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)
Vincent Pietropaolo, 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: 1-617-772-3698
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Date of fiscal year end: 11/30/2004
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Date of reporting period: 05/31/02004
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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, 2004
[PHOTO OF DOMED BUILDING]
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
PRESIDENT'S MESSAGE
July 21, 2004
Dear Shareholder:
We are pleased to let you know that FleetBoston Financial Corporation and Bank
of America Corporation have merged, effective April 1, 2004. As a result of the
merger, Columbia Management Group and your Colonial High Income Municipal Trust
became part of the Bank of America family of companies. Looking ahead, we
believe this merger will be a real benefit to our shareholders. Preserving and
leveraging our strengths, the combined organization intends to deliver
additional research and management capabilities, as well as new products. There
are no immediate changes planned for fund names, product lines, or customer
service contacts.
As you might know, on March 15, 2004, FleetBoston Financial announced an
agreement in principle with the staff of the Securities and Exchange Commission
("SEC") and the New York Attorney General ("NYAG") to settle charges involving
market timing in Columbia Management mutual funds. (You may also know that Bank
of America came to a similar settlement in principle at the same time.) The
agreement requires the final approval of the SEC and the NYAG. This settlement
in principle reflects our strong wish to put this regrettable situation behind
us. Columbia Management has taken and will continue to take steps to strengthen
policies, procedures and oversight to curb frequent trading of Columbia open-end
fund shares.
Both your fund's trustees and Columbia Management are committed to serving the
interests of our shareholders, and we will continue to work hard to help you
achieve your financial goals.
As always, thank you for choosing Colonial High Income Municipal Trust, and for
giving us the opportunity to help you build a strong financial future.
Sincerely,
/s/ Thomas C. Theobald /s/ J. Kevin Connaughton
Thomas C. Theobald J. Kevin Connaughton
Chairman, Board of Trustees President
J. Kevin Connaughton was named president of Colonial High Income Municipal Trust
on February 27, 2004.
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
[SIDEBAR DATA]:
PRICE PER SHARE AS OF 05/31/04 ($)
Net asset value 6.26
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Market price 5.79
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SIX-MONTH (CUMULATIVE) TOTAL
RETURN AS OF 05/31/04 (%)
Net asset value -1.07
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Market price -6.79
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Lipper High Yield Municipal
Debt Funds Category average 0.74
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All results shown assume reinvestment of distributions.
DISTRIBUTIONS DECLARED
PER COMMON SHARE 12/01/03-05/31/04 ($)
0.24
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A portion of the trust's income may be subject to the alternative minimum tax.
The trust may at times purchase tax-exempt securities at a discount from their
original issue price. Some or all of this discount may be included in the
trust's ordinary income, and any market discount is taxable when distributed.
TOP 5 SECTORS AS OF 05/31/04 (%)
Local general obligations 12.9
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Hospitals 11.5
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Congregate care retirement 6.3
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Investor owned utilities 6.0
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Multi-family 5.9
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QUALITY BREAKDOWN
AS OF 05/31/04 (%)
AAA 30.9
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AA 3.0
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A 10.5
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BBB 19.6
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BB 4.5
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B 0.3
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CCC 0.5
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C 0.1
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Non-rated 30.0
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Cash equivalents 0.6
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Sector breakdown is calculated as a percentage of net assets (including auction
preferred shares). Quality breakdown is calculated as a percentage of total
investments. 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 Ratings Ltd.
Because the trust is actively managed, there is no guarantee that the trust will
continue to invest in these sectors or maintain this quality breakdown in the
future.
For the six-month period ended May 31, 2004, Colonial High Income Municipal
Trust returned negative 1.07%, based on investment at net asset value. The trust
trailed its peer group, the Lipper High Yield Municipal Debt Funds Category,
which averaged a return of 0.74%.1
The trust's investments in multi-family housing and airline bonds detracted from
performance. Multi-family housing bonds declined as low interest rates allowed
more renters to become homeowners, resulting in high apartment vacancy rates.
Delta Air Lines and US Airways (0.1% and 0.2% of total investments,
respectively)2 turned in disappointing returns. The trust's above-average stake
in nursing home bonds further hampered returns.
The trust's slightly short duration hindered performance early on when stagnant
job growth drove interest rates lower. Duration is a measure, expressed in
years, of a bond's sensitivity to changes in interest rates. As interest rates
fell, bonds with shorter durations did not appreciate as much as bonds with
longer durations. We made up some, but not all, of this relative
underperformance in the spring when job growth picked up and interest rates
moved higher.
For the six-month period ended May 31, 2004, the trust had an even lower return
of negative 6.79%, based on its market price, as the discount to net asset value
increased. Fears that higher short-term interest rates would hurt the trust's
dividend yield put pressure on the trust's stock price.
LEVERAGE HELPED BOOST INCOME
During the period the trust derived added income from its leverage. These are
preferred shares, issued in 1999, which allowed the trust to borrow against its
underlying investments. We invested the proceeds from these shares in longer
maturity, higher-yielding bonds, while paying out a short-term rate that is
influenced by the federal funds rate. The trust earns the difference between the
rate paid to the preferred shareholders and the yield on the longer maturity
securities. With the federal funds rate at 1.0% during this reporting period,
the difference was significant and resulted in added income for the trust.
However, going forward, if the trend is toward higher interest rates, the rate
paid on the preferred shares could rise, lowering the income available for
paying dividends on the common shares.
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.
2 Holdings are disclosed as of May 31, 2004, and are subject to change.
1
PORTFOLIO MANAGER'S REPORT (CONTINUED)
To bolster the trust's yield, we sold some higher quality bonds and replaced
them with higher-yielding issues. We also replaced 30-year bonds with 20-year
bonds with nearly comparable yields but shorter durations, which should make
them less volatile as interest rates rise. These shorter-maturity bonds did
well.
The trust further benefited from its above-average stake in health care bonds,
which were strong performers. Specific issues, such as HealthEast, a Minnesota
hospital, and Eskaton Gold River Lodge, an elder care facility in northern
California (0.7% and 0.4% of total investments, respectively)2 rallied amid
credit improvements. In addition, we took advantage of attractive yields in the
retirement housing sector, buying bonds issued by well-run companies that were
expanding their facilities. We also purchased securities issued by Charter Mac,
a multi-family housing loan pool (1.0% of total investments).2
LOOKING AHEAD TO RISING INTEREST RATES
We plan to maintain the trust's slightly short duration on the expectation that
interest rates will rise gradually as job gains fuel the economy, while high oil
prices keep growth somewhat in check. In this environment, we continue to
believe that high-yield bonds will outpace higher quality issues.
/s/ Maureen G. Newman
Maureen G. Newman has been the portfolio manager of Colonial High Income
Municipal Trust since August 1998. Ms. Newman has managed various other
municipal funds for Columbia Management Advisors, Inc. or its predecessors since
May 1996.
Past performance is no guarantee of future investment results. Current
performance may be higher or lower than the performance data shown.
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.
2
INVESTMENT PORTFOLIO
May 31, 2004 (Unaudited)
MUNICIPAL BONDS - 96.5% PAR (S) VALUE (S)
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EDUCATION - 2.9%
CA Educational Facilities Authority,
Loyola Marymount University,
Series 2001,
(a) 10/01/19 2,025,000 915,786
CA Public Works Board, Lease Revenue,
UCLA, Series 2002 A,
5.375% 10/01/15 1,010,000 1,089,780
CA Statewide Community Development
Authority, Crossroads School for
Arts & Sciences, Series 1998,
6.000% 08/01/28 (b) 1,280,000 1,303,629
IL Development Finance Authority,
Latin School of Chicago, Series 1998,
5.650% 08/01/28 230,000 230,860
MA Development Finance Agency,
Western New England College,
Series 2002,
6.125% 12/01/32 300,000 299,796
MA Industrial Finance Agency:
Cambridge Friends School,
Series 1998,
5.800% 09/01/28 1,000,000 945,260
St. John's High School,
Series 1998,
5.350% 06/01/28 300,000 292,326
MI Southfield Economic Development
Corp., Lawrence University,
Series 1998 A,
5.400% 02/01/18 1,000,000 992,290
NC Capital Facilities Finance
Authority, Meredith College,
Series 2001,
5.125% 06/01/16 1,000,000 1,047,460
VT Educational & Health Buildings
Finance Agency, Norwich University,
Series 1998,
5.500% 07/01/21 1,500,000 1,511,490
WV University, Series 2000 A,
(a) 04/01/19 1,000,000 466,780
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EDUCATION TOTAL 9,095,457
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HEALTH CARE - 25.2%
CONGREGATE CARE RETIREMENT - 6.3%
CA Association of Bay Area Governments
Finance Authority for Nonprofit
Corps., Eskaton Gold River Lodge,
Series 1998:
6.375% 11/15/15 675,000 696,485
6.375% 11/15/28 550,000 551,914
CA La Verne Certificates of Participation,
Brethren Hillcrest Home, Series 2003 B,
6.625% 02/15/25 690,000 693,588
CA Statewide Community Development
Authority, Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 (b) 1,000,000 1,089,520
PAR (S) VALUE (S)
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CT Development Authority, First
Mortgage, The Elim Park Baptist,
Inc. Project, Series 2003,
5.850% 12/01/33 660,000 656,139
FL Capital Projects Finance Authority,
Continuing Care Retirement,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 750,000 737,415
FL Lee County Industrial Development
Authority, Shell Point Village Project,
Series 1999 A,
5.500% 11/15/29 600,000 554,472
GA Fulton County Residential Care
Facilities, Canterbury Court Project,
Series 2004 A,
6.125% 02/15/34 750,000 727,568
GA Savannah Economic Development
Authority, 1st Mortgage, Marshes of
Skidaway, Series 2003 A,
7.400% 01/01/34 465,000 450,250
HI Department of Budget & Finance,
Kahala Nui Project, Series 2003 A,
8.000% 11/15/33 1,000,000 993,500
IL Health Facilities Authority Revenue:
Lutheran Senior Ministries,
Series 2001,
7.375% 08/15/31 300,000 291,150
Washington and Jane Smith Community,
Series 2003 A,
7.000% 11/15/32 725,000 708,274
KS Manhattan, Meadowlark Hills Retirement
Home, Series 1999 A,
6.375% 05/15/20 650,000 653,237
MA Boston Industrial Development
Financing Authority, Springhouse, Inc.,
Series 1988,
5.875% 07/01/20 255,000 245,988
MA Development Finance Agency,
Loomis Communities:
Series 1999 A,
5.625% 07/01/15 400,000 381,976
Series 2002 A,
6.900% 03/01/32 100,000 101,651
MD Westminister Economic Development,
Carroll Lutheran Village, Inc.,
Series 2004 A:
5.875% 05/01/21 500,000 491,615
6.250% 05/01/34 250,000 247,350
NH Higher Educational & Health
Facilities Authority, Rivermead at
Peterborough, Series 1998:
5.625% 07/01/18 500,000 459,195
5.750% 07/01/28 500,000 437,480
NJ Economic Development Authority,
Seabrook Village, Inc., Series 2000 A,
8.250% 11/15/30 625,000 662,738
3
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
CONGREGATE CARE RETIREMENT (CONTINUED)
PA County Authority, Dunwoody
Village, Series 2003 A,
5.375% 04/01/17 600,000 613,296
PA Lancaster Industrial Development
Authority, Garden Spot Village,
Series 2000 A,
7.625% 05/01/31 500,000 521,155
PA Philadelphia Authority for Industrial
Development, Baptist Home of Philadelphia,
Series 1998 A,
5.500% 11/15/18 360,000 321,019
TN Metropolitan Government, Nashville &
Davidson Counties, Blakeford at Green
Hills, Series 1998,
5.650% 07/01/24 600,000 534,936
TN Shelby County Health, Educational &
Housing Facilities Board, Germantown
Village, Series 2003 A,
7.250% 12/01/34 900,000 871,965
TX Abilene Health Facilities Development
Corp., Sears Methodist Retirement
Obligated Group:
Series 1998 A,
5.900% 11/15/25 1,000,000 917,740
Series 2003 A,
7.000% 11/15/33 300,000 302,553
TX Houston Health Facilities Development
Corp., Buckingham Senior Living
Community, Inc., Series 2004 A,
7.125% 02/15/34 500,000 484,865
WI Health & Educational
Facilities Authority:
Attic Angel Obligated Group,
Series 1998,
5.750% 11/15/27 1,000,000 875,230
Clement Manor, Series 1998,
5.750% 08/15/24 1,300,000 1,146,561
Three Pillars Senior Living
Communities, Series 2003,
5.750% 08/15/26 500,000 482,935
United Lutheran Program for Aging, Inc.,
Series 1998,
5.700% 03/01/28 1,000,000 877,190
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Congregate Care Retirement Total 19,780,950
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HEALTH SERVICES - 0.7%
MA Development Finance Agency,
Boston Biomedical Research Institute,
Series 1999:
5.650% 02/01/19 200,000 188,378
5.750% 02/01/29 450,000 416,003
MA Health & Educational Facilities
Authority, Civic Investments, Inc.,
Series 1999 A,
9.000% 12/15/15 1,000,000 1,123,730
PAR (S) VALUE (S)
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MN Minneapolis & St. Paul Housing &
Redevelopment Authority, Healthpartners
Project, Series 2003,
6.000% 12/01/21 500,000 515,330
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Health Services Total 2,243,441
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HOSPITALS - 11.5%
AR Conway Health Facilities Board,
Conway Regional Medical Center:
Series 1999 A,
6.400% 08/01/29 425,000 440,304
Series 1999 B,
6.400% 08/01/29 1,000,000 1,034,820
AZ Yavapai County Industrial Development
Authority, Yavapai Regional Medical Center,
Series 2003 A,
6.000% 08/01/33 275,000 275,742
CA Health Facilities Financing
Authority, Cedars-Sinai Medical Center,
Series 1999 A,
6.125% 12/01/30 750,000 791,272
CA Rancho Mirage Joint Powers
Financing Authority, Eisenhower
Medical Center, Series 2004,
5.625% 07/01/29 1,000,000 992,630
CO Health Facilities Authority:
National Jewish Medical & Research Center:
Series 1998,
5.375% 01/01/23 330,000 307,058
Series 1998 B,
5.375% 01/01/29 750,000 674,130
Parkview Medical Center, Inc.,
Series 2001,
6.600% 09/01/25 300,000 310,395
FL Orange County Health Facilities
Authority, Orlando Regional Healthcare,
Series 2002,
5.750% 12/01/32 200,000 202,682
FL South Lake County Hospital District,
South Lake Hospital, Inc., Series 2003,
6.375% 10/01/34 500,000 498,815
FL Tampa, H. Lee Moffitt Cancer
Center, Series 1999 A,
5.750% 07/01/29 2,000,000 2,024,240
FL West Orange Healthcare District,
Series 2001 A,
5.650% 02/01/22 525,000 525,598
IL Health Facilities Authority:
Swedish American Hospital, Series 2000,
6.875% 11/15/30 500,000 543,865
Thorek Hospital & Medical Center,
Series 1998,
5.250% 08/15/18 600,000 564,420
IL Southwestern Illinois Development
Authority, Anderson Hospital,
Series 1999,
5.500% 08/15/20 225,000 218,176
See notes to investment portfolio.
4
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
IN Health Facility Authority, Community
Foundation, Northwest Indiana, Inc.,
Series 2004 A,
6.000% 03/01/34 575,000 548,096
LA Public Facilities Authority,
Touro Infirmary, Series 1999,
5.625% 08/15/29 350,000 344,180
MA Health & Educational
Facilities Authority:
Jordan Hospital, Series 2003 E,
6.750% 10/01/33 500,000 508,665
Milford-Whitinsville Regional Hospital,
Series 2002 D,
6.350% 07/15/32 1,000,000 1,002,510
MD Health & Higher Education
Facilities Authority, Adventist Healthcare,
Series 2003 A:
5.000% 01/01/16 400,000 391,040
5.750% 01/01/25 600,000 594,252
MI Dickinson County Healthcare System,
Series 1999,
5.700% 11/01/18 750,000 719,370
MI Flint Hospital Building Authority,
Hurley Medical Center, Series 1998 A,
5.375% 07/01/20 450,000 412,852
MN St. Paul Housing & Redevelopment
Authority, HealthEast Project,
Series 1997 A,
5.700% 11/01/15 1,000,000 956,180
MN Washington County Housing &
Redevelopment Authority,
HealthEast, Inc., Series 1998,
5.250% 11/15/12 1,300,000 1,253,681
NC Medical Care Commission,
Stanly Memorial Hospital, Series 1999,
6.375% 10/01/29 1,915,000 2,025,821
NH Higher Educational Facilities Authority:
Catholic Medical Center,
Series 2002,
6.125% 07/01/32 400,000 400,120
Littleton Hospital Association, Inc.,
Series 1998 A:
5.900% 05/01/28 780,000 672,617
6.000% 05/01/28 625,000 546,113
NJ Health Care Facilities Financing
Authority Revenue, Capital Health
Systems Obligated Group,
Series, 2003 A,
5.000% 07/01/23 650,000 661,005
NV Henderson Healthcare Facility
Revenue, Catholic Healthcare West,
Series 1998,
5.375% 07/01/26 500,000 461,420
PAR (S) VALUE (S)
-----------------------------------------------------------
NY State Dormitory Authority Revenue:
North Shore - Long Island Jewish
Medical Center, Series 2003,
5.500% 05/01/33 300,000 299,553
South Nassau Communities
Hospital, Series 2003,
5.500% 07/01/23 550,000 555,847
OH Belmont County, East Ohio
Regional Hospital, Series 1998,
5.700% 01/01/13 900,000 798,642
OH Highland County Joint Township
Hospital District, Series 1999,
6.750% 12/01/29 950,000 878,285
OH Lakewood Hospital Improvement
Revenue, Lakewood Hospital
Association, Series 2003,
5.500% 02/15/14 600,000 633,468
OH Miami County, Upper Valley Medical
Center, Inc., Series 1996 A,
6.375% 05/15/26 1,000,000 1,019,010
OH Sandusky County, County
Memorial Hospital,
Series 1998,
5.150% 01/01/10 250,000 251,193
PA Allegheny County Hospital
Development, Ohio Valley General
Hospital, Series 1998 A,
5.450% 01/01/28 1,000,000 898,500
PA Pottsville Hospital Authority, Pottsville
Hospital & Warne Clinic, Series 1998,
5.500% 07/01/18 1,000,000 911,990
SC Jobs-Economic Development
Authority, Bon Secours Health
Care Systems, Inc., Series 2002 A,
5.500% 11/15/23 1,750,000 1,693,143
SC Lexington County Health Services
District, Inc., Hospital Improvement,
Series 2003,
5.500% 11/01/23 750,000 753,248
TX Comal County Health Facilities
Development, McKenna Memorial,
Series 2002 A,
6.250% 02/01/32 500,000 500,940
TX Richardson Hospital Authority,
Baylor Richardson Medical Center,
Series 1998,
5.625% 12/01/28 1,000,000 935,170
TX Tyler Health Facilities Development
Corp., Mother Frances Hospital,
Series 2001,
6.000% 07/01/31 1,000,000 1,006,930
VA Prince William County Industrial
Development Authority Revenue,
Potomac Hospital Corp., Series 2003,
5.200% 10/01/30 650,000 618,651
See notes to investment portfolio.
5
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
VT Educational & Health Buildings Finance
Agency, Brattleboro Memorial Hospital,
Series 1998,
5.375% 03/01/28 1,075,000 975,272
WA Health Care Facilities Authority,
Kadlec Medical Center,
Series 2001,
5.875% 12/01/21 600,000 636,924
WI Health & Educational
Facilities Authority:
Aurora Health Care, Inc.,
Series 2003,
6.400% 04/15/33 525,000 540,782
Fort HealthCare, Inc. Project,
Series 2004,
5.750% 05/01/29 1,000,000 976,670
Wheaton Franciscan Services,
Series 2002,
5.750% 08/15/30 600,000 615,648
-----------
Hospitals Total 36,401,935
-----------
INTERMEDIATE CARE FACILITIES - 1.0%
IL Health Facilities Financing Authority,
Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 1,200,000 974,184
IN Health Facilities Financing
Authority, Hoosier Care, Inc.,
Series 1999 A,
7.125% 06/01/34 150,000 121,773
PA Economic Development
Financing Authority, Northwestern
Human Services, Inc., Series 1998 A,
5.250% 06/01/14 2,510,000 1,997,835
-----------
Intermediate Care Facilities Total 3,093,792
-----------
NURSING HOMES - 5.7%
AK Juneau, St. Ann's Care Center,
Series 1999,
6.875% 12/01/25 1,250,000 1,257,175
CO Health Facilities Authority:
American Housing Foundation I, Inc.
Project, Series 2003,
8.500% 12/01/31 470,000 443,215
Pioneer Healthcare, Series 1989,
10.500% 05/01/19 1,790,000 1,519,137
Volunteers of America:
Series 1998 A:
5.450% 07/01/08 300,000 291,867
5.750% 07/01/20 865,000 763,224
Series 1999 A,
6.000% 07/01/29 350,000 305,035
PAR (S) VALUE (S)
------------------------------------------------------------
IA Finance Authority,
Care Initiatives Project:
Series 1996,
9.250% 07/01/25 985,000 1,147,436
Series 1998 B:
5.750% 07/01/18 550,000 494,488
5.750% 07/01/28 1,475,000 1,231,197
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/01/17 (c) 1,330,000 665,000
IN Michigan City Health Facilities,
Metro Health Foundation, Inc. Project,
Series 1993,
11.000% 11/01/22 (d) 3,085,000 401,050
MA Development Finance Agency:
Alliance Health Care Facilities,
Series 1999,
7.100% 07/01/32 1,300,000 1,223,079
American Health Woodlawn Manor, Inc.:
Series 2000 A,
7.750% 12/01/27 1,533,135 1,282,835
Series 2000 B,
10.250% 06/01/27 (c) 475,907 327,338
MN Sartell, Foundation for Healthcare,
Series 1999 A,
6.625% 09/01/29 1,145,000 1,082,380
PA Chester County Industrial
Development Authority, RHA Nursing
Home, Series 2002,
8.500% 05/01/32 1,595,000 1,519,126
PA Washington County Industrial
Development Authority, AHF
Project, Series 2003,
6.500% 01/01/29 1,211,000 1,127,041
TN Metropolitan Government,
Nashville & Davidson Counties
Health & Education Facilities,
AHF Project, Series 2003,
6.500% 01/01/29 1,141,000 1,061,894
TX Kirbyville Health Facilities
Development Corp., Heartway III
Project, Series 1997 A,
10.000% 03/20/18 (c) 668,626 234,019
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
Series 1996,
7.100% 02/20/36 1,000,000 1,165,400
WI Health & Educational Facilities
Authority, Metro Health Foundation, Inc.,
Series 1993,
11.000% 11/01/22 (d) 2,775,000 360,750
-----------
Nursing Homes Total 17,902,686
-----------
HEALTH CARE TOTAL 79,422,804
-----------
-----------------------------------------------------------
See notes to investment portfolio.
6
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HOUSING - 8.6%
ASSISTED LIVING/SENIOR - 2.7%
DE Kent County, Heritage at Dover,
Series 1999, AMT,
7.625% 01/01/30 1,690,000 1,395,517
GA Columbus Housing Authority, The
Gardens at Calvary, Series 1999,
7.000% 11/15/19 495,000 417,404
IL Development Finance Authority,
Care Institute, Inc., Series 1995,
8.250% 06/01/25 1,245,000 1,183,895
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 (c) 1,740,000 1,131,000
NC Medical Care Commission,
DePaul Community Facilities Project,
Series 1999,
7.625% 11/01/29 1,470,000 1,497,357
NY Huntington Housing Authority, Gurwin
Jewish Senior Center, Series 1999:
5.875% 05/01/19 700,000 653,023
6.000% 05/01/29 775,000 704,235
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
Series 1994,
9.000% 11/01/24 1,700,000 1,532,686
-----------
Assisted Living/Senior Total 8,515,117
-----------
MULTI-FAMILY - 5.9%
AZ Maricopa County Industrial Development
Authority, National Health Facilities,
Series 1998 A,
5.100% 01/01/33 4,500,000 4,434,480
DE Wilmington, Electra Arms Senior
Association Project, Series 1998, AMT,
6.250% 06/01/28 940,000 740,006
FL Broward County Housing Finance
Authority, Chaves Lake Apartment Project,
Series 2000, AMT,
7.500% 07/01/40 750,000 735,225
FL Clay County Housing Finance Authority,
Madison Commons Apartments,
Series 2000 A, AMT,
7.450% 07/01/40 740,000 729,892
MN Lakeville, Southfork Apartments Project:
Series 1989 A,
9.875% 02/01/20 2,570,000 2,575,191
Series 1989 B,
(a) 02/01/20 903,000 446,804
MN Robbinsdale Economic
Development Authority, Broadway
Court, Series 1999 A,
6.875% 01/01/26 500,000 448,265
MN Washington County Housing &
Redevelopment Authority, Cottages
of Aspen, Series 1992, AMT,
9.250% 06/01/22 990,000 1,012,117
PAR (S) VALUE (S)
-----------------------------------------------------------
MN White Bear Lake, Birch Lake
Townhome Project:
Series 1989 A, AMT,
10.250% 07/15/19 2,200,000 2,201,540
Series 1989 B, AMT,
(a) 07/15/19 691,000 336,109
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
Series 1979,
7.375% 06/01/21 267,139 258,887
Resolution Trust Corp., Pass-Through
Certificates, Series 1993 A,
8.500% 12/01/16 (e) 546,075 523,445
TX Affordable Housing Corp.,
NHT/GTEX Project, Series 2001 C,
10.000% 10/01/31 (c) 870,000 217,500
TX Department of Housing &
Community Affairs, Pebble Brooks
Apartments, Series 1998, AMT,
5.500% 12/01/18 1,000,000 1,031,400
TN Franklin Industrial Development
Board, Landings Apartment Project,
Series 1996 B,
8.750% 04/01/27 845,000 864,866
TX El Paso County Housing Finance Corp.,
American Village Communities:
Series 2000 C,
8.000% 12/01/32 385,000 389,481
Series 2000 D,
10.000% 12/01/32 415,000 421,611
VA Alexandria Redevelopment & Housing
Authority, Courthouse Commons
Apartments, Series 1990 A, AMT,
10.000% 01/01/21 1,500,000 1,287,195
-----------
Multi-Family Total 18,654,014
-----------
HOUSING TOTAL 27,169,131
-----------
-----------------------------------------------------------
INDUSTRIAL - 4.3%
FOOD PRODUCTS - 1.2%
GA Cartersville Development Authority,
Anheuser Busch Project, Series 1989 A,
AMT,
5.950% 02/01/32 1,000,000 1,024,570
IN Hammond, American Maize
Products Co., Series 1994, AMT,
8.000% 12/01/24 510,000 535,576
LA Southern Louisiana Port Commission,
Cargill, Inc. Project, Series 1997,
5.850% 04/01/17 1,000,000 1,047,820
MI Strategic Fund, Michigan
Sugar Co., Sebewaing Project,
Series 1998 A,
6.250% 11/01/15 1,250,000 1,167,413
-----------
Food Products Total 3,775,379
-----------
See notes to investment portfolio.
7
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
INDUSTRIAL (CONTINUED)
FOREST PRODUCTS - 1.5%
AL Camden Industrial Development
Board, Weyerhaeuser Co.,
Series 2003 B, AMT,
6.375% 12/01/24 550,000 573,270
AL Courtland Industrial Development
Board Environmental Improvement
Revenue, International Paper Co.,
Series 2003 B, AMT,
6.250% 08/01/25 1,000,000 1,015,230
AL Phenix City Industrial Development
Board Environmental Improvement
Revenue, Meadwestvaco Corp.,
Series 2002 A, AMT,
6.350% 05/15/35 550,000 567,292
GA Rockdale County Development
Authority, Solid Waste Disposal,
Visy Paper, Inc., Series 1993, AMT,
7.500% 01/01/26 1,800,000 1,844,406
MI Delta County Economic Development
Corp., Environmental Import, Mead
Westvaco-Escanaba, Series 2002 B, AMT,
6.450% 04/15/23 450,000 464,238
VA Bedford County Industrial Development
Authority, Nekoosa Packaging Corp.,
Series 1998, AMT,
5.600% 12/01/25 400,000 357,192
-----------
Forest Products Total 4,821,628
-----------
MANUFACTURING - 0.6%
IL Will-Kankakee Regional Development
Authority, Flanders Corp. Precisionaire
Project, Series 1997, AMT,
6.500% 12/15/17 820,000 799,918
TX Trinity River Authority, Texas
Instruments Project,
Series 1996, AMT,
6.200% 03/01/20 1,000,000 1,038,750
-----------
Manufacturing Total 1,838,668
-----------
METALS & MINING - 0.3%
NV Department of Business & Industry,
Wheeling-Pittsburgh Steel Corp.,
Series 1999 A, AMT,
8.000% 09/01/14 (e) 948,387 722,519
VA Greensville County Industrial Development
Authority, Wheeling-Pittsburgh Steel Corp.,
Series 1999 A, AMT,
7.000% 04/01/14 500,000 386,555
-----------
Metals & Mining Total 1,109,074
-----------
OIL & GAS - 0.7%
TX Gulf Coast Industrial Development
Authority, Solid Waste Disposal,
Citgo Petroleum, Series 1998, AMT,
8.000% 04/01/28 500,000 521,685
PAR (S) VALUE (S)
-----------------------------------------------------------
VI Government Refinery Facilities,
Hovensa Coker Project,
Series 2002, AMT,
6.500% 07/01/21 (b) 375,000 396,304
VI Public Finance Authority, Refinery
Facilities Revenue, Hovensa Refinery:
Series 2003, AMT,
6.125% 07/01/22 525,000 540,498
Series 2004, AMT,
5.875% 07/01/22 600,000 607,248
-----------
Oil & Gas Total 2,065,735
-----------
INDUSTRIAL TOTAL 13,610,484
-----------
-----------------------------------------------------------
OTHER - 7.3%
OTHER - 0.4%
NY Convention Center Operating Corp.,
Yale Building Project, Series 2003,
(a) 06/01/08 1,700,000 1,411,527
-----------
Other Total 1,411,527
-----------
POOL/BOND BANK - 0.3%
MI Municipal Bond Authority, Local
Government Loan Project, Series 2001 A,
5.375% 11/01/17 750,000 803,715
-----------
Pool/Bond Bank Total 803,715
-----------
REFUNDED/ESCROWED (F) - 5.4%
CO Denver City & County Airport,
Series 1992 C, AMT,
6.125% 11/15/25 5,120,000 5,417,403
CT Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996, AMT,
8.250% 12/01/06 480,000 525,322
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 695,000 771,492
GA Forsyth County Hospital Authority,
Georgia Baptist Healthcare System,
Series 1998,
6.000% 10/01/08 760,000 818,193
ID Health Facilities Authority,
IHC Hospitals, Inc., Series 1992,
6.650% 02/15/21 1,750,000 2,147,407
IL University of Illinois, Series 2001 A,
5.500% 08/15/17 685,000 766,953
NC Lincoln County, Lincoln County
Hospital, Series 1991,
9.000% 05/01/07 190,000 212,525
NY New York City,
Series 1997 A,
7.000% 08/01/07 40,000 44,702
PA Delaware County, Health Facilities,
Series 1996:
6.000% 12/15/16 1,400,000 1,541,316
6.000% 12/15/26 1,000,000 1,094,420
See notes to investment portfolio.
8
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
OTHER (CONTINUED)
REFUNDED/ESCROWED (F) (CONTINUED)
TN Shelby County, Health, Education &
Housing Facilities Board, Open Arms
Development Center:
Series 1992 A,
9.750% 08/01/19 830,000 1,018,559
Series 1992 C,
9.750% 08/01/19 810,000 991,408
TX Board of Regents, University of Texas,
Series 2001 B,
5.375% 08/15/18 650,000 720,902
WV Hospital Finance Authority, Charleston
Medical Center, Series 2000 A,
6.750% 09/01/30 805,000 960,132
-----------
Refunded/Escrowed Total 17,030,734
-----------
TOBACCO - 1.2%
CA Golden State Tobacco Securitization
Authority, Asset Backed:
Series 2003 A-1,
6.250% 06/01/33 1,800,000 1,619,028
Series 2003 B,
5.500% 06/01/43 750,000 726,615
NJ Tobacco Settlement Financing Corp.,
Series 2003,
6.750% 06/01/39 1,500,000 1,328,055
WA Tobacco Settlement Authority,
Series 2002,
6.625% 06/01/32 250,000 218,023
-----------
Tobacco Total 3,891,721
-----------
OTHER TOTAL 23,137,697
-----------
-----------------------------------------------------------
OTHER REVENUE - 2.3%
HOTELS - 0.3%
PA Philadelphia Authority for Industrial
Development, Doubletree Project,
Series 1997 A,
6.500% 10/01/27 1,000,000 1,005,760
-----------
Hotels Total 1,005,760
-----------
RECREATION - 1.4%
CA Agua Caliente, Band of Cahuilla
Indians Revenue, Series 2003,
5.600% 07/01/13 1,000,000 991,250
CT Gaming Authority, Mohegan Tribe,
Series 2001,
6.250% 01/01/31 (e) 275,000 284,713
CT Mashantucket Western Pequot
Tribe, Series 1999 B,
(a) 09/01/16 (e) 1,000,000 498,050
FL Capital Trust Agency, Seminole Tribe
Convention Center, Series 2002 A,
10.000% 10/01/33 (e) 1,350,000 1,623,969
NM Red River Sports Facility, Red River
Ski Area Project, Series 1998,
6.450% 06/01/07 800,000 805,384
-----------
Recreation Total 4,203,366
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
RETAIL - 0.6%
NJ Economic Development Authority,
Glimcher Properties LP Project,
Series 1998, AMT,
6.000% 11/01/28 1,250,000 1,258,700
OH Lake County, North Madison Properties,
Series 1993,
8.819% 09/01/11 675,000 662,337
-----------
Retail Total 1,921,037
-----------
OTHER REVENUE TOTAL 7,130,163
-----------
-----------------------------------------------------------
RESOURCE RECOVERY - 1.3%
DISPOSAL - 0.4%
MA Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 435,000 445,797
UT Carbon County, Laidlaw Environmental:
Series 1995 A, AMT,
7.500% 02/01/10 250,000 253,615
Series 1997 A, AMT,
7.450% 07/01/17 500,000 505,425
-----------
Disposal Total 1,204,837
-----------
RESOURCE RECOVERY - 0.9%
MA Development Finance Agency,
Ogden Haverhill Project,
Series 1999 A, AMT,
6.700% 12/01/14 250,000 260,887
MA Industrial Finance Agency,
Ogden Haverhill Project,
Series 1998 A, AMT,
5.500% 12/01/13 500,000 489,700
PA Delaware County Industrial Development
Authority, BFI Project, Series 1997 A,
6.200% 07/01/19 2,000,000 2,048,520
-----------
Resource Recovery Total 2,799,107
-----------
RESOURCE RECOVERY TOTAL 4,003,944
-----------
-----------------------------------------------------------
TAX-BACKED - 25.3%
LOCAL APPROPRIATED - 0.5%
CA Compton Certificates of Participation,
Civic Center & Capital Improvements,
Series 1997 A,
5.500% 09/01/15 1,000,000 1,019,080
SC Dorchester County School District No. 2,
Installment Purchase Revenue,
Series 2004,
5.250% 12/01/29 650,000 626,132
-----------
Local Appropriated Total 1,645,212
-----------
LOCAL GENERAL OBLIGATIONS - 12.9%
CA East Side Union High School District,
Series 2003 B,
5.100% 02/01/20 1,000,000 1,060,870
CA Fresno Unified School District,
Series 2002 A,
6.000% 02/01/18 2,000,000 2,319,340
See notes to investment portfolio.
9
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
LOCAL GENERAL OBLIGATIONS (CONTINUED)
CA Los Angeles Unified School District,
Series 2002,
5.750% 07/01/16 700,000 794,899
CA Montebello Unified School District,
Series 2001:
(a) 08/01/21 1,435,000 575,622
(a) 08/01/23 1,505,000 531,747
CA San Juan Unified School District,
Series 2001,
(a) 08/01/19 2,210,000 1,008,091
IL Chicago Board of Education,
Series 1997 A,
5.250% 12/01/30 (g) 14,470,000 14,559,280
IL Cook County, Series 1997 A,
5.625% 11/15/22 4,200,000 4,496,226
NY New York City:
Series 1997 A,
7.000% 08/01/07 960,000 1,053,302
Series 1997 H,
6.000% 08/01/17 1,400,000 1,506,344
TX Dallas County Flood Control,
District No. 1,
Series 2002,
7.250% 04/01/32 1,000,000 1,012,300
TX Irving Independent School District,
Series 1997,
(a) 02/15/18 1,000,000 497,250
TX San Antonio Independent School District,
Series 1997,
5.000% 08/15/27 9,000,000 8,815,320
WA Clark County School District No. 37,
Series 2001 C,
(a) 12/01/18 5,000,000 2,387,650
-----------
Local General Obligations Total 40,618,241
-----------
SPECIAL NON-PROPERTY TAX - 3.6%
CA San Diego Redevelopment Agency,
Series 2001,
(a) 09/01/22 1,910,000 710,520
FL Northern Palm Beach County
Improvement District, Series 1999,
6.000% 08/01/29 750,000 808,222
IL Metropolitan Pier & Exposition Authority,
McCormick Place Expansion Project,
Series 1993 A,
(a) 06/15/16 10,000,000 5,541,900
OH Hamilton County,
Series 2000 B,
(a) 12/01/21 5,000,000 2,035,300
PR Commonwealth Highway &
Transportation Authority,
Series 2003 AA:
5.500% 07/01/18 500,000 559,520
5.500% 07/01/20 1,500,000 1,668,555
-----------
Special Non-Property Tax Total 11,324,017
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
SPECIAL PROPERTY TAX - 4.1%
CA Carson, Series 1992,
7.375% 09/02/22 35,000 35,383
CA Huntington Beach Community Facilities
District, Grand Coast Resort,
Series 2001-1,
6.450% 09/01/31 750,000 764,010
CA Oakdale Public Financing Authority,
Tax Allocation Revenue, Central City
Redevelopment Project,
Series 2004,
5.375% 06/01/33 1,375,000 1,297,092
CA Orange County Community Facilities
District, Ladera Ranch,
Series 1999 A,
6.700% 08/15/29 500,000 523,135
CA Orange County Improvement Bond
Act 1915, Phase IV, No. 01-1-B,
Series 2003
5.750% 09/02/33 500,000 498,545
CA Placer Unified High School District,
Series 2000 A,
(a) 08/01/19 1,700,000 776,611
CA Redwood City Community Facilities
District, No. 1, Redwood, Series 2003 B,
5.950% 09/01/28 600,000 607,164
CA Riverside County Public Financing
Authority, Redevelopment Projects,
Series 1997 A,
5.500% 10/01/22 650,000 652,931
CA Temecula Valley Unified School
District, No. 02-1, Series 2003,
6.125% 09/01/33 400,000 399,952
FL Celebration Community Development
District, Special Assessment,
Series 2003 A,
6.400% 05/01/34 1,000,000 1,013,480
FL Colonial Country Club Community
Development, Capital Improvement
Series 2003,
6.400% 05/01/33 740,000 755,533
FL Double Branch Community
Development District, Special
Assessment, Series 2002 A,
6.700% 05/01/34 700,000 733,341
FL Heritage Palms Community
Development District, Series 1999,
6.250% 11/01/04 465,000 466,827
FL Islands at Doral Southwest
Community Development District,
Series 2003,
6.375% 05/01/35 380,000 388,128
See notes to investment portfolio.
10
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
SPECIAL PROPERTY TAX (CONTINUED)
FL Lexington Oaks Community
Development District:
Series 1998 A,
6.125% 05/01/19 345,000 348,126
Series 1998 B,
5.500% 05/01/05 35,000 35,112
Series 2000 A,
7.200% 05/01/30 285,000 297,754
Series 2002 A,
6.700% 05/01/33 250,000 258,335
FL Orlando, Conroy Road Interchange
Project, Series 1998 A:
5.500% 05/01/10 180,000 182,900
5.800% 05/01/26 300,000 299,676
FL Stoneybrook Community
Development District:
Series 1998 A,
6.100% 05/01/19 315,000 317,980
Series 1998 B,
5.700% 05/01/08 40,000 40,220
FL Westchester Community Development
District No. 1 Special Assessment,
Series 2003,
6.125% 05/01/35 425,000 422,446
MI Pontiac Finance Authority, Development
Area No. 3, Series 2002,
6.375% 06/01/31 550,000 544,071
MI Taylor Tax Increment Finance Authority,
Series 2001,
5.375% 05/01/17 1,220,000 1,302,301
-----------
Special Property Tax Total 12,961,053
-----------
STATE APPROPRIATED - 1.3%
CA State Public Works Board Lease
Revenue, Coalinga State Hospital,
Series 2004 A,
5.500% 06/01/19 1,000,000 1,048,630
NY State Urban Development Corp.,
University Facilities Grants, Series 1995,
5.875% 01/01/21 1,000,000 1,125,640
PR Commonwealth of Puerto Rico
Public Finance Corp., Series 2002 E,
6.000% 08/01/26 1,800,000 1,998,180
-----------
State Appropriated Total 4,172,450
-----------
STATE GENERAL OBLIGATIONS - 2.9%
CA, Series 2003,
5.250% 02/01/23 380,000 380,418
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 1,700,000 1,797,070
TX, Series 1999 ABC,
5.500% 08/01/35 4,200,000 4,333,644
WA, Series 1999 B,
5.000% 01/01/24 2,500,000 2,505,975
-----------
State General Obligations Total 9,017,107
-----------
TAX-BACKED TOTAL 79,738,080
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
TRANSPORTATION - 6.1%
AIR TRANSPORTATION - 2.7%
CA Los Angeles Regional Airport,
LAXFuel Corp.,
Series 2001, AMT,
5.250% 01/01/23 750,000 743,812
CO Denver City & County Airport,
United Airlines, Inc.,
Series 1992 A, AMT,
6.875% 10/01/32 (d) 1,645,000 1,246,137
FL Capital Trust Agency Revenue,
Air Cargo - Orlando Project,
Series 2003, AMT,
6.750% 01/01/32 500,000 462,365
KY Kenton County Airport Board,
Delta Air Lines, Inc.,
Series 1992 A, AMT,
7.500% 02/01/12 500,000 425,220
MN Minneapolis & St. Paul Metropolitan
Airport Commission,
Northwest Airlines, Inc.
Series 2001 A, AMT,
7.000% 04/01/25 500,000 441,485
Series 2001 B, AMT,
6.500% 04/01/25 250,000 239,055
NC Charlotte Special Facilities Revenue,
Douglas International Airport,
US Airways, Inc.:
Series 1998, AMT,
5.600% 07/01/27 250,000 133,750
Series 2000, AMT,
7.750% 02/01/28 750,000 536,048
NJ Economic Development Authority,
Continental Airlines, Inc. Project,
Series 1999, AMT,
6.250% 09/15/29 250,000 188,328
Series 2003,
9.000% 06/01/33 750,000 775,650
TX Alliance Airport Authority:
American Airlines Project,
Series 1990, AMT,
7.500% 12/01/29 1,600,000 1,050,368
Federal Express Corp. Project,
Series 1996, AMT,
6.375% 04/01/21 1,000,000 1,040,820
TX Houston Industrial Development Corp.,
Air Cargo, Perot Development,
Series 2002, AMT,
6.000% 03/01/23 731,283 728,556
WA Seattle, Northwest Airlines, Inc.,
Series 2000, AMT,
7.250% 04/01/30 500,000 444,605
-----------
Air Transportation Total 8,456,199
-----------
See notes to investment portfolio.
11
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
TRANSPORTATION (CONTINUED)
AIRPORTS - 0.9%
CO Denver City & County Airport,
Series 1997 E,
5.250% 11/15/23 1,700,000 1,741,786
MA Port Authority, Series 1998 D,
5.000% 07/01/28 1,000,000 988,910
-----------
Airports Total 2,730,696
-----------
TOLL FACILITIES - 2.2%
CO Northwest Parkway Public
Highway Authority, Series 2001 D,
7.125% 06/15/41 1,250,000 1,295,262
CO Public Highway Authority,
Arapahoe County, E-470,
Series 2000 B:
(a) 09/01/18 3,000,000 1,453,170
(a) 09/01/35 8,750,000 854,787
NY Triborough Bridge &
Tunnel Authority, Series 2002,
5.500% 11/15/20 1,125,000 1,250,651
VA Richmond Metropolitan Authority,
Series 1998,
5.250% 07/15/22 2,000,000 2,135,640
-----------
Toll Facilities Total 6,989,510
-----------
TRANSPORTATION - 0.3%
NV Department of Business &
Industry, Las Vegas Monorail Project,
Series 2000,
7.375% 01/01/40 1,000,000 978,310
-----------
Transportation Total 978,310
-----------
TRANSPORTATION TOTAL 19,154,715
-----------
-----------------------------------------------------------
UTILITIES - 13.2%
INDEPENDENT POWER PRODUCERS - 2.6%
MI Midland County Economic
Development Corp.,
Series 2000, AMT,
6.875% 07/23/09 1,250,000 1,289,687
NY Port Authority of New York
& New Jersey, KIAC Partners,
Series 1996 IV, AMT,
6.750% 10/01/11 2,000,000 2,057,540
PA Carbon City Industrial Development
Panther Creek Partners Project,
Series 2000, AMT,
6.650% 05/01/10 275,000 294,344
PA Economic Development
Finance Authority:
Colver Project, Series 1994 D, AMT,
7.125% 12/01/15 1,500,000 1,547,550
Northampton Generating,
Series 1994 A, AMT,
6.500% 01/01/13 1,000,000 1,009,980
PAR (S) VALUE (S)
------------------------------------------------------------
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical &
Environmental Cogeneration Facilities,
AES Project, Series 2000, AMT,
6.625% 06/01/26 645,000 668,343
VA Pittsylvania County Industrial
Development Authority, Multi-trade of
Pittsylvania, Series 1994 A, AMT:
7.450% 01/01/09 1,000,000 939,170
7.550% 01/01/19 500,000 450,335
-----------
Independent Power Producers Total 8,256,949
-----------
INVESTOR OWNED - 6.0%
AZ Maricopa County Pollution Control,
El Paso Electric Co., Series 2002 A,
6.250% 05/01/37 1,000,000 1,035,490
AZ Pima County Industrial Development
Authority, Tucson Electric Power Co.,
Series 1997 A, AMT,
6.100% 09/01/25 750,000 704,700
CA Chula Vista Industrial Development
Revenue, San Diego Gas & Electric Co.,
Series 1996 B, AMT,
5.500% 12/01/21 (h) 625,000 633,775
CT Development Authority,
Connecticut Light & Power Co.,
Series 1993 B, AMT,
5.950% 09/01/28 200,000 207,600
FL Polk County Industrial Development
Authority, Tampa Electric Co. Project,
Series 1996, AMT,
5.850% 12/01/30 1,200,000 1,168,344
IL Bryant, Pollution Control Revenue,
Central Illinois Light Co.,
Series 1993,
5.900% 08/01/23 2,650,000 2,653,021
IN Petersburg Pollution Control Revenue,
Indianapolis Power & Light Project,
Series 1995,
6.625% 12/01/24 1,000,000 1,022,390
LA Calcasieu Parish Industrial
Development Board, Entergy
Gulf States, Inc.,
Series 1999,
5.450% 07/01/10 500,000 510,955
LA West Feliciana Parish, Entergy
Gulf States, Inc., Series 1999 B,
6.600% 09/01/28 500,000 511,165
MS State Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 04/01/22 2,000,000 2,006,000
MT Forsyth Pollution Control,
Portland General, Series 1998 A,
5.200% 05/01/33 300,000 311,739
NV Clark County Industrial Development
Revenue, Nevada Power Co.,
Series 1995 B, AMT,
5.900% 10/01/30 750,000 648,638
See notes to investment portfolio.
12
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
UTILITIES (CONTINUED)
INVESTOR OWNED (CONTINUED)
OH Air Quality Development Authority,
Pollution Control, Cleveland Electric,
Series 2002 A,
6.000% 12/01/13 900,000 921,645
TX Brazos River Authority Pollution Control,
TXU Electric Co.:
Series 2001 C, AMT,
5.750% 05/01/36 350,000 366,608
Series 2003 C, AMT,
6.750% 10/01/38 900,000 944,361
VA Chesterfield County Industrial
Development Authority, Pollution Control
Revenue, Virginia Electric & Power Co.,
Series 1987 B,
5.875% 06/01/17 250,000 265,808
WV Pleasant County, Western
Pennsylvania Power Co.,
Series 1999 E, AMT,
5.500% 04/01/29 4,750,000 4,830,228
-----------
Investor Owned Total 18,742,467
-----------
JOINT POWER AUTHORITY - 0.3%
NC Eastern Municipal Power Agency:
Series 1999 D:
5.500% 01/01/16 285,000 297,876
6.700% 01/01/19 500,000 550,585
-----------
Joint Power Authority Total 848,461
-----------
MUNICIPAL ELECTRIC - 2.9%
CA Department of Water Resources, Power
Supply Revenue Bonds, Series 2002 A,
5.500% 05/01/14 2,000,000 2,202,260
NY Long Island Power Authority,
Series 1998 B,
5.000% 04/01/10 1,000,000 1,081,600
PR Electric Power Authority,
Series 1998 II,
5.125% 07/01/26 2,000,000 2,027,180
WA Chelan County Public Utilities
District No. 1, Columbia River
Rock Hydroelectric, Series 1997,
(a) 06/01/14 5,000,000 3,119,400
WA Seattle Light &Power, Series 2001,
5.500% 03/01/17 750,000 801,795
-----------
Municipal Electric Total 9,232,235
-----------
WATER & SEWER - 1.4%
MA Water Resource Authority,
Series 1997 D,
5.000% 08/01/24 3,000,000 3,012,450
MO Water & Sewer, Lee's Summit,
Series 2002,
5.250% 07/01/15 500,000 531,575
MS V Lakes Utility District,
Series 1994,
8.250% 07/15/24 500,000 477,470
PAR (S) VALUE (S)
-----------------------------------------------------------
NH Industrial Development Authority,
Pennichuck Water Works, Inc.,
Series 1988, AMT
7.500% 07/01/18 470,000 517,216
-----------
Water & Sewer Total 4,538,711
-----------
UTILITIES TOTAL 41,618,823
-----------
TOTAL MUNICIPAL BONDS
(Cost of $311,404,699) 304,081,298
-----------
MUNICIPAL PREFERRED STOCKS - 1.7% SHARES
-----------------------------------------------------------
HOUSING - 1.7%
MULTI-FAMILY - 1.7%
Charter Mac Equity Issue Trust:
6.300% 04/30/19 (e) 1,000,000 1,007,720
AMT, 6.625% 06/30/49 (e) 2,000,000 2,177,100
MuniMae Equity Issue Trust,
AMT, 7.750% 06/30/50 (e) 2,000,000 2,251,720
-----------
TOTAL MUNICIPAL PREFERRED STOCKS
(Cost of $5,000,000) 5,436,540
-----------
SHORT-TERM OBLIGATIONS - 0.6% PAR ($)
-----------------------------------------------------------
VARIABLE RATE DEMAND NOTES (I) - 0.6%
IA Woodbury County Educational
Facility Revenue, Siouxland Medical
Educational Foundation, Inc.,
Series 1996,
1.140% 11/01/16 100,000 100,000
IL Health Care Facilities Authority,
OSF Healthcare System,
Series 2002,
1.100% 11/15/27 300,000 300,000
IL Quad Cities Regional Economic
Development Authority Revenue,
Two Rivers YMCA Project,
Series 2002,
1.140% 12/01/31 200,000 200,000
MO Development Finance Board
Infrastructure Facilities Revenue,
St. Louis Convention Center,
Series 2000 C,
1.140% 12/01/20 100,000 100,000
NY State, Series 1993 A-10,
1.020% 08/01/16 700,000 700,000
WY Uinta County Pollution Control Revenue,
Chevron U.S.A. Inc. Project,
Series 1992,
1.080% 12/01/22 500,000 500,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Cost of $1,900,000) 1,900,000
-----------
TOTAL INVESTMENTS - 98.8%
(Cost of $318,304,699)(j) 311,417,838
-----------
OTHER ASSETS & LIABILITIES, NET - 1.2% 3,629,312
-----------------------------------------------------------
NET ASSETS* - 100.0% 315,047,150
===========
See notes to investment portfolio.
13
INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2004 (Unaudited)
NOTES TO INVESTMENT PORTFOLIO:
* Net assets represent both Common Shares and Auction Preferred Shares.
(a) Zero coupon bond.
(b) Denotes a restricted security, which is subject to restrictions on resale
under federal securities laws. At May 31, 2004, these securities amounted to
$2,789,453, which represents 0.9% of net assets.
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 $1,280,000
Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 09/08/00 1,000,000
VI Government Refinery Facilities,
Hovensa Coker Project,
Series 2002,
6.500% 07/01/21 11/15/02 375,000
-----------
$2,655,000
-----------
(c) The issuer is in default of certain debt covenants. Income is
not being fully accrued. As of May 31, 2004, the value of these securities
amounted to $2,574,857, which represents 0.8% of net assets.
(d) The issuer has filed for bankruptcy protection under Chapter 11, and is in
default of certain debt covenants. Income is not being accrued. As of May
31, 2004, the value of these securities amounted to $2,007,937, which
represents 0.6% of net assets.
(e) Security exempt from registration pursuant to Rule 144A under the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31, 2004,
these securities amounted to $9,089,236, which represents 2.9% 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
principal and interest.
(g) A portion of the security with a market value of $3,028,572 pledged as
collateral for open futures contracts.
(h) Security purchased is on a delayed delivery basis.
(i) Variable rate demand notes. These securities are payable upon demand and are
secured by letters of credit or other credit support agreements from banks.
The interest rates change periodically and the interest rates shown reflect
the rates as of May 31, 2004.
(j) Cost for federal income tax purposes is $317,976,371.
At May 31, 2004, the Trust held the following open short futures contracts:
UNREALIZED
AGGREGATE EXPIRATION APPRECIATION
TYPE VALUE FACE VALUE DATE (DEPRECIATION)
-----------------------------------------------------------------------------
10 Year U.S.
Treasury Note $27,249,000 $28,576,933 Jun-2004 $1,327,933
U.S. Long Bond 34,722,187 34,699,747 Sept-2004 (22,440)
------------
$1,305,493
------------
ACRONYM NAME
------------------------------------------
AMT Alternative Minimum Tax
See notes to financial statements.
14
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2004 (Unaudited)
ASSETS:
Investments, at cost $318,304,699
------------
Investments, at value $311,417,838
Cash 24,537
Receivable for:
Investments sold 44,746
Interest 5,344,360
Futures variation margin 317,184
Deferred Trustees' compensation plan 13,603
Other assets 39,447
------------
Total Assets 317,201,715
------------
LIABILITIES:
Payable for:
Investments purchased on a delayed
delivery basis 625,000
Distributions-- common shares 1,245,040
Distributions-- preferred shares 19,776
Preferred shares remarketing commissions 4,526
Investment advisory fee 199,218
Pricing and bookkeeping fees 18,949
Custody fee 1,375
Audit fee 27,078
Deferred Trustees' fees 13,603
------------
Total Liabilities 2,154,565
------------
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 $263,244,152
Undistributed net investment income 895,595
Accumulated net realized loss (63,511,229)
Net unrealized appreciation (depreciation) on:
Investments (6,886,861)
Futures contracts 1,305,493
------------
Net assets at value applicable to 31,134,627
common shares of beneficial interest
outstanding $195,047,150
============
Net asset value per common share $ 6.26
============
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 2004 (Unaudited)
INVESTMENT INCOME:
Interest $ 9,468,517
Dividends 1,424
------------
Total Investment Income 9,469,941
------------
EXPENSES:
Investment advisory fee 1,209,500
Transfer agent fee 30,557
Pricing and bookkeeping fees 80,286
Trustees' fees 5,942
Preferred shares remarketing commissions 150,583
Custody fee 9,596
Other expenses 85,369
------------
Total Expenses 1,571,833
Custody earnings credit (259)
------------
Net Expenses 1,571,574
------------
Net Investment Income 7,898,367
------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FUTURES CONTRACTS:
Net realized loss on:
Investments (704,826)
Futures contracts (2,167,971)
------------
Net realized loss (2,872,797)
------------
Net change in unrealized appreciation/
depreciation on:
Investments (7,749,182)
Futures contracts 1,210,143
------------
Net change in unrealized appreciation/
depreciation (6,539,039)
------------
Net Loss (9,411,836)
------------
Net Decrease in Net Assets from Operations (1,513,469)
------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (590,277)
------------
Net Decrease in Net Assets from Operations
Applicable to Common Shares $ (2,103,746)
------------
See notes to financial statements.
15
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
MAY 31, NOVEMBER 30,
INCREASE (DECREASE) IN NET ASSETS: 2004 2003
-------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 7,898,367 $ 16,652,711
Net realized loss on investments and futures contracts (2,872,797) (6,269,389)
Net change in unrealized appreciation/depreciation on investments and futures contracts (6,539,039) 7,635,696
------------ ------------
Net Increase (Decrease) from Operations (1,513,469) 18,019,018
------------ ------------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (590,277) (1,158,676)
------------ ------------
Net Increase (Decrease) in Net Assets from Operations Applicable to Common Shares (2,103,746) 16,860,342
------------ ------------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (7,470,231) (15,243,036)
------------ ------------
SHARE TRANSACTIONS:
Distributions reinvested 114,796 124,151
------------ ------------
Total Increase (Decrease) in Net Assets Applicable to Common Shares (9,459,181) 1,741,457
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 204,506,331 202,764,874
------------ ------------
End of period (including undistributed net investment income
of $895,595 and $1,057,736, respectively) $195,047,150 $204,506,331
============ ============
NUMBER OF TRUST SHARES:
Common Shares:
Issued for distributions reinvested 17,353 19,292
Outstanding at:
Beginning of period 31,117,274 31,097,982
------------ ------------
End of period 31,134,627 31,117,274
------------ ------------
Preferred Shares:
Outstanding at end of period 4,800 4,800
------------ ------------
See notes to financial statements.
16
NOTES TO FINANCIAL STATEMENTS
May 31, 2004 (Unaudited)
NOTE 1. 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.
INVESTMENT GOAL
The Trust seeks to provide high current income, generally exempt from federal
income taxes. The Trust's secondary goal is to seek total return.
TRUST SHARES
The Trust may issue an unlimited number of common shares. On August 26, 1999,
the Trust issued 4,800 Auction Preferred Shares ("APS").
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Trust in the preparation of its financial statements.
SECURITY VALUATION
Debt securities generally are valued by a pricing service approved by the
Trust's Board of Trustees, based upon market transactions for normal,
institutional-size trading units of similar securities. The services may use
various pricing techniques which take into account appropriate factors such as
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other data, as well as broker quotes. Debt securities for which quotations
are readily available are valued at an over-the-counter or exchange bid
quotation. Certain debt securities, which tend to be more thinly traded and of
lesser quality, are priced based on fundamental analysis of the financial
condition of the issuer and the estimated value of any collateral. Valuations
developed through pricing techniques may vary from the actual amounts realized
upon sale of the securities, and the potential variation may be greater for
those securities valued using fundamental analysis.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
FUTURES CONTRACTS
The Trust may invest in municipal and U.S. Treasury futures contracts. The Trust
may invest in these instruments to hedge against the effects of changes in the
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, for duration management, or when the transactions are
economically appropriate to the reduction of risk inherent in the management of
the Trust and not for trading purposes. The use of futures contracts involves
certain risks, which include: (1) imperfect correlation between the price
movement of the instruments and the underlying securities, (2) inability to
close out positions due to differing trading hours, or the temporary absence of
a liquid market, for either the instrument or the underlying securities, or (3)
an inaccurate prediction by Columbia Management Advisors, Inc. of the future
direction of interest rates. Any of these risks may involve amounts exceeding
the variation margin recorded on the Trust's Statement of Assets and Liabilities
at any given time.
Upon entering into a futures contract, the Trust deposits cash or securities
with the broker in an amount sufficient to meet the initial margin requirement.
Subsequent payments are made or received by the Trust equal to the daily change
in the contract value and are recorded as variation margin payable or receivable
and offset in unrealized gains or losses. The Trust also identifies portfolio
securities as segregated with the custodian in a separate account in an amount
equal to the futures contract. The Trust recognizes a realized gain or loss when
the contract is closed or expires.
OPTIONS
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
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2004 (Unaudited)
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
Trust 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. The risk associated with purchasing put and call
options is limited to the premium paid. Premiums paid for purchasing options
which expire are treated as realized losses. 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. The Trust's custodian will set aside cash or liquid
portfolio securities equal to the amount of the written options contract
commitment in a separate account.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from 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.
DELAYED DELIVERY SECURITIES
The Trust may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. This may increase the
risk if the other party to the transaction fails to deliver and causes the Trust
to subsequently invest at less advantageous prices. The Trust identifies cash or
liquid portfolio securities as segregated with the custodian in an amount equal
to the delayed delivery commitment.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Premium and discount are
amortized and accreted, respectively, on all debt securities. Corporate actions
and dividend income are recorded on the ex-date.
FEDERAL INCOME TAX STATUS
The Trust intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its taxable or tax-exempt income, if any, for its tax year,
and as such will not be subject to federal income taxes. In addition, the Trust
intends to distribute in each calendar year substantially all of its net
investment income, capital gains and certain other amounts, if any, such that
the Trust should not be subject to federal excise tax. Therefore no federal
income or excise tax provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to common shareholders are recorded on ex-date. Distributions to
Auction Preferred shareholders are recorded daily and payable at the end of each
dividend period. Each dividend payment period for the APS is generally seven
days. The applicable dividend rate for the APS on May 31, 2004 was 1.05% for
Series T and 1.06% for Series W. For the six months ended May 31, 2004, the
Trust declared dividends to Auction Preferred shareholders amounting to
$590,277, representing an average APS dividend rate of 0.98%.
NOTE 3. FEDERAL TAX INFORMATION
The tax character of distributions paid during the year ended November 30, 2003
was as follows:
Distributions paid from:
Tax-Exempt Income $16,377,912
Ordinary Income* 23,800
Long-Term Capital Gains --
* For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
Unrealized appreciation and depreciation at May 31, 2004, based on cost of
investments for federal income tax purposes was:
Unrealized appreciation $ 14,212,099
Unrealized depreciation (20,770,632)
------------
Net unrealized depreciation $ (6,558,533)
------------
18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2004 (Unaudited)
The following capital loss carryforwards, determined as of November 30, 2003,
may be available to reduce taxable income arising from future net realized gains
on investments, if any, to the extent permitted by the Internal Revenue Code:
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
--------------------------------------------------
2004 $ 2,815,387
2005 5,926,653
2007 3,941,668
2008 14,340,573
2009 4,198,716
2010 12,980,738
2011 4,761,736
------------
$48,965,471
------------
Capital loss carryforwards of $5,267,623 were utilized and/or expired during the
year ended November 30, 2003 for the Trust.
Expired capital loss carryforwards are recorded as a reduction of paid-in
capital.
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the
Trust. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary
of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004,
FleetBoston, including the Trust's investment advisor, was acquired by Bank of
America Corporation ("BOA"). The acquisition did not change the way the Trust is
managed, the investment personnel assigned to manage the Trust or the fees paid
by the Trust.
INVESTMENT ADVISORY FEE
Columbia provides administrative and other services to the Trust in addition to
investment advisory services. Columbia receives a monthly investment advisory
fee 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
Corporation ("State Street"). As a result, Columbia pays the total fees received
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 APS,
exceed $50 million, an additional monthly fee. The additional fee rate is
calculated by taking into account the fees payable to State Street under the
Outsourcing Agreement. This rate is applied to the average weekly net assets,
including assets applicable to APS, of the Trust for that month. The Trust also
pays additional fees for pricing services based on the number of securities held
by the Trust. For the six months ended May 31, 2004, the Trust's annualized
effective pricing and bookkeeping fee rate was 0.050%.
CUSTODY CREDITS
The Trust has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. The Trust could have invested a portion of the
assets utilized in connection with the expense offset arrangement in an
income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
The Trust pays no compensation to its officers, all of whom are employees of
Columbia or its affiliates.
The Trust's Trustees may participate in a deferred compensation plan which may
be terminated at any time. Obligations of the plan will be paid solely out of
the Trust's assets.
OTHER
Columbia provides certain services to the Trust related to Sarbanes-Oxley
compliance. For the six months ended May 31, 2004, the Trust paid $802 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
NOTE 5. PORTFOLIO INFORMATION
For the six months ended May 31, 2004, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $20,915,235 and
$21,905,126, respectively.
NOTE 6. PREFERRED SHARES
The Trust currently has outstanding 4,800 APS (2,400 shares each of Series T and
Series 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
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2004 (Unaudited)
meet more stringent asset coverage requirements under the terms of the APS
Agreement and in accordance with the guidelines prescribed by the APS' rating
agencies. Should these requirements not be met, or should dividends accrued on
the APS not be paid, the Trust may be restricted in its ability to declare
dividends to common shareholders or may be required to redeem certain APS. At
May 31, 2004, there were no such restrictions on the Trust.
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS
AND CONTINGENCIES
GEOGRAPHIC CONCENTRATION
The Trust has greater than 5% of its total investments at May 31, 2004 invested
in debt obligations issued by the states of California, Colorado, Florida,
Illinois and Texas and their respective political subdivisions, agencies and
public authorities. The Trust is more susceptible to economic and political
factors adversely affecting issuers of the specific state's municipal securities
than are municipal bond funds that are not concentrated to the same extent in
these issuers.
HIGH-YIELD SECURITIES
Investing in high-yield securities may involve greater credit risk and
considerations not typically associated with investing in U.S. Government bonds
and other higher quality fixed income securities. These securities are
non-investment grade securities, often referred to as "junk bonds." Economic
downturns may disrupt the high yield market and impair the ability of issuers to
repay principal and interest. Also, an increase in interest rates would likely
have an adverse impact on the value of such obligations. Moreover, high-yield
securities may be less liquid to the extent there is no established secondary
market.
INDUSTRY FOCUS
The Trust may focus its investments in certain industries, subjecting it to
greater risk than a trust that is more diversified.
LEGAL PROCEEDINGS
Columbia and Columbia Funds Distributor, Inc. ("CFDI"), and certain of their
affiliates (collectively, "the Columbia Group") have received information
requests and subpoenas from various regulatory and law enforcement authorities
in connection with their investigations of late trading and market timing in
mutual funds, as well as other industry wide issues. The Columbia Group has not
uncovered any instances where Columbia or CFDI were knowingly involved in late
trading of mutual fund shares.
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and CFDI, alleging that they had violated certain
provisions of the federal securities laws in connection with trading activity in
mutual fund shares. Also on February 24, 2004, the New York Attorney General
("NYAG") filed a civil complaint in New York Supreme Court, County of New York
against Columbia and CFDI alleging that Columbia and CFDI had violated certain
New York anti-fraud statutes. If either Columbia or CFDI is unsuccessful in its
defense of these proceedings, it could be barred from serving as an investment
advisor or distributor for any investment company registered under the
Investment Company Act of 1940, as amended (a "registered investment company").
Such results could prevent Columbia, CFDI or any company that is an affiliated
person of Columbia and CFDI from serving as an investment advisor or distributor
for any registered investment company, including your fund. Your fund has been
informed by Columbia and CFDI that, if these results occur, they will seek
exemptive relief from the SEC to permit them to continue to serve as your fund's
investment advisor and distributor. There is no assurance that such exemptive
relief will be granted. On March 15, 2004, Columbia and CFDI entered into
agreements in principle with the SEC Division of Enforcement and NYAG in
settlement of the charges. Under the agreements, Columbia and CFDI agreed, among
other things, to the following conditions: payment of $70 million in
disgorgement; payment of $70 million in civil penalties; an order requiring
Columbia and CFDI to cease and desist from violations of the antifraud
provisions and other provisions of the federal securities laws; governance
changes designed to maintain the independence of the mutual fund boards of
trustees and ensure compliance with securities laws and their fiduciary duties;
and retention of an independent consultant to review Columbia's and CFDI's
compliance policies and procedures. The agreement requires the final approval of
the SEC. In a separate agreement with the NYAG, the Columbia Group has agreed to
reduce mutual fund fees by $80 million over a five-year period.
20
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
May 31, 2004 (Unaudited)
As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of fund
shares, which could increase transaction costs or operating expenses, or have
other adverse consequences for the funds.
In connection with the events described in detail above, various parties have
filed suit against certain trusts, their Boards and/or FleetBoston (and
affiliated entities). These suits and certain regulatory investigations are
ongoing. Accordingly, an estimate of the financial impact of this litigation on
any trust, if any, cannot currently be made.
21
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise stated):
(UNAUDITED)
SIX MONTHS PERIOD
ENDED YEAR ENDED NOVEMBER 30, ENDED
MAY 31, ------------------------------------------------- NOVEMBER 30,
2004 2003 2002 2001 2000 1999 (a)
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.57 $ 6.52 $ 6.93 $ 6.92 $ 7.49 $ 8.49
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.26(b) 0.54(b) 0.57(b)(c) 0.61(b) 0.62(d) 0.46
Net realized and unrealized gain (loss) on
investments and futures contracts (0.31) 0.04 (0.42)(c) (0.04) (0.54) (0.92)
--------- --------- --------- --------- --------- ---------
Total from Investment Operations (0.05) 0.58 0.15 0.57 0.08 (0.46)
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (0.02) (0.04) (0.06) (0.12) (0.16) (0.04)
--------- --------- --------- --------- --------- ---------
Total from Investment Operations Applicable
to Common Shareholders (0.07) 0.54 0.09 0.45 (0.08) (0.50)
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.24) (0.49) (0.50) (0.44) (0.48) (0.45)
--------- --------- --------- --------- --------- ---------
LESS SHARE TRANSACTIONS:
Commissions and offering costs--preferred shares -- -- -- -- (0.01) (0.05)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 6.26 $ 6.57 $ 6.52 $ 6.93 $ 6.92 $ 7.49
========= ========= ========= ========= ========= =========
Market price per share--common shares $ 5.79 $ 6.45 $ 6.26 $ 6.38 $ 5.75 $ 6.13
========= ========= ========= ========= ========= =========
Total return--based on market value--common shares (e) (6.79)%(f) 11.17% 5.81% 18.56% 1.05% (21.72)%(f)
========= ========= ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (g)(h) 1.55%(i) 1.54% 1.49% 1.59% 1.60% 1.13%(i)
Net investment income before preferred stock dividend (g)(h) 7.81%(i) 8.30% 8.36%(c) 8.67% 8.63% 6.18%(i)
Net investment income after preferred stock dividend (g)(h) 7.23%(i) 7.72% 7.53%(c) 7.00% 6.37% 5.67%(i)
Portfolio turnover rate 7%(f) 14% 15% 15% 10% 16%(f)
Net assets, end of period (000's)--common shares $ 195,047 $ 204,506 $ 202,765 $ 215,348 $ 214,975 $ 232,540
(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.
22
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise stated):
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.56 $ 8.34 $ 8.55 $ 7.96 $ 8.67 $ 8.78
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.52 0.55 0.56 0.60 0.62 0.67
Net realized and unrealized gain (loss) on
investments and futures contracts (0.07) 0.22 (0.19) 0.58 (0.72) (0.11)
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations
Applicable to Common Shareholders 0.45 0.77 0.37 1.18 (0.10) 0.56
---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.52) (0.55) (0.58) (0.59) (0.61) (0.67)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 8.49 $ 8.56 $ 8.34 $ 8.55 $ 7.96 $ 8.67
========== ========== ========== ========== ========== ==========
Market price per share--common shares $ 8.31 $ 8.63 $ 8.25 $ 7.38 $ 6.88 $ 8.25
========== ========== ========== ========== ========== ==========
Total return--based on market value--
common shares (a) 2.47% 11.60% 20.09% 15.65% (9.83)% 7.96%
========== ========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (b) 0.93% 0.96% 1.00% 1.06% 1.03% 0.97%
Net investment income (b) 6.02% 6.54% 6.74% 7.15% 7.44% 7.58%
Portfolio turnover rate 29% 17% 15% 23% 20% 29%
Net assets, end of period (000's)--common shares $ 263,705 $ 265,190 $ 257,768 $ 264,467 $ 245,967 $ 268,130
(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
---------------------------------------------------------------------------------------------------------------------------------
05/31/04* $120,000,000 $65,635 $25,004 $25,000
11/30/03 120,000,000 67,605 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.
23
SHAREHOLDER MEETING RESULTS
RESULTS OF THE ANNUAL MEETING OF SHAREHOLDERS
On May 26, 2004, 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 March 10, 2004, the record date for
the Meeting, the Trust had 31,125,991 common shares outstanding. The votes cast
were as follows:
PROPOSAL 1.
ELECTION OF TRUSTEES: FOR WITHHELD
-------------------------------------------------------------------------------
William E. Mayer 26,276,559 893,371
Charles R. Nelson 26,420,791 749,139
Patrick J. Simpson 26,421,890 748,040
Thomas C. Theobald 26,409,108 760,822
Richard L. Woolworth 26,419,440 750,490
On March 10, 2004, the record date for 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 4,780 0
William E. Mayer 4,780 0
John J. Neuhauser 4,780 0
Patrick J. Simpson 4,780 0
Thomas E. Stitzel 4,780 0
Thomas C. Theobald 4,780 0
Richard L. Woolworth 4,780 0
24
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 the 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 the
participant's 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 by mail at P.O. Box 43010, Providence, RI 02940-3010, or by phone at
1-800-730-6001.
25
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TRANSFER AGENT
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial High Income Municipal Trust is:
EquiServe
P.O. Box 43010
Providence, RI 02940-3010
The trust mails one shareholder report to each shareholder address. Shareholders
can order additional reports by calling 800-730-6001. In addition,
representatives at that number can provide shareholders information about the
trust.
Financial advisors who want additional information about the trust may speak to
a representative at 800-426-3750.
A description of the policies and procedures that the trust uses to determine
how to vote proxies relating to its portfolio securities is available (i)
without charge, upon request, by calling 800-730-6001 and (ii) on the Securities
and Exchange Commission's website at http://www.sec.gov.
This report has been prepared for shareholders of Colonial High Income Municipal
Trust.
COLONIAL HIGH INCOME MUNICIPAL TRUST SEMIANNUAL REPORT
120-03/057S-0504 (07/04) 04/1534
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. SCHEDULE OF INVESTMENTS
Not applicable at this time.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable at this time.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable at this time.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have not been any material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees/Directors since
those procedures were last disclosed in response to Item 7(d)(2)(ii)(G) of
Schedule 14A.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer, based on his evaluation of the registrant's disclosure
controls and procedures as of a date within 90 days of the filing of
this report, has concluded that such controls and procedures are
adequately designed to ensure that information required to be
disclosed by the registrant in Form N-CSR is accumulated and
communicated to the registrant's management, including the principal
executive officer and principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not
applicable at this time.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable at this time.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Colonial High Income Municipal Trust
------------------------------------------------------------------
By (Signature and Title) /s/ J. Kevin Connaughton
------------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date August 3, 2004
--------------------------------------------------------------------------
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/ J. Kevin Connaughton
------------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date August 3, 2004
--------------------------------------------------------------------------