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 811-5754
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Colonial High Income 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)
Russell L. Kane, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-426-3363
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Date of fiscal year end: November 30, 2003
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Date of reporting period: May 31, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
COLONIAL HIGH INCOME MUNICIPAL TRUST SEMIANNUAL REPORT
MAY 31, 2003
[photo of domed building]
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The US bond market continued to reward investors with solid returns for the
period covered by this report. As key economic indicators sent mixed signals,
the US economy continued to struggle and interest rates declined. In November,
the Federal Reserve Board lowered a key short-term interest rate--the federal
funds rate--to 1.25%, a new low.1 The yield on the 10-year US Treasury bond fell
to a 45-year low of 3.3% near the end of the period. Although the environment
was favorable to bonds, declining interest rates and relatively low inflation
raised the fear that deflation, which hasn't been seen since the 1930s, would
return.
Bonds reported gains across all sectors. Leadership rotated from higher quality
bonds, which were the top performers in the previous period, to lower quality
bonds. Corporate and high-yield bonds rebounded as investors became more willing
to take on risk. However, in the municipal market high-grade bonds outperformed
high yield.
The following report will provide you with more detailed information about the
trust's performance and the investment strategies used by portfolio manager
Maureen Newman. For more information, please contact your financial advisor.
CONSOLIDATION AND A NEW NAME: COLUMBIA
On April 1, 2003, six of the asset management firms brought together when
Columbia Management Group, Inc. was formed were consolidated and renamed
Columbia Management Advisors, Inc. (Columbia Management). This consolidation
does not affect the management or investment objectives of your trust and is the
next step in our efforts to create a consistent identity and to streamline our
organization. Although the name of the asset manager familiar to you has
changed, what hasn't changed is the commitment of our specialized investment
teams to a multi-disciplined approach to investing, focused on our goal of
offering shareholders the best products and services.
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/ Joseph R. Palombo
Joseph R. Palombo
President
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MEET THE NEW PRESIDENT
Joseph R. Palombo is president of the Trust. He is also president and chairman
of the Board of Trustees for Liberty Funds and chief operating officer and
executive vice president of Columbia Management Advisors, Inc. (Columbia
Management). Mr. Palombo has over 19 years of experience in the financial
services industry. Prior to joining Columbia Management, he was chief operating
officer and chief compliance officer for Putnam Mutual Funds. Prior to that, he
was a partner at Coopers & Lybrand. Mr. Palombo received his degree in
economics/accounting from the College of the Holy Cross, where he was a member
of Phi Beta Kappa. He earned his master's degree in taxation from Bentley
College and participated in the Executive Program at the Amos B. Tuck School at
Dartmouth College.
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NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
1 On June 25, 2003, the Federal Reserve Board cut the federal funds rate to
1.00%.
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 six-month period ended May 31, 2003, Colonial High Income Municipal
Trust returned 2.04%, based on net asset value. The trust trailed its peer
group. The average return for the Lipper High Yield Municipal Debt Funds
Category was 4.63%.1
The trust's performance relative to its peer group suffered because nursing home
bonds were hurt by cutbacks in Medicaid reimbursements. The nursing home sector
represents a sizeable portion of the trust. A small stake in tobacco bonds,
which are backed by settlement money from tobacco companies, also hurt
performance. The bonds lost value as investors reacted to an unfavorable court
judgement, which raised fears that the industry might default on payments. While
we believe that we will continue to see volatility in that sector, we do not
share the concern about default and continue to hold the bonds. The trust's
United Airlines bond (0.2% of net assets)2 tumbled as well after the company
declared bankruptcy and stopped payments to bondholders. Also deterring
performance to some extent were short positions in U.S. Treasury futures
contracts, which are employed to reduce the overall duration of the trust. We
believe that the trust's duration was shorter, on average, than that of our
competitors during a period of rising bond prices. Duration is a measure of
interest rate sensitivity. Shorter duration bonds underperform during bond
market rallies.
The trust benefited, however, from US Airways bonds (0.2% of net assets), which
rallied after the company emerged from bankruptcy. It also benefited from its
investment in zero coupon municipal bonds, which did well as interest rates
declined. Approximately 31% of the trust's assets was invested in non-rated
bonds, which helped generate income. We attempted to reduce the impact of any
individual default by diversifying across many different sectors. Additional
income came from the trust's leverage through its preferred shares. The trust
benefited because the short-term variable rate it paid out on these shares was
much lower than the yield it earned through investing in longer maturity bonds.
Our focus was on essential services bonds, which are backed by revenues from
user fees. We added utilities and retirement housing bonds, but trimmed slightly
in the health-care area. We also shifted toward intermediate maturity (15-20
year) bonds. These bonds offer most of the yield of longer maturity issues with
less risk. Going forward, we expect a slow economic recovery, stable interest
rates and tame inflation to benefit high-yield municipal bonds.
/s/ Maureen G. Newman
Maureen G. Newman is the portfolio manager of Colonial High Income Municipal
Trust and a senior vice president of Columbia Management Advisors, Inc. 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.
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 fund.
2 Holdings are disclosed as of May 31, 2003 and are subject to change.
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.
6-MONTH RETURN AS OF 5/31/03 (%)
Lipper High Yield Municipal
Debt Funds Category 4.63
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PRICE PER SHARE AS OF 5/31/03 ($)
Net asset value 6.40
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Market price 6.64
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6-MONTH TOTAL RETURN (%)
Net asset value 2.04
--------------------------------
Market price 10.27
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DISTRIBUTIONS DECLARED PER
COMMON SHARE 12/1/02-5/31/03 ($)
0.25
--------------------------------
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.
QUALITY BREAKDOWN
AS OF 5/31/03 (%) (UNAUDITED)
AAA 36.4
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AA 3.7
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A 9.0
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BBB 13.5
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BB 5.3
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CCC 0.6
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Non-rated 31.3
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Cash equivalents 0.2
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TOP 10 INDUSTRY SECTORS
AS OF 5/31/03 (%) (UNAUDITED)
Local general obligations 14.4
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Hospital 9.8
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Nursing 7.5
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Multi-family 7.3
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Refunded/escrowed 5.8
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Investor owned utility 5.1
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Congregate care retirement 4.0
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State general obligations 3.9
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Municipal electric utility 3.6
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Special non-property tax 3.5
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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.
1
INVESTMENT PORTFOLIO
May 31, 2003 (Unaudited)
MUNICIPAL BONDS - 97.2% PAR VALUE
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EDUCATION - 3.3%
CA Loyola Marymount University,
Series 2001,
(a) 10/01/19 $ 2,025,000 $ 978,824
CA State Public Works Board,
UCLA Replacement Hospital,
Series 2002 A,
5.375% 10/01/15 1,010,000 1,165,752
CA Statewide Community Development
Authority, Crossroads School for
Arts & Sciences, Series 1998,
6.000% 08/01/28 (b) 1,310,000 1,380,753
IL State Development Finance Authority,
Latin School of Chicago, Series 1998,
5.650% 08/01/28 230,000 236,192
IL University of Illinois, Series 2001 A,
5.500% 08/15/17 685,000 783,469
MA State Development Finance Agency,
Western New England College,
6.125% 12/01/32 300,000 311,895
MA State Industrial Finance Agency:
Cambridge Friends School, Series 1998,
5.800% 09/01/28 1,000,000 1,032,850
St. John's High School, Series 1998,
5.350% 06/01/28 300,000 305,130
MI Southfield Economic Development
Corp., Lawrence University,
Series 1998 A,
5.400% 02/01/18 1,000,000 1,030,660
NC State Capital Facilities Finance
Authority, Meredith College,
Series 2001,
5.125% 06/01/16 1,000,000 1,111,050
VT State Educational & Health Buildings
Finance Agency, Norwich University,
Series 1998,
5.500% 07/01/21 1,500,000 1,522,770
WV State University, Series 2000 A,
(a) 04/01/19 1,000,000 498,860
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10,358,205
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HEALTH CARE - 22.9%
CONGREGATE CARE RETIREMENT - 4.0%
CA La Verne CFTS
Partnership,
Brethren Hillcrest Home,
Series 2003 B,
6.625% 02/15/25 690,000 698,880
CA Statewide Community Development
Authority, Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 (b) 1,000,000 1,094,460
CT State Development Authority, First
Meeting Gross Revenue Health Care,
Elim Park Baptist, Inc. Project,
Series 2003,
5.850% 12/01/33 660,000 684,856
PAR VALUE
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FL Capital Projects Finance Authority,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 $ 750,000 $ 765,157
IL State Health Facilities Authority,
Lutheran Senior Ministries,
Series 2001 A,
7.375% 08/15/31 300,000 313,956
KS Manhattan, Meadowlark Hills
Retirement Home, Series 1999 A,
6.375% 05/15/20 650,000 667,712
MA Boston Industrial Development
Financing Authority, Springhouse, Inc.,
Series 1988,
5.875% 07/01/20 255,000 254,565
MA State Development Finance Agency,
Loomis Communities:
Series 1999 A,
5.625% 07/01/15 400,000 393,304
Series 2002 A,
6.900% 03/01/32 100,000 104,289
NH State Higher Educational & Health
Facilities Authority, Rivermead at
Peterborough, Series 1998:
5.625% 07/01/18 500,000 476,475
5.750% 07/01/28 500,000 465,475
NJ Economic Development Authority,
Seabrook Village, Inc., Series 2000 A,
8.250% 11/15/30 625,000 687,938
PA Lancaster Industrial Development
Authority, Garden Spot Village,
Series 2000 A,
7.625% 05/01/31 500,000 533,405
PA Philadelphia Authority for Industrial
Development, Baptist Home of
Philadelphia, Series 1998 A:
5.500% 11/15/18 360,000 327,920
5.600% 11/15/28 500,000 443,660
TN Metropolitan Government, Nashville &
Davidson Counties, Blakeford at Green
Hills, Series 1998,
5.650% 07/01/24 600,000 542,292
TX Abilene Health Facilities Development
Corp., Sears Methodist Retirement
Obligation Group:
Series 1998 A,
5.900% 11/15/25 1,000,000 923,780
Series 2003 A,
7.000% 11/15/33 300,000 302,055
See notes to investment portfolio.
2
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
CONGREGATE CARE RETIREMENT (CONTINUED)
WI State Health & Educational Facilities
Authority:
Attic Angel Obligated Group,
Series 1998,
5.750% 11/15/27 $ 1,000,000 $ 908,500
Clement Manor, Series 1998,
5.750% 08/15/24 1,300,000 1,189,448
United Lutheran Program for
Aging, Inc.,
Series 1998,
5.700% 03/01/28 1,000,000 911,030
-----------
12,689,157
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HEALTH SERVICES - 0.5%
IL State Health Facilities Authority, Midwest
Physician Group Ltd., Series 1998,
5.500% 11/15/19 120,000 96,686
MA State Development Finance Agency,
Boston Biomedical Research Institute,
Series 1999:
5.650% 02/01/19 200,000 193,922
5.750% 02/01/29 450,000 433,156
MA State Health & Educational
Facilities Authority,
Civic Investments, Inc.,
Series 1999 A,
9.000% 12/15/15 750,000 831,713
-----------
1,555,477
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HOSPITALS - 9.8%
AR Conway Health Facilities Board,
Conway Regional Medical Center:
Series 1999 A,
6.400% 08/01/29 425,000 456,237
Series 1999 B,
6.400% 08/01/29 1,000,000 1,072,400
CA State Health Facilities Financing
Authority, Cedars-Sinai Medical Center,
Series 1999 A,
6.125% 12/01/30 750,000 809,587
CO State Health Facilities Authority:
National Jewish Medical & Research
Center, Series 1998,
5.375% 01/01/23 330,000 330,891
Parkview Medical Center, Inc.,
Series 2001,
6.600% 09/01/25 300,000 328,452
FL Citrus County Hospital Board,
Citrus Memorial Hospital,
Series 2002,
6.375% 08/15/32 750,000 785,737
FL Orange County Health Facilities
Authority, Orlando Regional
Healthcare, Series 2002,
5.750% 12/01/32 200,000 211,082
PAR VALUE
-----------------------------------------------------------
FL Tampa, H. Lee Moffitt Cancer Center,
Series 1999 A,
5.750% 07/01/29 $ 2,000,000 $ 2,090,440
FL West Orange Healthcare District,
Series 2001 A,
5.650% 02/01/22 525,000 546,782
IL Health Facilities Authority,
Thorek Hospital & Medical Center,
Series 1998,
5.250% 08/15/18 600,000 558,240
IL Southwestern Illinois Development
Authority, Anderson Hospital,
Series 1999,
5.500% 08/15/20 225,000 227,347
IL State Health Facilities Authority,
Swedish American Hospital,
Series 2000,
6.875% 11/15/30 500,000 552,015
LA State Public Facilities Authority, Touro
Infirmary, Series 1999,
5.625% 08/15/29 350,000 360,087
MA State Health & Educational Facilities,
Milford-Whitinsville Hospital,
Series 2002 D,
6.350% 07/15/32 465,000 490,091
MD State Health & Higher Education
Facilities Authority, Adventist Healthcare,
Series 2003 A:
5.000% 01/01/16 400,000 404,904
5.750% 01/01/25 600,000 621,138
MI Dickinson County Healthcare System,
Series 1999,
5.700% 11/01/18 750,000 763,905
MI Flint Hospital Building Authority,
Hurley Medical Center, Series 1998 A,
5.375% 07/01/20 450,000 398,961
MN St. Paul Housing & Redevelopment
Authority, Healtheast Project,
Series 1997 A,
5.700% 11/01/15 1,000,000 864,600
MN Washington County Housing &
Redevelopment Authority,
Healtheast, Inc., Series 1998,
5.250% 11/15/12 1,500,000 1,284,315
MS State Business Finance Corp., Rush
Medical Foundation, Inc., Series 1998,
5.625% 07/01/23 710,000 625,148
NC State Medical Care Commission,
Stanly Memorial Hospital, Series 1999,
6.375% 10/01/29 1,915,000 2,095,431
NH Health & Education Facilities
Authority, Hospital Revenue, Catholic
Medical Center, Series 2002,
6.125% 07/01/32 400,000 418,068
See notes to investment portfolio.
3
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
NH State Higher Educational & Health
Facilities Authority, Littleton Hospital
Association, Inc., Series 1998 A:
5.900% 05/01/28 $ 780,000 $ 646,519
6.000% 05/01/28 625,000 498,300
OH Belmont County, East Ohio Regional
Hospital, Series 1998,
5.700% 01/01/13 1,875,000 1,670,831
OH Highland County Joint Township
Hospital District, Series 1999,
6.750% 12/01/29 965,000 957,859
OH Miami County, Upper Valley Medical
Center, Inc., Series 1996 A,
6.375% 05/15/26 1,000,000 1,038,810
OH Sandusky County, Memorial Hospital,
Series 1998,
5.150% 01/01/10 250,000 249,713
PA Allegheny County Hospital
Development, Ohio Valley General
Hospital, Series 1998 A,
5.450% 01/01/28 1,000,000 968,130
PA Pottsville Hospital Authority, Pottsville
Hospital & Warne Clinic, Series 1998,
5.500% 07/01/18 1,000,000 905,150
SC Lexington County Health Services
District, Inc., Hospital Revenue,
5.500% 11/01/23 750,000 790,102
TX Comal County Health Facilities
Development, McKenna Memorial,
Series 2002 A,
6.250% 02/01/32 500,000 519,800
TX Lufkin Health Facilities Development
Corp., Memorial Health Systems of
East Texas, Series 1998,
5.700% 02/15/28 1,120,000 887,309
TX Richardson Hospital Authority, Baylor
Richardson Medical Center, Series 1998,
5.625% 12/01/28 1,000,000 1,027,370
TX Tyler Health Facilities Development
Corp., Mother Frances Hospital,
Series 2001,
6.000% 07/01/31 1,000,000 1,040,400
UT Weber County, IHC Health Services,
Inc., Series 1999,
5.000% 08/15/30 1,500,000 1,543,635
VT State Educational & Health Buildings
Authority, Brattleboro Memorial
Hospital, Series 1998,
5.375% 03/01/28 1,075,000 1,050,458
WA State Health Care Facilities
Authority, Kadlec Medical Center,
Series 2001,
5.875% 12/01/21 600,000 657,234
PAR VALUE
-----------------------------------------------------------
WI State Health & Educational
Facilities Authority,
Wheaton Franciscan Services,
Series 2002,
5.750% 08/15/30 $ 600,000 $ 630,456
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31,377,934
-----------
INTERMEDIATE CARE FACILITIES - 1.1%
IL State Development Finance Authority,
Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 1,210,000 1,035,300
IN State Health Facilities Financing
Authority, Hoosier Care, Inc.,
Series 1999 A,
7.125% 06/01/34 150,000 128,343
PA State Economic Development
Financing Authority, Northwestern
Human Services, Inc.,
Series 1998 A,
5.250% 06/01/14 2,510,000 2,162,089
-----------
3,325,732
-----------
NURSING HOMES - 7.5%
AK Juneau, St. Ann's Care Center,
Series 1999,
6.875% 12/01/25 1,250,000 1,284,225
CO Healthcare Facilities Authority:
American Housing Foundation I, Inc.
Project, Series 2003,
8.500% 12/01/31 475,000 462,389
Pioneer Healthcare, Series 1989,
10.500% 05/01/19 1,840,000 1,786,714
CO State Healthcare Facilities Authority,
Volunteers of America Care
Facilities, Inc.:
Series 1998 A:
5.450% 07/01/08 300,000 295,194
5.750% 07/01/20 865,000 786,493
Series 1999 A,
6.000% 07/01/29 350,000 314,734
IA State Finance Authority, Care
Initiatives Project:
Series 1996,
9.250% 07/01/25 1,000,000 1,209,360
Series 1998 B:
5.750% 07/01/18 550,000 496,100
5.750% 07/01/28 1,475,000 1,274,960
IN Gary Industrial Economic
Development, West Side Health
Care Center, Series 1987 A,
11.500% 10/01/17 (k) 1,330,000 997,500
IN Michigan City Health Facilities,
Metro Health Foundation, Inc.
Project, Series 1993,
11.000% 11/01/22 (d) 3,085,000 1,048,900
See notes to investment portfolio.
4
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
NURSING HOMES (CONTINUED)
IN State Health Facilities Financing
Authority, Metro Health Indiana, Inc.,
Series 1998,
6.400% 12/01/33 (d) $ 1,210,000 $ 157,300
MA State Development Finance Agency,
Alliance Health Care Facilities,
Series 1999,
7.100% 07/01/32 1,300,000 1,308,541
MA State Industrial Finance Agency,
Woodlawn Nursing Home,
Series 2000 A:
7.750% 12/01/27 1,558,135 1,366,126
10.250% 06/01/27 336,372 314,252
MN Carlton, Inter-Faith Social Services,
Inc., Series 2000,
7.750% 04/01/29 225,000 237,652
MN Sartell, Foundation for Healthcare,
Series 1999 A,
6.625% 09/01/29 1,145,000 1,109,436
NJ State Economic Development Authority,
Geriatric & Medical Service, Inc.,
Series 1990 B,
10.500% 05/01/20 2,000,000 2,005,400
PA Chester County Industrial
Development Authority,
RHA Nursing Home, Series 2002,
8.500% 05/01/32 1,610,000 1,583,612
PA Washington County Industrial
Development Authority,
Central States, Series 1989,
10.250% 11/01/19 (c) 1,750,000 787,500
TN Metropolitan Government, Nashville &
Davidson Counties Health & Education
Facilities, Central States, Series 1989,
10.250% 11/01/19 (c) 1,650,000 742,500
TX Kirbyville Health Facilities
Development Corp.,
Heartway III Project:
Series 1997 A,
10.000% 03/20/18 (k) 668,626 568,332
Series 1997 B,
6.000% 03/20/04 (k) 106,000 5,300
TX Whitehouse Health Facilities
Development Corp., Oak Brook
Healthcare Center, Series 1989,
10.000% 12/01/19 1,620,000 1,648,075
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
Series 1996,
7.100% 02/20/36 1,000,000 1,213,190
PAR VALUE
-----------------------------------------------------------
WI State Health & Educational Facilities
Authority, Metro Health Foundation, Inc.,
Series 1993,
11.000% 11/01/22 (d) $ 2,775,000 $ 943,500
-----------
23,947,285
-----------
-----------------------------------------------------------
HOUSING - 10.7%
ASSISTED LIVING/SENIOR - 3.2%
CA Abag Finance Authority for Nonprofit
Corps., Eskaton Gold River Lodge,
Series 1998:
6.375% 11/15/15 720,000 666,101
6.375% 11/15/28 550,000 470,497
DE Kent County, Heritage at Dover,
Series 1999,
7.625% 01/01/30 1,710,000 1,495,669
GA Columbus Housing Authority, The
Gardens at Calvary, Series 1999,
7.000% 11/15/19 500,000 437,720
IL State Development Finance Authority,
Care Institute, Inc., Series 1995,
8.250% 06/01/25 1,265,000 1,265,670
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 (k) 1,740,000 1,201,244
NC State Medical Care Commission,
DePaul Community Facilities Project,
Series 1999,
7.625% 11/01/29 1,490,000 1,550,330
NY Huntington Housing Authority,
Gurwin Jewish Senior Center,
Series 1999:
5.875% 05/01/19 700,000 639,660
6.000% 05/01/29 775,000 685,952
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
Series 1994,
9.000% 11/01/24 1,730,000 1,777,073
-----------
10,189,916
-----------
MULTI-FAMILY - 7.3%
AZ Maricopa County Industrial
Development Authority,
National Health Facilities,
Series 1998 A,
5.100% 01/01/33 4,500,000 4,698,945
DE Wilmington, Electra Arms Senior
Association Project, Series 1998,
6.250% 06/01/28 955,000 794,159
FL Broward County Housing Finance
Authority, Chaves Lake Apartment
Project, Series 2000,
7.500% 07/01/40 750,000 769,755
FL Clay County Housing Finance Authority,
Madison Commons Apartments,
Series 2000 A,
7.450% 07/01/40 745,000 764,668
See notes to investment portfolio.
5
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
HOUSING (CONTINUED)
MULTI-FAMILY (CONTINUED)
GA Clayton County Housing Authority,
Magnolia Park Apartments,
Series 1999 A,
6.250% 06/01/30 $ 955,000 $ 765,070
MN Lakeville, Southfork Apartments Project:
Series 1989 A,
9.875% 02/01/20 2,570,000 2,577,247
Series 1989 B,
(a) 02/01/20 903,000 751,283
MN Robbinsdale Economic Development
Authority, Broadway Court,
Series 1999 A,
6.875% 01/01/26 500,000 473,510
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen, Series 1992,
9.250% 06/01/22 1,010,000 1,039,906
MN White Bear Lake, Birch Lake
Townhome Project:
Series 1989 A,
10.250% 07/15/19 2,200,000 2,233,660
Series 1989 B,
(a) 07/15/19 (b) 699,000 473,912
NY Nyack Housing Assistance Corp., Nyack
Plaza Apartments, Series 1979,
7.375% 06/01/21 293,885 298,311
Resolution Trust Corp., Pass-Through
Certificates, Series 1993 A,
8.500% 12/01/16 (e) 546,075 547,937
TN Franklin Industrial Board, Landings
Apartment Project, Series 1996 B,
8.750% 04/01/27 865,000 907,869
TX El Paso County Housing Finance Corp.,
American Village Communities:
Series 2000 C,
8.000% 12/01/32 390,000 403,619
Series 2000 D,
10.000% 12/01/32 420,000 438,803
TX Galveston Housing Finance Corp.,
Driftwood Apartments,
8.000% 08/01/23 1,000,000 1,050,330
TX State Affordable Housing Corp.,
NHT/GTEX Project, Series 2001 C,
10.000% 10/01/31 880,000 873,937
TX State Department of Housing &
Community Affairs, Pebble Brooks
Apartments, Series 1998,
5.500% 12/01/18 1,000,000 1,064,390
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990 A,
10.000% 01/01/21 1,500,000 1,287,180
WA Vancouver Housing Authority,
Series 1998 I,
5.500% 03/01/28 1,000,000 1,017,870
-----------
23,232,361
-----------
PAR VALUE
-----------------------------------------------------------
SINGLE FAMILY - 0.2%
WA State Housing Finance Commission,
Series 1992 D1,
6.150% 01/01/26 $ 720,000 $ 776,664
-----------
-----------------------------------------------------------
INDUSTRIAL - 4.0%
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 1,071,980
IN Hammond, American Maize
Products Co., Series 1994,
8.000% 12/01/24 1,510,000 1,652,906
LA Southern Louisiana Port Commission,
Cargill, Inc., Series 1997,
5.850% 04/01/17 1,000,000 1,080,970
MI State Strategic Fund, Michigan
Sugar Co., Sebewaing Project,
Series 1998 A,
6.250% 11/01/15 1,250,000 1,153,300
-----------
4,959,156
-----------
FOREST PRODUCTS - 0.8%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 1,800,000 1,827,054
MI Delta County Economic Development
Corp., Environmental Import,
Mead Westvaco Corp.,
Series 2002 B,
6.450% 04/15/23 450,000 464,364
VA Bedford County Industrial
Development Authority, Nekoosa
Packaging Corp., Series 1998,
5.600% 12/01/25 400,000 300,224
-----------
2,591,642
-----------
MANUFACTURING - 1.1%
IL Will-Kankakee Regional Development
Authority, Flanders Corp./Precisionaire
Project, Series 1997,
6.500% 12/15/17 855,000 852,837
KS Wichita Airport Authority,
Cessna Citation Service Center,
Series 2002 A,
6.250% 06/15/32 675,000 701,393
MN Brooklyn Park, TL Systems Corp.,
Series 1991,
10.000% 09/01/16 685,000 707,804
TX Trinity River Authority, Texas
Instruments Project, Series 1996,
6.200% 03/01/20 1,000,000 1,065,110
-----------
3,327,144
-----------
See notes to investment portfolio.
6
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
INDUSTRIAL (CONTINUED)
METALS & MINING - 0.3%
MD Baltimore County, Bethlehem Steel
Corp. Project, Series 1994 B,
7.500% 06/01/15 (d) $ 500,000 $ 10,000
NV State Department of Business &
Industry, Wheeling-Pittsburgh Steel
Corp., Series 1999 A,
8.000% 09/01/14 (d)(e) 1,000,000 700,000
VA Greensville County Industrial
Development Authority,
Wheeling-Pittsburgh Steel Corp.,
Series 1999 A:
6.375% 04/01/04 (d) 95,000 66,501
7.000% 04/01/14 (d) 500,000 350,000
-----------
1,126,501
-----------
OIL & GAS - 0.3%
TX Gulf Coast Industrial Development
Authority, Solid Waste Disposal,
Citgo Petroleum, Series 1998,
8.000% 04/01/28 500,000 505,910
VI Government Refinery,
Hovensa Coker Project,
Series 2002,
6.500% 07/01/21 (b) 375,000 382,605
-----------
888,515
-----------
-----------------------------------------------------------
OTHER - 6.7%
OTHER - 0.7%
CA Tobacco Securitization Authority,
Asset Backed,
Series 2003 A-1,
6.750% 06/01/39 1,575,000 1,474,735
NJ Tobacco Settlement Financing Corp.,
Series 2003,
6.750% 06/01/39 500,000 465,180
WA Tobacco Settlement Authority,
Series 2002,
6.625% 06/01/32 250,000 229,773
-----------
2,169,688
-----------
POOL/BOND BANK - 0.2%
MI State Municipal Bond Authority,
Local Government Loan Project,
Series 2001 A,
5.375% 11/01/17 750,000 851,543
-----------
REFUNDED/ESCROWED (f) - 5.8%
CO Denver City & County Airport,
Series 1992 C,
6.125% 11/15/25 5,120,000 5,692,125
CT State Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/01/06 600,000 684,948
PAR VALUE
-----------------------------------------------------------
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 $ 695,000 $ 818,064
GA Forsyth County Hospital Authority,
Georgia Baptist Healthcare System,
Series 1998,
6.000% 10/01/08 885,000 984,394
HI State Department Budget and
Finance, Kahala Nui Project,
Series 2003 A,
8.000% 11/15/33 1,000,000 1,019,970
ID State Health Facilities Authority,
IHC Hospitals, Inc., Series 1992,
6.650% 02/15/21 1,750,000 2,324,700
MA State Health & Educational
Facilities, Authority Corporation
for Independent Living,
Series 1993,
8.100% 07/01/18 660,000 676,606
NC Lincoln County, Lincoln County
Hospital, Series 1991,
9.000% 05/01/07 245,000 288,186
PA Delaware County, Health Facilities,
Mercy Health Corp., Series 1996,
6.000% 12/15/16 2,400,000 2,762,306
TN Shelby County, Health, Education &
Housing Facilities Board, Open Arms
Development Center:
Series 1992 A,
9.750% 08/01/19 850,000 1,115,200
Series 1992 C,
9.750% 08/01/19 830,000 1,089,184
WV Hospital Finance Authority, Charleston
Medical Center, Series 2000 A,
6.750% 09/01/30 805,000 1,026,246
-----------
18,481,929
-----------
-----------------------------------------------------------
OTHER REVENUE - 1.6%
HOTELS - 0.3%
PA Philadelphia Authority for Industrial
Development, Doubletree Project A,
Series 1997,
6.500% 10/01/27 1,000,000 1,013,430
-----------
RECREATION - 0.7%
CT Gaming Authority, Mohegan Tribe,
Series 2001,
6.250% 01/01/31 275,000 296,013
FL Capital Trust Agency,
Seminole Tribe Convention Center,
Series 2002 A,
10.000% 10/01/33 750,000 852,983
NM Red River Sports Facility,
Red River Ski Area Project, Series 1998,
6.450% 06/01/07 945,000 962,568
-----------
2,111,564
-----------
See notes to investment portfolio.
7
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
OTHER REVENUE (CONTINUED)
RETAIL - 0.6%
NJ State Economic Development Authority,
Glimcher Properties LP Project,
Series 1998,
6.000% 11/01/28 $ 1,250,000 $ 1,284,413
OH Lake County, North Madison
Properties, Series 1993,
8.819% 09/01/11 715,000 710,281
-----------
1,994,694
-----------
-----------------------------------------------------------
RESOURCE RECOVERY - 1.3%
DISPOSAL - 0.4%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 605,000 634,706
UT Carbon County, Laidlaw Environmental:
Series 1995 A,
7.250% 02/01/10 250,000 243,595
Series 1997 A,
7.450% 07/01/17 500,000 486,405
-----------
1,364,706
-----------
RESOURCE RECOVERY - 0.9%
MA State Development Finance Agency,
Ogden Haverhill Project, Series 1999 A,
6.700% 12/01/14 250,000 263,607
MA State Industrial Finance Agency,
Ogden Haverhill Project, Series 1998 A,
5.500% 12/01/13 500,000 487,465
PA Delaware County Industrial
Development Authority,
BFI Project,
Series 1997 A,
6.200% 07/01/19 2,000,000 2,060,240
-----------
2,811,312
-----------
-----------------------------------------------------------
TAX-BACKED - 26.1%
LOCAL GENERAL OBLIGATIONS - 14.4%
CA Fresno Unified School District,
Series 2002 A,
6.000% 02/01/18 2,000,000 2,522,240
CA Los Angeles Unified School District:
Series 1997 E,
5.125% 01/01/27 4,000,000 4,276,960
Series 2002,
5.750% 07/01/16 700,000 863,373
CA Montebello Unified School District,
Series 2001:
(a) 08/01/21 1,435,000 619,174
(a) 08/01/23 1,505,000 575,888
CA San Juan Unified School District,
Series 2001,
(a) 08/01/19 2,210,000 1,076,204
PAR VALUE
-----------------------------------------------------------
IL Chicago Board of Education,
Series 1997 A,
5.250% 12/01/30 (g) $14,470,000 $ 15,343,988
IL Cook County, Series 1997 A,
5.625% 11/15/22 4,200,000 4,714,752
NY New York City:
Series 1997 A,
7.000% 08/01/07 1,000,000 1,149,220
Series 1997 H,
6.000% 08/01/17 1,400,000 1,581,048
TX Dallas County Flood Control
District, Series 2002,
7.250% 04/01/32 1,000,000 1,029,230
TX Irving Independent School District,
Series 1997,
(a) 02/15/18 1,000,000 529,040
TX San Antonio Independent School
District, Series 1997,
5.000% 08/15/27 9,000,000 9,254,250
WA Clark County School District No. 037,
Vancouver, Series 2001 C,
(a) 12/01/18 5,000,000 2,546,500
-----------
46,081,867
-----------
SPECIAL NON-PROPERTY TAX - 3.5%
CA San Diego Redevelopment Agency,
Series 2001,
(a) 09/01/22 1,910,000 764,917
FL Northern Palm Beach County
Improvement District, Series 1999,
6.000% 08/01/29 750,000 863,565
IL Metropolitan Pier & Exposition
Authority, McCormick Place Expansion
Project, Series 1993 A,
(a) 06/15/16 10,000,000 5,845,200
OH Hamilton County,
Series 2000 B,
(a) 12/01/21 5,000,000 2,139,800
PR Commonwealth Highway &
Transportation Authority:
Series 2002 E,
5.500% 07/01/21 750,000 898,125
Series 2003 AA,
5.500% 07/01/18 500,000 605,910
-----------
11,117,517
-----------
SPECIAL PROPERTY TAX - 3.2%
CA Carson, Series 1992,
7.375% 09/02/22 35,000 35,843
CA Huntington Beach Community
Facilities District, Grand Coast Resort,
Series 2001-1,
6.450% 09/01/31 750,000 784,215
CA Orange County Community Facilities
District, Ladera Ranch, Series 1999 A,
6.700% 08/15/29 500,000 539,065
See notes to investment portfolio.
8
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
SPECIAL PROPERTY TAX (CONTINUED)
CA Placer Unified High School District,
Series 2000 A,
(a) 08/01/19 $ 1,700,000 $ 829,158
CA Riverside County Public Financing
Authority, Redevelopment Projects,
Series 1997 A,
5.500% 10/01/22 650,000 665,620
FL Celebration Community Development
District, Special Assessment,
Series 2003 A,
6.400% 05/01/34 1,000,000 1,028,310
FL Colonial Country Club Community
Development,
Series 2003,
6.400% 05/01/33 750,000 762,810
FL Double Branch Community
Development District,
Special Assessment, Series 2002 A,
6.700% 05/01/34 700,000 721,721
FL Heritage Palms Community
Development District,
Series 1999,
6.250% 11/01/04 725,000 736,948
FL Lexington Oaks Community
Development District:
Series 1998 A,
6.125% 05/01/19 355,000 362,686
Series 1998 B,
5.500% 05/01/05 90,000 90,968
Series 2000 A,
7.200% 05/01/30 290,000 307,902
Series 2000 D,
6.700% 05/01/07 10,000 10,466
Series 2002 A,
6.700% 05/01/33 250,000 262,288
FL Orlando, Conroy Road Interchange
Project, Series 1998 A:
5.500% 05/01/10 180,000 185,807
5.800% 05/01/26 300,000 304,176
FL Stoneybrook Community
Development District:
Series 1998 A,
6.100% 05/01/19 315,000 321,990
Series 1998 B,
5.700% 05/01/08 230,000 233,740
MI Pontiac Finance Authority,
Development Area No. 3,
Series 2002,
6.375% 06/01/31 550,000 569,393
MI Taylor Tax Increment Finance
Authority, Series 2001,
5.375% 05/01/17 1,220,000 1,380,918
-----------
10,134,024
-----------
PAR VALUE
-----------------------------------------------------------
STATE APPROPRIATED - 1.1%
NY State Urban Development Corp.,
University Facilities Grants,
Series 1995,
5.875% 01/01/21 $ 1,000,000 $ 1,209,560
PR Commonwealth of Puerto Rico
Public Finance Corp., Series 2002 E,
6.000% 08/01/26 1,800,000 2,168,316
-----------
3,377,876
-----------
STATE GENERAL OBLIGATIONS - 3.9%
DC District of Columbia,
Unrefunded Balance,
Series 1999 A,
5.375% 06/01/18 1,700,000 1,886,558
TX Board of Regents,
University of Texas, Series 2001 B,
5.375% 08/15/18 650,000 730,470
TX State, Series 1999 ABC,
5.500% 08/01/35 4,200,000 4,649,442
WA State, Series 1999 B,
5.000% 01/01/24 5,000,000 5,182,050
-----------
12,448,520
-----------
-----------------------------------------------------------
TRANSPORTATION - 6.3%
AIR TRANSPORTATION - 2.0%
CA Los Angeles Regional Airport,
LAXFuel Corp., Series 2001,
5.250% 01/01/23 750,000 778,837
CO Denver City & County Airport,
United Airlines, Inc., Series 1992 A,
6.875% 10/01/32 (d) 1,645,000 590,144
KY Kenton County Airport Board,
Delta Airlines, Inc., Series 1992 A:
7.500% 02/01/12 500,000 430,360
7.500% 02/01/20 500,000 408,765
MN Minneapolis & St. Paul Metropolitan
Airport Commission,
Northwest Airlines Corp.:
Series 2001 A,
7.000% 04/01/25 500,000 358,740
Series 2001 B,
6.500% 04/01/25 250,000 214,815
NC Charlotte, US Airways, Inc.:
Series 1998,
5.600% 07/01/27 250,000 175,987
Series 2000,
7.750% 02/01/28 750,000 549,697
TX Alliance Airport Authority:
American Airlines Project,
Series 1990,
7.500% 12/01/29 1,600,000 636,000
Federal Express Corp. Project,
Series 1996,
6.375% 04/01/21 1,000,000 1,047,680
See notes to investment portfolio.
9
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
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 $ 769,605
WA Seattle, Northwest Airways, Inc.,
Series 2000,
7.250% 04/01/30 500,000 362,325
-----------
6,322,955
-----------
AIRPORTS - 1.8%
CO Denver City & County Airport,
Series 1997 E,
5.250% 11/15/23 1,700,000 1,778,914
MA State Port Authority, Series 1998 D,
5.000% 07/01/28 4,000,000 4,129,560
-----------
5,908,474
-----------
TOLL FACILITIES - 2.2%
CO Northwest Parkway Public Highway
Authority, Series 2001 D,
7.125% 06/15/41 1,000,000 1,046,010
CO State Public Highway Authority,
E-470, Series 2000 B:
(a) 09/01/18 3,000,000 1,549,230
(a) 09/01/35 8,750,000 831,512
NY State Triborough Bridge & Tunnel
Authority, Series 2002,
5.500% 11/15/20 1,125,000 1,356,154
VA Richmond Metropolitan Authority,
Series 1998,
5.250% 07/15/22 2,000,000 2,323,080
-----------
7,105,986
-----------
TRANSPORTATION - 0.3%
NV State Department of Business &
Industry, Las Vegas Monorail Project,
Series 2000,
7.375% 01/01/40 1,000,000 919,320
-----------
-----------------------------------------------------------
UTILITIES - 14.3%
INDEPENDENT POWER PRODUCERS - 2.6%
MI Midland County Economic
Development Corp., Series 2000,
6.875% 07/23/09 1,250,000 1,279,663
NY Port Authority of New York &
New Jersey, KIAC Partners,
Series 1996 IV,
6.750% 10/01/11 2,000,000 2,147,420
PA State Economic Development Finance
Authority:
Colver Project, Series 1994 D,
7.125% 12/01/15 1,500,000 1,558,155
Northampton Generating,
Series 1994 A,
6.500% 01/01/13 1,000,000 1,016,520
PAR VALUE
-----------------------------------------------------------
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical &
Environmental Cogeneration Facilities,
AES Project, Series 2000,
6.625% 06/01/26 $ 650,000 $ 685,139
VA Pittsylvania County Industrial
Development Authority, Multi-trade
of Pittsylvania, Series 1994 A:
7.450% 01/01/09 1,000,000 1,032,050
7.550% 01/01/19 500,000 513,115
-----------
8,232,062
-----------
INVESTOR OWNED - 5.1%
AZ Maricopa County Pollution Control
Corp., El Paso Electric Co.,
Series 2002 A,
6.250% 05/01/37 1,000,000 1,015,180
AZ Pima County Industrial Development
Authority, Tucson Electric Power Co.,
Series 1997 A,
6.100% 09/01/25 750,000 716,400
CT State Development Authority,
Connecticut Light & Power Co.,
Series 1993 B,
5.950% 09/01/28 200,000 212,442
IL Bryant, Central Illinois Light Co.,
Series 1993,
5.900% 08/01/23 2,650,000 2,650,318
LA Calcasieu Parish Industrial
Development Board, Entergy Gulf
States, Inc., Series 1999,
5.450% 07/01/10 500,000 504,750
LA West Feliciana Parish, Entergy Gulf
States, Inc., Series 1999 B,
6.600% 09/01/28 500,000 511,905
MS State Business Finance Corp., Systems
Energy Resources Project, Series 1998,
5.875% 04/01/22 2,000,000 1,994,160
MT Forsyth Pollution Control,
Portland General,
Series 1998 A,
5.200% 05/01/33 300,000 307,350
OH State Air Quality Development
Authority, Cleveland Pollution Control,
Series 2002 A,
6.000% 12/01/13 1,800,000 1,895,184
TX Brazos River Authority,
TXU Electric Co., Series 2001 C,
5.750% 05/01/36 1,250,000 1,275,837
VA Chesterfield County Industrial
Development Authority, Pollution
Control Revenue, Virginia Electric
& Power Co., Series 1987 B,
5.875% 06/01/17 250,000 270,805
WV Pleasant County, Western
Pennsylvania Power Co., Series 1999 E,
5.500% 04/01/29 4,750,000 5,006,548
-----------
16,360,879
-----------
See notes to investment portfolio.
10
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
-----------------------------------------------------------
UTILITIES (CONTINUED)
JOINT POWER AUTHORITY - 0.3%
NC Eastern Municipal Power Agency,
Series 1999 D:
5.500% 01/01/16 (h) $ 285,000 $ 301,969
6.700% 01/01/19 500,000 561,850
-----------
863,819
-----------
MUNICIPAL ELECTRIC - 3.6%
CA State Water Resources Authority,
Power Revenue Bonds,
Series 2002 A,
5.500% 05/01/14 2,000,000 2,344,000
NY Long Island Power Authority,
Series 1998 B,
5.000% 04/01/10 1,000,000 1,138,850
PR Electric Power Authority,
Series 1998 II,
5.125% 07/01/26 3,500,000 3,776,675
WA Chelan County Public Utilities
District No. 1, Columbia River Rock
Hydroelectric, Series 1997,
(a) 06/01/14 5,000,000 3,223,400
WA Seattle, Series 2001,
5.500% 03/01/17 750,000 851,865
-----------
11,334,790
-----------
WATER & SEWER - 2.7%
LA Public Facility Belmont Water
Authority,
9.000% 09/15/24 (k) 760,000 532,000
MA State Water Resources Authority,
Series 1997 D,
5.000% 08/01/24 3,000,000 3,152,730
MO Water & Sewer, Lee's Summit,
Series 2002,
5.250% 07/01/15 500,000 565,570
MS Five Lakes Utility District,
8.250% 07/15/24 500,000 491,805
NH State Industrial Development
Authority, Pennichuck Water Works,
Inc., Series 1988,
7.500% 07/01/18 500,000 568,685
WA King County, Series 1999,
5.250% 01/01/30 3,250,000 3,468,205
-----------
8,778,995
-----------
TOTAL MUNICIPAL BONDS
(cost of $307,554,184) 310,131,639
-----------
MUNICIPAL PREFERRED STOCKS - 1.4% SHARES
-----------------------------------------------------------
HOUSING - 1.4%
MULTI-FAMILY - 1.4%
Charter Mac Equity Issue Trust,
6.625% 06/30/49 (e) 2,000,000 2,204,580
MuniMae Equity Issue Trust,
7.750% 06/30/50 (e) 2,000,000 2,268,060
-----------
(cost of $4,000,000) 4,472,640
-----------
PURCHASED PUT OPTION - 0.0% PAR VALUE
-----------------------------------------------------------
U.S. Treasury Notes,
Strike Price $115.00, Expires 08/31/03
(cost of $246,283) $ 290,000 $ 135,938
-----------
SHORT-TERM OBLIGATIONS - 0.2%
-----------------------------------------------------------
VARIABLE RATE DEMAND NOTES (i) - 0.2%
IA Finance Authority, Private College
Revenue, Drake University Project,
Series 2001,
1.350% 07/01/31 200,000 200,000
IA Higher Education Loan Authority,
Loras College,
Series 2000,
1.300% 11/01/30 300,000 300,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $500,000) 500,000
-----------
TOTAL INVESTMENTS - 98.8%
(cost of $312,300,467)(j) 315,240,217
-----------
OTHER ASSETS & LIABILITIES, NET - 1.2% 3,726,528
-----------------------------------------------------------
NET ASSETS* - 100.0% $318,966,745
============
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 May 31, 2003, these securities amounted to
$3,331,730 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
& Sciences, 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, Birch Lake
Townhome Project,
Series 1989 B,
(a) 07/15/19 07/19/89 699,000
VI Government Refinery,
Hovensa Coker Project,
Series 2002,
6.500% 07/01/21 11/15/02 375,000
----------
$3,384,000
----------
(c) These issuers are in default of certain debt covenants. Income is not being
fully accrued.
(d) As of May 31, 2003, 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.
See notes to financial statements.
11
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2003 (Unaudited)
NOTES TO INVESTMENT PORTFOLIO (CONTINUED):
(e) These securities are 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 May 31, 2003,
the value of these securities amounted to $5,720,577, which represents 1.8%
of net assets.
(f) 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.
(g) This security, or a portion thereof with a market value of $3,191,804, is
being used to collateralize open futures contracts.
(h) Settlement of this security is on a delayed delivery basis.
(i) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of May 31, 2003.
(j) Cost for federal income tax purposes is $312,014,734.
(k) These issuers are in default of certain debt covenants. Income is not being
accrued.
Short futures contracts open at May 31, 2003:
UNREALIZED
PAR VALUE APPRECIATION
COVERED BY EXPIRATION (DEPRECIATION)
TYPE CONTRACTS MONTH AT 05/31/03
-------------------------------------------------------------
10-Year Municipal
Note Index $ 7,000,000 Jun-2003 $(307,948)
10-Year U.S. Treasury
Notes 87,300,000 Sept-2003 (72,782)
30-Year U.S. Treasury
Bonds 49,300,000 Sept-2003 567,443
---------
$ 186,713
---------
* Net assets represent both Common Shares and Auction Preferred Shares.
See notes to financial statements.
12
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2003 (Unaudited)
ASSETS:
Investments, at cost $312,300,467
------------
Investments, at value $315,240,217
Cash 9,724
Receivable for:
Interest 5,366,928
Futures variation margin 108,721
Deferred Trustees' compensation plan 8,342
Other assets 42,375
------------
Total Assets 320,776,307
------------
LIABILITIES:
Payable for:
Investments purchased on a delayed
delivery basis 297,047
Distributions-- common shares 1,244,311
Distributions-- preferred shares 13,531
Management fee 202,916
Pricing and bookkeeping fees 3,030
Reports to shareholders 40,385
Deferred Trustees' fee 8,342
------------
Total Liabilities 1,809,562
------------
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 $268,336,065
Undistributed net investment income 698,256
Accumulated net realized loss (73,194,039)
Net unrealized appreciation on:
Investments 2,939,750
Futures contracts 186,713
------------
Net assets at value applicable to 31,107,771
common shares of beneficial interest
outstanding $198,966,745
============
Net asset value per common share $ 6.40
============
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 2003 (Unaudited)
INVESTMENT INCOME:
Interest $ 9,831,668
------------
EXPENSES:
Management fee 1,200,416
Pricing and bookkeeping fees 65,991
Trustees' fee 6,347
Preferred shares remarketing commissions 149,760
Custody fee 5,077
Other expenses 90,534
------------
Total Expenses 1,518,125
Custody earnings credit (476)
------------
Net Expenses 1,517,649
------------
Net Investment Income 8,314,019
------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FUTURES CONTRACTS:
Net realized gain (loss) on:
Investments 1,328,301
Futures contracts (14,877,127)
------------
Net realized loss (13,548,826)
------------
Net change in unrealized appreciation/
depreciation on:
Investments 10,545,542
Futures contracts (741,054)
------------
Net change in unrealized
appreciation/depreciation 9,804,488
------------
Net Loss (3,744,338)
------------
Net Increase in Net Assets from Operations 4,569,681
------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (656,156)
------------
Net Increase in Net Assets from Operations
Applicable to Common Shares $ 3,913,525
------------
See notes to financial statements.
13
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
MAY 31, NOVEMBER 30,
INCREASE (DECREASE) IN NET ASSETS: 2003 2002
-------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 8,314,019 $ 17,671,992
Net realized loss on investments and futures contracts (13,548,826) (9,209,036)
Net change in unrealized appreciation/depreciation on investments and
futures contracts 9,804,488 (3,859,383)
----------- ------------
Net Increase from Operations 4,569,681 4,603,573
----------- ------------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (656,156) (1,763,487)
----------- ------------
Increase in Net Assets from Operations Applicable to Common Shares 3,913,525 2,840,086
----------- ------------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (7,774,891) (15,558,339)
----------- ------------
SHARE TRANSACTIONS:
Distributions reinvested 63,237 134,759
----------- ------------
Total Decrease in Net Assets Applicable to Common Shares (3,798,129) (12,583,494)
----------- ------------
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 202,764,874 215,348,368
------------ ------------
End of period (including undistributed net investment income of
$698,256 and $815,284, respectively) $198,966,745 $202,764,874
============ ============
NUMBER OF TRUST SHARES:
Common Shares:
Issued for distributions reinvested 9,789 19,955
Outstanding at:
Beginning of period 31,097,982 31,078,027
------------ ------------
End of period 31,107,771 31,097,982
------------ ------------
Preferred Shares:
Outstanding at end of period 4,800 4,800
------------ ------------
See notes to financial statements.
14
NOTES TO FINANCIAL STATEMENTS
May 31, 2003 (Unaudited)
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 accounting principles
generally accepted in the United States of America 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.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
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. Premium and discount are being
amortized and accreted, respectively for all debt securities.
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 May 31, 2003
was 0.93% for Series T and 1.10% for Series W. For the six months ended May 31,
2003, the Trust declared dividends to Auction Preferred shareholders amounting
to $656,156, representing an average APS dividend rate of 1.10%.
NOTE 2. FEDERAL TAX INFORMATION
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from accounting principles generally accepted
in the United States of America.
15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2003 (Unaudited)
The following capital loss carryforwards, determined as of November 30, 2002,
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:
On April 1, 2003, Colonial Management Associates, Inc. ("Colonial"), the
investment advisor to the Trust merged into Columbia Management Advisors, Inc.
("Columbia"), formerly known as Columbia Management Co., an indirect,
wholly-owned subsidiary of FleetBoston Financial Corporation. At the time of the
merger, Columbia assumed the obligations of Colonial with respect to the Trust.
The merger did not change the way the Trust is managed, the investment personnel
assigned to manage the Trust or the fees paid by the Trust to Columbia.
Columbia 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:
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
Bank and Trust Company ("State Street"). Columbia pays fees to State Street
under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Trust, Columbia 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 six months
ended May 31, 2003, the annualized net asset based fee rate was 0.033%. 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
Columbia 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 $476 of custody
fees were reduced by balance credits for the six months ended May 31, 2003. 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).
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 of the APS. At May 31, 2003,
there were no such restrictions on the Trust.
NOTE 5. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
During the six months ended May 31, 2003, purchases and sales of investments,
other than short-term obligations, were $16,867,255 and $29,794,093,
respectively.
Unrealized appreciation (depreciation) at May 31, 2003, based on cost of
investments for federal income tax purposes, was:
Gross unrealized appreciation $ 25,228,217
Gross unrealized depreciation (22,002,734)
------------
Net unrealized appreciation $ 3,225,483
============
16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2003 (Unaudited)
FUTURES CONTRACTS AND OPTIONS:
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 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 Columbia 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 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.
The Trust may write call and put options on futures it owns or in which it may
invest. Writing put options tends to increase the Trust's exposure to the
underlying instrument. Writing call options tends to decrease the Trust's
exposure to the underlying instrument. When the Trust writes a call or put
option, an amount equal to the premium received is recorded as a liability and
subsequently marked-to-market to reflect the current value of the option
written. Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are exercised or
closed are added to the proceeds or offset against the amounts paid on the
underlying future transaction to determine the realized gain or loss. The Trust
as a writer of an option has no control over whether the underlying future may
be sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the future underlying the written option.
There is the risk the Trust may not be able to enter into a closing transaction
because of an illiquid market.
The Trust may also purchase put and call options. Purchasing call options tends
to increase the Trust's exposure to the underlying instrument. Purchasing put
options tends to decrease the Trust's exposure to the underlying instrument. The
Fund pays a premium which is included in the Trust's Statement of Assets and
Liabilities as an investment and subsequently marked-to-market to reflect the
current value of the option. Premiums paid for purchasing options which expire
are treated as realized losses. The risk associated with purchasing put and call
options is limited to the premium paid. Premiums paid for purchasing options
which are exercised or closed are added to the amounts paid or offset against
the proceeds on the underlying future transaction to determine the realized gain
or loss.
Refer to the Trust's Investment Portfolio for a summary of open futures
contracts at May 31, 2003.
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 also, investing in non-rated securities offer the potential for high
current income and attractive total return, but involves certain risks.
The Trust may focus its investments in certain industries, subjecting it to
greater risk than a trust that is more diversified.
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 noted):
(UNAUDITED)
SIX MONTHS PERIOD
ENDED YEAR ENDED NOVEMBER 30, ENDED YEAR ENDED DECEMBER 31,
MAY 31, ---------------------------------- NOVEMBER 30, -------------------------
2003 2002 2001 2000 1999 (a) 1998 1997
--------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.52 $ 6.93 $ 6.92 $ 7.49 $ 8.49 $ 8.56 $ 8.34
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.27(b) 0.57(b)(c) 0.61(b) 0.62(d) 0.46 0.52 0.55
Net realized and unrealized gain (loss)
on investments and futures contracts (0.12) (0.42)(c) (0.04) (0.54) (0.92) (0.07) 0.22
--------- --------- --------- --------- --------- --------- ---------
Total from Investment Operations 0.15 0.15 0.57 0.08 (0.46) 0.45 0.77
--------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO PREFERRED
SHAREHOLDERS:
From net investment income (0.02) (0.06) (0.12) (0.16) (0.04) -- --
--------- --------- --------- --------- --------- --------- ---------
Total from Investment Operations
Applicable to Common
Shareholders 0.13 0.09 0.45 (0.08) (0.50) 0.45 0.77
--------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO COMMON
SHAREHOLDERS:
From net investment income (0.25) (0.50) (0.44) (0.48) (0.45) (0.52) (0.55)
--------- --------- --------- --------- --------- --------- ---------
LESS SHARE TRANSACTIONS:
Commission and offering costs --
preferred shares -- -- -- (0.01) (0.05) -- --
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 6.40 $ 6.52 $ 6.93 $ 6.92 $ 7.49 $ 8.49 $ 8.56
========= ========= ========= ========= ========= ========= =========
Market price per share --
common shares $ 6.64 $ 6.26 $ 6.38 $ 5.75 $ 6.13 $ 8.31 $ 8.63
========= ========= ========= ========= ========= ========= =========
Total return -- based on market value
-- common shares (e) 10.27%(f) 5.81% 18.56% 1.05% (21.72)%(f) 2.47% 11.60%
========= ========= ========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (g)(h) 1.52%(i) 1.49% 1.59% 1.60% 1.13%(i) 0.93% 0.96%
Net investment income before
preferred stock dividend (g)(h) 8.30%(i) 8.36%(c) 8.67% 8.63% 6.18%(i) 6.02% 6.54%
Net investment income after
preferred stock dividend (g)(h) 7.64%(i) 7.53%(c) 7.00% 6.37% 5.67%(i) 6.02% 6.54%
Portfolio turnover rate 5%(f) 15% 15% 10% 16%(f) 29% 17%
Net assets, end of period (000's) --
common shares $ 198,967 $ 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)Per share data was calculated using average shares outstanding during the
period.
(c)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 ratio of
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.
(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.
18
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
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%.
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE PER SHARE PER SHARE
-----------------------------------------------------------------------------------------------------------------
05/31/03 * $120,000,000 $66,451 $25,003 $25,000
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
* Unaudited.
** On August 26, 1999, the Trust began offering Auction Preferred Shares.
19
UNAUDITED INFORMATION
RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS
On May 21, 2003, the Annual Meeting of Shareholders of the Trust was held to
conduct a vote for or against the approval of the following items listed on the
Trust's Proxy Statement for said Meeting. On February 28, 2003, the record date
for the Meeting, the Trust had 31,097,982 common shares outstanding. The votes
cast were as follows:
PROPOSAL 1.
ELECTION OF TRUSTEES: FOR AGAINST
----------------------------------------------------------------------------
Janet Langford Kelly 26,687,466 466,588
Joseph R. Palombo 26,669,509 484,546
Anne-Lee Verville 26,687,736 466,319
On February 28,2003, the record date of the Meeting, the Trust had 4,800
preferred shares outstanding. The votes cast were as follows:
PROPOSAL 2
ELECTION OF TRUSTEES: FOR WITHHELD
----------------------------------------------------------------------------
Douglas A. Hacker 4,488 0
Janet Langford Kelly 4,488 0
Joseph R. Palombo 4,488 0
Anne-Lee Verville 4,488 0
Thomas E. Stitzel 4,488 0
20
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.
21
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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
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.
This report has been prepared for shareholders of Colonial High Income Municipal
Trust.
COLONIAL HIGH INCOME MUNICIPAL TRUST SEMIANNUAL REPORT
120-03/242O-0503 (07/03) 03/1843
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 at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable at this time.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The Registrant's Chief Executive Officer and Chief Financial Officer,
based on their evaluation of the Registrant's disclosure controls and procedures
as of June 20, 2003, have concluded that such controls and procedures are
adequately designed to ensure that information required to be disclosed by the
Registrant in its reports that it files or submits under the Securities Exchange
Act of 1934, as amended, is accumulated and communicated to the Registrant's
management, including the Chief Executive Officer and Chief Financial Officer,
or persons performing similar functions, as appropriate, to allow timely
decisions regarding required disclosure.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could affect these controls subsequent to the date of our
evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable at
this time.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act (17
CFR 270.30a-2) in the exact form set forth below: Attached hereto.
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 High Income Municipal Trust
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By (Signature and Title)* /s/ Joseph R. Palombo
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Joseph R. Palombo, President
Date August 6, 2003
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Joseph R. Palombo
----------------------------------------------
Joseph R. Palombo, President
Date August 6, 2003
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By (Signature and Title)* /s/ J. Kevin Connaughton
----------------------------------------------
J. Kevin Connaughton, Treasurer
Date August 6, 2003
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* Print the name and title of each signing officer under his or her signature.