COLONIAL HIGH INCOME MUNICIPAL TRUST ANNUAL REPORT
NOVEMBER 30, 2002
[PHOTO OF BUILDING]
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
For a third consecutive year, the municipal bond market offered positive
returns. In general, the bond market was aided by strong demand, as investors
shied away from the stock market in light of economic uncertainty, corporate
scandals and the threat of war. Relatively stable interest rates were also an
aid to market performance. The Federal Reserve lowered short-term interest rates
early in the period and again late in the period as the economy struggled and
consumer confidence sagged. The volume of new municipal bonds increased as
cities and states faced budget deficits and revenue shortfalls. However,
investor demand for bonds also rose, and that helped support returns throughout
the year.
The following report will provide you with more detailed information about the
fund's performance and the investment strategies used by portfolio manager
Maureen Newman. As always, we thank you for choosing Colonial High Income
Municipal Trust and for giving us the opportunity to help you build a strong
financial future.
/s/ Keith T. Banks
Keith T. Banks
President
o NOT FDIC INSURED o MAY LOSE VALUE o NO BANK GUARANTEE
Economic and market conditions change frequently. There is no assurance that the
trends described in this report will continue or commence.
PORTFOLIO MANAGER'S REPORT
For the 12-month period ended November 30, 2002, Colonial High Income Municipal
Trust generated a total return of 1.44%, based on net asset value. The trust
underperformed its peer group, the Lipper High Yield Municipal Debt Funds
Category Average, which returned 2.53%.1
The trust's underperformance was partially the result of our decision to reduce
the trust's duration (a measure of interest rate sensitivity) by selling
Treasury futures contracts. The use of the futures was driven by the longer
duration that results from the leverage on the trust (the preferred shares).
These short futures contracts positions held back the trust's results because US
Treasuries actually significantly outperformed municipal bonds. (As the price of
Treasury bonds went up, the value of the short futures contracts went down).
However, the trust's leverage boosted the trust's income, which enhanced the
income paid to common shareholders. During the period, high-quality municipal
bonds outperformed lower-quality bonds, and the trust benefited from its large
number of high-quality securities relative to the average of its Lipper
category.
Toward the end of the fiscal year, we sold some of the high-quality issues that
had performed well and invested the proceeds in lower-quality bonds, which were
laggards. We believe that lower-quality bonds have the potential for strong
performance, as economic growth improves. We found some of the best values in
electric utility and certain housing development bonds, which are supported by
property taxes.
We have structured the portfolio to take advantage of a slowly improving economy
and a stable or slightly rising interest-rate environment. Because most states
project large budgetary imbalances, we have been cautious about investing in
sectors that depend on state government spending and that may be affected by
budget cuts. We believe some of the best opportunities will come from the
essential services sectors, such as utilities, and water and sewer.
/s/ Maureen G. Newman
Maureen G. Newman
Maureen G. Newman is the portfolio manager of Colonial High Income Municipal
Trust and a senior vice president of Colonial Management Associates, Inc., an
affiliate of Columbia Management Group. Ms. Newman received her BA in economics
from Boston College and her MBA from Babson College. She is a Chartered
Financial Analyst, a member of the Boston Security Analysts Society and former
chairman of the National Federation of Municipal Analysts.
Past performance is no guarantee of future investment results. The principal
value and investment returns will fluctuate, resulting in a gain or loss on
sale.
Tax-exempt investing offers current tax-free income, but it also involves
certain risks. The value of the trust shares will be affected by interest rate
changes and the creditworthiness of issues held in the trust. Investing in high
yield securities offers the potential for high current income and attractive
total return, but involves certain risks. Lower-rated bond risks include default
of the issuer and rising interest rates. Interest income from certain tax-exempt
bonds may be subject to the federal alternative minimum tax for individuals and
corporations.
1 Lipper Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment objectives
as those of the trust.
PRICE PER SHARE AS OF 11/30/02 ($)
Net asset value 6.52
--------------------------------
Market price 6.26
--------------------------------
12-MONTH TOTAL RETURN, ASSUMING
REINVESTMENT OF ALL DISTRIBUTIONS
FOR THE PERIOD ENDED 11/30/02 (%)
Net asset value 1.44
--------------------------------
Market price 5.81
--------------------------------
DISTRIBUTIONS DECLARED PER
COMMON SHARE 12/1/01-11/30/02 ($)
0.50
--------------------------------
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 10 INDUSTRY SECTORS AS OF 11/30/02 (%)
Local general obligations 13.1
---------------------------------------------
Hospitals 9.1
---------------------------------------------
Multi-family housing 8.6
---------------------------------------------
Nursing homes 7.9
---------------------------------------------
Refunded/escrowed 7.2
---------------------------------------------
Investor owned utility 4.7
---------------------------------------------
Congregate care retirement 3.6
---------------------------------------------
Municipal electric utility 3.5
---------------------------------------------
State general obligations 3.1
---------------------------------------------
Assisted living / senior housing 3.1
---------------------------------------------
QUALITY BREAKDOWN AS OF
11/30/02 (%)
AAA 35.6
-------------------------------
AA 3.4
-------------------------------
A 8.0
-------------------------------
BBB 12.7
-------------------------------
BB 4.7
-------------------------------
CCC 0.5
-------------------------------
Non-rated 32.8
-------------------------------
Cash equivalents 2.3
-------------------------------
Quality breakdowns are calculated as a percentage of total investments,
including short-term obligations. Ratings shown in the quality breakdown
represent the highest rating assigned to a particular bond by one of the
following nationally-recognized rating agencies: Standard & Poor's Corporation,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc. Sector
breakdowns are calculated as a percentage of net assets.
Because the trust is actively managed, there can be no guarantee that the trust
will continue to maintain this quality breakdown or invest in these sectors in
the future.
ABOUT DURATION
Duration is a measure, expressed in years, of interest-rate sensitivity. It's
similar to maturity, but because it takes into consideration the entire stream
of future principal and interest payments and how long it will take to collect
them, it is a more complex and also a more accurate measure of a trust's
exposure to changing interest rates.
Because we are active duration managers, we tend to use duration as a tactical
tool to anticipate or respond to interest rate changes. Because bond prices move
in the opposite direction that interest rates are moving, we lower duration when
we expect interest rates to rise and we raise duration when we expect interest
rates to fall. This adjustment provides the potential to benefit performance. If
we are wrong and interest rates rise after we lengthen duration or fall after we
shorten duration, trust performance could be hurt.
1
INVESTMENT PORTFOLIO
November 30, 2002
MUNICIPAL BONDS - 96.2% PAR VALUE
------------------------------------------------------------
EDUCATION - 2.9%
CA Loyola Marymount University,
Series 2001,
(a) 10/01/19 $2,025,000 $ 848,921
CA State Public Works Board,
UCLA Replacement Hospital,
Series 2002 A,
5.375% 10/01/15 1,010,000 1,100,526
CA Statewide Community
Development Authority,
Crossroads School for Arts &
Sciences, Series 1998,
6.000% 08/01/28 (b) 1,310,000 1,354,566
IL State Development Finance Authority,
Latin School of Chicago, Series 1998,
5.650% 08/01/28 230,000 220,197
IL University of Illinois, Series 2001 A,
5.500% 08/15/17 685,000 733,354
MA State Industrial Finance Agency:
Cambridge Friends School,
Series 1998,
5.800% 09/01/28 1,000,000 963,060
St. John's High School, Series 1998,
5.350% 06/01/28 300,000 278,715
MI Southfield Economic Development
Corp., Lawrence University, Series 1998 A,
5.400% 02/01/18 1,000,000 964,800
NC State Capital Facilities Finance
Authority, Meredith College,
Series 2001,
5.125% 06/01/16 1,000,000 1,043,460
VT State Educational & Health Buildings
Finance Agency, Norwich University,
Series 1998,
5.500% 07/01/21 1,500,000 1,481,025
WV State University, Series 2000 A,
(a) 04/01/19 1,000,000 427,450
-----------
9,416,074
-----------
-----------------------------------------------------------
HEALTH CARE - 22.1%
CONGREGATE CARE RETIREMENT - 3.6%
CA Statewide Community Development
Authority, Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 (b) 1,000,000 1,062,770
FL Capital Projects Finance Authority,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 750,000 712,433
IL State Health Facilities Authority,
Lutheran Senior Ministries,
Series 2001 A,
7.375% 08/15/31 300,000 302,184
KS Manhattan, Meadowlark Hills
Retirement Home, Series 1999 A,
6.375% 05/15/20 650,000 649,818
PAR VALUE
------------------------------------------------------------
KY State Economic Development Finance
Authority, Christian Church Homes of
Kentucky, Inc., Series 1998,
5.500% 11/15/30 $ 320,000 $ 286,912
MA Boston Industrial Development
Financing Authority, Springhouse, Inc.,
Series 1988,
5.875% 07/01/20 605,000 524,226
MA State Development Finance Agency,
Loomis Communities:
Series 1999 A,
5.625% 07/01/15 400,000 371,492
Series 2002 A,
6.900% 03/01/32 100,000 99,968
MN Columbia Heights, Crest View Corp.,
Series 1998,
6.000% 03/01/33 255,000 223,890
NH State Higher Educational & Health
Facilities Authority, Rivermead at
Peterborough, Series 1998:
5.625% 07/01/18 500,000 449,925
5.750% 07/01/28 500,000 433,305
NJ Economic Development Authority,
Seabrook Village, Inc., Series 2000 A,
8.250% 11/15/30 625,000 668,500
PA Lancaster Industrial Development
Authority, Garden Spot Village,
Series 2000 A,
7.625% 05/01/31 500,000 517,025
PA Philadelphia Authority for Industrial
Development, Baptist Home of
Philadelphia, Series 1998 A:
5.500% 11/15/18 360,000 309,240
5.600% 11/15/28 500,000 412,925
TN Metropolitan Government, Nashville &
Davidson Counties, Blakeford at Green
Hills, Series 1998,
5.650% 07/01/24 600,000 520,968
TX Abilene Health Facilities Development
Corp., Sears Methodist Retirement
Obligation Group:
Series 1998 A,
5.900% 11/15/25 1,000,000 910,900
Series 1999,
6.000% 11/15/29 250,000 229,413
WI State Health & Educational Facilities
Authority:
Attic Angel Obligated Group,
Series 1998,
5.750% 11/15/27 1,000,000 846,830
Clement Manor, Series 1998,
5.750% 08/15/24 1,300,000 1,112,761
United Lutheran Program for Aging, Inc.,
Series 1998,
5.700% 03/01/28 1,000,000 848,540
-----------
11,494,025
-----------
See notes to investment portfolio.
2
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
------------------------------------------------------------
HEALTH CARE (CONTINUED)
HEALTH SERVICES - 0.5%
IL State Health Facilities Authority, Midwest
Physician Group, Ltd., Series 1998,
5.500% 11/15/19 $ 120,000 $ 99,522
MA State Development Finance Agency,
Boston Biomedical Research Institute,
Series 1999:
5.650% 02/01/19 200,000 187,298
5.750% 02/01/29 450,000 413,037
MA State Health & Educational
Facilities Authority,
Civic Investments, Inc.
Series 1999 A,
9.000% 12/15/15 750,000 790,485
-----------
1,490,342
-----------
HOSPITALS - 9.1%
AR Conway Health Facilities Board,
Conway Regional Medical Center:
Series 1999 A,
6.400% 08/01/29 425,000 439,335
Series 1999 B,
6.400% 08/01/29 1,000,000 1,032,360
CA State Health Facilities Financing
Authority, Cedars-Sinai Medical Center,
Series 1999 A,
6.125% 12/01/30 750,000 783,480
CO State Health Facilities Authority:
National Jewish Medical & Research
Center, Series 1998,
5.375% 01/01/23 330,000 307,362
Parkview Medical Center, Inc.,
Series 2001,
6.600% 09/01/25 300,000 324,531
FL Orange County Health Facilities
Authority, Orlando Regional
Healthcare, Series 2002,
5.750% 12/01/32 200,000 200,906
FL Tampa, H. Lee Moffitt Cancer Center,
Series 1999 A,
5.750% 07/01/29 2,000,000 2,010,640
FL West Orange Healthcare District,
Series 2001 A,
5.650% 02/01/22 525,000 519,986
GA Forsyth County Hospital Authority,
Georgia Baptist Healthcare System,
Series 1998,
6.000% 10/01/08 885,000 970,296
IL Health Facilities Authority,
Thorek Hospital & Medical Center,
Series 1998,
5.250% 08/15/18 600,000 538,176
PAR VALUE
------------------------------------------------------------
IL Southwestern Illinois Development
Authority, Anderson Hospital,
Series 1999,
5.500% 08/15/20 $ 225,000 $ 210,897
IL State Health Facilities Authority,
Swedish American Hospital,
Series 2000,
6.875% 11/15/30 500,000 533,290
LA State Public Facilities Authority,
Touro Infirmary, Series 1999,
5.625% 08/15/29 600,000 584,976
MA State Health & Educational Facilities,
Milford-Whitinsville Hospital,
Series 2002 D,
6.350% 07/15/32 465,000 467,381
MI Dickinson County Healthcare System,
Series 1999,
5.700% 11/01/18 750,000 708,585
MI Flint Hospital Building Authority,
Hurley Medical Center, Series 1998 A,
5.375% 07/01/20 450,000 396,000
MN St. Paul Housing & Redevelopment
Authority, Healtheast Project,
Series 1997 A,
5.700% 11/01/15 1,000,000 800,580
MN Washington County Housing &
Redevelopment Authority,
Healtheast, Inc., Series 1998,
5.250% 11/15/12 1,500,000 1,212,405
MS State Business Finance Corp., Rush
Medical Foundation, Inc., Series 1998,
5.625% 07/01/23 710,000 604,380
NC State Medical Care Commission,
Stanly Memorial Hospital, Series 1999,
6.375% 10/01/29 1,915,000 2,035,396
NH State Higher Educational & Health
Facilities Authority, Littleton Hospital
Association, Inc., Series 1998 A:
5.900% 05/01/28 780,000 604,601
6.000% 05/01/28 625,000 491,231
NY City Industrial Development Agency,
Staten Island University Hospital,
Series 2001 B,
6.375% 07/01/31 500,000 496,385
OH Belmont County, East Ohio Regional
Hospital, Series 1998,
5.700% 01/01/13 1,875,000 1,689,787
OH Highland County Joint Township
Hospital District, Series 1999,
6.750% 12/01/29 980,000 908,940
OH Miami County, Upper Valley Medical
Center, Inc., Series 1996 A,
6.375% 05/15/26 1,000,000 1,010,730
See notes to investment portfolio.
3
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-------------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
OH Sandusky County, Memorial Hospital,
Series 1998,
5.150% 01/01/10 $ 250,000 $ 245,050
PA Allegheny County Hospital
Development, Ohio Valley General
Hospital, Series 1998 A,
5.450% 01/01/28 1,000,000 887,510
PA Pottsville Hospital Authority, Pottsville
Hospital & Warne Clinic, Series 1998,
5.500% 07/01/18 1,000,000 873,120
TX Comal County Health Facilities
Development, McKenna Memorial,
Series 2002 A,
6.250% 02/01/32 (c) 500,000 486,235
TX Lufkin Health Facilities Development
Corp., Memorial Health Systems of
East Texas, Series 1998,
5.700% 02/15/28 1,120,000 888,832
TX Richardson Hospital Authority,
Baylor Richardson Medical Center,
Series 1998,
5.625% 12/01/28 1,200,000 1,181,472
TX Tyler Health Facilities Development
Corp., Mother Frances Hospital,
Series 2001,
6.000% 07/01/31 1,000,000 986,480
UT Weber County,
IHC Health Services,
Inc., Series 1999,
5.000% 08/15/30 1,500,000 1,449,690
VT State Educational & Health
Buildings Authority, Brattleboro
Memorial Hospital, Series 1998,
5.375% 03/01/28 1,075,000 959,319
WA State Health Care Facilities
Authority, Kadlec Medical Center,
Series 2001,
5.875% 12/01/21 600,000 627,840
WI State Health & Educational
Facilities Authority,
Wheaton Franciscan Services,
Series 2002,
5.750% 08/15/30 600,000 600,858
WV Hospital Finance Authority,
Charleston Medical Center,
Series 2000 A,
6.750% 09/01/30 195,000 210,582
-----------
29,279,624
-----------
PAR VALUE
------------------------------------------------------------
INTERMEDIATE CARE FACILITIES - 1.0%
IL State Development Finance Authority,
Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 $1,215,000 $ 1,033,163
IN State Health Facilities Financing
Authority, Hoosier Care, Inc.,
Series 1999 A,
7.125% 06/01/34 150,000 127,551
PA State Economic Development
Financing Authority, Northwestern
Human Services, Inc.,
Series 1998 A,
5.250% 06/01/14 2,510,000 2,163,419
-----------
3,324,133
-----------
NURSING HOMES - 7.9%
AK Juneau, St. Ann's Care Center,
Series 1999,
6.875% 12/01/25 1,250,000 1,232,925
CO Healthcare Facilities Authority:
American Housing Foundation, Inc.,
Series 1990 A,
10.250% 12/01/20 (i) 1,300,000 403,000
Pioneer Healthcare, Series 1989,
10.500% 05/01/19 1,885,000 1,823,738
CO State Health Facilities Authority,
Volunteers of America Care
Facilities, Inc.:
Series 1998 A:
5.450% 07/01/08 300,000 287,130
5.750% 07/01/20 865,000 740,371
Series 1999 A,
6.000% 07/01/29 350,000 293,545
IA State Finance Authority, Care
Initiatives Project:
Series 1996,
9.250% 07/01/25 1,000,000 1,176,590
Series 1998 B:
5.750% 07/01/18 550,000 499,042
5.750% 07/01/28 1,475,000 1,276,671
IN Gary Industrial Economic
Development, West Side Health
Care Center,
Series 1987 A,
11.500% 10/01/17 1,330,000 1,340,973
IN Michigan City Health Facilities,
Metro Health Foundation, Inc.
Project, Series 1993,
11.000% 11/01/22 (i) 3,085,000 1,048,900
IN State Health Facilities Financing
Authority, Metro Health Indiana, Inc.,
Series 1998,
6.400% 12/01/33 (i) 1,210,000 484,000
See notes to investment portfolio.
4
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-------------------------------------------------------------
HEALTH CARE (CONTINUED)
NURSING HOMES (CONTINUED)
MA State Development Finance Agency,
Alliance Health Care Facilities,
Series 1999,
7.100% 07/01/32 $1,300,000 $ 1,290,276
MA State Industrial Finance Agency,
Woodlawn Nursing Home,
Series 2000 A:
7.750% 12/01/27 1,578,135 1,375,581
10.250% 06/01/27 336,372 312,826
MN Carlton, Inter-Faith Social
Services, Inc., Series 2000,
7.750% 04/01/29 750,000 774,135
MN New Hope,
North Ridge Care Center,
Inc., Series 1999,
5.875% 03/01/29 600,000 546,594
MN Sartell, Foundation for Healthcare,
Series 1999 A,
6.625% 09/01/29 1,145,000 1,049,152
NJ State Economic Development Authority,
Geriatric & Medical Service, Inc.,
Series 1990 B,
10.500% 05/01/20 2,000,000 2,012,060
PA Chester County Industrial Development
Authority, RHA Nursing Home,
Series 2002,
8.500% 05/01/32 1,615,000 1,498,106
PA Washington County Industrial
Development Authority,
Central States, Series 1989,
10.250% 11/01/19 (d) 1,750,000 875,000
TN Metropolitan Government, Nashville &
Davidson Counties Health & Education
Facilities, Central States, Series 1989,
10.250% 11/01/19 (d) 1,650,000 825,000
TX Kirbyville Health Facilities Development
Corp., Heartway III Project:
Series 1997 A,
10.000% 03/20/18 673,313 626,181
Series 1997 B,
6.000% 03/20/04 (d) 106,000 5,300
TX Whitehouse Health Facilities
Development Corp., Oak Brook
Healthcare Center, Series 1989,
10.000% 12/01/19 1,655,000 1,679,196
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
Series 1996,
7.100% 02/20/36 1,000,000 1,168,700
WI State Health & Educational Facilities
Authority, Metro Health Foundation, Inc.,
Series 1993,
11.000% 11/01/22 (i) 2,775,000 943,500
-----------
25,588,492
-----------
-------------------------------------------------------------
PAR VALUE
-------------------------------------------------------------
HOUSING - 11.0%
ASSISTED LIVING/SENIOR - 3.1%
CA Abag Finance Authority for Nonprofit
Corps., Eskaton Gold River Lodge,
Series 1998:
6.375% 11/15/15 $ 720,000 $ 652,349
6.375% 11/15/28 550,000 464,579
DE Kent County, Heritage at Dover,
Series 1999,
7.625% 01/01/30 1,730,000 1,496,415
GA Columbus Housing Authority,
The Gardens at Calvary, Series 1999,
7.000% 11/15/19 500,000 432,810
IL State Development Finance Authority,
Care Institute, Inc., Series 1995,
8.250% 06/01/25 1,265,000 1,257,979
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 (d) 1,740,000 1,188,159
NC State Medical Care Commission,
DePaul Community Facilities Project,
Series 1999,
7.625% 11/01/29 1,490,000 1,502,874
NY Huntington Housing Authority,
Gurwin Jewish Senior Center,
Series 1999:
5.875% 05/01/19 700,000 615,860
6.000% 05/01/29 775,000 667,849
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
Series 1994,
9.000% 11/01/24 1,730,000 1,774,859
-----------
10,053,733
-----------
MULTI-FAMILY - 7.3%
AZ Maricopa County Industrial
Development Authority,
National Health Facilities,
Series 1998 A,
5.100% 01/01/33 4,500,000 4,531,860
DE Wilmington, Electra Arms Senior
Association Project, Series 1998,
6.250% 06/01/28 955,000 784,093
FL Broward County Housing Finance
Authority, Chaves Lake Apartment
Project, Series 2000,
7.500% 07/01/40 750,000 765,315
FL Clay County Housing Finance Authority,
Madison Commons Apartments,
Series 2000 A,
7.450% 07/01/40 745,000 760,243
GA Clayton County Housing Authority,
Magnolia Park Apartments, Series 1999 A,
6.250% 06/01/30 955,000 831,700
See notes to investment portfolio.
5
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-------------------------------------------------------------
HOUSING (CONTINUED)
MULTI-FAMILY (CONTINUED)
MN Lakeville, Southfork Apartments Project:
Series 1989 A,
9.875% 02/01/20 $2,570,000 $ 2,576,836
Series 1989 B,
(a) 02/01/20 903,000 1,027,788
MN Robbinsdale Economic Development
Authority, Broadway Court,
Series 1999 A,
6.875% 01/01/26 500,000 468,035
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen, Series 1992,
9.250% 06/01/22 1,015,000 1,048,251
MN White Bear Lake, Birch Lake
Townhome Project:
Series 1989 A,
10.250% 07/15/19 2,200,000 2,244,638
Series 1989 B,
(a) 07/15/19 (b) 703,000 476,623
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments, Series 1979,
7.375% 06/01/21 306,527 307,550
Resolution Trust Corp., Pass-Through
Certificates, Series 1993 A,
8.500% 12/01/16 (e) 546,075 547,238
TN Franklin Industrial Board, Landings
Apartment Project, Series 1996 B,
8.750% 04/01/27 865,000 908,068
TX El Paso County Housing Finance Corp.,
American Village Communities:
Series 2000 C,
8.000% 12/01/32 395,000 399,590
Series 2000 D,
10.000% 12/01/32 425,000 429,794
TX Galveston Housing Finance Corp.,
Driftwood Apartments,
8.000% 08/01/23 1,000,000 1,040,000
TX State Affordable Housing Corp.,
NHT/GTEX Project, Series 2001 C,
10.000% 10/01/31 880,000 869,933
TX State Department of Housing &
Community Affairs, Pebble Brooks
Apartments, Series 1998,
5.500% 12/01/18 1,000,000 1,018,780
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990 A,
10.000% 01/01/21 1,500,000 1,317,000
WA Vancouver Housing Authority,
Series 1998 I,
5.500% 03/01/28 1,000,000 986,470
-----------
23,339,805
-----------
PAR VALUE
-------------------------------------------------------------
SINGLE FAMILY - 0.6%
TX Bexar County Housing Finance Corp.,
GNMA Collateralized Mortgage,
Series 1989 A,
8.200% 04/01/22 $1,160,000 $ 1,161,984
WA State Housing Finance Commission,
Series 1992 D1,
6.150% 01/01/26 (f) 775,000 837,186
-----------
1,999,170
-----------
-----------------------------------------------------------
INDUSTRIAL - 3.9%
FOOD PRODUCTS - 1.5%
GA Cartersville Development Authority,
Waste & Wastewater Facilities,
Anheuser Busch Cos., Inc. Project,
Series 1989 A,
5.950% 02/01/32 1,000,000 1,029,880
IN Hammond, American Maize
Products Co., Series 1994,
8.000% 12/01/24 1,760,000 1,920,952
LA Southern Louisiana Port Commission,
Cargill, Inc., Series 1997,
5.850% 04/01/17 1,000,000 1,055,280
MI State Strategic Fund, Michigan
Sugar Co., Sebewaing Project,
Series 1998 A,
6.250% 11/01/15 1,250,000 894,288
-----------
4,900,400
-----------
FOREST PRODUCTS - 0.7%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 1,800,000 1,807,650
MI Delta County Economic Development
Corp., Environmental Import,
Mead Westvaco Corp.,
Series 2002 B,
6.450% 04/15/23 450,000 442,454
-----------
2,250,104
-----------
MANUFACTURING - 1.0%
IL Will-Kankakee Regional Development
Authority, Flanders Corp./Precisionaire
Project, Series 1997,
6.500% 12/15/17 890,000 845,981
KS Wichita Airport Authority,
Cessna Citation Service Center,
Series 2002 A,
6.250% 06/15/32 675,000 688,709
MN Brooklyn Park, TL Systems Corp.,
Series 1991,
10.000% 09/01/16 685,000 723,983
TX Trinity River Authority, Texas
Instruments Project, Series 1996,
6.200% 03/01/20 1,000,000 1,046,640
-----------
3,305,313
-----------
See notes to investment portfolio.
6
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
------------------------------------------------------------
INDUSTRIAL (CONTINUED)
METALS & MINING - 0.4%
MD Baltimore County, Bethlehem Steel
Corp. Project, Series 1994 B,
7.500% 06/01/15 (i) $ 500,000 $ 30,000
NV State Department of Business &
Industry, Wheeling-Pittsburg Steel Corp.,
Series 1999 A,
8.000% 09/01/14 (e)(i) 1,000,000 700,000
VA Greensville County Industrial
Development Authority,
Wheeling-Pittsburg Steel Corp.,
Series 1999 A:
6.375% 04/01/04 (i) 95,000 66,500
7.000% 04/01/14 (i) 500,000 350,000
-----------
1,146,500
-----------
OIL & GAS - 0.3%
TX Gulf Coast Industrial Development
Authority, Solid Waste Disposal,
Citgo Petroleum, Series 1998,
8.000% 04/01/28 500,000 514,705
VI Government Refinery,
Hovensa Coker Project,
Series 2002,
6.500% 07/01/21 (b) 375,000 376,072
-----------
890,777
-----------
-----------------------------------------------------------
OTHER - 8.1%
OTHER - 0.7%
CA Tobacco Securitization Authority,
Asset Backed, Series 2002 B,
6.000% 06/01/43 1,100,000 1,081,916
MD Baltimore, Park Charles Project,
Series 1986,
8.000% 01/01/15 649,656 650,975
WA Tobacco Settlement Authority,
Series 2002,
6.625% 06/01/32 500,000 494,565
-----------
2,227,456
-----------
POOL/BOND BANK - 0.2%
MI State Municipal Bond Authority,
Local Government Loan Project,
Series 2001 A,
5.375% 11/01/17 750,000 796,628
-----------
REFUNDED/ESCROWED (G) - 7.2%
CA Colton Public Financing Authority,
Series 1995,
7.500% 10/01/20 1,830,000 1,935,774
CO Denver City & County Airport,
Series 1992 C,
6.125% 11/15/25 5,120,000 5,440,422
PAR VALUE
------------------------------------------------------------
CT State Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/01/06 $ 715,000 $ 802,895
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 2,395,000 2,572,170
FL Clearwater Housing Authority,
Hampton Apartments, Series 1994,
8.250% 05/01/24 2,390,000 2,665,710
ID State Health Facilities Authority,
IHC Hospitals, Inc., Series 1992,
6.650% 02/15/21 1,750,000 2,124,115
MA State Health & Educational Facilities,
Authority Corporation for Independent
Living, Series 1993,
8.100% 07/01/18 660,000 698,122
NC Lincoln County, Lincoln County
Hospital, Series 1991,
9.000% 05/01/07 295,000 340,362
PA Delaware County Authority,
Southeastern Pennsylvania Obligated
Group, Series 1996:
6.000% 12/15/16 1,400,000 1,598,884
6.000% 12/15/26 1,000,000 1,111,990
PA Montgomery County Industrial
Development Authority, Assisted Living
Facility, Series 1993 A,
8.250% 05/01/23 800,000 837,096
TN Shelby County, Health, Education &
Housing Facilities Board, Open Arms
Development Center:
Series 1992 A,
9.750% 08/01/19 850,000 1,083,750
Series 1992 C,
9.750% 08/01/19 830,000 1,058,366
WV Hospital Finance Authority,
Charleston Medical Center,
Series 2000 A,
6.750% 09/01/30 805,000 979,484
-----------
23,249,140
-----------
-----------------------------------------------------------
OTHER REVENUE - 1.8%
HOTELS - 0.3%
PA Philadelphia Authority for Industrial
Development, Doubletree Project A,
Series 1997,
6.500% 10/01/27 1,000,000 984,420
-----------
See notes to investment portfolio.
7
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-------------------------------------------------------------
OTHER REVENUE (CONTINUED)
RECREATION - 0.9%
CT Gaming Authority, Mohegan Tribe,
Series 2001,
6.250% 01/01/31 $ 275,000 $ 280,709
FL Capital Trust Agency,
Seminole Tribe Convention Center,
Series 2002 A,
10.000% 10/01/33 750,000 771,863
NM Red River Sports Facility,
Red River Ski Area Project, Series 1998,
6.450% 06/01/07 945,000 944,452
NY New York City Cultural Trust,
Museum of Modern Art,
Series 2001 D,
5.125% 07/01/31 1,000,000 1,003,340
-----------
3,000,364
-----------
RETAIL - 0.6%
NJ State Economic Development Authority,
Glimcher Properties L.P. Project,
Series 1998,
6.000% 11/01/28 1,250,000 1,245,163
OH Lake County, North Madison
Properties, Series 1993,
8.819% 09/01/11 735,000 707,224
-----------
1,952,387
-----------
-----------------------------------------------------------
RESOURCE RECOVERY - 1.2%
DISPOSAL - 0.4%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 605,000 634,155
UT Carbon County, Laidlaw Environmental,
Series 1997 A,
7.450% 07/01/17 500,000 500,505
-----------
1,134,660
-----------
RESOURCE RECOVERY - 0.8%
MA State Development Finance Agency,
Ogden Haverhill Project, Series 1999 A,
6.700% 12/01/14 250,000 245,963
MA State Industrial Finance Agency,
Ogden Haverhill Project, Series 1998 A,
5.500% 12/01/13 500,000 446,635
PA Delaware County Industrial Development
Authority, BFI Project, Series 1997 A,
6.200% 07/01/19 2,000,000 2,002,020
-----------
2,694,618
-----------
-------------------------------------------------------------
PAR VALUE
-------------------------------------------------------------
TAX-BACKED - 22.6%
LOCAL GENERAL OBLIGATIONS - 13.1%
CA Fresno Unified School District,
Series 2002 A,
6.000% 02/01/18 (c) $2,000,000 $ 2,327,140
CA Los Angeles Unified School District:
Series 1997 E,
5.125% 01/01/27 4,000,000 4,046,640
Series 2002,
5.750% 07/01/16 700,000 802,046
CA Montebello Unified School District,
Series 2001:
(a) 08/01/21 1,435,000 530,591
(a) 08/01/23 1,505,000 488,282
CA San Juan Unified School District,
Series 2001,
(a) 08/01/19 2,210,000 934,476
IL Chicago Board of Education,
Series 1997 A,
5.250% 12/01/30 (h) 14,470,000 14,605,005
IL Cook County, Series 1997 A,
5.625% 11/15/22 4,200,000 4,482,114
NY New York City:
Series 1997 A,
7.000% 08/01/07 1,000,000 1,148,290
Series 1997 H,
6.000% 08/01/17 1,400,000 1,466,906
TX Irving Independent School District,
Series 1997,
(a) 02/15/18 1,000,000 458,010
TX San Antonio Independent School
District, Series 1997,
5.000% 08/15/27 9,000,000 8,853,840
WA Clark County School District No. 037,
Vancouver, Series 2001 C,
(a) 12/01/18 5,000,000 2,191,650
-----------
42,334,990
-----------
SPECIAL NON-PROPERTY TAX - 2.6%
CA San Diego Redevelopment Agency,
Series 2001,
(a) 09/01/22 1,910,000 655,168
IL Metropolitan Pier & Exposition
Authority, McCormick Place Expansion
Project, Series 1993 A,
(a) 06/15/16 10,000,000 5,116,000
OH Hamilton County,
Series 2000 B,
(a) 12/01/21 5,000,000 1,870,800
PR Commonwealth Highway &
Transportation Authority, Series 2002 E,
5.500% 07/01/21 750,000 821,835
-----------
8,463,803
-----------
See notes to investment portfolio.
8
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-------------------------------------------------------------
TAX-BACKED (CONTINUED)
SPECIAL PROPERTY TAX - 2.8%
CA Carson, Series 1992,
7.375% 09/02/22 $ 35,000 $ 35,815
CA Huntington Beach Community Facilities
District, Grand Coast Resort,
Series 2001-1,
6.450% 09/01/31 750,000 766,815
CA Orange County Community Facilities
District, Ladera Ranch, Series 1999 A,
6.700% 08/15/29 500,000 531,045
CA Placer Unified High School District,
Series 2000 A,
(a) 08/01/19 1,700,000 720,001
CA Riverside County Public Financing
Authority, Redevelopment Projects,
Series 1997 A,
5.500% 10/01/22 650,000 654,784
FL Double Branch Community
Development District,
Special Assessment, Series 2002 A,
6.700% 05/01/34 700,000 697,221
FL Heritage Palms Community
Development District:
Series 1999,
6.250% 11/01/04 830,000 841,396
FL Lexington Oaks Community
Development District:
Series 1998 A,
6.125% 05/01/19 370,000 372,098
Series 1998 B,
5.500% 05/01/05 135,000 135,414
Series 2000 A,
7.200% 05/01/30 295,000 308,378
Series 2000 D,
6.700% 05/01/07 45,000 46,493
Series 2002 A,
6.700% 05/01/33 250,000 253,850
FL Northern Palm Beach County
Improvement District, Series 1999,
6.000% 08/01/29 750,000 759,075
FL Orlando, Conroy Road Interchange
Project, Series 1998 A:
5.500% 05/01/10 180,000 181,064
5.800% 05/01/26 300,000 292,845
FL Stoneybrook Community
Development District:
Series 1998 A,
6.100% 05/01/19 325,000 327,031
Series 1998 B,
5.700% 05/01/08 330,000 333,594
MI Pontiac Finance Authority,
Development Area No. 3,
Series 2002,
6.375% 06/01/31 550,000 546,117
PAR VALUE
------------------------------------------------------------
MI Taylor Tax Increment Finance Authority,
Series 2001,
5.375% 05/01/17 $1,220,000 $ 1,288,845
-----------
9,091,881
-----------
STATE APPROPRIATED - 1.0%
NY State Urban Development Corp.,
University Facilities Grants, Series 1995,
5.875% 01/01/21 1,000,000 1,109,650
PR Commonwealth of Puerto Rico Public
Finance Corp., Series 2002 E,
6.000% 08/01/26 1,800,000 2,034,864
-----------
3,144,514
-----------
STATE GENERAL OBLIGATIONS - 3.1%
TX Board of Regents,
University of Texas, Series 2001 B,
5.375% 08/15/18 650,000 682,916
TX State, Series 1999 ABC,
5.500% 08/01/35 4,200,000 4,318,062
WA State, Series 1999 B,
5.000% 01/01/24 5,000,000 4,948,350
-----------
9,949,328
-----------
-----------------------------------------------------------
TRANSPORTATION - 8.6%
AIR TRANSPORTATION - 1.9%
CA Los Angeles Regional Airport,
LAXFuel Corp., Series 2001,
5.250% 01/01/23 750,000 736,275
CO Denver City & County Airport, United
Airlines, Inc., Series 1992 A,
6.875% 10/01/32 (l) 1,645,000 693,219
KY Kenton County Airport Board,
Delta Airlines, Inc., Series 1992 A:
7.500% 02/01/12 500,000 427,575
7.500% 02/01/20 500,000 411,165
MN Minneapolis & St. Paul Metropolitan
Airport Commission,
Northwest Airlines Corp.:
Series 2001 A,
7.000% 04/01/25 500,000 366,295
Series 2001 B,
6.500% 04/01/25 (f) 250,000 237,305
NC Charlotte, US Airways, Inc.:
Series 1998,
5.600% 07/01/27 (m) 250,000 120,940
Series 2000,
7.750% 02/01/28 (m) 750,000 407,272
TX Alliance Airport Authority:
American Airlines Project,
Series 1990,
7.500% 12/01/29 1,600,000 639,440
Federal Express Corp. Project,
Series 1996,
6.375% 04/01/21 1,000,000 1,049,210
See notes to investment portfolio.
9
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-------------------------------------------------------------
TRANSPORTATION (CONTINUED)
AIR TRANSPORTATION (CONTINUED)
TX Houston Industrial Development
Corp., Air Cargo, Perot Development,
Series 2002,
6.000% 03/01/23 $ 750,000 $ 750,600
WA Seattle, Northwest Airways, Inc.,
Series 2000,
7.250% 04/01/30 500,000 367,080
-----------
6,206,376
-----------
AIRPORT - 2.7%
MA State Port Authority, Series 1998 D,
5.000% 07/01/28 4,000,000 3,934,560
CO Denver City & County Airport,
Series 1997 E,
5.250% 11/15/23 4,590,000 4,645,906
OH Cleveland, Series 2001 A,
5.000% 01/01/31 150,000 148,652
-----------
8,729,118
-----------
TOLL FACILITIES - 2.0%
CO Northwest Parkway Public Highway
Authority, Series 2001 D,
7.125% 06/15/41 1,000,000 1,017,860
CO State Public Highway Authority,
E-470, Series 2000 B:
(a) 09/01/18 3,000,000 1,336,140
(a) 09/01/35 8,750,000 787,238
NY State Triborough Bridge & Tunnel
Authority, Series 2002,
5.500% 11/15/20 1,125,000 1,231,898
VA Richmond Metropolitan Authority,
Series 1998,
5.250% 07/15/22 2,000,000 2,100,440
-----------
6,473,576
-----------
TRANSPORTATION - 2.0%
NV State Department of Business &
Industry, Las Vegas Monorail Project,
Series 2000,
7.375% 01/01/40 1,000,000 962,500
NY Metropolitan Transportation Authority,
Series 2002 A,
5.000% 11/15/30 5,350,000 5,294,253
-----------
6,256,753
-----------
-----------------------------------------------------------
UTILITY - 14.0%
INDEPENDENT POWER PRODUCER - 3.0%
MI Midland County Economic
Development Corp., Series 2000,
6.875% 07/23/09 1,250,000 1,247,063
NY Port Authority of New York &
New Jersey, KIAC Partners,
Series 1996 IV,
6.750% 10/01/11 2,000,000 2,076,080
PAR VALUE
------------------------------------------------------------
PA State Economic Development Finance
Authority:
Colver Project, Series 1994 D,
7.125% 12/01/15 $3,000,000 $ 3,119,910
Northampton Generating,
Series 1994 A,
6.500% 01/01/13 1,000,000 1,010,620
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical &
Environmental Cogeneration Facilities,
AES Project, Series 2000,
6.625% 06/01/26 650,000 670,644
VA Pittsylvania County Industrial
Development Authority, Multi-trade
of Pittsylvania, Series 1994 A:
7.450% 01/01/09 1,000,000 1,019,860
7.550% 01/01/19 500,000 506,725
-----------
9,650,902
-----------
INVESTOR OWNED - 4.7%
AZ Maricopa County Pollution Control
Corp., El Paso Electric Co.,
Series 2002 A,
6.250% 05/01/37 (f) 1,000,000 1,003,770
AZ Pima County Industrial Development
Authority, Tucson Electric Power Co.,
Series 1997 A,
6.100% 09/01/25 750,000 686,078
CT State Development Authority,
Connecticut Light & Power Co.,
Series 1993 B,
5.950% 09/01/28 (f) 200,000 207,984
IL Bryant, Central Illinois Light Co.,
Series 1993,
5.900% 08/01/23 2,650,000 2,451,621
LA Calcasieu Parish Industrial
Development Board, Entergy Gulf
States, Inc., Series 1999,
5.450% 07/01/10 500,000 496,585
LA West Feliciana Parish, Entergy Gulf
States, Inc., Series 1999 B,
6.600% 09/01/28 500,000 504,870
MS State Business Finance Corp., Systems
Energy Resources Project, Series 1998,
5.875% 04/01/22 2,000,000 1,803,400
OH State Air Quality Development
Authority, Cleveland Pollution Control,
Series 2002 A,
6.000% 12/01/13 1,800,000 1,835,712
TX Brazos River Authority,
TXU Electric Co., Series 2001 C,
5.750% 05/01/36 (f) 1,250,000 1,128,138
See notes to investment portfolio.
10
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-------------------------------------------------------------
UTILITY (CONTINUED)
INVESTOR OWNED (CONTINUED)
VA Chesterfield County Industrial
Development Authority, Pollution
Control Revenue, Virginia Electric &
Power Co., Series 1987 B,
5.875% 06/01/17 (f) $ 250,000 $ 254,653
WV Pleasant County, Western
Pennsylvania Power Co., Series 1999 E,
5.500% 04/01/29 4,750,000 4,847,280
-----------
15,220,091
-----------
JOINT POWER AUTHORITY - 0.2%
NC Eastern Municipal Power Agency,
Series 1999 D,
6.700% 01/01/19 500,000 540,280
-----------
MUNICIPAL ELECTRIC - 3.5%
CA State Water Resources Authority,
Series 2002 A,
5.500% 05/01/14 2,000,000 2,217,340
NY Long Island Power Authority,
Series 1998 A,
5.250% 12/01/26 2,000,000 2,022,240
PR Electric Power Authority,
Series 1998 II,
5.125% 07/01/26 3,500,000 3,561,985
WA Chelan County Public Utilities
District No. 1, Columbia River Rock
Hydroelectric, Series 1997,
(a) 06/01/14 5,000,000 2,897,050
WA Seattle, Series 2001,
5.500% 03/01/17 750,000 795,878
-----------
11,494,493
-----------
WATER & SEWER - 2.6%
LA Public Facility Belmont Water
Authority,
9.000% 09/15/24 (d) 760,000 532,000
MA State Water Resources Authority,
Series 1997 D,
5.000% 08/01/24 3,000,000 2,984,070
MO Water & Sewer, Lee's Summit,
Series 2002,
5.250% 07/01/15 500,000 532,315
MS Five Lakes Utility District,
8.250% 07/15/24 500,000 467,500
NH State Industrial Development
Authority, Pennichuck Water
Works, Inc., Series 1988,
7.500% 07/01/18 (f) 500,000 547,230
WA King County, Series 1999,
5.250% 01/01/30 3,250,000 3,279,673
-----------
8,342,788
-----------
TOTAL MUNICIPAL BONDS
(cost of $318,287,850) 310,417,058
-----------
-------------------------------------------------------------
MUNICIPAL PREFERRED STOCKS - 1.3% SHARES VALUE
-------------------------------------------------------------
HOUSING - 1.3%
MULTI-FAMILY - 1.3%
Charter Mac Equity Issue Trust,
6.625% 06/30/49 (e) 2,000,000 $ 2,092,500
MuniMae Equity Issue Trust,
7.750% 06/30/50 (e) 2,000,000 2,172,500
-----------
(cost of $4,000,000) 4,265,000
-----------
SHORT-TERM OBLIGATIONS - 2.3% PAR
------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (j) - 2.3%
IA Higher Education Loan Authority,
Loras College,
Series 2000,
1.250% 11/01/30 $1,800,000 1,800,000
IL Quad Cities Regional Economic
Development Authority,
Two Rivers YMCA,
Series 2002,
1.300% 12/01/31 300,000 300,000
MI State Strategic Fund, Limited
Obligation, Detroit Symphony,
Series 2001 A,
1.250% 06/01/31 1,200,000 1,200,000
NY Long Island Power Authority Electric
System, Series 1998 2,
1.300% 05/01/33 1,500,000 1,500,000
NY New York City,
Series 1993 A-7,
1.300% 08/01/21 200,000 200,000
NY New York City Municipal Water
Finance Authority,
Series 1994 G,
1.300% 06/15/24 2,300,000 2,300,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $7,300,000) 7,300,000
-----------
TOTAL INVESTMENTS - 99.8%
(cost of $329,587,850)(k) 321,982,058
-----------
OTHER ASSETS & LIABILITIES, NET - 0.2% 782,816
-----------------------------------------------------------
NET ASSETS* - 100.0% $322,764,874
-----------
See notes to investment portfolio.
11
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2002
NOTES TO INVESTMENT PORTFOLIO:
(a) Zero coupon bond.
(b) Denotes a restricted security, which is subject to restrictions on resale
under federal securities laws. At November 30, 2002, these securities
amounted to $3,270,031, which represents 1.0% of net assets.
Additional information on these restricted securities is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
--------------------------------------------------------------
CA Statewide Community
Development Authority:
Crossroads School for Arts
& Science, Series 1998,
6.000% 08/01/28 08/31/98 $1,310,000
Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 09/08/00 1,000,000
MN White Bear Lake, Birch Lake
Townhome Project,
Series 1989B
(a) 07/15/19 07/19/89 703,000
VI Government Refinery,
Hovensa Coker Project,
Series 2002,
6.500% 07/01/21 11/15/02 375,000
-------------
$3,388,000
-------------
(c) Settlement of this security is on a delayed delivery basis.
(d) These issuers are in default of certain debt covenants. Income is not being
fully accrued.
(e) This security is exempt from registration under Rule 144A of the Securities
Act of 1933 and may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At November 30, 2002, the value
of these securities amounted to $5,512,238, which represented 1.7% of net
assets.
(f) Interest rates on variable rate securities change periodically. The rate
listed is as of November 30, 2002.
(g) 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
the principal and interest.
(h) This security, or a portion thereof with a market value of $3,038,083, is
being used to collateralize open futures contracts.
(i) As of November 30, 2002, the Trust held securities of certain issuers that
have filed for bankruptcy protection under Chapter 11 representing 1.2% of
net assets. These issuers are in default of certain debt covenants. Income
is not being fully accrued.
(j) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of November 30, 2002.
(k) Cost for generally accepted accounting principles is $329,587,850. Cost for
federal income tax purposes is $329,342,032. The difference between cost for
generally accepted accounting principles and cost on a tax basis is related
to amortization/accretion tax elections on fixed-income securities.
(l) As of November 30, 2002, the Trust held bonds of United Airlines, Inc.
representing 0.2% of net assets. United Airlines, Inc. filed for bankruptcy
protection under Chapter 11 on December 9, 2002.
(m) As of November 30, 2002, the Trust held bonds of US Airways, Inc.
representing 0.2% of net assets. US Airways, Inc. filed for bankruptcy
protection under Chapter 11 on August 11, 2002.
Short futures contracts open at November 30, 2002:
PAR VALUE UNREALIZED
COVERED BY EXPIRATION APPRECIATION
TYPE CONTRACTS MONTH AT 11/30/02
----------------------------------------------------------------------------
10 Year Municipal Bond $15,500,000 March $ 91,307
10 Year U.S. Treasury Note 87,300,000 March 428,922
30 Year U.S. Treasury Bond 49,300,000 March 407,538
-----------
$927,767
-----------
* Net assets represent both Common Shares and Auction Preferred Shares.
See notes to financial statements.
12
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2002
ASSETS:
Investments, at cost $329,587,850
------------
Investments, at value $321,982,058
Cash 52,018
Receivable for:
Investments sold 150,000
Interest 5,511,183
Deferred Trustees' compensation plan 8,342
Other assets 19,940
------------
Total Assets 327,723,541
------------
LIABILITIES:
Payable for:
Investments purchased
on a delayed delivery basis 2,791,435
Futures variation margin 558,435
Distributions-- common shares 1,306,112
Distributions-- preferred shares 9,053
Management fee 196,730
Pricing and bookkeeping fees 9,121
Trustees' fee 267
Deferred Trustees' fee 8,342
Other liabilities 79,172
------------
Total Liabilities 4,958,667
------------
Auction Preferred Shares (4,800 shares issued
and outstanding at $25,000 per share) 120,000,000
------------
COMPOSITION OF NET ASSETS
APPLICABLE TO COMMON SHARES:
Paid-in capital -- common shares $268,272,828
Undistributed net investment income 815,284
Accumulated net realized loss (59,645,213)
Net unrealized appreciation (depreciation) on:
Investments (7,605,792)
Futures contracts 927,767
------------
Net assets at value applicable to 31,097,982
common shares of beneficial interest
outstanding $202,764,874
------------
Net asset value per common share $ 6.52
------------
STATEMENT OF OPERATIONS
For the Year Ended November 30, 2002
INVESTMENT INCOME:
Interest $ 20,820,974
------------
EXPENSES:
Management fee 2,486,370
Pricing and bookkeeping fees 155,552
Trustees' fee 16,468
Custody fee 12,751
Preferred shares remarketing commissions 300,344
Other expenses 179,532
------------
Total Expenses 3,151,017
Custody earnings credit (2,035)
------------
Net Expenses 3,148,982
------------
Net Investment Income 17,671,992
------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FUTURES CONTRACTS:
Net realized loss on:
Investments (349,090)
Futures contracts (8,859,946)
------------
Net realized loss (9,209,036)
------------
Net change in unrealized
appreciation/ depreciation on:
Investments (242,296)
Futures contracts (3,617,087)
------------
Net change in unrealized
appreciation/depreciation (3,859,383)
------------
Net Loss (13,068,419)
------------
Net Increase in Net Assets from Operations 4,603,573
------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (1,763,487)
------------
Net Increase (Decrease) in Net Assets from
Operations Applicable to Common Shares $ 2,840,086
------------
See notes to financial statements.
13
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED NOVEMBER 30,
-----------------------------------
INCREASE (DECREASE) IN NET ASSETS: 2002 2001
--------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 17,671,992 $ 18,967,985
Net realized loss on investments and futures contracts (9,209,036) (15,428,929)
Net change in unrealized appreciation/depreciation on investments
and futures contracts (3,859,383) 14,127,254
------------ ------------
Net Increase from Operations 4,603,573 17,666,310
------------ ------------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (1,763,487) (3,649,679)
------------ ------------
Net Increase in Net Assets from Operations Applicable to Common Shares 2,840,086 14,016,631
------------ ------------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (15,558,339) (13,643,254)
------------ ------------
SHARE TRANSACTIONS:
Distributions reinvested 134,759 --
------------ ------------
Total Increase (Decrease) in Net Assets Applicable to Common Shares (12,583,494) 373,377
------------ ------------
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 215,348,368 214,974,991
------------ ------------
End of period (including undistributed net investment income of
$815,284 and $259,160, respectively) $202,764,874 $215,348,368
------------ ------------
NUMBER OF TRUST SHARES:
Common Shares:
Issued for distributions reinvested 19,955 --
Outstanding at:
Beginning of period 31,078,027 31,078,027
------------ ------------
End of period 31,097,982 31,078,027
------------ ------------
Preferred Shares:
Outstanding at end of period 4,800 4,800
------------ ------------
See notes to financial statements.
14
NOTES TO FINANCIAL STATEMENTS
November 30, 2002
NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Colonial High Income 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. The Trust's
investment goal is to provide high current income, generally exempt from federal
income taxes. The Trust's secondary investment goal is to seek total return. The
Trust is authorized to issue an unlimited number of common shares of beneficial
interest and 4,800 Auction Preferred Shares ("APS").
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Trust in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS:
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
Such 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. Certain
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. When management deems it appropriate, an
over-the-counter or exchange bid quotation is used.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value under
procedures approved by the Board of Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The Trust may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Trust to subsequently invest at less advantageous prices.
FEDERAL INCOME TAXES:
Consistent with the Trust's policy to qualify as a regulated investment company
and to distribute all of its taxable and tax-exempt income, no federal income
tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM:
Interest income is recorded on the accrual basis. Original issue discount is
accreted to interest income over the life of the security with a corresponding
increase in the cost basis. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
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 cumulative effect of this accounting change
did not impact total net assets of the Trust, but resulted in reclassifications
as follows, based on securities held by the Trust on December 1, 2001:
NET UNREALIZED
COST DEPRECIATION
------ --------------
$186,128 $(186,128)
The effect of this change, for the year ended November 30, 2002, was as follows:
NET INVESTMENT NET REALIZED NET UNREALIZED
INCOME LOSS DEPRECIATION
------ ------- ------------
$110,851 $(51,161) $(59,690)
The Statement of Changes in Net Assets and Financial Highlights for prior
periods have not been restated to reflect this change.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to common shareholders are recorded on the ex-date.
Distributions to preferred shareholders are recorded daily and are payable at
the end of each dividend period. Each dividend payment period for the APS is
generally seven days. The applicable dividend rate for the APS on November 30,
2002 was 1.26% for Series T and 1.35% for Series W. For the year ended November
30, 2002, the Trust declared dividends to Auction Preferred shareholders
amounting to $1,763,487 representing an average APS dividend rate of 1.47%.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2002
NOTE 2. FEDERAL TAX INFORMATION
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for discount
accretion on debt securities, straddle deferrals, mark-to-market on futures
contracts, current year distribution payable, capital loss carryforwards,
non-deductible expenses, distribution reclassifications, expired capital loss
carryforward and defaulted bond interest. Reclassifications are made to the
Trust's capital accounts to reflect income and gains available for distribution
(or available capital loss carryforwards) under income tax regulations.
For the year ended November 30, 2002 permanent items identified and reclassified
among the components of net assets are as follows:
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN
INCOME LOSS CAPITAL
------ ------- ------------
$19,830 $6,575,610 $(6,595,440)
Net investment income, net realized gains (losses) and net assets were not
affected by this reclassification.
The tax character of distributions paid to common and APS shareholders during
the year was as follows:
TAX-EXEMPT
ORDINARY INCOME INCOME
-------------------- --------------
$101,473 $17,220,353
As of November 30, 2002, the components of distributable earnings on a tax basis
were as follows:
UNDISTRIBUTED
TAX-EXEMPT UNREALIZED
INCOME DEPRECIATION
---------- ---------------
$3,667,224 $(6,432,207)
The following capital loss carryforwards are 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
---------- -------------
2003 $ 5,267,623
2004 2,815,387
2005 5,926,653
2007 3,941,668
2008 14,340,573
2009 4,198,716
2010 12,980,738
-------------
$ 49,471,358
-------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE:
Colonial Management Associates, Inc. (the "Advisor") is the investment advisor
of the Trust and furnishes accounting and other services and office facilities
for a fee to be paid monthly at the annual rate of 0.75% of the Trust's average
weekly net assets, including assets applicable to the APS.
PRICING AND BOOKKEEPING FEES:
The Advisor is responsible for providing pricing and bookkeeping services to the
Trust under a Pricing and Bookkeeping Agreement. Under a separate agreement (the
"Outsourcing Agreement"), the Advisor has delegated those functions to State
Street Bank and Trust Company ("State Street"). The Advisor pays fees to State
Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Trust, the Advisor receives
from the Trust an annual flat fee of $10,000, paid monthly, and in any month
that the Trust's average weekly net assets, including assets applicable to the
APS, are more than $50 million, a monthly fee equal to the average weekly net
assets, including assets applicable to the APS, of the Trust for that month
multiplied by a fee rate that is calculated by taking into account the fees
payable to State Street under the Outsourcing Agreement. For the year ended
November 30, 2002, the net asset based fee rate was 0.036%. The Trust also pays
out-of-pocket costs for pricing services.
OTHER:
The Trust pays no compensation to its officers, all of whom are employees of the
Advisor or its affiliates.
The Trust's Independent 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.
The Trust has an agreement with its custodian bank under which $2,035 of custody
fees were reduced by balance credits for the year ended November 30, 2002. 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.
NOTE 4. PREFERRED SHARES
The Trust currently has outstanding 4,800 APS (2,400 shares each of Series T and
W). 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).
16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2002
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 and in accordance with
the guidelines prescribed by the 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 of the APS. At November 30, 2002, there were no such
restrictions on the Trust.
Under Emerging Issues Task Force ("EITF") promulgation Topic D-98,
Classification and Measurement of Redeemable Securities, which was issued on
July 19, 2001, preferred securities that are redeemable for cash or other assets
are classified outside of permanent equity to the extent that the redemption is
at a fixed or determinable price and at the option of the holder or upon the
occurrence of an event that is not solely within the control of the issuer.
Subject to the guidance of the EITF, the Trust's preferred shares, which were
previously classified as a component of net assets, have been reclassified
outside of permanent equity (net assets) in the accompanying financial
statements. Prior year amounts have also been reclassified to conform with this
presentation. The impact of this reclassification creates no change to the net
assets available to common shareholders.
NOTE 5. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
During the year ended November 30, 2002, purchases and sales of investments,
other than short-term obligations, were $48,000,090 and $56,797,645,
respectively.
Unrealized appreciation (depreciation) at November 30, 2002, based on cost of
investments for federal income tax purposes, was:
Gross unrealized appreciation $ 15,225,298
Gross unrealized depreciation (22,585,272)
------------
Net unrealized depreciation $ (7,359,974)
------------
OTHER:
There are certain risks arising from geographic concentration in any state.
Certain revenue or tax related events in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
The Trust may focus its investments in certain industries, subjecting it to
greater risk than a trust that is more diversified.
The Trust may invest in municipal and U.S. Treasury futures contracts and
purchase and write options on futures. The Trust will invest in these
instruments to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and/or market
conditions, for duration management, or when the transactions are economically
appropriate to the reduction of risk inherent in the management of the Trust and
not for trading purposes. The use of futures contracts and options involves
certain risks, which include: (1) imperfect correlation between the price
movement of the instruments and the underlying securities, (2) inability to
close out positions due to different trading hours, or the temporary absence of
a liquid market, for either the instrument or the underlying securities or (3)
an inaccurate prediction by the Advisor of the future direction of interest
rates. Any of these risks may involve amounts exceeding the amount 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 its custodian 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 payable
or receivable and offset in unrealized gains or losses. The Trust recognizes a
realized gain or loss when the contract is closed or expires. Refer to the
Trust's Investment Portfolio for a summary of open futures contracts at November
30, 2002.
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
In some cases, the issuer of restricted securities has agreed to register such
securities for resale, at the issuer's expense either upon demand by the Trust
or in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Board of Trustees. The Trust will not
incur any registration costs upon such resale. The Trust's restricted securities
are valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined in good faith using
methods approved by the Board of Trustees.
17
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise stated):
PERIOD
YEAR ENDED NOVEMBER 30, ENDED YEAR ENDED DECEMBER 31,
------------------------------------ NOVEMBER 30, -----------------------
2002 2001 2000 1999 (a) 1998 1997
---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.93 $ 6.92 $ 7.49 $ 8.49 $ 8.56 $ 8.34
------------ ----------- ----------- ------------ ------------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.57(b)(c) 0.61(c) 0.62(d) 0.46 0.52 0.55
Net realized and unrealized gain (loss) on
investments and futures contracts (0.42)(b) (0.04) (0.54) (0.92) (0.07) 0.22
------------ ----------- ----------- ------------ ------------ -----------
Total from Investment Operations 0.15 0.57 0.08 (0.46) 0.45 0.77
------------ ----------- ----------- ------------ ------------ -----------
LESS DISTRIBUTIONS DECLARED TO PREFERRED
SHAREHOLDERS:
From net investment income (0.06) (0.12) (0.16) (0.04) -- --
------------ ----------- ----------- ------------ ------------ -----------
Total from Investment Operations Applicable
to Common Shareholders 0.09 0.45 (0.08) (0.50) 0.45 0.77
------------ ----------- ----------- ------------ ------------ -----------
LESS DISTRIBUTIONS DECLARED TO COMMON
SHAREHOLDERS:
From net investment income (0.50) (0.44) (0.48) (0.45) (0.52) (0.55)
------------ ----------- ----------- ------------ ------------ -----------
LESS CAPITAL TRANSACTIONS:
Commissions and offering costs--
preferred shares -- -- (0.01) (0.05) -- --
------------ ----------- ----------- ------------ ------------ -----------
NET ASSET VALUE, END OF PERIOD $ 6.52 $ 6.93 $ 6.92 $ 7.49 $ 8.49 $ 8.56
------------ ----------- ----------- ------------ ------------ -----------
Market price per share-- common shares $ 6.26 $ 6.38 $ 5.75 $ 6.13 $ 8.31 $ 8.63
------------ ----------- ----------- ------------ ------------ -----------
Total return-- based on market value--
common shares (e) 5.81% 18.56% 1.05% (21.72)%(f) 2.47% 11.60%
------------ ----------- ----------- ------------ ------------ -----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (g)(h) 1.49% 1.59% 1.60% 1.13%(i) 0.93% 0.96%
Net investment income before
preferred stock dividend (g)(h) 8.36%(b) 8.67% 8.63% 6.18%(i) 6.02% 6.54%
Net investment income after
preferred stock dividend (g)(h) 7.53%(b) 7.00% 6.37% 5.67%(i) 6.02% 6.54%
Portfolio turnover rate 15% 15% 10% 16%(f) 29% 17%
Net assets, end of period (000's)--common shares $ 202,765 $ 215,348 $ 214,975 $ 232,540 $ 263,705 $ 265,190
(a) The Trust changed its fiscal year end from December 31 to November 30.
(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 the ratio of net investment
income to average net assets from 8.31% to 8.36% and increase the net
investment income (adjusted for dividend payments to preferred
shareholders) from 7.48% to 7.53%. The impact to net investment income and
net realized and unrealized loss per share was less than $0.01. Per share
data and ratios for periods prior to November 30, 2002, have not been
restated to reflect this change in presentation.
(c) Per share data was calculated using average shares outstanding during the
period.
(d) The per share net investment income amount does not reflect the period's
reclassification of differences between book and tax basis net investment
income.
(e) Total return at market value assuming all distributions reinvested at
prices calculated in accordance with the Dividend Reinvestment Plan.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Ratios reflect average net assets available to common shares only.
(i) Annualized.
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE PER SHARE PER SHARE
---------------------------------------------------------------------------------------------------------------------------------
11/30/02 $120,000,000 $67,243 $25,002 $25,000
11/30/01 120,000,000 69,864 25,004 25,000
11/30/00 120,000,000 69,786 25,009 25,000
11/30/99 * 120,000,000 73,466 25,021 25,000
* On August 26, 1999, the Trust began offering Auction Preferred Shares.
18
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise stated):
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.55 $ 7.96 $ 8.67 $ 8.78 $ 8.91
----------- ----------- ------------ ------------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.62 0.67 0.69
Net realized and unrealized gain (loss) on investments
and futures contracts (0.19) 0.58 (0.72) (0.11) (0.14)
----------- ----------- ------------ ------------ -----------
Total from Investment Operations Applicable to
Common Shareholders 0.37 1.18 (0.10) 0.56 0.55
----------- ----------- ------------ ------------ -----------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.58) (0.59) (0.61) (0.67) (0.68)
----------- ----------- ------------ ------------ -----------
NET ASSET VALUE, END OF PERIOD $ 8.34 $ 8.55 $ 7.96 $ 8.67 $ 8.78
----------- ----------- ------------ ------------ -----------
Market price per share-- common shares $ 8.25 $ 7.38 $ 6.88 $ 8.25 $ 8.25
----------- ----------- ------------ ------------ -----------
Total return-- based on market value-- common shares (a) 20.09% 15.65% (9.83)% 7.96% 3.51%
----------- ----------- ------------ ------------ -----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (b) 1.00% 1.06% 1.03% 0.97% 0.96%
Net investment income (b) 6.74% 7.15% 7.44% 7.58% 7.86%
Portfolio turnover rate 15% 23% 20% 29% 15%
Net assets, end of period (000's)--
common shares $ 257,768 $ 264,467 $ 245,967 $ 268,130 $ 269,848
(a)Total return at market value assuming all distributions reinvested at prices
calculated in accordance with the Dividend Reinvestment Plan.
(b)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
19
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES AND THE SHAREHOLDERS OF COLONIAL HIGH INCOME MUNICIPAL TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial High Income Municipal
Trust (the "Trust") at November 30, 2002, and the results of its operations, the
changes in its net assets and its financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at November 30, 2002 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 20, 2003
20
UNAUDITED INFORMATION
FEDERAL INCOME TAX INFORMATION
99.41% of the distributions from net investment income will be treated as exempt
income for federal income tax purposes.
21
DIVIDEND REINVESTMENT PLAN
COLONIAL HIGH INCOME MUNICIPAL TRUST
Shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested by EquiServe Trust Company, N.A. (the "Plan Agent"), as
agent under the Trust's Dividend Reinvestment Plan (the "Plan"). Pursuant to the
Plan, the provisions of which are described below, shareholders not making such
an election will receive all such amounts in cash paid by check mailed directly
to the shareholder by the Plan Agent, as the dividend paying agent.
If the Trustees of the Trust declare a dividend or determine to make a capital
gain distribution payable either in shares of the Trust or in cash, as
shareholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive the equivalent in shares of the Trust.
If the market price of the shares on the payment date for the dividend or
distribution is equal to or exceeds their net asset value, participants will be
issued shares of the Trust at the higher of net asset value of 95% of the market
price. If net asset value exceeds the market price of Trust shares at such time,
or if the Trust declares a dividend or other distribution payable only in cash,
the Plan Agent will, as agent for Plan participants, buy Trust shares in the
open market, on the New York Stock Exchange or elsewhere, for the participants'
accounts. If, before the Plan Agent has completed its purchases, the market
price exceeds the net asset value of the Trust's shares, the average per share
purchase price paid by the Plan Agent may exceed the net asset value of the
Trust's shares, resulting in the acquisition of fewer shares than if the
dividend or distribution had been paid in shares issued by the Trust. In
circumstances in which the net asset value of Trust shares is more than 5% below
their market price, participants in the Plan will be issued shares through the
Plan at a price exceeding net asset value.
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 participate in or 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 dividends or
distributions. The Plan Agent's fees for the handling of the reinvestment of
dividends and distributions will be paid by the Trust. There will be no
brokerage charges with respect to shares issued directly by the Trust as a
result of dividends or distributions payable either in stock or in cash.
However, each participant 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 dividends or distributions.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax that may be payable on such dividends or
distributions.
The Plan may be amended or terminated on 30 days' written notice to Plan
participants. All correspondence concerning the Plan should be directed to
EquiServe Trust Company, N.A., by mail at P.O. Box 43010, Providence, RI
02940-3010, or by phone at 1-800-730-6001.
22
TRUSTEES
The Trustees serve terms of indefinite duration. The names, addresses and ages
of the Trustees and officers of Colonial High Income Municipal Trust Fund, the
year each was first elected or appointed to office, their principal business
occupations during at least the last five years, the number of portfolios
overseen by each Trustee, and other directorships they hold are shown below.
Year first Number of
elected or portfolios in fund Other
Position with appointed Principal occupation(s) complex overseen directorships
Name, address and age Liberty Funds1 to office during past five years by trustee held
------------------------------------------------------------------------------------------------------------------------------------
Disinterested Trustees
----------------------
Douglas A. Hacker (age 47) Trustee 1996 Executive Vice President-Strategy of United Airlines 103 None
c/o Liberty Funds Group LLC since December 2002 (formerly President of UAL
One Financial Center Loyalty Services and Executive Vice President
Boston, MA 02111 of United Airlines (airline) from September 2001
to December 2002; formerly Executive Vice
President from July 1999 to September 2001);
Chief Financial Officer of United Airlines since
July 1999; Senior Vice President and Chief
Financial Officer of UAL, Inc. prior thereto
Janet Langford Kelly (age 45) Trustee 1996 Executive Vice President-Corporate Development 103 None
c/o Liberty Funds Group LLC and Administration, General Counsel and
One Financial Center Secretary, Kellogg Company (food manufacturer),
Boston, MA 02111 since September 1999; Senior Vice President,
Secretary and General Counsel, Sara Lee
Corporation (branded, packaged, consumer-
products manufacturer) prior thereto
Richard W. Lowry (age 66) Trustee 1995 Private Investor since 1987 (formerly 105*** None
c/o Liberty Funds Group LLC Chairman and Chief Executive Officer, U.S.
One Financial Center Plywood Corporation (building products
Boston, MA 02111 manufacturer))
Salvatore Macera (age 71) Trustee 1998 Private Investor since 1981 (formerly Executive 103 None
c/o Liberty Funds Group LLC Vice President and Director of Itek Corporation
One Financial Center (electronics) from 1975 to 1981)
Boston, MA 02111
Charles R. Nelson (age 60) Trustee 1981 Professor of Economics, University of Washington, 118* None
c/o Liberty Funds Group LLC since January 1976; Ford and Louisa Van Voorhis
One Financial Center Professor of Political Economy, University of
Boston, MA 02111 Washington, since September 1993; Director,
Institute for Economic Research, University of
Washington, since September2001; Adjunct
Professor of Statistics, University of Washington,
since September 1980; Associate Editor, Journal
of Money Credit and Banking, since September,
1993; Trustee, Columbia Funds since July 2002;
consultant on economic and statistical matters
John J. Neuhauser (age 59) Trustee 1985 Academic Vice President and Dean of Faculties 105*** Saucony, Inc.
c/o Liberty Funds Group LLC since August 1999, Boston College (formerly (athletic footwear)
One Financial Center Dean, Boston College School of Management and SkillSoft Corp.
Boston, MA 02111 from September 1977 to September 1999) (e-learning)
Thomas E. Stitzel (age 66) Trustee 1998 Business Consultant since 1999 (formerly 103 None
c/o Liberty Funds Group LLC Professor of Finance from 1975 to 1999 and Dean
One Financial Center from 1977 to 1991, College of Business, Boise State
Boston, MA 02111 University); Chartered Financial Analyst
1 In December 2000, the board of each of the Liberty Funds and Stein Roe Funds
were combined into one board of trustees with common membership. The date
shown is the earliest date on which a trustee was elected to either the
Liberty board or the former Stein Roe Funds board.
23
TRUSTEES (CONTINUED)
Year first Number of
elected or portfolios in fund Other
Position with appointed Principal occupation(s) complex overseen directorships
Name, address and age Liberty Funds to office during past five years by trustee held
------------------------------------------------------------------------------------------------------------------------------------
Disinterested Trustees
-----------------------
Thomas C. Theobald (age 65) Trustee 1996 Managing Director, William Blair Capital Partners 103 Xerox Corporation
c/o Liberty Funds Group LLC (private equity investing) since September 1994 (business products
One Financial Center (formerly Chief Executive Officer and Chairman and services),
Boston, MA 02111 of the Board of Directors, Continental Bank Anixter International
Corporation) (network support
equipment distributor),
Jones Lang LaSalle
(real estate management
services) and MONY
Group (life insurance)
Anne-Lee Verville (age 57) Trustee 1998 Author and speaker on educational systems needs 103 Chairman of the
c/o Liberty Funds Group LLC (formerly General Manager, Global Education Board of Directors,
One Financial Center Industry from 1994 to 1997, and President, Enesco Group, Inc.
Boston, MA 02111 Applications Solutions Division from 1991 to (designer, importer
1994, IBM Corporation (global education and and distributor of
global applications)) giftware and
collectibles)
Interested Trustees
William E. Mayer** (age 62) Trustee 1994 Managing Partner, Park Avenue Equity Partners 105*** Lee Enterprises
c/o Liberty Funds Group LLC (private equity fund) since February 1999 (print and online
One Financial Center (formerly Founding Partner, Development Capital media), WR Hambrecht
Boston, MA 02111 LLC from November 1996 to February 1999; + Co. (financial
Dean and Professor, College of Business and service provider),
Management, University of Maryland from First Health (health
October 1992 to November 1996) care) and Systech
Retail Systems
(retail industry
technology provider)
Joseph R. Palombo** (age 49) Trustee 2000 Chief Operating Officer of Columbia 103 None
One Financial Center and Management Group, Inc. (Columbia Management
Boston, MA 02111 Chairman Group) since November 2001; formerly Chief
of the Operations Officer of Mutual Funds, Liberty
Board Financial Companies, Inc. from August 2000 to
November 2001; Executive Vice President of Stein
Roe & Farnham, Incorporated (Stein Roe) since
April 1999; Executive Vice President and Director
of Colonial Management Associates, Inc. since
April 1999; Executive Vice President and Chief
Administrative Officer of Liberty Funds Group
LLC (LFG) since April 1999; Director of Stein Roe
since September 2000; Trustee and Chairman of
the Board of Stein Roe Mutual Funds since
October 2000; Manager of Stein Roe Floating
Rate Limited Liability Company since October
2000; Vice President of Galaxy Funds since September
2002; (formerly Vice President of Liberty Funds
from April 1999 to August 2000; Chief Operating
Officer and Chief Compliance Officer, Putnam
Mutual Funds from December 1993 to March 1999)
* In addition to serving as a disinterested trustee of Liberty Funds, Mr.
Nelson serves as a disinterested director of Columbia Funds, currently
consisting of 15 funds, which are advised by an affiliate of the Advisor.
** Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 ("1940 Act")) by reason of his affiliation with WR Hambrecht +
Co, a registered broker-dealer. Mr. Palombo is an interested person as an
employee of an affiliate of the Advisor.
*** In addition to serving as a trustee of Liberty Funds, Mr. Lowry, Mr.
Neuhauser and Mr. Mayer each serve as a director/trustee of Liberty
All-Star Funds, currently consisting of 2 funds, which are advised by an
affiliate of the Advisor.
24
OFFICERS
Year first
elected or
Position with appointed
Name, address and age Liberty Funds to office Principal occupation(s) during past five years
------------------------------------------------------------------------------------------------------------------------------------
Keith T. Banks (age 47) President 2001 President of Liberty Funds since November 2001; President, Chief Investment
Columbia Management Group, Inc. Officer and Chief Executive Officer of Columbia Management Group or its
590 Madison Avenue, 36th Floor predecessor since August 2000; President, Chief Executive Officer and Chief
New York, NY 10022 Investment Officer of Fleet Investment Advisors Inc. since 2000 (formerly
Managing Director and Head of U.S. Equity, J.P. Morgan Investment Management
from November 1996 to August 2000); President of Galaxy Funds since September
2002
Vicki L. Benjamin (age 41) Chief 2001 Controller of Liberty Funds, Stein Roe and Liberty All-Star Funds since May
One Financial Center Accounting 2002; Chief Accounting Officer of Liberty Funds, Stein Roe and Liberty All-Star
Boston, MA 02111 Officer Funds since June 2001; Controller and Chief Accounting Officer of Galaxy Funds
since September 2002; Vice President of Liberty Funds since April 2001 (formerly
Vice President, Corporate Audit, State Street Bank and Trust Company from May
1998 to April 2001; Audit Manager from July 1994 to June 1997; Senior Audit
Manager from July 1997 to May 1998, Coopers & Lybrand, LLP)
J. Kevin Connaughton (age 38) Treasurer 2000 Treasurer of Liberty Funds and Liberty All-Star Funds since December 2000
One Financial Center (formerly Controller of the Liberty Funds and Liberty All-Star Funds from
Boston, MA 02111 February 1998 to October 2000); Treasurer of Stein Roe Funds since February 2001
(formerly Controller from May 2000 to February 2001); Treasurer of Galaxy Funds
since September 2002; Senior Vice President of Liberty Funds since January 2001
(formerly Vice President from April 2000 to January 2001; Vice President of
Colonial Management Associates, Inc. from February 1998 to October 2000; Senior
Tax Manager; Coopers & Lybrand, LLP from April 1996 to January 1998)
Jean S. Loewenberg (age 57) Secretary 2002 Secretary of Liberty Funds, Stein RoeFunds and Liberty All-Star Funds since
One Financial Center February 2002; General Counsel of Columbia Management Group since December 2001;
Boston, MA 02111 Senior Vice President since November 1996, Assistant General Counsel since
September 2002 of Fleet National Bank (formerly Senior Vice President and Group
Counsel of Fleet National Bank from November 1996 to September 2002)
25
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TRANSFER AGENT
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial High Income Municipal Trust is:
EquiServe Trust Company, N.A.
150 Royall Street
Canton, MA 02021
800-730-6001
The trust mails one shareholder report to each shareholder address. Shareholders
can order additional reports by calling 800-345-6611. In addition,
representatives at that number can provide shareholders information about the
fund.
Financial advisors who want additional information about the fund may speak to a
representative at 800-426-3750.
This report has been prepared for shareholders of Colonial High Income Municipal
Trust.
COLONIAL HIGHINCOME MUNICIPAL TRUST ANNUAL REPORT
120-02/042M-1102 (01/03) 02/3053