 500,000 518,105
CA Oakdale Public Financing
Authority, Central City
Redevelopment Project,
Series 2004,
5.375% 06/01/33 500,000 513,070
FL Celebration Community
Development District,
Series 2003 A,
6.400% 05/01/34 240,000 251,513
PAR ($) VALUE ($)
---------------------------------------------------------
FL Double Branch Community
Development District,
Series 2002 A,
6.700% 05/01/34 325,000 350,308
FL Seven Oaks Community
Development District:
Series 2004 A,
5.875% 05/01/35 495,000 503,143
Series 2004 B,
5.000% 05/01/09 195,000 194,828
FL West Villages Improvement
District, Series 2006,
5.500% 05/01/37 500,000 501,975
FL Westridge Community
Development District,
Series 2005,
5.800% 05/01/37 500,000 497,290
GA Atlanta, Eastside Project,
Series 2005 A, AMT,
5.625% 01/01/16 400,000 408,608
IL Chicago, Pilsen Redevelopment,
Series 2004 B,
6.750% 06/01/22 610,000 627,037
IL Lincolnshire Special Services Area
No. 1, Sedgebrook Project,
Series 2004,
6.250% 03/01/34 225,000 232,852
IL Plano Special Service Area No.4,
Series 2005 5-B,
6.000% 03/01/35 750,000 727,050
IN City of Portage, Series 2006,
5.000% 01/15/27 105,000 102,344
MO Fenton, Tax Increment Revenue,
Series 2006,
4.500% 04/01/21 500,000 499,435
MO Riverside, L-385 Levee Project,
Series 2004,
5.250% 05/01/20 500,000 508,165
---------
Special Property Tax Total 6,755,790
---------
STATE APPROPRIATED - 10.9%
IN Office Building Commission,
Women's Prison, Series 1995 B,
Insured: AMBAC
6.250% 07/01/16 2,820,000 3,240,011
KY Property & Buildings Commission,
Series 2001,
5.500% 11/01/14 455,000 490,522
NY Dormitory Authority:
City University, Series 1993 A,
5.750% 07/01/18 5,000,000 5,561,200
State University, Series 2000 C,
Insured: FSA
5.750% 05/15/17 1,000,000 1,135,530
See Accompanying Notes to Financial Statements.
11
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-------------------------------------------------------
TAX-BACKED (CONTINUED)
STATE APPROPRIATED (CONTINUED)
NY Urban Development Corp.,
Series 1995,
5.600% 04/01/15 1,000,000 1,087,630
UT Building Ownership
Authority, Facilities Master
Lease, Series 1998 C,
Insured: FSA
5.500% 05/15/19 1,750,000 1,951,355
WV Building Commission,
Series 1998 A, Insured: AMBAC
5.375% 07/01/18 500,000 545,295
----------
State Appropriated Total 14,011,543
----------
STATE GENERAL OBLIGATIONS - 3.6%
CA State, Series 1995,
5.750% 03/01/19 70,000 70,603
MA State, Series 1998 C,
5.250% 08/01/17 1,000,000 1,087,560
PR Commonwealth of Puerto
Rico Aqueduct & Sewer
Authority:
Series 1995, Insured: MBIA:
6.250% 07/01/12 1,000,000 1,126,710
6.250% 07/01/13 750,000 854,655
Series 2001, Insured: FSA
5.500% 07/01/17 1,000,000 1,110,940
Series 2004 A,
5.000% 07/01/30 415,000 428,147
----------
State General Obligations Total 4,678,615
----------
TAX-BACKED TOTAL 56,003,489
----------
-------------------------------------------------------
TRANSPORTATION - 10.4%
AIR TRANSPORTATION - 2.8%
IN Indianapolis Airport
Authority, FedEx Corp.,
Series 2004, AMT,
5.100% 01/15/17 250,000 257,388
NC Charlotte Douglas International
Airport, US Airways, Inc.,
Series 2000, AMT,
7.750% 02/01/28 500,000 526,765
NJ Economic Development Authority,
Continental Airlines, Inc.,
Series 1999, AMT,
6.250% 09/15/19 900,000 890,442
NY New York City Industrial
Development Agency, Terminal
One Group-JFK International
Airport, Series 2005, AMT,
5.500% 01/01/21 250,000 264,487
PAR ($) VALUE ($)
----------------------------------------------------------
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 1,053,340
TX Alliance Airport Authority, Inc.
Special Facilities, Federal Express
Corp., Series 2006, AMT,
4.850% 04/01/21 250,000 246,835
TX Houston Industrial Development
Corp., United Parcel Service, Series
2002, AMT,
6.000% 03/01/23 365,000 377,950
---------
Air Transportation Total 3,617,207
---------
AIRPORTS - 0.9%
MA Port Authority, Series 1999,
IFRN, Insured: FGIC
7.208% 07/01/29(g) 1,000,000 1,145,000
---------
Airports Total 1,145,000
---------
TOLL FACILITIES - 4.4%
CA Foothill/Eastern Transportation
Corridor Agency, Series 1995 A,
5.000% 01/01/35(h) 1,000,000 976,180
CA San Joaquin Hills Transportation
Corridor Agency, Series 1997 A,
Insured: MBIA
(c) 01/15/15 2,000,000 1,375,260
CO Northwest Parkway Public
Highway Authority, Series 2001 D,
7.125% 06/15/41 500,000 460,660
NH Turnpike Systems, Series 1991 C,
IFRN, Insured: FGIC
9.780% 11/01/17(g) 1,000,000 1,064,020
NY Thruway Authority, Second
General Highway & Bridge Trust
Fund, Series 2005 B,
Insured: AMBAC
5.500% 04/01/20 1,540,000 1,736,242
---------
Toll Facilities Total 5,612,362
---------
TRANSPORTATION - 2.3%
IL Regional Transportation Authority,
Series 1994 C, Insured: FGIC
7.750% 06/01/20 1,000,000 1,341,120
NV Department of Business &
Industry, Las Vegas Monorail
Project,
Series 2000:
7.375% 01/01/30 250,000 257,448
7.375% 01/01/40 250,000 256,280
See Accompanying Notes to Financial Statements.
12
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TRANSPORTATION (CONTINUED)
TRANSPORTATION (CONTINUED)
OH Toledo-Lucas County Port
Authority,
CSX Transportation, Inc.,
Series 1992,
6.450% 12/15/21 1,000,000 1,132,090
----------
Transportation Total 2,986,938
----------
TRANSPORTATION TOTAL 13,361,507
----------
-----------------------------------------------------------
UTILITIES - 17.0%
INDEPENDENT POWER PRODUCERS - 1.1%
NY Suffolk County Industrial
Development Authority,
Nissequogue Cogeneration Partners
Facilities, Series 1998, AMT,
5.500% 01/01/23 550,000 506,396
PA Carbon City Industrial
Development Authority, Panther
Creek Partners Project, Series 2000,
AMT,
6.650% 05/01/10 110,000 116,269
PA Economic Development Financing
Authority, Colver Project,
Series 2005 G, AMT,
5.125% 12/01/15 425,000 415,038
PR Commonwealth of Puerto Rico
Industrial, Tourist, Educational,
Medical & Environmental
Cogeneration Facilities, AES
Project, Series 2000, AMT,
6.625% 06/01/26 320,000 348,950
----------
Independent Power Producers Total 1,386,653
----------
INVESTOR OWNED - 10.7%
CA Chula Vista Industrial
Development Authority,
San Diego Gas & Electric Co.,
Series 1996 B, AMT,
5.500% 12/01/21 625,000 666,131
FL Polk County Industrial
Development Authority, Tampa
Electric Co., Series 1996, AMT,
5.850% 12/01/30 500,000 509,780
IN Petersburg, Indiana Power &
Light Co., Series 1993 B,
Insured: MBIA
5.400% 08/01/17 2,500,000 2,717,150
MI Strategic Fund, Detroit Edison
Co., Series 1998 A, AMT,
Insured: MBIA
5.550% 09/01/29 3,000,000 3,132,060
PAR ($) VALUE ($)
-------------------------------------------------------
MS Business Finance Corp.,
Systems Energy Resources,
Series 1998,
5.875% 04/01/22 1,000,000 1,006,120
MT Forsyth:
Northwestern Corp.,
Series 2006, Insured: AMBAC
4.650% 08/01/23 500,000 500,290
Portland General, Series 1998 A,
5.200% 05/01/33 150,000 154,376
NV Clark County Industrial
Development Authority, Nevada
Power Co.:
Series 1995 B, AMT,
5.900% 10/01/30 250,000 250,000
Series 1997 A, AMT,
5.900% 11/01/32 250,000 249,988
OH Air Quality Development
Authority, Cleveland Electric
Illuminating Co., Series 2002 A,
6.000% 12/01/13 650,000 673,393
PA Economic Development Financing
Authority, Reliant Energy, Inc.,
Series 2001 A, AMT,
6.750% 12/01/36 200,000 214,058
TX Brazos River Authority, TXU
Energy Co., LLC:
Series 1999, AMT,
7.700% 04/01/33 250,000 291,687
Series 2001 C, AMT,
5.750% 05/01/36 100,000 105,758
Series 2003 C, AMT,
6.750% 10/01/38 270,000 303,164
TX Matagorda County Navigation
District No. 1, Houston Light &
Power Co., Series 1997, AMT,
Insured: AMBAC
5.125% 11/01/28 2,000,000 2,082,680
WY Campbell County, Black Hills
Power, Inc., Series 2004,
5.350% 10/01/24 500,000 514,805
WY Converse County, PacifiCorp,
Series 1988,
3.900% 01/01/14 500,000 475,925
----------
Investor Owned Total 13,847,365
----------
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 1,070,490
NC Eastern Municipal Power Agency,
Series 2003 F,
5.500% 01/01/16 285,000 302,237
See Accompanying Notes to Financial Statements.
13
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
---------------------------------------------------
UTILITIES (CONTINUED)
JOINT POWER AUTHORITY (CONTINUED)
NC Municipal Power Agency,
Catawba Electric No. 1:
Series 1998 A,
Insured: MBIA
5.500% 01/01/15 640,000 700,864
Series 2003 A, Insured: MBIA
5.250% 01/01/18 2,500,000 2,652,475
-----------
Joint Power Authority Total 4,726,066
-----------
WATER & SEWER - 1.5%
MS V Lakes Utility District,
Series 1994,
8.250% 07/15/24(i) 135,000 106,767
WA King County, Series 1999,
Insured: FGIC
5.250% 01/01/30 1,750,000 1,813,683
-----------
Water & Sewer Total 1,920,450
-----------
UTILITIES TOTAL 21,880,534
-----------
TOTAL MUNICIPAL BONDS
(cost of $178,981,797) 184,650,547
-----------
MUNICIPAL PREFERRED
STOCKS -2.0% SHARES
---------------------------------------------------
HOUSING - 2.0%
MULTI-FAMILY - 2.0%
Charter Mac Equity Issuer
Trust, AMT:
6.300% 04/30/19(d) 500,000 538,730
Series 2000,
7.600% 11/30/10(d) 500,000 554,115
GMAC Municipal Mortgage
Trust, AMT,
5.600% 10/31/39(d) 500,000 509,970
Munimae TE Bond Subsidiary LLC,
Series 2005 C-3, AMT,
5.500% 11/29/49(d) 1,000,000 1,002,890
---------
Multi-Family Total 2,605,705
---------
HOUSING TOTAL 2,605,705
---------
TOTAL MUNICIPAL PREFERRED STOCKS
(cost of $2,500,000) 2,605,705
---------
INVESTMENT COMPANY - 0.0%
---------------------------------------------------
Dreyfus Tax-Exempt Cash
Management Fund 949 949
---------
TOTAL INVESTMENT COMPANY
(cost of $949) 949
---------
SHORT-TERM OBLIGATIONS - 0.8% PAR ($) VALUE ($)
---------------------------------------------------------
VARIABLE RATE DEMAND NOTES (J) - 0.8%
FL Pinellas County Health Facility
Authority, All Childrens Hospital,
Series 1985,
LOC: Wachovia Bank N.A.
3.600% 12/01/15 200,000 200,000
MN Center City Health Care
Facilities, Hazelden Foundation,
Series 2005,
LOC: Bank of New York
3.580% 11/01/35 200,000 200,000
MN Mankato, Bethany Lutheran
College, Inc., Series 2000 B,
LOC: Wells Fargo Bank
3.630% 11/01/15 200,000 200,000
WY Uinta County, Chevron Corp.,
Series 1992,
3.540% 12/01/22 400,000 400,000
-----------
VARIABLE RATE DEMAND NOTES TOTAL 1,000,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $1,000,000) 1,000,000
-----------
TOTAL INVESTMENTS - 146.5% 188,257,201
-----------
(cost of $182,482,746) (k)
AUCTION PREFERRED SHARES
PLUS CUMULATIVE UNPAID
DISTRIBUTIONS - (46.7)% (60,016,603)
OTHER ASSETS & LIABILITIES, NET - 0.2% 241,540
-----------
NET ASSETS - 100.0% 128,482,138
-----------
See Accompanying Notes to Financial Statements.
14
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------------
(a)Security purchased on a delayed delivery basis.
(b)The issuer has filed for bankruptcy protection under Chapter 11, and is in
default of certain debt covenants. Income is not being accrued. At May 31,
2006, the value of this security represents less than 0.1% of net assets.
(c)Zero coupon bond.
(d)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 May 31, 2006,
these securities, which did not include any illiquid securities except the
following, amounted to $3,299,595, which represents 2.6% of net assets.
Acquisition
Security Date Par Cost Value
------------------------------------------------------------
Resolution Trust
Corp., Pass-
Through
Certificates, Series
1993 A,
8.500% 12/01/16 08/27/93 $227,741 $232,276 $221,685
(e)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.
(f)Step bond. This security is currently not paying a coupon. Shown
parenthetically is the interest rate to be paid and the date the Trust will
begin accruing at this rate.
(g)The interest rate shown on floating rate or variable rate securities
reflects the rate at May 31, 2006.
(h)Security pledged as collateral for open futures contracts.
(i)The issuer is in default of certain debt covenants. Income is being accrued.
At May 31, 2006, the value of this security represents 0.1% of net assets.
(j)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 May 31, 2006.
(k)Cost for federal income tax purposes is $182,173,386.
At May 31, 2006, the Trust held the following open short futures contracts:
Number
of Aggregate Expiration Unrealized
Type Contracts Value Face Value Date Appreciation
--------------------------------------------------------------------
10-Year U.S
Treasury
Notes 75 $7,880,859 $8,011,865 Jun-06 $131,006
U.S Treasury
Bonds 60 6,384,375 6,770,430 Jun-06 386,055
--------
$517,061
--------
At May 31, 2006, the Trust held the following forward swap contract:
NET
NOTIONAL EFFECTIVE EXPIRATION COUNTER- RECEIVE FIXED VARIABLE UNREALIZED
AMOUNT DATE DATE PARTY (PAY) RATE RATE DEPRECIATION
------------------------------------------------------------------------------
$17,000,000 08/08/06 08/08/16 JPMorgan (Pay) 4.158% BMA $(78,525)
Chase Index
Bank
At May 31, 2006, the composition of the Trust by revenue source is as follows:
% OF
HOLDINGS BY REVENUE SOURCE NET ASSETS
--------------------------------------------
Tax-Backed 43.6%
Health Care 26.6
Utilities 17.0
Other 16.6
Housing 16.0
Transportation 10.4
Education 6.8
Resource Recovery 3.4
Industrials 3.1
Other Revenue 2.2
Investment Company --*
Short-Term Obligations 0.8
Auction Preferred Shares (46.7)
Other Assets and Liabilities, Net 0.2
-----
100.0%
-----
* Rounds to less than 0.1%.
See Accompanying Notes to Financial Statements.
15
[GRAPHIC]
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2006 (Unaudited)
Acronym Name
-------------------------------------------------
AMBAC Ambac Assurance Corp.
AMT Alternative Minimum Tax
BMA Bond Market Association
CGIC Capital Guaranty Insurance Corp.
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage
Association
MBIA MBIA Insurance Corp.
QSBLF Qualified State Bond Loan Fund
RAD Radian Asset Assurance, Inc.
See Accompanying Notes to Financial Statements.
16
[GRAPHIC]
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2006 (Unaudited)
ASSETS:
Investments, at cost $182,482,746
------------
Investments, at value $188,257,201
Cash 91,706
Receivable for:
Interest 2,964,179
Futures variation margin 42,188
Deferred Trustees' compensation plan 16,603
------------
Total Assets 191,371,877
------------
LIABILITIES:
Net unrealized depreciation on swap contracts 78,525
Payable for:
Investments purchased on a delayed delivery
basis 2,064,128
Distributions -- common shares 563,941
Distributions -- preferred shares 11,575
Investment advisory fee 98,476
Pricing and bookkeeping fees 15,294
Custody fee 3,482
Chief compliance officer expenses (See Note 4) 716
Deferred Trustees' fees 16,603
Other liabilities 36,999
------------
Total Liabilities 2,889,739
------------
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 288,571
Accumulated net realized loss (5,012,516)
Net unrealized appreciation on:
Investments 5,774,455
Swap contracts (78,525)
Futures contracts 517,061
------------
Net assets at value applicable to 11,509,000
common shares of beneficial interest
outstanding $128,482,138
------------
Net asset value per share per common share $ 11.16
------------
[GRAPHIC]
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 2006 (Unaudited)
INVESTMENT INCOME:
Interest $ 5,194,598
-----------
EXPENSES:
Investment advisory fee 612,634
Transfer agent fee 23,504
Pricing and bookkeeping fees 64,538
Trustees' fees 7,408
Preferred shares remarketing commissions 74,880
Custody fee 6,999
Chief compliance officer expenses (See Note 4) 2,231
Other expenses 68,773
-----------
Total Expenses 860,967
Fees and expenses waived or reimbursed by
Investment Advisor (18,850)
Custody earnings credit (978)
-----------
Net Expenses 841,139
-----------
Net Investment Income 4,353,459
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, SWAP CONTRACTS AND
FUTURES CONTRACTS:
Net realized gain on:
Investments 782,418
Futures contracts 372,532
-----------
Net realized gain 1,154,950
-----------
Net change in unrealized appreciation
(depreciation) on:
Investments (1,415,850)
Swap contracts (78,525)
Futures contracts 512,776
-----------
Net change in unrealized
appreciation (depreciation) (981,599)
-----------
Net Gain 173,351
-----------
Net Increase in Net Assets from Operations 4,526,810
-----------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (971,139)
-----------
Net Increase in Net Assets from Operations
Applicable to Common Shares $ 3,555,671
-----------
See Accompanying Notes to Financial Statements.
17
[GRAPHIC]
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
2006 2005
INCREASE (DECREASE) IN NET ASSETS: ------------ ------------
------------------------------------
OPERATIONS:
Net investment income $ 4,353,459 $ 8,608,973
Net realized gain on
investments
and futures contracts 1,154,950 1,361,892
Net change in unrealized
appreciation (depreciation)
on investments, swap contracts
and futures contracts (981,599) (830,789)
------------ ------------
Net Increase from Operations 4,526,810 9,140,076
------------ ------------
LESS DISTRIBUTIONS DECLARED
TO PREFERRED SHAREHOLDERS:
From net investment income (971,139) (1,333,536)
------------ ------------
Increase in Net Assets
from Operations
Applicable to Common
Shares 3,555,671 7,806,540
------------ ------------
LESS DISTRIBUTIONS DECLARED
TO COMMON SHAREHOLDERS:
From net investment income (3,475,718) (7,561,413)
------------ ------------
Total Increase in Net Assets
Applicable to Common Shares 79,953 245,127
NET ASSETS APPLICABLE TO
COMMON SHARES:
Beginning of period 128,402,185 128,157,058
------------ ------------
End of period (including
undistributed net
investment income of
$288,571 and $381,969,
respectively) $128,482,138 $128,402,185
------------ ------------
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.
18
[GRAPHIC]
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, ------------------------------------------------------
2006 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.16 $ 11.14 $ 11.47 $ 11.04 $ 11.06 $ 10.55
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.38 0.75 0.74 0.74 0.78 (b) 0.75
Net realized and unrealized gain (loss) on
investments, swap contracts and futures contracts -- 0.05 (0.33) 0.42 (0.05)(b) 0.52
-------- -------- -------- -------- -------- --------
Total from Investment Operations 0.38 0.80 0.41 1.16 0.73 1.27
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (0.08) (0.12) (0.06) (0.05) (0.08) (0.16)
-------- -------- -------- -------- -------- --------
Total from Investment Operations
Applicable to Common Shareholders 0.30 0.68 0.35 1.11 0.65 1.11
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO
COMMON SHAREHOLDERS:
From net investment income (0.30) (0.66) (0.68) (0.68) (0.67) (0.60)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 11.16 $ 11.16 $ 11.14 $ 11.47 $ 11.04 $ 11.06
-------- -------- -------- -------- -------- --------
Market price per share -- common shares $ 10.30 $ 10.40 $ 10.01 $ 10.63 $ 10.09 $ 10.87
-------- -------- -------- -------- -------- --------
Total return -- based on market value --
common shares (c) 1.89%(d)(e) 10.68%(d) 0.64% 12.48% (1.10)% 29.28%
-------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (f)(g) 1.31%(h) 1.30% 1.29% 1.31% 1.28% 1.28%
Net investment income before preferred
stock dividend (f)(g) 6.77%(h) 6.64% 6.55% 6.57% 7.06%(b) 6.80%
Net investment income after preferred
stock dividend (f)(g) 5.26%(h) 5.61% 6.06% 6.12% 6.38%(b) 5.38%
Waiver/reimbursement 0.03%(h) --%(i) -- -- -- --
Portfolio turnover rate 11%(e) 16% 15% 13% 10% 31%
Net assets, end of period (000's) --
common shares $128,482 $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)Had the Investment Advisor and/or any of its affiliates not waived or
reimbursed a portion of expenses, total return would have been reduced.
(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.
(i)Rounds to less than 0.01%.
See Accompanying Notes to Financial Statements.
19
[GRAPHIC]
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
YEAR PERIOD
ENDED 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 TRANSACTIONS:
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.
See Accompanying Notes to Financial Statements.
20
[GRAPHIC]
NOTES TO FINANCIAL STATEMENTS
May 31, 2006 (Unaudited)
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 that 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
21
[GRAPHIC]
NOTES TO FINANCIAL STATEMENTS (continued)
May 31, 2006 (Unaudited)
amount equal to the futures contract. The Trust recognizes a realized gain or
loss when the contract is closed or expires.
SWAP CONTRACTS
The Trust may engage in swap transactions such as interest rate, forward, total
return or index swaps, consistent with its investment objective and policies to
obtain a desired return at a lower cost than if the Trust had invested directly
in the asset that yielded the desired return. Swaps involve the exchange by a
Trust with another party of their respective commitments to pay or receive
interest or total return throughout the lives of the agreements. The interest
to be paid or received on swaps is included in net realized gain/(loss) on
investments. Unrealized gains are reported as an asset and unrealized losses
are reported as a liability on the Statement of assets and liabilities. A
realized gain or loss is recorded upon termination of swap agreements and is
equal to the difference between the Trust's basis in the swap and the proceeds
from (or cost of) the closing transaction. Swap agreements are stated at fair
value. Notional principal amounts are used to express the extent of involvement
in these transactions, but the amounts potentially subject to credit risk are
much smaller.
If there is a default by the counterparty to a swap contract, a Trust will be
limited to contractual remedies pursuant to the agreements related to the
transaction. There is no assurance that the swap contract counterparties will
be able to meet their obligations pursuant to the swap contracts or that, in
the event of default, the Trust will succeed in pursuing contractual remedies.
The Trust thus assumes the risk that it may be delayed in or prevented from
obtaining payments owed to it pursuant to the swap contracts.
The use of derivative instruments involves, to varying degrees, elements of
market risk in excess of the amount recognized in the Statements of assets and
liabilities.
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.
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 the
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 May 31, 2006, was
3.52%. For the six months ended May 31, 2006, the Trust declared dividends to
Auction Preferred shareholders amounting to $971,139, representing an average
dividend rate of 3.26% per APS.
NOTE 3. FEDERAL TAX INFORMATION
The tax character of distributions paid during the year ended November 30, 2005
was as follows:
Tax-Exempt Income $8,894,949
Ordinary Income --
Long-Term Capital Gains --
Unrealized appreciation and depreciation at May 31, 2006, based on cost of
investments for federal income tax purposes, was:
Unrealized appreciation $11,388,900
Unrealized depreciation (5,305,085)
-----------
Net unrealized appreciation $ 6,083,815
-----------
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
----------
22
[GRAPHIC]
NOTES TO FINANCIAL STATEMENTS (continued)
May 31, 2006 (Unaudited)
Capital loss carryforwards of $1,369,281 were utilized during the year ended
November 30, 2005 for the Trust.
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. 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.
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, including assets
applicable to the APS. Columbia, at its discretion, may revise or discontinue
this arrangement 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, Columbia pays State Street
the total fees collected under the pricing and bookkeeping agreement.
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 daily net assets for the month; provided that during any
12-month period, the aggregate fee, exclusive of out-of-pocket expenses and
charges, shall not exceed $140,000.
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 fund accounting oversight and monitoring and certain
other services. For the six months ended May 31, 2006, the annualized effective
pricing and bookkeeping fee rate for the Trust, inclusive of out-of-pocket
expenses, was 0.068% of the Trust's average daily net assets.
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 six months ended May 31, 2006, the Trust paid $1,222 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of operations.
NOTE 5. PORTFOLIO INFORMATION
For the six months ended May 31, 2006, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $41,855,838 and
$20,773,000, 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 May 31, 2006,
there were no such restrictions on the Trust.
23
[GRAPHIC]
NOTES TO FINANCIAL STATEMENTS (continued)
May 31, 2006 (Unaudited)
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 Trust's insurers is rated Aaa by
Moody's Investor Services Inc., except for Radian Asset Assurance, Inc., which
is rated Aa3. At May 31, 2006, private insurers who insure greater than 5% of
the total investments of the Trust were as follows:
% OF TOTAL
INSURER INVESTMENTS
----------------------------------------------
MBIA Insurance Corp. 14.9%
Ambac Assurance Corp. 10.6
Financial Guaranty Insurance Corp. 5.9
GEOGRAPHIC CONCENTRATION
The Trust has greater than 5% of its total investments at May 31, 2006 invested
in debt obligations issued by the states of California, Florida, Illinois,
Massachusetts and New York, 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 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 management fees for certain
Columbia Funds (including the former Nations Funds) and other mutual funds
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 developed by an independent distribution consultant and
approved by the SEC. The independent distribution consultant has been in
consultation with the staff of the SEC and has submitted a proposed plan of
distribution. The SEC has not yet approved a final plan of distribution.
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.
24
[GRAPHIC]
NOTES TO FINANCIAL STATEMENTS (continued)
May 31, 2006 (Unaudited)
On February 20, 2004, the Judicial Panel on Multidistrict Litigation
transferred these cases and cases against several other mutual fund companies
based on similar allegations to the United States District Court in Maryland
for consolidated or coordinated pretrial proceedings (the "MDL"). Subsequently,
additional related cases were transferred to the MDL. On September 29, 2004,
the plaintiffs in the MDL filed amended and consolidated complaints. One of
these amended complaints is a putative class action that includes claims under
the federal securities laws and state common law, and that names Columbia, the
Distributor, the Trustees of the Columbia Funds, Bank of America Corporation
and others as defendants. Another of the amended complaints is a derivative
action purportedly on behalf of the Columbia Funds that asserts claims under
federal securities laws and state common law.
On February 25, 2005, Columbia and other defendants filed motions to dismiss
the claims in the pending cases. On March 1, 2006, for reasons stated in the
court's memoranda dated November 3, 2005, the U.S. District Court for the
District of Maryland granted in part and denied in part the defendants' motions
to dismiss. The court dismissed all of the class action claims pending against
the Columbia Funds Trusts and the Columbia Acorn Trusts. As to Columbia and the
Distributor, the claims under the Securities Act of 1933, the claims under
Sections 34(b) and 36(a) of the Investment Company Act of 1940 ("ICA") and the
state law claims were dismissed. The claims under Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and claims under Section 36(b) of the ICA
along with related claims under Section 48(a) of the ICA were not dismissed.
On March 21, 2005, a purported class action was filed 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 purpose. 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 and this appeal is pending.
25
[GRAPHIC]
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE* PER SHARE PER SHARE
------------------------------------------------------------
05/31/06** $60,000,000 $78,534 $25,005 $25,000
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.
**Unaudited.
***On August 26, 1999, the Trust began offering Auction Preferred Shares.
26
See Accompanying Notes to Financial Statements.
[GRAPHIC]
RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS
On May 24, 2006, the Annual Meeting of Shareholders of the Trust was held to
consider re-election of Trustees. On March 10, 2006, the record date for the
Meeting, the Trust had 11,509,000 common shares outstanding and 2,400 preferred
shares outstanding. The votes cast were as follows:
ELECTION OF TRUSTEES:
The shareholders re-elected the following Trustees as follows:
For Withheld
----------------------------------------
Janet Langford Kelly 10,433,160 157,983
Patrick J. Simpson 10,437,799 153,344
The holders of preferred shareholders re-elected the following Trustees as
follows:
For Withheld
--------------------------------
Douglas A. Hacker 2,199 0
Thomas E. Stitzel 2,199 0
The terms of office of Thomas C. Theobald, John J. Neuhauser, Richard L.
Woolworth, William E. Mayer, Richard W. Lowry, Charles R. Nelson and Anne-Lee
Verville continued after the Meeting.
27
[GRAPHIC]
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. Contact the Plan Agent for additional information regarding the
Plan. 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
[LOGO]
Transfer Agent
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 21, 2006, 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.
[GRAPHIC]
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
SEMIANNUAL REPORT
SHC-44/111422-0506 (07/06) 06/26645
Item 2. Code of Ethics.
Not applicable at this time.
Item 3. Audit Committee Financial Expert.
Not applicable at this time.
Item 4. Principal Accountant Fees and Services.
Not applicable at this time.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
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.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Registrant Purchases of Equity Securities*
-----------------------------------------------------------------
(c)
Total Number of (d)
(a) (b) Shares Purchased as Maximum Number of
Total Number Average Part of Publicly Shares that May Yet
of Shares Price Paid Announced Plans Be Purchased Under
Period Purchased Per Share or Programs the Plans or Programs
------ ------------ ---------- ------------------- ---------------------
12/01/05 through 12/31/05... 6,652 $10.42 6,652 N/A
01/01/06 through 01/31/06... 6,532 $10.61 6,532 N/A
02/01/06 through 02/28/06... 6,575 $10.55 6,575 N/A
03/01/06 through 03/31/06... 6,235 $10.92 6,235 N/A
04/01/06 through 04/30/06... 6,286 $10.70 6,286 N/A
05/01/06 through 05/31/06... 6,359 $10.66 6,359 N/A
------ ------ ------ ---
Total....................... 38,639 $10.64 38,639 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 the 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, have 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: Not
applicable at this time.
(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
-----------------------------------------------------
By (Signature and Title) /S/ Christopher L. Wilson
-----------------------------------------
Christopher L. Wilson, President
Date July 27, 2006
-------------------------------------------------------------
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
-----------------------------------------
Christopher L. Wilson, President
Date July 27, 2006
-------------------------------------------------------------
By (Signature and Title) /S/ J. Kevin Connaughton
-----------------------------------------
J. Kevin Connaughton, Treasurer
Date July 27, 2006
-------------------------------------------------------------