UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-5754
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Colonial High Income Municipal Trust
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Russell Kane, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3363
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Date of fiscal year end: November 30, 2003
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Date of reporting period: November 30, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
Item 1. Reports to Stockholders.
[PHOTO]
COLONIAL HIGH INCOME MUNICIPAL TRUST ANNUAL REPORT
November 30, 2003
Not FDIC May Lose Value
Insured No Bank Guarantee
COLONIAL FUNDS ONE FINANCIAL CENTER
BOSTON, MA 02111-2621
January 14, 2004
Dear Shareholder:
I am writing to you as the independent chairman of the board of trustees of your
Colonial fund. I have been privileged to serve on the board of the Colonial
funds for more than three years and on the board of many of the affiliated
Columbia funds for more than seven years. On December 8, 2003 the board of
trustees elected me the chairman. Over those seven years I have gained a deep
sense of responsibility for the continued success of our funds. Needless to say,
the entire board shares that commitment to you.
These have been troubling times in the fund industry, with newspapers reporting
widely on trading and governance failings. Your board has been energetic over
the past year in strengthening our organization and our capacity to effectively
oversee the Colonial funds.
First, as already indicated, the trustees in December elected an independent
trustee to chair our twelve person board. All of the trustees are completely
independent of the advisor and its affiliates except for the president of the
funds, Joseph Palombo. Each committee of the board is comprised only of
independent trustees.
Second, last year we reconfigured the membership of the four person audit
committee to include only persons qualifying as "audit committee financial
experts" under the demanding standards of the Sarbanes-Oxley legislation. Few
audit committees are fortunate to possess such a breadth and depth of financial
experience.
Third, we strengthened our oversight capacity by appointing Martha Fox as chief
compliance officer of the Colonial funds, reporting directly to your fund's
audit committee. We also assigned board members to four separate investment
oversight committees, each better able to monitor performance of individual
funds.
Fourth, with guidance from our board the investment advisor last year increased
its vigilance to identify and discourage trading in open end mutual fund shares
by speculators. Monitoring personnel have attempted to identify and reject
frequent traders, but frankly that effort by itself cannot be 100% effective.
Accordingly, in February 2003 we implemented 2% redemption penalties in the open
end international funds most subject to market timing, and we are considering
still broader application of redemption fees to curb further attempts to profit
from the open end funds by short-term trading. We are also closely monitoring
legislative and regulatory initiatives that would aid in preventing abuses of
open end funds that currently cannot be detected directly by management or our
transfer agent.
Finally, to further align the interests of the trustees with those of our
shareholders, the board late last year voted to double the required investment
by each trustee in the funds that we oversee. At the same time, new policies
were instituted requiring all investment personnel and trustees to hold any
mutual fund shares for a minimum of one year (unless extraordinary circumstances
warrant an exception to be granted by a board committee).
Undoubtedly, more improvements will be made in the period ahead, but the board
wants you to know that we take our responsibilities very seriously and we commit
to you our continued efforts to serve your interests.
Sincerely,
/s/ Thomas C. Theobald
Thomas C. Theobald
Chairman
--
PRESIDENT'S MESSAGE
1
DEAR SHAREHOLDER:
It was another solid year for the US bond market. However, the positive gains
reported from all major sectors masked an extremely volatile environment. Most
of the gains were actually earned in the first half of the reporting period and
they were sufficient to offset losses or declining performance in the second
half.
From December through mid-June, interest rates generally declined and bond
prices rose as the economy struggled to gain a solid footing and the nation
prepared to go to war. In June, the yield on the 10-year Treasury note fell to a
45-year low of just over 3.1%. High-yield bonds were the primary beneficiaries
of this trend as investors seemed willing to put their fears aside and look to
better times ahead. However, after the major military battles of the war were
declared over and the economy showed clear signs of picking up, interest rates
began to rise and bond prices came down in most sectors. The 10-year yield
reached a high of 4.4% in August, then moved within a tight range around 4.0% to
4.2% for the remainder of the period. As the environment changed, high-yield and
mortgage bonds held up better than other sectors while Treasury bonds lagged.
This reversal of fortune for bonds and a shift of investor enthusiasm back to
stocks, which drove equity returns back into double digit territory, serve as a
reminder that a diversified portfolio may offer the best opportunity for
long-term investment success. Talk to your financial advisor if you're uncertain
about the level of diversification of your portfolio. Your advisor can help you
keep your investments on track.
As always, thank you for investing in Colonial Funds. We look forward to
continuing to serve you in the years ahead.
Sincerely,
/s/ Joseph R. Palombo
Joseph R. Palombo
President
January 12, 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 2
PRICE PER SHARE AS OF 11/30/03 ($)
Net asset value 6.57
------------------------------
Market price 6.45
------------------------------
1-YEAR TOTAL RETURN
AS OF 11/30/03 (%)
Net asset value 8.75
------------------------------
Market price 11.17
------------------------------
Lipper High Yield
Municipal Debt Funds
Category average 8.61
------------------------------
All results shown assume reinvestment of distributions.
DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/1/02-11/30/03 ($)
0.49
------------------------------
A portion of the trust's income may be subject to the alternative minimum tax.
The trust may at times purchase tax- exempt securities at a discount from their
original issue price. Some or all of this discount may be included in the
trust's ordinary income, and any market discount is taxable when distributed.
TOP 5 SECTORS AS OF 11/30/03 (%)
Local general obligations 12.9
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Hospitals 10.5
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Multi-family 7.6
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Nursing homes 6.6
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Investor-owned utilities 5.4
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QUALITY BREAKDOWN
AS OF 11/30/03 (%)
AAA 35.3
------------------------------
AA 2.9
------------------------------
A 8.8
------------------------------
BBB 15.7
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BB 4.6
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B 0.8
------------------------------
CCC 0.7
------------------------------
CC 0.5
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Non-rated 30.1
------------------------------
Cash equivalents 0.6
------------------------------
Sector breakdowns are calculated as a percentage of net assets (including
auction preferred shares). Quality breakdowns are calculated as a percentage of
total investments, including short-term obligations. Ratings shown in the
quality breakdown represent the highest rating assigned to a particular bond by
one of the following nationally-recognized rating agencies: Standard & Poor's
Corporation, Moody's Investors Service, Inc. or Fitch Investors Service, Inc.
Because the trust is actively managed, there can be no guarantee that the trust
will continue to maintain this quality breakdown or invest in these sectors in
the future.
For the 12-month period ended November 30, 2003, Colonial High Income Municipal
Trust returned 8.75%, based on investment at net asset value. The trust slightly
outperformed its peer group, the Lipper High Yield Municipal Debt Funds Category
average, which averaged 8.61%.(1)
In the first half of the period, the trust's performance was helped by its
underweight in high-yield bonds, which lagged higher-quality issues when
interest rates were falling. This underweight hurt the trust slightly in the
second half of the period, when high-yield, lower-quality bonds outperformed as
the economy improved and interest rates rose. Yet, its position in high yield
was substantial enough to make a positive overall contribution to the fund's
performance.
We kept the trust's duration short relative to its peer group. Duration is a
measure of interest rate sensitivity. We lower, or shorten, duration when we
expect interest rates to rise and bond prices to fall. This move helped
performance as rising interest rates hampered bond returns.
Leveraged positions provided the trust with additional income during the period.
We have, in effect, "borrowed against" the trust's investment positions by
issuing preferred shares, which pay out a short-term variable rate. When those
preferred shares were issued in 1999, we invested the proceeds in bonds with
longer maturities. During this reporting period, the payout rate of preferred
shares was much lower than the yield the trust earned from those longer-maturity
bonds. The trust issued preferred shares because the leverage they provided made
it possible to enhance yield. However, the use of leverage increases the
likelihood of share price volatility and market risk. In order to reduce that
extra price volatility, we can hedge using futures contracts. When we shorten
duration (decrease price volatility) using futures, and bond prices rise, we
show losses on the futures contracts that are typically offset, at least
partially, by unrealized price gains on the bonds held.
Specific issues also contributed positively to performance, including
HealthEast, a Minnesota hospital and US Airways (0.7% and 0.3% of total
investments, respectively)(2) and other airline bonds. The trust's stake in zero
coupon municipal bonds, which did especially well early in the period, further
helped returns.
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(1) Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
(2) Holdings are disclosed as of November 30, 2003.
3
--
PORTFOLIO MANAGER'S REPORT (CONTINUED)
The trust's stake in nursing home bonds detracted from performance because many
issuers suffered as liability insurance costs soared and some fiscally-strapped
states lowered Medicaid payments. We have reduced our nursing home stake. We
increased the fund's exposure to more economically-sensitive sectors, such as
paper, where we added bonds issued on behalf of Weyerhaeuser (0.2% of total
investments), which made a positive contribution to performance.
Going forward, we expect high-yield municipal bonds to do well as the economy
improves and interest rates slowly rise.
/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
tax-exempt 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.
4
INVESTMENT PORTFOLIO
November 30, 2003
MUNICIPAL BONDS - 96.8% PAR VALUE
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EDUCATION - 4.0%
EDUCATION - 4.0%
CA Loyola Marymount
University, Series 2001,
(a)10/01/19 $2,025,000 $ 941,989
CA State Public Works Board,
UCLA Series 2002 A,
5.375% 10/01/15 1,010,000 1,122,049
CA Statewide Community
Development Authority,
Crossroads School for Arts
& Sciences, Series 1998,
6.000% 08/01/28(b) 1,280,000 1,329,715
IL State Development Finance
Authority, Latin School of
Chicago, Series 1998,
5.650% 08/01/28 230,000 232,385
IL University of Illinois,
Series 2001 A,
5.500% 08/15/17 685,000 764,172
MA Health & Educational
Facilities Authority,
Massachusetts Institute of
Technology, Series 2002 K,
5.500% 07/01/32 2,500,000 2,853,575
MA State Development Finance
Agency, Western New England
College,
6.125% 12/01/32 300,000 305,841
MA State Industrial Finance
Agency:
Cambridge Friends School,
Series 1998,
5.800% 09/01/28 1,000,000 1,011,310
St. John's High School,
Series 1998,
5.350% 06/01/28 300,000 298,335
MI Southfield Economic
Development Corp., Lawrence
University, Series 1998 A,
5.400% 02/01/18 1,000,000 1,006,280
NC State Capital Facilities
Finance Authority, Meredith
College, Series 2001,
5.125% 06/01/16 1,000,000 1,085,230
PAR VALUE
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VT State Educational & Health
Buildings Finance Agency,
Norwich University, Series
1998,
5.500% 07/01/21 $1,500,000 $ 1,510,620
WV State University, Series
2000 A,
(a) 04/01/19 1,000,000 477,260
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12,938,761
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HEALTHCARE - 23.9%
CONGREGATE CARE RETIREMENT - 5.1%
CA La Verne CFTS Partnership,
Brethren Hillcrest Home,
Series 2003 B,
6.625% 02/15/25 690,000 687,571
CA Statewide Community
Development Authority,
Eskaton Village - Grass
Valley, Series 2000,
8.250% 11/15/31(b) 1,000,000 1,081,740
CT State Development
Authority, First Meeting
Gross Revenue Health Care,
Elim Park Baptist, Inc.
Project, Series 2003,
5.850% 12/01/33 660,000 668,369
FL Capital Projects Finance
Authority, Glenridge on
Palmer Ranch, Series 2002
A,
8.000% 06/01/32 750,000 771,735
FL Lee County Industrial
Development Authority,
Shell Point Village Project
Series 1999 A,
5.500% 11/15/29 600,000 573,660
GA Savannah Economic
Development Authority, 1st
Mortgage, Marshes of
Skidaway, Series 2003 A,
7.400% 01/01/34 465,000 459,369
HI State Department Budget
and Finance, Kahala Nui
Project, Series 2003 A,
8.000% 11/15/33 1,000,000 1,007,770
IL State Health Facilities
Authority, Lutheran Senior
Ministries, Series 2001 A,
7.375% 08/15/31 300,000 306,183
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
5
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
HEALTHCARE (CONTINUED)
CONGREGATE CARE RETIREMENT (CONTINUED)
IL State Health Facilities
Authority, Smith Crossing,
Series 2003 A,
7.000% 11/15/32 $ 725,000 $ 723,151
KS Manhattan, Meadowlark
Hills Retirement Home,
Series 1999 A,
6.375% 05/15/20 650,000 660,868
MA Boston Industrial
Development Financing
Authority, Springhouse,
Inc., Series 1988,
5.875% 07/01/20 255,000 250,767
MA State Development Finance
Agency, Loomis Communities:
Series 1999 A,
5.625% 07/01/15 400,000 388,536
Series 2002 A,
6.900% 03/01/32 100,000 102,996
NH State Higher Educational &
Health Facilities
Authority, Rivermead at
Peterborough, Series 1998:
5.625% 07/01/18 500,000 466,840
5.750% 07/01/28 500,000 446,265
NJ Economic Development
Authority, Seabrook
Village, Inc., Series 2000
A,
8.250% 11/15/30 625,000 670,763
PA County Authority, Dunwoody
Village, Series 2003 A,
5.375% 04/01/17 600,000 620,208
PA Lancaster Industrial
Development Authority,
Garden Spot Village, Series
2000 A,
7.625% 05/01/31 500,000 527,465
PA Philadelphia Authority for
Industrial Development,
Baptist Home of
Philadelphia, Series 1998
A:
5.500% 11/15/18 360,000 326,268
5.600% 11/15/28 500,000 437,410
TN Metropolitan Government,
Nashville & Davidson
Counties, Blakeford at
Green Hills, Series 1998,
5.650% 07/01/24 600,000 546,108
PAR VALUE
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TX Abilene Health Facilities
Development Corp., Sears
Methodist Retirement
Obligation Group:
Series 1998 A,
5.900% 11/15/25 $1,000,000 $ 935,580
Series 2003 A,
7.000% 11/15/33 300,000 303,585
WI State Health & Educational
Facilities Authority:
Attic Angel Obligated
Group, Series 1998,
5.750% 11/15/27 1,000,000 892,560
Clement Manor, Series 1998,
5.750% 08/15/24 1,300,000 1,170,130
Three Pillars Senior Living
Communities, Series 2003,
5.750% 08/15/26 500,000 494,950
United Lutheran Program for
Aging, Inc., Series 1998,
5.700% 03/01/28 1,000,000 894,810
-------------
16,415,657
-------------
HEALTH SERVICES - 0.7%
IL State Health Facilities
Authority, Midwest
Physician Group Ltd.,
Series 1998,
5.500% 11/15/19 120,000 94,986
MA State Development Finance
Agency, Boston Biomedical
Research Institute, Series
1999:
5.650% 02/01/19 200,000 192,494
5.750% 02/01/29 450,000 442,436
MA State Health & Educational
Facilities Authority, Civic
Investments, Inc., Series
1999 A,
9.000% 12/15/15 1,000,000 1,139,720
MN Minneapolis & St. Paul
Housing Redevelopment
Authority, Healthpartners
Project, Series 2003,
6.000% 12/01/21 500,000 514,775
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2,384,411
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See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
6
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
HEALTHCARE (CONTINUED)
HOSPITALS - 10.5%
AR Conway Health Facilities
Board, Conway Regional
Medical Center:
Series 1999 A,
6.400% 08/01/29 $ 425,000 $ 446,530
Series 1999 B,
6.400% 08/01/29 1,000,000 1,049,380
AZ Yavapai County Industrial
Development Authority,
Yavapai Regional Medical
Center Series 2003 A,
6.000% 08/01/33 275,000 280,225
CA State Health Facilities
Financing Authority,
Cedars-Sinai Medical
Center, Series 1999 A,
6.125% 12/01/30 750,000 802,117
CO State Health Facilities
Authority:
National Jewish Medical &
Research Center, Series
1998,
5.375% 01/01/23 330,000 326,680
Parkview Medical Center,
Inc., Series 2001,
6.600% 09/01/25 300,000 314,751
FL Citrus County Hospital
Board, Citrus Memorial
Hospital, Series 2002,
6.375% 08/15/32 750,000 768,727
FL Orange County Health
Facilities Authority,
Orlando Regional
Healthcare, Series 2002,
5.750% 12/01/32 200,000 205,370
FL South Lake County Hospital
District, South Lake
Hospital Inc., Series 2003,
6.375% 10/01/34 500,000 505,150
FL Tampa, H. Lee Moffitt
Cancer Center, Series 1999
A,
5.750% 07/01/29 2,000,000 2,054,280
FL West Orange Healthcare
District, Series 2001 A,
5.650% 02/01/22 525,000 530,082
PAR VALUE
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IL Health Facilities
Authority:
Swedish American Hospital,
Series 2000,
6.875% 11/15/30 $ 500,000 $ 544,605
Thorek Hospital & Medical
Center, Series 1998,
5.250% 08/15/18 600,000 547,008
IL Southwestern Illinois
Development Authority,
Anderson Hospital, Series
1999,
5.500% 08/15/20 225,000 221,836
LA State Public Facilities
Authority, Touro Infirmary,
Series 1999,
5.625% 08/15/29 350,000 351,617
MA State Health & Educational
Facilities Authority:
Jordan Hospital, Series
2003 E,
6.750% 10/01/33 500,000 493,745
Milford-Whitinsville
Hospital, Series 2002 D,
6.350% 07/15/32 465,000 465,553
MD State Health & Higher
Education Facilities
Authority, Adventist
Healthcare, Series 2003 A:
5.000% 01/01/16 400,000 396,760
5.750% 01/01/25 600,000 604,992
MI Dickinson County
Healthcare System, Series
1999,
5.700% 11/01/18 750,000 749,213
MI Flint Hospital Building
Authority, Hurley Medical
Center, Series 1998 A,
5.375% 07/01/20 450,000 394,394
MN St. Paul Housing &
Redevelopment Authority,
HealthEast Project, Series
1997 A,
5.700% 11/01/15 1,000,000 943,690
MN Washington County Housing
& Redevelopment Authority,
HealthEast, Inc., Series
1998,
5.250% 11/15/12 1,500,000 1,390,665
NC State Medical Care
Commission, Stanly Memorial
Hospital, Series 1999,
6.375% 10/01/29 1,915,000 2,055,140
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
7
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
HEALTHCARE (CONTINUED)
HOSPITALS (CONTINUED)
NH Health & Education
Facilities Authority,
Hospital Revenue, Catholic
Medical Center, Series
2002,
6.125% 07/01/32 $ 400,000 $ 406,672
NH State Higher Educational &
Health Facilities
Authority, Littleton
Hospital Association, Inc.,
Series 1998 A:
5.900% 05/01/28 780,000 613,103
6.000% 05/01/28 625,000 500,856
NJ New Jersey Health Care
Facilities Financing
Authority Revenue, Health
Systems Series 2003 A,
5.000% 12/01/14 (c) 650,000 664,378
NV Henderson Healthcare
Facility Revenue, Catholic
Healthcare West, Series
1998,
5.375% 07/01/26 500,000 468,625
NY State Dormitory Authority
Revenue:
North Shore-Long Island
Jewish Medical Center,
Series 2003,
5.500% 05/01/33 300,000 306,849
Winthrop/South Nassau
Communities Hospital,
Series 2003,
5.500% 07/01/23 550,000 562,727
OH Belmont County, East Ohio
Regional Hospital, Series
1998,
5.700% 01/01/13 1,875,000 1,662,150
OH Highland County Joint
Township Hospital District,
Series 1999,
6.750% 12/01/29 965,000 910,777
OH Lakewood Hospital
Improvement Revenue,
Lakewood Hospital
Association, Series 2003,
5.500% 02/15/14 600,000 642,000
OH Miami County, Upper Valley
Medical Center, Inc.,
Series 1996 A,
6.375% 05/15/26 1,000,000 1,023,880
OH Sandusky County, Memorial
Hospital, Series 1998,
5.150% 01/01/10 250,000 247,800
PAR VALUE
---------------------------------------------------------------
PA Allegheny County Hospital
Development, Ohio Valley
General Hospital, Series
1998 A,
5.450% 01/01/28 $1,000,000 $ 929,140
PA Pottsville Hospital
Authority, Pottsville,
Hospital & Warner Clinic,
Series 1998,
5.500% 07/01/18 1,000,000 888,010
SC Lexington County Health
Services District, Inc.,
Hospital Improvement,
5.500% 11/01/23 750,000 773,693
TX Comal County Health
Facilities Development,
McKenna Memorial, Series
2002 A,
6.250% 02/01/32 500,000 508,670
TX Richardson Hospital
Authority, Baylor
Richardson Medical Center,
Series 1998,
5.625% 12/01/28 1,000,000 1,007,180
TX Tyler Health Facilities
Development Corp., Mother
Frances Hospital, Series
2001,
6.000% 07/01/31 1,000,000 1,019,410
UT Weber County, IHC Health
Services, Inc., Series
1999,
5.000% 08/15/30 1,500,000 1,518,075
VT State Educational & Health
Buildings Authority,
Brattleboro Memorial
Hospital, Series 1998,
5.375% 03/01/28 1,075,000 1,007,845
WA State Health Care
Facilities Authority Kadlec
Medical Center, Series
2001,
5.875% 12/01/21 600,000 646,500
WI State Health & Educational
Facilities Authority:
Aurora Health Care Inc.,
Series 2003,
6.400% 04/15/33 525,000 547,963
Wheaton Franciscan
Services, Series 2002,
5.750% 08/15/30 600,000 621,198
-------------
33,920,011
-------------
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
8
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
HEALTHCARE (CONTINUED)
INTERMEDIATE CARE FACILITIES - 1.0%
IL State Development Finance
Authority, Hoosier Care,
Inc., Series 1999 A,
7.125% 06/01/34 $1,205,000 $ 993,535
IN State Health Facilities
Financing Authority,
Hoosier Care, Inc., Series
1999 A,
7.125% 06/01/34 150,000 123,676
PA State Economic Development
Financing Authority,
Northwestern Human Services
Inc., Series 1998 A,
5.250% 06/01/14 2,510,000 2,147,506
-------------
3,264,717
-------------
NURSING HOMES - 6.6%
AK Juneau, St. Ann's Care
Center, Series 1999,
6.875% 12/01/25 1,250,000 1,270,825
CO Healthcare Facilities
Authority:
American Housing Foundation
I, Inc. Project, Series
2003,
8.500% 12/01/31 475,000 455,269
Pioneer Healthcare, Series
1989,
10.500% 05/01/19 1,840,000 1,742,756
CO State Healthcare
Facilities Authority,
Volunteers of America Care
Facilities, Inc.:
Series 1998 A:
5.450% 07/01/08 300,000 293,769
5.750% 07/01/20 865,000 775,680
Series 1999 A,
6.000% 07/01/29 350,000 310,737
IA State Finance Authority,
Care Initiatives Project:
Series 1996,
9.250% 07/01/25 985,000 1,172,554
Series 1998 B:
5.750% 07/01/18 550,000 490,094
5.750% 07/01/28 1,475,000 1,253,322
IN Gary Industrial Economic
Development, West Side
Health Care Center, Series
1987 A,
11.500% 10/01/17(d) 1,330,000 997,500
PAR VALUE
---------------------------------------------------------------
IN Michigan City Health
Facilities, Metro Health
Foundation, Inc. Project,
Series 1993,
11.000% 11/01/22(e) $3,085,000 $ 802,100
MA State Development Finance
Agency:
Alliance Health Care
Facilities, Series 1999,
7.100% 07/01/32 1,300,000 1,256,541
Woodlawn Nursing Home,
Series 2000 A:
7.750% 12/01/27 1,558,135 1,321,641
10.250% 06/01/27 336,372 305,510
MN Carlton, Inter-Faith
Social Services, Inc.,
Series 2000,
7.750% 04/01/29 225,000 234,918
MN Sartell, Foundation for
Healthcare, Series 1999 A,
6.625% 09/01/29 1,145,000 1,089,765
PA Chester County Industrial
Development Authority, RHA
Nursing Home, Series 2002,
8.500% 05/01/32 1,610,000 1,558,883
PA Washington County
Industrial Development
Authority, Central States,
Series 1989,
10.250% 11/01/19(e) 1,750,000 1,137,500
TN Metropolitan Government,
Nashville & Davidson
Counties Health & Education
Facilities, Central States,
Series 1989,
10.250% 11/01/19(e) 1,650,000 1,072,500
TX Kirbyville Health
Facilities Development
Corp., Heartway III
Project:
Series 1997 A,
10.000% 03/20/18(d) 668,626 401,176
Series 1997 B,
6.000% 03/20/04(d) 106,000 5,300
TX Whitehouse Health
Facilities Development
Corp., Oak Brook Healthcare
Center, Series 1989,
10.000% 12/01/19 1,620,000 1,647,054
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
9
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
HEALTHCARE (CONTINUED)
NURSING HOMES (CONTINUED)
WA Kitsap County Housing
Authority, Martha & Mary
Nursing Home, Series 1996,
7.100% 02/20/36 $1,000,000 $ 1,212,820
WI State Health & Educational
Facilities Authority:
Metro Health Foundation,
Inc., Series 1993,
11.000% 11/01/22 (e) 2,775,000 721,500
-------------
21,529,714
-------------
---------------------------------------------------------------
HOUSING - 9.6%
ASSISTED LIVING/SENIOR - 3.1%
CA Abag Finance Authority for
Nonprofit Corps., Eskaton
Gold River Lodge, Series
1998:
6.375% 11/15/15 720,000 681,019
6.375% 11/15/28 550,000 489,401
DE Kent County, Heritage at
Dover, Series 1999,
7.625% 01/01/30 1,710,000 1,443,753
GA Columbus Housing
Authority, The Gardens at
Calvary, Series 1999,
7.000% 11/15/19 495,000 420,740
IL State Development Finance
Authority, Care Institute,
Inc., Series 1995,
8.250% 06/01/25 1,245,000 1,235,687
MN Roseville, Care Institute,
Inc., Series 1993,
7.750% 11/01/23 (d) 1,740,000 1,131,000
NC State Medical Care
Commission, DePaul
Community Facilities
Project, Series 1999,
7.625% 11/01/29 1,470,000 1,513,189
NY Huntington Housing
Authority, Gurwin Jewish
Senior Center, Series 1999:
5.875% 05/01/19 700,000 645,757
6.000% 05/01/29 775,000 693,354
TX Bell County Health
Facilities Development
Corp., Care Institute,
Inc., Series 1994,
9.000% 11/01/24 1,700,000 1,723,069
-------------
9,976,969
-------------
PAR VALUE
---------------------------------------------------------------
MULTI-FAMILY - 6.3%
AZ Maricopa County Industrial
Development Authority,
National Health Facilities,
Series 1998 A,
5.100% 01/01/33 $4,500,000 $ 4,586,940
DE Wilmington, Electra Arms
Senior Association Project,
Series 1998,
6.250% 06/01/28 940,000 761,917
FL Broward County Housing
Finance Authority, Chaves
Lake Apartment Project,
Series 2000,
7.500% 07/01/40 750,000 757,470
FL Clay County Housing
Finance Authority, Madison
Commons Apartments, Series
2000 A,
7.450% 07/01/40 745,000 752,435
GA Clayton County Housing
Authority, Magnolia Park
Apartments, Series 1999 A,
6.250% 06/01/30 955,000 606,902
MN Lakeville, Southfork
Apartments Project:
Series 1989 A,
9.875% 02/01/20 2,570,000 2,576,399
Series 1989 B,
(a) 02/01/20 903,000 751,283
MN Robbinsdale Economic
Development Authority,
Broadway Court, Series 1999
A,
6.875% 01/01/26 500,000 461,500
MN Washington County Housing
& Redevelopment Authority,
Cottages of Aspen, Series
1992,
9.250% 06/01/22 1,000,000 1,023,750
MN White Bear Lake, Birch
Lake Townhome Project:
Series 1989 A,
10.250% 07/15/19 2,200,000 2,215,840
Series 1989 B,
(a) 07/15/19 694,000 470,522
NY Nyack Housing Assistance
Corp., Nyack Plaza
Apartments, Series 1979,
7.375% 06/01/21 280,762 276,994
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
10
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
HOUSING (CONTINUED)
MULTI-FAMILY (CONTINUED)
Resolution Trust Corp.,
Pass-Through Certificates,
Series 1993 A,
8.500% 12/01/16 (f) $ 546,075 $ 538,206
TN Franklin Industrial
Development Board, Landings
Apartment Project, Series
1996 B,
8.750% 04/01/27 845,000 876,282
TX Affordable Housing Corp.,
NHT/GTEX Project, Series
2001 C,
10.000% 10/01/31(d) 875,000 611,039
TX Department of Housing &
Community Affairs, Pebble
Brooks Apartments, Series
1998,
5.500% 12/01/18 1,000,000 1,046,690
TX El Paso County Housing
Finance Corp., American
Village Communities:
Series 2000 C,
8.000% 12/01/32 390,000 395,480
Series 2000 D,
10.000% 12/01/32 420,000 431,743
VA Alexandria Redevelopment &
Housing Authority,
Courthouse Commons
Apartments, Series 1990 A,
10.000% 01/01/21 1,500,000 1,287,180
-------------
20,428,572
-------------
SINGLE FAMILY - 0.2%
WA State Housing Finance
Commission, Series 1992 D1,
6.150% 01/01/26 635,000 635,260
-------------
---------------------------------------------------------------
INDUSTRIAL - 3.8%
FOOD PRODUCTS - 1.2%
GA Cartersville Development
Authority, Anheuser Busch
Cos., Inc. Project, Series
1989 A,
5.950% 02/01/32 1,000,000 1,048,670
IN Hammond, American Maize
Products, Co., Series 1994,
8.000% 12/01/24 510,000 552,116
PAR VALUE
---------------------------------------------------------------
LA Southern Louisiana Port
Commission, Cargill, Inc.
Project, Series 1997,
5.850% 04/01/17 $1,000,000 $ 1,062,800
MI State Strategic Fund,
Michigan Sugar Co.,
Sebewaing Project, Series
1998 A,
6.250% 11/01/15 1,250,000 1,143,513
-------------
3,807,099
-------------
FOREST PRODUCTS - 1.3%
AL Camden Industrial
Development Board:
International Paper Co.,
Series 2003 B,
6.250% 08/01/25 1,000,000 1,054,060
Weyerhaeuser Co., Series
2003 B,
6.375% 12/01/24 550,000 581,025
GA Rockdale County
Development Authority,
Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 1,800,000 1,821,456
MI Delta County Economic
Development Corp.,
Environmental Import, Mead
Westvaco Corp., Series 2002
B,
6.450% 04/15/23 450,000 467,046
VA Bedford County Industrial
Development Authority,
Nekoosa Packaging Corp.
Project, Series 1998,
5.600% 12/01/25 400,000 332,320
-------------
4,255,907
-------------
MANUFACTURING - 0.6%
IL Will-Kankakee Regional
Development Authority,
Flanders Corp.
Precisionaire Project,
Series 1997,
6.500% 12/15/17 855,000 842,782
TX Trinity River Authority,
Texas Instruments Project,
Series 1996,
6.200% 03/01/20 1,000,000 1,050,190
-------------
1,892,972
-------------
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
11
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
INDUSTRIAL (CONTINUED)
METALS & MINING - 0.4%
NV State Department of
Business & Industry,
Wheeling-Pittsburgh Steel
Corp., Series 1999 A,
8.000% 09/01/14(f) $1,000,000 $ 742,980
VA Greensville County
Industrial Development
Authority,
Wheeling-Pittsburgh Steel
Corp., Series 1999 A:
6.375% 04/01/04 95,000 93,305
7.000% 04/01/14 500,000 372,035
-------------
1,208,320
-------------
OIL & GAS - 0.3%
TX Gulf Coast Industrial
Development Authority,
Solid Waste Disposal, Citgo
Petroleum, Series 1998,
8.000% 04/01/28 500,000 517,385
VI Government Refinery,
Hovensa Coker Project,
Series 2002,
6.500% 07/01/21(b) 375,000 390,364
-------------
907,749
-------------
---------------------------------------------------------------
OTHER - 6.5%
OTHER - 1.3%
CA Tobacco Securitization
Authority, Asset Backed:
Series 2003 A-1:
6.250% 06/01/33 1,300,000 1,220,414
6.750% 06/01/39 275,000 264,987
Series 2003 B,
5.500% 06/01/43 750,000 735,772
NJ Tobacco Settlement
Financing Corp., Series
2003,
6.750% 06/01/39 500,000 481,795
NY Convention Center
Operating Corp., Yale
Building Project, Series
2003,
(a) 06/01/08 1,700,000 1,330,573
WA Tobacco Settlement
Authority, Series 2002,
6.625% 06/01/32 250,000 235,560
-------------
4,269,101
-------------
POOL/BOND BANK - 0.2%
MI State Municipal Bond
Authority, Local Government
Loan Project, Series 2001
A,
5.375% 11/01/17 750,000 832,125
-------------
PAR VALUE
---------------------------------------------------------------
REFUNDED/ESCROWED (G) - 5.0%
CO Denver City & County
Airport, Series 1992 C,
6.125% 11/15/25 $5,120,000 $ 5,522,972
CT State Development
Authority, Sewer Sludge
Disposal Facilities, Series
1996,
8.250% 12/01/06 600,000 662,844
DC District of Columbia,
Series 1999 A,
5.375% 06/01/18 695,000 799,410
GA Forsyth County Hospital
Authority, Georgia Baptist
Healthcare System, Series
1998,
6.000% 10/01/08 760,000 839,298
ID State Health Facilities
Authority, IHC Hospitals,
Inc., Series 1992,
6.650% 02/15/21 1,750,000 2,205,543
NC Lincoln County, Lincoln
County Hospital, Series
1991,
9.000% 05/01/07 245,000 277,850
PA Delaware County, Health
Facilities, Series 1996:
6.000% 12/15/16 1,400,000 1,579,480
6.000% 12/15/26 1,000,000 1,120,290
TN Shelby County, Health,
Education & Housing
Facilities Board, Open Arms
Development Center:
Series 1992 A,
9.750% 08/01/19 830,000 1,050,008
Series 1992 C,
9.750% 08/01/19 810,000 1,024,909
WV Hospital Finance
Authority, Charleston
Medical Center, Series 2000
A,
6.750% 09/01/30 805,000 996,799
-------------
16,079,403
-------------
---------------------------------------------------------------
OTHER REVENUE - 2.1%
HOTELS - 0.3%
PA Philadelphia Authority for
Industrial Development,
Doubletree Project A,
Series 1997,
6.500% 10/01/27 1,000,000 1,000,860
-------------
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
12
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
OTHER REVENUE (CONTINUED)
RECREATION - 1.2%
CA Agua Cliente, Band of
Cahuilla Indians Revenue,
Series 2003,
5.600% 07/01/13 $1,000,000 $ 1,008,060
CT Gaming Authority, Mohegan
Indians Tribe, Series 2001,
6.250% 01/01/31 275,000 291,068
FL Capital Trust Agency,
Seminole Tribe Convention
Center, Series 2002 A,
10.000% 10/01/33 1,350,000 1,665,023
NM Red River Sports Facility,
Red River Ski Area Project,
Series 1998,
6.450% 06/01/07 800,000 811,192
-------------
3,775,343
-------------
RETAIL - 0.6%
NJ State Economic Development
Authority, Glimcher
Properties LP Project,
Series 1998,
6.000% 11/01/28 1,250,000 1,266,550
OH Lake County, North Madison
Properties, Series 1993,
8.819% 09/01/11 695,000 687,480
-------------
1,954,030
-------------
---------------------------------------------------------------
RESOURCE RECOVERY - 1.3%
DISPOSAL - 0.4%
MA State Industrial Finance
Agency, Peabody Monofill
Associates, Inc., Series
1995,
9.000% 09/01/05 605,000 627,754
UT Carbon County, Laidlaw
Environmental:
Series 1995 A,
7.500% 02/01/10 250,000 255,650
Series 1997 A,
7.450% 07/01/17 500,000 509,875
-------------
1,393,279
-------------
PAR VALUE
---------------------------------------------------------------
RESOURCE RECOVERY - 0.9%
MA State Development Finance
Agency, Ogden Haverhill
Project, Series 1999 A,
6.700% 12/01/14 $ 250,000 $ 264,097
MA State Industrial Finance
Agency, Ogden Haverhill
Project, Series 1998 A,
5.500% 12/01/13 500,000 495,340
PA Delaware County Industrial
Development Authority, BFI
Project, Series 1997 A,
6.200% 07/01/19 2,000,000 2,077,180
-------------
2,836,617
-------------
---------------------------------------------------------------
TAX-BACKED - 24.6%
LOCAL APPROPRIATED - 0.3%
CA Compton Certificates of
Participation, Civic Center
& Capital Improvements,
Series 1997 A,
5.500% 09/01/15 1,000,000 1,042,430
-------------
LOCAL GENERAL OBLIGATIONS - 12.9%
CA East Side Union High
School District, Series
2003 B,
5.100% 02/01/20 1,000,000 1,094,950
CA Fresno Unified School
District, Series 2002 A,
6.000% 02/01/18 2,000,000 2,390,980
CA Los Angeles Unified School
District, Series 2002,
5.750% 07/01/16 700,000 820,988
CA Montebello Unified School
District, Series 2001:
(a) 08/01/21 1,435,000 593,301
(a) 08/01/23 1,505,000 542,899
CA San Juan Unified School
District, Series 2001,
(a) 08/01/19 2,210,000 1,039,518
IL Chicago Board of
Education, Series 1997 A,
5.250% 12/01/30 (h) 14,470,000 15,046,630
IL Cook County, Series 1997
A,
5.625% 11/15/22 4,200,000 4,617,102
NY New York City:
Series 1997 A,
7.000% 08/01/07 1,000,000 1,127,580
Series 1997 H,
6.000% 08/01/17 1,400,000 1,562,260
TX Dallas County Flood
Control District, Series
2002,
7.250% 04/01/32 1,000,000 1,015,640
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
13
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
TAX-BACKED (CONTINUED)
LOCAL GENERAL OBLIGATIONS (CONTINUED)
TX Irving Independent School
District, Series 1997,
(a)02/15/18 $1,000,000 $ 507,940
TX San Antonio Independent
School District, Series
1997,
5.000% 08/15/27 9,000,000 9,073,710
WA Clark County School
District No. 037,
Vancouver, Series 2001 C,
(a)12/01/18 5,000,000 2,450,000
-------------
41,883,498
-------------
SPECIAL NON-PROPERTY TAX - 3.9%
CA San Diego Redevelopment
Agency, Series 2001,
(a)09/01/22 1,910,000 730,499
FL Northern Palm Beach County
Improvement District,
Series 1999,
6.000% 08/01/29 750,000 841,328
IL Metropolitan Pier &
Exposition Authority,
McCormick Place Expansion
Project, Series 1993 A,
(a)06/15/16 10,000,000 5,686,400
OH Hamilton County, Series
2000 B,
(a)12/01/21 5,000,000 2,098,400
PR Commonwealth Highway &
Transportation Authority:
Series 2002 E,
5.500% 07/01/21 750,000 863,265
Series 2003 AA:
5.500% 07/01/20 1,500,000 1,733,220
5.500% 07/01/18 500,000 579,270
-------------
12,532,382
-------------
SPECIAL PROPERTY TAX - 3.6%
CA Carson, Series 1992,
7.375% 09/02/22 35,000 35,476
CA Huntington Beach Community
Facilities District, Grand
Coast Resort, Series
2001-1,
6.450% 09/01/31 750,000 772,312
CA Orange County Community
Facilities District, Ladera
Ranch, Series 1999 A,
6.700% 08/15/29 500,000 527,255
PAR VALUE
---------------------------------------------------------------
CA Orange County Improvement
Bond Act 1915, Phase IV,
No. 01-1-B, Series 2003
5.750% 09/02/33 $ 500,000 $ 503,285
CA Placer Unified High School
District, Series 2000 A,
(a)08/01/19 1,700,000 800,853
CA Redwood City Community
Facilities District, 1
Redwood, Series 2003 B,
5.950% 09/01/28 600,000 612,384
CA Riverside County Public
Financing Authority,
Redevelopment Projects,
Series 1997 A,
5.500% 10/01/22 650,000 658,755
CA Temecula Valley Unified
School District, No. 02-1,
Series 2003,
6.125% 09/01/33 400,000 403,164
FL Celebration Community
Development District,
Special Assessment, Series
2003 A,
6.400% 05/01/34 1,000,000 1,023,320
FL Colonial Country Club
Community Development,
Series 2003,
6.400% 05/01/33 750,000 768,720
FL Double Branch Community
Development District,
Special Assessment, Series
2002 A,
6.700% 05/01/34 700,000 726,334
FL Heritage Palms Community
Development District,
Series 1999,
6.250% 11/01/04 590,000 595,646
FL Islands at Doral Southwest
Community Development
District, Series 2003,
6.375% 05/01/35 380,000 388,611
FL Lexington Oaks Community
Development District:
Series 1998 A,
6.125% 05/01/19 355,000 360,254
Series 1998 B,
5.500% 05/01/05 85,000 85,523
Series 2000 A,
7.200% 05/01/30 290,000 305,228
Series 2002 A,
6.700% 05/01/33 250,000 259,252
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
14
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
TAX-BACKED (CONTINUED)
SPECIAL PROPERTY TAX (CONTINUED)
FL Orlando, Conroy Road
Interchange Project, Series
1998 A:
5.500% 05/01/10 $ 180,000 $ 184,030
5.800% 05/01/26 300,000 301,626
FL Stoneybrook Community
Development District:
Series 1998 A,
6.100% 05/01/19 315,000 319,810
Series 1998 B,
5.700% 05/01/08 105,000 105,953
MI Pontiac Finance Authority,
Development Area No. 3,
Series 2002,
6.375% 06/01/31 550,000 551,925
MI Taylor Tax Increment
Finance Authority, Series
2001,
5.375% 05/01/17 1,220,000 1,350,040
-------------
11,639,756
-------------
STATE APPROPRIATED - 1.0%
NY State Urban Development
Corp., University
Facilities Grants, Series
1995,
5.875% 01/01/21 1,000,000 1,161,390
PR Commonwealth of Puerto
Rico Public Finance Corp.,
Series 2002 E,
6.000% 08/01/26 1,800,000 2,069,118
-------------
3,230,508
-------------
STATE GENERAL OBLIGATIONS - 2.9%
DC District of Columbia,
Unrefunded, Series 1999 A,
5.375% 06/01/18 1,700,000 1,847,764
TX Board of Regents,
University of Texas, Series
2001 B,
5.375% 08/15/18 650,000 713,622
TX State, Series 1999 ABC,
5.500% 08/01/35 4,200,000 4,496,814
WA State, Series 1999 B,
5.000% 01/01/24 2,500,000 2,529,000
-------------
9,587,200
-------------
---------------------------------------------------------------
PAR VALUE
---------------------------------------------------------------
TRANSPORTATION - 6.9%
AIR TRANSPORTATION - 2.8%
CA Los Angeles Regional
Airport, LAXFuel Corp.,
Series 2001,
5.250% 01/01/23 $ 750,000 $ 760,320
CO Denver City & County
Airport, United Airlines,
Inc., Series 1992 A,
6.875% 10/01/32 (e) 1,645,000 982,986
FL Capital Trust Agency
Revenue, Air Cargo-Orlando
Project, Series 2003,
6.750% 01/01/32 500,000 468,895
KY Kenton County Airport
Board, Delta Airlines,
Inc., Series 1992 A:
7.500% 02/01/12 500,000 499,915
7.500% 02/01/20 500,000 499,000
MN Minneapolis & St. Paul
Metropolitan Airport
Commission, Northwest
Airlines Corp.:
Series 2001 A,
7.000% 04/01/25 500,000 467,245
Series 2001 B,
6.500% 04/01/25 250,000 242,813
NC Charlotte, US Airways,
Inc.:
Series 1998,
5.600% 07/01/27 250,000 180,990
Series 2000,
7.750% 02/01/28 750,000 677,948
NJ State Economic Development
Authority, Continental
Airlines, Inc. Project,
Series 2003,
9.000% 06/01/33 750,000 803,498
TX Alliance Airport
Authority:
American Airlines Project,
Series 1990,
7.500% 12/01/29 1,600,000 1,056,048
Federal Express Corp.
Project, Series 1996,
6.375% 04/01/21 1,000,000 1,056,030
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
15
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
TRANSPORTATION (CONTINUED)
AIR TRANSPORTATION (CONTINUED)
TX Houston Industrial
Development Corp., Air
Cargo, Perot Development,
Series 2002,
6.000% 03/01/23 $ 750,000 $ 755,168
WA Port Seattle, Northwest
Airlines, Inc., Series
2000,
7.250% 04/01/30 500,000 476,150
-------------
8,927,006
-------------
AIRPORTS - 1.8%
CO Denver City & County
Airport, Series 1997 E,
5.250% 11/15/23 1,700,000 1,795,268
MA State Port Authority,
Series 1998 D,
5.000% 07/01/28 4,000,000 4,036,880
-------------
5,832,148
-------------
TOLL FACILITIES - 2.0%
CO Northwest Parkway Public
Highway Authority, Series
2001 D,
7.125% 06/15/41 1,000,000 1,008,820
CO State Public Highway
Authority, E-470, Series
2000 B:
(a)09/01/18 3,000,000 1,492,080
(a)09/01/35 8,750,000 844,462
NY State Triborough Bridge &
Tunnel Authority, Series
2002,
5.500% 11/15/20 1,125,000 1,293,739
VA Richmond Metropolitan
Authority, Series 1998,
5.250% 07/15/22 2,000,000 2,214,520
-------------
6,853,621
-------------
TRANSPORTATION - 0.3%
NV State Department of
Business & Industry, Las
Vegas Monorail Project,
Series 2000,
7.375% 01/01/40 1,000,000 994,280
-------------
---------------------------------------------------------------
PAR VALUE
---------------------------------------------------------------
UTILITIES - 14.1%
INDEPENDENT POWER PRODUCERS - 2.6%
MI Midland County Economic
Development Corp., Series
2000,
6.875% 07/23/09 $1,250,000 $ 1,286,175
NY Port Authority of New York
& New Jersey, KIAC
Partners, Series 1996 IV,
6.750% 10/01/11 2,000,000 2,096,080
PA Carbon City Industrial
Development Panther Creek
Partners Project, Series
2000,
6.650% 05/01/10 300,000 324,897
PA State Economic Development
Finance Authority:
Colver Project, Series 1994
D,
7.125% 12/01/15 1,500,000 1,566,465
Northampton Generating,
Series 1994 A,
6.500% 01/01/13 1,000,000 1,008,880
PR Commonwealth of Puerto
Rico Industrial
Educational, Medical &
Environmental Cogeneration
Facilities, AES Project,
Series 2000,
6.625% 06/01/26 650,000 674,382
VA Pittsylvania County
Industrial Development
Authority, Multi-trade of
Pittsylvania, Series 1994
A:
7.450% 01/01/09 1,000,000 1,000,450
7.550% 01/01/19 500,000 494,275
-------------
8,451,604
-------------
INVESTOR OWNED - 5.4%
AZ Maricopa County Pollution
Control Corp., El Paso
Electric Co., Series 2002
A,
6.250% 05/01/37 1,000,000 1,032,170
AZ Pima County Industrial
Development Authority,
Tucson Electric Power Co.,
Series 1997 A,
6.100% 09/01/25 750,000 713,362
CT State Development
Authority, Connecticut
Light & Power Co., Series
1993 B,
5.950% 09/01/28 200,000 209,934
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
16
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
UTILITIES (CONTINUED)
INVESTOR OWNED (CONTINUED)
FL Polk County Industrial
Development Authority,
Tampa Electric Co. Project,
Series 1996,
5.850% 12/01/30 $1,200,000 $ 1,195,152
IL Bryant, Pollution Control
Revenue, Central Illinois
Light Co., Series 1993,
5.900% 08/01/23 2,650,000 2,663,356
IN Petersburg in Pollution
Control Revenue,
Indianapolis Power & Light
Project, Series 1995,
6.625% 12/01/24 1,000,000 1,023,040
LA Calcasieu Parish
Industrial Development
Board, Entergy Gulf States,
Inc., Series 1999,
5.450% 07/01/10 500,000 503,095
LA West Feliciana Parish,
Entergy Gulf States, Inc.,
Series 1999 B,
6.600% 09/01/28 500,000 508,945
MS State Business Finance
Corp., Systems Energy
Resources Project, Series
1998,
5.875% 04/01/22 2,000,000 2,002,040
MT Forsyth Pollution Control,
Portland General, Series
1998 A,
5.200% 05/01/33 300,000 309,402
OH State Air Quality
Development Authority,
Cleveland Pollution
Control, Series 2002 A,
6.000% 12/01/13 900,000 913,338
TX Brazos River Authority,
TXU Electric Co.:
Series 2001 C,
5.750% 05/01/36 350,000 367,104
Series 2003 C,
6.750% 10/01/38 900,000 945,666
PAR VALUE
---------------------------------------------------------------
VA Chesterfield County
Industrial Development
Authority, Pollution
Control Revenue, Virginia
Electric & Power Co.,
Series 1987 B,
5.875% 06/01/17 $ 250,000 $ 268,992
WV Pleasant County, Western
Pennsylvania Power Co.,
Series 1999 E,
5.500% 04/01/29 4,750,000 4,921,760
-------------
17,577,356
-------------
JOINT POWER AUTHORITY - 0.2%
NC Eastern Municipal Power
Agency:
Series 1999 D:
5.500% 01/01/16 285,000 303,653
6.700% 01/01/19 500,000 561,770
-------------
865,423
-------------
MUNICIPAL ELECTRIC - 3.4%
CA State Department of Water
Resources Authority, Power
Supply Revenue Bonds,
Series 2002 A,
5.500% 05/01/14 2,000,000 2,263,860
NY Long Island Power
Authority, Series 1998 B,
5.000% 04/01/10 1,000,000 1,113,150
PR Electric Power Authority,
Series 1998 II,
5.125% 07/01/26 3,500,000 3,664,010
WA Chelan County Public
Utilities District No. 1,
Columbia River Rock
Hydroelectric, Series 1997,
(a)06/01/14 5,000,000 3,135,650
WA Seattle, Light-Power,
Series 2001,
5.500% 03/01/17 750,000 832,950
-------------
11,009,620
-------------
WATER & SEWER - 2.5%
MA State Water Resources
Authority, Series 1997 D,
5.000% 08/01/24 3,000,000 3,056,010
MO Water & Sewer, Lee's
Summit, Series 2002,
5.250% 07/01/15 500,000 550,520
MS Five Lakes Utility
District,
8.250% 07/15/24 500,000 484,720
See notes to investment portfolio.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
17
MUNICIPAL BONDS (CONTINUED) PAR VALUE
---------------------------------------------------------------
UTILITIES (CONTINUED)
WATER & SEWER (CONTINUED)
NH State Industrial
Development Authority,
Pennichuck Water Works,
Inc., Series 1988,
7.500% 07/01/18 $ 470,000 $ 526,391
WA King County, Series 1999,
5.250% 01/01/30 3,250,000 3,377,238
-------------
7,994,879
-------------
TOTAL MUNICIPAL BONDS
(cost of $313,620,487) 314,128,588
-------------
MUNICIPAL PREFERRED STOCKS - 1.3% SHARES
---------------------------------------------------------------
HOUSING - 1.3%
MULTI-FAMILY - 1.3%
Charter Mac Equity Issue
Trust,
6.625% 06/30/49(f) 2,000,000 2,143,280
MuniMae Equity Issue Trust,
7.750% 06/30/50(f) 2,000,000 2,210,940
-------------
(cost of $4,000,000) 4,354,220
-------------
SHORT-TERM OBLIGATIONS - 0.6% PAR
---------------------------------------------------------------
VARIABLE RATE DEMAND NOTES(I) - 0.6%
IN State Development Finance
Authority, Cathedral High,
Series 2001,
1.150% 09/01/26 $ 300,000 300,000
IN State Health Facility
Financing Authority,
Fayette Memorial Hospital
Association, Inc., Series
2002 A,
1.150% 10/01/32 600,000 600,000
MO State Health & Educational
Facilities Authority,
Washington University,
Series 1996 C,
1.050% 09/01/30 400,000 400,000
PAR VALUE
---------------------------------------------------------------
NY State, Series 1993 A-4,
1.080% 08/01/22 $ 500,000 $ 500,000
SD Lower Brule Sioux Tribe,
Series 1999,
1.150% 02/01/11(c) 10,000 10,000
-------------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $1,810,000) 1,810,000
-------------
TOTAL INVESTMENTS - 98.7%
(cost of $319,430,487)(j) 320,292,808
-------------
OTHER ASSETS & LIABILITIES, NET - 1.3% 4,213,523
---------------------------------------------------------------
NET ASSETS* - 100.0% $ 324,506,331
------------
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 November 30, 2003, the value of these
securities amounted to $2,801,819, which represents 0.9% of net assets.
Additional information on these restricted securities is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
-----------------------------------------------------------------
CA Statewide Community
Development Authority:
Crossroads School for Arts &
Sciences,
Series 1998,
6.000% 08/01/28 08/31/98 $1,280,000
Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 09/08/00 1,000,000
VI Government Refinery,
Hovenska Coker
Project Series 2002,
6.500% 07/01/21 11/15/02 375,000
----------
$2,655,000
==========
(c) This security has been purchased on a delayed delivery basis.
(d) The issuer is in default of certain debt covenants. Income is not being
fully accrued.
(e) As of November 30, 2003, the Trust held securities of certain issuers that
have filed for bankruptcy protection under Chapter 11, representing 1.5% of
net assets. These issuers are in default of certain debt covenants. Income
is not being fully accrued.
(f) This security is exempt from registration under Rule 144A of the Securities
Act of 1933 and may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At November 30, 2003, the value
of these securities amounted to $5,635,406, which represents 1.7% of net
assets.
(g) The Trust has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
principal and interest.
(h) This security, or a portion thereof, with a market value of $3,129,949, is
being used to collateralize open futures contracts.
See notes to financial statements.
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003
18
(i) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of November 30,
2003.
(j) Cost for federal income tax purposes is $319,120,247.
Short futures contracts open at November 30, 2003:
PAR VALUE UNREALIZED
COVERED BY EXPIRATION APPRECIATION
TYPE CONTRACTS MONTH AT 11/30/03
----------------------------------------------------------------------
10 Year U.S. Treasury Note $39,500,000 Mar-04 $59,546
30 Year U.S. Treasury Bond 49,300,000 Mar-04 35,804
-------
$95,350
----------
See notes to financial statements.
19
--
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2003
ASSETS:
Investments, at cost $319,430,487
------------
Investments, at value $320,292,808
Cash 519,222
Receivable for:
Interest 5,587,830
Futures variation margin 777,018
Deferred Trustees' compensation plan 10,137
------------
Total Assets 327,187,015
------------
LIABILITIES:
Payable for:
Investments purchased 500,399
Investments purchased on a delayed
delivery basis 666,359
Distributions -- common shares 1,244,691
Distributions -- preferred shares 16,707
Investment advisory fee 197,510
Pricing and bookkeeping fees 2,722
Trustees' fees 133
Custody fee 3,337
Deferred Trustees' fees 10,137
Other liabilities 38,689
------------
Total Liabilities 2,680,684
------------
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 $263,129,356
Undistributed net investment income 1,057,736
Accumulated net realized loss (60,638,432)
Net unrealized appreciation on:
Investments 862,321
Futures contracts 95,350
------------
Net assets at value applicable to
31,117,274 common shares of beneficial
interest outstanding $204,506,331
============
Net asset value per common share $ 6.57
============
--
STATEMENT OF OPERATIONS
For the Year Ended November 30, 2003
INVESTMENT INCOME:
Interest $19,744,561
-----------
EXPENSES:
Investment advisory fee 2,405,109
Transfer agent fee 63,545
Pricing and bookkeeping fees 160,445
Trustees' fees 16,106
Preferred shares remarketing commissions 299,932
Custody fee 18,175
Other expenses 129,757
-----------
Total Expenses 3,093,069
Custody earnings credit (1,219)
-----------
Net Expenses 3,091,850
-----------
Net Investment Income 16,652,711
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES CONTRACTS:
Net realized loss on:
Investments (625,128)
Futures contracts (5,644,261)
-----------
Net realized loss (6,269,389)
-----------
Net change in unrealized appreciation/
depreciation on:
Investments 8,468,113
Futures contracts (832,417)
-----------
Net change in unrealized appreciation/
depreciation 7,635,696
-----------
Net Gain 1,366,307
-----------
Net Increase in Net Assets from
Operations 18,019,018
-----------
LESS DISTRIBUTIONS DECLARED TO PREFERRED
SHAREHOLDERS:
From net investment income (1,158,676)
-----------
Net Increase in Net Assets from
Operations Applicable to Common Shares $16,860,342
===========
See notes to financial statements.
20
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED NOVEMBER 30,
------------------------------
INCREASE (DECREASE) IN NET ASSETS: 2003 2002
------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 16,652,711 $ 17,671,992
Net realized loss on investments and futures contracts (6,269,389) (9,209,036)
Net change in unrealized appreciation/depreciation on
investments and futures contracts 7,635,696 (3,859,383)
------------ ------------
Net Increase from Operations 18,019,018 4,603,573
------------ ------------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (1,158,676) (1,763,487)
------------ ------------
Net increase in Net Assets from Operations Applicable to
Common Shares 16,860,342 2,840,086
------------ ------------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (15,243,036) (15,558,339)
------------ ------------
SHARE TRANSACTIONS:
Distributions reinvested 124,151 134,759
------------ ------------
Total Increase (Decrease) in Net Assets Applicable to Common
Shares 1,741,457 (12,583,494)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 202,764,874 215,348,368
------------ ------------
End of period (including undistributed net investment income
of $1,057,736 and $815,284, respectively) $204,506,331 $202,764,874
============ ============
NUMBER OF TRUST SHARES:
Common Shares:
Issued for distributions reinvested 19,292 19,955
Outstanding at:
Beginning of period 31,097,982 31,078,027
------------ ------------
End of period 31,117,274 31,097,982
------------ ------------
Preferred Shares:
Outstanding at end of period 4,800 4,800
------------ ------------
See notes to financial statements.
21
NOTES TO FINANCIAL STATEMENTS
November 30, 2003
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 service may use
various pricing techniques which take into account appropriate factors such as
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other data, as well as broker quotes. Certain securities, which tend to be
more thinly traded and of lesser quality, are priced based on fundamental
analysis of the financial condition of the issuer and the estimated value of any
collateral. Valuations developed through pricing techniques may vary from the
actual amounts realized upon sale of the securities, and the potential variation
may be greater for those securities valued using fundamental analysis. Debt
securities for which quotations are readily available are valued at an
over-the-counter or exchange bid quotation.
Short-term 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, which tend to
be more thinly traded and of lesser quality 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
will invest in these instruments to hedge against the effects of changes in the
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, for duration management, or when the transactions are
economically appropriate to the reduction of risk inherent in the management of
the Trust and not for trading purposes. The use of futures contracts involves
certain risks, which include: (1) imperfect correlation between the price
movement of the instruments and the underlying securities, (2) inability to
close out positions due to differing trading hours, or the temporary absence of
a liquid market, for either the instrument or the underlying securities, or (3)
an inaccurate prediction by Columbia Management Advisors, Inc. of the future
direction of interest rates. Any of these risks may involve amounts exceeding
the variation margin recorded in the Trust's Statement of Assets and Liabilities
at any given time.
Upon entering into a futures contract, the Trust deposits cash or securities
with the broker in an amount sufficient to meet the initial margin requirement.
Subsequent payments are made or received by the Trust equal to the daily change
in the contract value and are recorded as variation margin 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 Fund may write call and put options on futures it owns or in which it may
invest. Writing put options tends to increase the fund's exposure to the
underlying instrument. Writing call options tends to decrease the Fund's
exposure to the underlying instrument. When the Fund 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 Fund
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
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2003
22
Fund may not be able to enter into a closing transaction because of an illiquid
market.
The Fund may also purchase put and call options. Purchasing call options tends
to increase the Fund's exposure to the underlying instrument. Purchasing put
options tends to decrease the Fund's exposure to the underlying instrument. The
Fund pays a premium, which is included in the Fund'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 Fund
to subsequently invest at less advantageous prices. The Trust's custodian will
set aside cash or liquid portfolio securities equal to the amount of the delayed
delivery commitment in a separate account.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Premium and discount are
amortized and accreted, respectively, on all debt securities.
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, by distributing
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, by
distributing in each calendar year substantially all of its net investment
income, capital gains and certain other amounts, if any, the Trust will 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 November 30, 2003 was 1.05%.
For the year ended November 30, 2003, the Trust declared dividends to Auction
Preferred shareholders amounting to $1,158,676, representing an average APS
dividend rate of 0.97%.
NOTE 3. FEDERAL TAX INFORMATION
The timing and character of income and capital gain distributions are determined
in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Trust's capital accounts for permanent tax
differences to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
For the year ended November 30, 2003, permanent differences resulting primarily
from differing treatments for market discount reclassifications, discount
accretion/premium amortization on debt securities and expired capital loss
carryforward were identified and reclassified among the components of the
Trust's net assets as follows:
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT INCOME NET REALIZED LOSS PAID-IN CAPITAL
--------------------- ----------------- ---------------
$(8,547) $5,276,170 $(5,267,623)
Net investment income and net realized gains (losses), as disclosed on the
Statement of Operations, and net assets were not affected by this
reclassification.
The tax character of distributions paid during the years ended November 30, 2003
and November 30, 2002 was as follows:
NOVEMBER 30, 2003 NOVEMBER 30, 2002
----------------- -----------------
Distributions paid from:
Tax-Exempt Income $16,377,912 $17,220,353
Ordinary Income* 23,800 101,473
Long-Term Capital
Gains -- --
* For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
As of November 30, 2003, the components of distributable earnings on a tax basis
were as follows:
UNDISTRIBUTED UNDISTRIBUTED
UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED
TAX-EXEMPT INCOME INCOME CAPITAL GAINS APPRECIATION*
----------------- ------------- ------------- --------------
$3,293,669 $ -- $ -- $1,172,561
* The differences between book-basis and tax-basis net unrealized appreciation
are primarily due to discount accretion/premium amortization on debt
securities.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2003
23
Unrealized appreciation (depreciation) at November 30, 2003, based on cost of
investments for federal income tax purposes was:
Unrealized appreciation $ 19,974,048
Unrealized depreciation (18,801,487)
------------
Net unrealized appreciation $ 1,172,561
------------
The following capital loss carryforwards are available to reduce taxable income
arising from future net realized gains on investments, if any, to the extent
permitted by the Internal Revenue Code:
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
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
On April 1, 2003, Colonial Management Associates, Inc., the previous investment
advisor to the Trust, merged into Columbia Management Advisors, Inc.
("Columbia"), formerly known as Columbia Management Co., an indirect,
wholly-owned subsidiary of FleetBoston Financial Corporation. As a result of the
merger, Columbia now serves as the Trust's investment advisor. The merger did
not change the way the Trust is managed, the investment personnel assigned to
manage the Trust or the fees paid by the Trust.
INVESTMENT ADVISORY FEE
Columbia is the investment advisor to the Trust and provides administrative and
other services. Columbia receives a monthly 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").
Under its pricing and bookkeeping agreement with the Trust, Columbia receives
from the Trust an annual flat fee of $10,000 paid monthly, and in any month that
the Trust's average weekly net assets, including assets applicable to the APS,
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 the APS, of the Trust for that month. The Trust
also pays additional fees for pricing services. For the year ended November 30,
2003, the effective pricing and bookkeeping fee rate was 0.050%. Columbia pays
the total fees collected to State Street under the Outsourcing Agreement.
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.
NOTE 5. PREFERRED SHARES
The Trust currently has outstanding 4,800 APS. The APS are redeemable at the
option of the Trust on any dividend payment date at the redemption price of
$25,000 per share, plus an amount equal to any dividends accumulated on a daily
basis unpaid through the redemption date (whether or not such dividends have
been declared).
Under the Act, the Trust is required to maintain asset coverage of at least 200%
with respect to the APS as of the last business day of each month in which any
APS are outstanding. Additionally, the Trust is required to meet more stringent
asset coverage requirements under the terms of the APS Agreement and in
accordance with the guidelines prescribed by the APS' rating agencies. Should
these requirements not be met, or should dividends accrued on the APS not be
paid, the Trust may be restricted in its ability to declare dividends to common
shareholders or may be required to redeem certain APS. At November 30, 2003,
there were no restrictions on the Trust.
NOTE 6. PORTFOLIO INFORMATION
PURCHASES AND SALES OF SECURITIES
For the year ended November 30, 2003, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $42,974,746 and
$48,752,264, respectively.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2003
24
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
INDUSTRY FOCUS
The Trust may focus its investments in certain industries, subjecting it to
greater risk than a trust that is more diversified.
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 and industry events 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 due to the
extent that there is no established retail secondary market and because of a
decline in the value of such securities.
GEOGRAPHIC CONCENTRATION
The Trust had greater than 5% of its net assets at November 30, 2003, invested
in debt obligations issued by the states of California, Florida, Illinois,
Massachusetts, Pennsylvania and Texas and their respective political
subdivisions, agencies and public authorities to obtain funds for various
purposes. The Trust is more susceptible to economic and political factors
adversely affecting issuers of each respective state's specific municipal
securities than are municipal bond funds that are not concentrated to the same
extent in these issuers.
25
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise stated):
YEAR ENDED
YEAR ENDED NOVEMBER 30, PERIOD ENDED DECEMBER 31,
----------------------------------------------------- NOVEMBER 30, -------------------
2003 2002 2001 2000 1999(A) 1998 1997
---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $ 6.52 $ 6.93 $ 6.92 $ 7.49 $ 8.49 $ 8.56 $ 8.34
-------- -------- -------- -------- ---------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.54(b) 0.57(b)(c) 0.61(b) 0.62(d) 0.46 0.52 0.55
Net realized and unrealized
gain (loss) on investments
and futures contracts 0.04 (0.42)(c) (0.04) (0.54) (0.92) (0.07) 0.22
-------- -------- -------- -------- ---------- -------- --------
Total from Investment
Operations 0.58 0.15 0.57 0.08 (0.46) 0.45 0.77
-------- -------- -------- -------- ---------- -------- --------
LESS DISTRIBUTIONS DECLARED
TO PREFERRED SHAREHOLDERS:
From net investment income (0.04) (0.06) (0.12) (0.16) (0.04) -- --
-------- -------- -------- -------- ---------- -------- --------
Total from Investment
Operations Applicable to
Common Shareholders 0.54 0.09 0.45 (0.08) (0.50) 0.45 0.77
-------- -------- -------- -------- ---------- -------- --------
LESS DISTRIBUTIONS DECLARED
TO COMMON SHAREHOLDERS:
From net investment income (0.49) (0.50) (0.44) (0.48) (0.45) (0.52) (0.55)
-------- -------- -------- -------- ---------- -------- --------
LESS SHARE TRANSACTIONS:
Commissions and offering
costs -- preferred shares -- -- -- (0.01) (0.05) -- --
-------- -------- -------- -------- ---------- -------- --------
NET ASSET VALUE, END OF
PERIOD $ 6.57 $ 6.52 $ 6.93 $ 6.92 $ 7.49 $ 8.49 $ 8.56
======== ======== ======== ======== ======== ======== ========
Market price per
share -- common shares $ 6.45 $ 6.26 $ 6.38 $ 5.75 $ 6.13 $ 8.31 $ 8.63
======== ======== ======== ======== ======== ======== ========
Total return -- based on
market value -- common
shares(e) 11.17% 5.81% 18.56% 1.05% (21.72)%(f) 2.47% 11.60%
======== ======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET
ASSETS/ SUPPLEMENTAL DATA:
Expenses(g)(h) 1.54% 1.49% 1.59% 1.60% 1.13%(i) 0.93% 0.96%
Net investment income before
preferred stock
dividend(g)(h) 8.30% 8.36%(c) 8.67% 8.63% 6.18%(i) 6.02% 6.54%
Net investment income after
preferred stock
dividend(g)(h) 7.72% 7.53%(c) 7.00% 6.37% 5.67%(i) 6.02% 6.54%
Portfolio turnover rate 14% 15% 15% 10% 16%(f) 29% 17%
Net assets, end of period
(000's) -- common shares $204,506 $202,765 $215,348 $214,975 $232,540 $263,705 $265,190
(a) The Trust changed its fiscal year end from December 31 to November 30.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Effective December 1, 2001, the Trust adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began accreting
market discount on all debt securities. The effect of this change, for the
year ended November 30, 2002, was to increase the ratio of net investment
income to average net assets from 8.31% to 8.36% and increase the ratio of
net investment income (adjusted for dividend payments to preferred
shareholders) from 7.48% to 7.53%. The impact to net investment income and
net realized and unrealized loss per share was less than $0.01. Per share
data and ratios for periods prior to November 30, 2002, have not been
restated to reflect this change in presentation.
(d) The per share net investment income amount does not reflect the period's
reclassification of differences between book and tax basis net investment
income.
(e) Total return at market value assuming all distributions reinvested at prices
calculated in accordance with the Dividend Reinvestment Plan.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Ratios reflect average net assets available to common shares only.
(i) Annualized.
FINANCIAL HIGHLIGHTS (CONTINUED)
26
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1996 1995 1994 1993
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.55 $ 7.96 $ 8.67 $ 8.78
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.62 0.67
Net realized and unrealized gain (loss) on investments and
futures contracts (0.19) 0.58 (0.72) (0.11)
-------- -------- -------- --------
Total from Investment Operations Applicable to Common
Shareholders 0.37 1.18 (0.10) 0.56
-------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.58) (0.59) (0.61) (0.67)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 8.34 $ 8.55 $ 7.96 $ 8.67
======== ======== ======== ========
Market price per share -- common shares $ 8.25 $ 7.38 $ 6.88 $ 8.25
======== ======== ======== ========
Total return -- based on market value -- common shares(a) 20.09% 15.65% (9.83)% 7.96%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses(b) 1.00% 1.06% 1.03% 0.97%
Net investment income(b) 6.74% 7.15% 7.44% 7.58%
Portfolio turnover rate 15% 23% 20% 29%
Net assets, end of period (000's) -- common shares $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 AVERAGE
ASSET LIQUIDATING MARKET
TOTAL AMOUNT COVERAGE PREFERENCE VALUE
OUTSTANDING PER SHARE PER SHARE PER SHARE
----------------------------------------------------------------------
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
* On August 26, 1999, the Trust began offering Auction Preferred Shares.
27
REPORT OF INDEPENDENT AUDITORS
TO THE TRUSTEES AND THE SHAREHOLDERS OF COLONIAL HIGH INCOME MUNICIPAL TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial High Income Municipal
Trust (the "Trust") at November 30, 2003, and the results of its operations, the
changes in its net assets and its financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at November 30, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 12, 2004
28
UNAUDITED INFORMATION
FEDERAL INCOME TAX INFORMATION
99.85% of the distributions from net investment income will be treated as exempt
income for federal income tax purposes.
29
--
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 or 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 Trust Company, N.A., by mail at P.O. Box 43010, Providence, RI
02940-3010, or by phone at 1-800-730-6001.
30
TRUSTEES
Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were
appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth
had been directors of 15 Columbia Funds and 20 funds in the CMG Fund Trust. Also
effective October 8, 2003, the incumbent trustees of the Fund were elected as
directors of the 15 Columbia Funds and as trustees of the 20 funds in the CMG
Fund Trust. The new combined Board of Trustees/Directors of the Fund now
oversees 119 funds in the Columbia Funds Complex (including the former Liberty
Funds, former Stein Roe Funds, Columbia Funds and CMG Funds). Several of these
trustees/directors also serve on the Boards of other funds in the Columbia Funds
Complex.
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Funds in the Columbia
Funds complex, the year each was first elected or appointed to office, their
principal business occupations during at least the last five years, the number
of portfolios overseen by each Trustee/Director and other directorships they
hold are shown below. Each officer listed below serves as an officer of each
Fund in the Columbia Funds Complex.
YEAR FIRST
ELECTED OR
POSITION APPOINTED PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH FUNDS TO OFFICE(1) DURING PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
Douglas A. Hacker Trustee 1996 Executive Vice President-Strategy of
(age 48) United Airlines (airline) since December,
P.O. Box 66100 2002 (formerly President of UAL Loyalty
Chicago, IL 60666 Services (airline) from September, 2001
to December, 2002; Executive Vice
President and Chief Financial Officer of
United Airlines from March, 1993 to
September, 2001).
Janet Langford Kelly Trustee 1996 Chief Administrative Officer and Senior
(age 45) Vice President, Kmart Holding Corporation
3100 West Beaver Road (consumer goods) since September, 2003
Troy, MI 48084-3163 (formerly Executive Vice
President-Corporate Development and
Administration, General Counsel and
Secretary, Kellogg Company (food
manufacturer), from September, 1999 to
August, 2003; Senior Vice President,
Secretary and General Counsel, Sara Lee
Corporation (branded, packaged,
consumer-products manufacturer) from
January, 1995 to September, 1999).
Richard W. Lowry Trustee 1995 Private Investor since August, 1987
(age 67) (formerly Chairman and Chief Executive
10701 Charleston Drive Officer, U.S. Plywood Corporation
Vero Beach, FL 32963 (building products manufacturer)).
Charles R. Nelson Trustee 1981 Professor of Economics, University of
(age 61) Washington, since January, 1976; Ford and
Department of Economics Louisa Van Voorhis Professor of Political
University of Washington Economy, University of Washington, since
Seattle, WA 98195 September, 1993; Director, Institute for
Economic Research, University of
Washington, since September, 2001;
Adjunct Professor of Statistics,
University of Washington, since
September, 1980; Associate Editor,
Journal of Money Credit and Banking,
since September, 1993; consultant on
econometric and statistical matters.
John J. Neuhauser Trustee 1985 Academic Vice President and Dean of
(age 60) Faculties since August, 1999, Boston
84 College Road College (formerly Dean, Boston College
Chestnut Hill, MA 02467-3838 School of Management from September, 1977
to September, 1999).
Patrick J. Simpson Trustee 2000 Partner, Perkins Coie L.L.P. (law firm).
(age 58)
1211 S.W. 5th Avenue
Suite 1500
Portland, OR 97204
NUMBER OF
PORTFOLIOS IN
COLUMBIA FUNDS
COMPLEX OTHER
OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE TRUSTEE/DIRECTOR HELD
---------------------------------------------------------------------------
DISINTERESTED TRUSTEES
Douglas A. Hacker 119 Orbitz
(age 48) (online
P.O. Box 66100 travel company)
Chicago, IL 60666
Janet Langford Kelly 119 None
(age 45)
3100 West Beaver Road
Troy, MI 48084-3163
Richard W. Lowry 121(3) None
(age 67)
10701 Charleston Drive
Vero Beach, FL 32963
Charles R. Nelson 119 None
(age 61)
Department of Economics
University of Washington
Seattle, WA 98195
John J. Neuhauser 122(3)(4) Saucony, Inc.
(age 60) (athletic
84 College Road footwear);
Chestnut Hill, MA 02467-3838 SkillSoft Corp.
(e-learning)
Patrick J. Simpson 119 None
(age 58)
1211 S.W. 5th Avenue
Suite 1500
Portland, OR 97204
TRUSTEES (CONTINUED)
31
YEAR FIRST
ELECTED OR
POSITION APPOINTED PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH FUNDS TO OFFICE(1) DURING PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES (CONTINUED)
Thomas E. Stitzel Trustee 1998 Business Consultant since 1999 (formerly
(age 67) Professor of Finance from 1975 to 1999,
2208 Tawny Woods Place College of Business, Boise State
Boise, ID 83706 University); Chartered Financial Analyst.
Thomas C. Theobald Trustee 1996 Managing Director, William Blair Capital
(age 66) and Partners (private equity investing) since
27 West Monroe Street, Chairman of September, 1994.
Suite 3500 the Board(6)
Chicago, IL 60606
Anne-Lee Verville Trustee 1998 Author and speaker on educational systems
(age 58) needs (formerly General Manager, Global
359 Stickney Hill Road Education Industry, IBM Corporation
Hopkinton, NH 03229 (computer and technology) from 1994 to
1997).
Richard L. Woolworth Trustee 1991 Retired since December 2003 (formerly
(age 62) Chairman and Chief Executive Officer, The
100 S.W. Market Street Regence Group (regional health insurer);
#1500 Chairman and Chief Executive Officer,
Portland, OR 97207 BlueCross BlueShield of Oregon; Certified
Public Accountant, Arthur Young &
Company).
NUMBER OF
PORTFOLIOS IN
COLUMBIA FUNDS
COMPLEX OTHER
OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE TRUSTEE/DIRECTOR HELD
---------------------------------------------------------------------------
DISINTERESTED TRUSTEES (CONTINUED)
Thomas E. Stitzel 119 None
(age 67)
2208 Tawny Woods Place
Boise, ID 83706
Thomas C. Theobald 119 Anixter
(age 66) International
27 West Monroe Street, (network
Suite 3500 support
Chicago, IL 60606 equipment
distributor),
Jones Lang
LaSalle (real
estate
management
services) and
MONY Group
(life insurance)
Anne-Lee Verville 120(4) Chairman of
(age 58) the Board of
359 Stickney Hill Road Directors,
Hopkinton, NH 03229 Enesco Group,
Inc. (designer,
importer and
distributor of
giftware and
collectibles)
Richard L. Woolworth 119 NW Natural
(age 62) (a natural gas
100 S.W. Market Street service provider)
#1500
Portland, OR 97207
TRUSTEES (CONTINUED)
32
YEAR FIRST
ELECTED OR
POSITION APPOINTED PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH FUNDS TO OFFICE(1) DURING PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
William E. Mayer(2) Trustee 1994 Managing Partner, Park Avenue Equity
(age 63) Partners (private equity) since February,
399 Park Avenue 1999 (formerly Founding Partner,
Suite 3204 Development Capital LLC from November
New York, NY 10022 1996 to February, 1999).
Joseph R. Palombo(2) Trustee and 2000 Executive Vice President and Chief
(age 50) President Operating Officer of Columbia Management
One Financial Center Group, Inc. since December, 2001 and
Boston, MA 02111 Director, Executive Vice President and
Chief Operating Officer of Columbia
Management Advisors, Inc. (Advisor) since
April, 2003 (formerly Chief Operations
Officer of Mutual Funds, Liberty
Financial Companies, Inc. from August,
2000 to November, 2001; Executive Vice
President of Stein Roe & Farnham
Incorporated (Stein Roe) from April, 1999
to April, 2003; Director of Colonial
Management Associates, Inc. (Colonial)
from April, 1999 to April, 2003; Director
of Stein Roe from September, 2000 to
April, 2003) President of Columbia Funds
and Galaxy Funds since February, 2003
(formerly Vice President from September
2002 to February 2003); Manager of
Columbia Floating Rate Limited Liability
Company since October, 2000; (formerly
Vice President of the Columbia Funds from
April, 1999 to August, 2000; Chief
Operating Officer and Chief Compliance
Officer, Putnam Mutual Funds from
December, 1993 to March, 1999).
NUMBER OF
PORTFOLIOS IN
COLUMBIA FUNDS
COMPLEX OTHER
OVERSEEN BY DIRECTORSHIPS
NAME, ADDRESS AND AGE TRUSTEE/DIRECTOR HELD
---------------------------------------------------------------------------
INTERESTED TRUSTEES
William E. Mayer(2) 121(3) Lee Enterprises
(age 63) (print media), WR
399 Park Avenue Hambrecht
Suite 3204 + Co. (financial
New York, NY 10022 service provider)
and First Health
(healthcare)
Joseph R. Palombo(2) 120(5) None
(age 50)
One Financial Center
Boston, MA 02111
(1) In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds complex.
(2) Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co. Mr. Palombo is an interested person as an employee of the Advisor.
(3) Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of
the All-Star Funds, currently consisting of 2 funds, which are advised by
an affiliate of the Advisor.
(4) Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
(5) Mr. Palombo also serves as an interested director of Columbia Management
Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor.
(6) Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003. Prior to that date, Mr. Palombo was Chairman of the Board.
OFFICERS
YEAR FIRST
POSITION WITH ELECTED OR
COLUMBIA APPOINTED
NAME, ADDRESS AND AGE FUNDS TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------------
OFFICERS
Vicki L. Benjamin Chief 2001 Controller of the Columbia Funds and of the Liberty All-Star
(Age 42) Accounting Funds since May, 2002; Chief Accounting Officer of the
One Financial Center Officer and Columbia Funds and Liberty All-Star Funds since June, 2001;
Boston, MA 02111 Controller Controller and Chief Accounting Officer of the Galaxy Funds
since September, 2002 (formerly Vice President, Corporate
Audit, State Street Bank and Trust Company from May, 1998 to
April, 2001).
J. Kevin Connaughton Treasurer 2000 Treasurer of the Columbia Funds and of the Liberty All-Star
(Age 39) Funds since December, 2000; Vice President of the Advisor
One Financial Center since April, 2003 (formerly Controller of the Liberty Funds
Boston, MA 02111 and of the Liberty All-Star Funds from February, 1998 to
October, 2000); Treasurer of the Galaxy Funds since
September 2002; Treasurer, Columbia Management
Multi-Strategy Hedge Fund, LLC since December, 2002
(formerly Vice President of Colonial from February, 1998 to
October, 2000).
David A. Rozenson Secretary 2003 Secretary of the Columbia Funds and of the Liberty All-Star
(Age 49) Funds since December, 2003; Senior Counsel, Fleet Boston
One Financial Center Financial Corporation since January, 1996; Associate General
Boston, MA 02111 Counsel, Columbia Management Group since November, 2002.
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TRANSFER AGENT
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial High Income Municipal Trust is:
EquiServe Trust Company, N.A.
150 Royall Street
Canton, MA 02021
The trust mails one shareholder report to each shareholder address.
Shareholders can order additional reports by calling 800-730-6001. In addition,
representatives at that number can provide shareholders information about the
trust.
Financial advisors who want additional information about the trust may speak to
a representative at 800-426-3750.
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 ANNUAL REPORT
120-02/575Q-1103 (01/04) 03/3858
ITEM 2. CODE OF ETHICS.
(a) The registrant has, as of the end of the period covered by this report,
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless
of whether these individuals are employed by the registrant or a third
party.
(b) During the period covered by this report, there were not any amendments to
a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers or
implicit waivers to a provision of the code of ethics adopted in 2(a)
above.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Trustees has determined that Douglas A. Hacker,
Thomas E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of
whom are members of the registrant's Board of Trustees and Audit
Committee, each qualify as an audit committee financial expert. Mr.
Hacker, Mr. Stitzel, Ms. Verville and Mr. Woolworth are each independent
trustees, as defined in paragraph (a)(2) of this item's instructions and
collectively constitute the entire Audit Committee.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. RESERVED.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Fund has delegated to Columbia Management Advisors, Inc. (the "Advisor") the
responsibility to vote proxies relating to portfolio securities held by the
Fund. In deciding to delegate this responsibility to the Advisor, the Board of
Trustees of the Trust reviewed and approved the policies and procedures adopted
by the Advisor. These included the procedures that the Advisor follows when a
vote presents a conflict between the interests of the Fund and its shareholders
and the Advisor, its affiliates, its other clients or other persons.
The Advisor's policy is to vote all proxies for Fund securities in a manner
considered by the Advisor to be in the best interest of the Fund and its
shareholders without regard to any benefit to the Advisor, its affiliates, its
other clients or other persons. The Advisor examines each proposal and votes
against the proposal, if, in its judgment, approval or adoption of the proposal
would be expected to impact adversely the current or potential market value of
the issuer's securities. The Advisor also examines each proposal and votes the
proxies against the proposal, if, in its judgment, the proposal would be
expected to affect adversely the best interest of the Fund. The Advisor
determines the best interest of the Fund in light of the potential economic
return on the Fund's investment.
The Advisor addresses potential material conflicts of interest by having
predetermined voting guidelines. For those proposals that require special
consideration or in instances where special circumstances may require varying
from the predetermined guideline, the Advisor's Proxy Committee determines the
vote in the best interest of the Fund, without consideration of any benefit to
the Advisor, its affiliates, its other clients or other persons. A member of the
Proxy Committee is prohibited from voting on any proposal for which he or she
has a conflict of interest
by reason of a direct relationship with the issuer or other party affected by a
given proposal. Persons making recommendations to the Proxy Committee or its
members are required to disclose to the Committee any relationship with a party
making a proposal or other matter known to the person that would create a
potential conflict of interest.
The Advisor has three classes of proxy proposals. The first two classes are
predetermined guidelines to vote for or against specific proposals, unless
otherwise directed by the Proxy Committee. The third class is for proposals
given special consideration by the Proxy Committee. In addition, the Proxy
Committee considers requests to vote on proposals in the first two classes other
than according to the predetermined guidelines.
The Advisor generally votes in favor of proposals related to the following
matters: selection of auditors (unless the auditor receives more than 50% of its
revenues from non-audit activities from the company and its affiliates),
election of directors (unless the proposal gives management the ability to alter
the size of the board without shareholder approval), different persons for
chairman of the board/chief executive officer (unless, in light of the size of
the company and the nature of its shareholder base, the role of chairman and CEO
are not held by different persons), compensation (if provisions are consistent
with standard business practices), debt limits (unless proposed specifically as
an anti-takeover action), indemnifications (unless for negligence and or
breaches of fiduciary duty), meetings, name of company, principal office (unless
the purpose is to reduce regulatory or financial supervision), reports and
accounts (if the certifications required by Sarbanes-Oxley Act of 2002 have been
provided), par value, shares (unless proposed as an anti-takeover action), share
repurchase programs, independent committees, and equal opportunity employment.
The Advisor generally votes against proposals related to the following matters:
super majority voting, cumulative voting, preferred stock, warrants, rights,
poison pills, reclassification of common stock and meetings held by written
consent.
The Advisor gives the following matters special consideration: new proposals,
proxies of investment company shares (other than those covered by the
predetermined guidelines), mergers/acquisitions (proposals where a hostile
merger/acquisition is apparent or where the Advisor represents ownership in more
than one of the companies involved), shareholder proposals (other than those
covered by the predetermined guidelines), executive/director compensation (other
than those covered by the predetermined guidelines), pre-emptive rights and
proxies of international issuers which block securities sales between submission
of a proxy and the meeting (proposals for these securities are voted only on the
specific instruction of the Proxy Committee and to the extent practicable in
accordance with predetermined guidelines).
In addition, if a portfolio manager or other party involved with a client of the
Advisor or Fund account concludes that the interest of the client or Fund
requires that a proxy be voted on a proposal other than according to the
predetermined guidelines, he or she may request that the Proxy Committee
consider voting the proxy differently. If any person (or entity) requests the
Proxy Committee (or any of its members) to vote a proxy other than according to
a predetermined guideline, that person must furnish to the Proxy Committee a
written explanation of the reasons for the request and a description of the
person's (or entity's) relationship with the party proposing the matter to
shareholders or any other matter known to the person (or entity) that would
create a potential conflict of interest.
The Proxy Committee may vary from the predetermined guideline if it determines
that voting on the proposal according to the predetermined guideline would be
expected to impact adversely the
current or potential market value of the issuer's securities or to affect
adversely the best interest of the client. References to the best interest of a
client refer to the interest of the client in terms of the potential economic
return on the client's investment. In determining the vote on any proposal, the
Proxy Committee does not consider any benefit other than benefits to the owner
of the securities to be voted.
The Advisor's Proxy Committee is composed of operational and investment
representatives of its regional offices as well as senior representatives of the
Advisor's equity investments, equity research, compliance and legal functions.
During the first quarter of each year, the Proxy Committee reviews all
guidelines and establishes guidelines for expected new proposals. In addition to
these reviews and its other responsibilities described above, its functions
include annual review of its Proxy Voting Policy and Procedures to ensure
consistency with internal policies and regulatory agency policies, and
development and modification of voting guidelines and procedures as it deems
appropriate or necessary.
The Advisor uses Institutional Shareholder Services ("ISS"), a third party
vendor, to implement its proxy voting process. ISS provides proxy analysis,
record keeping services and vote disclosure services.
ITEM 8. 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.
Not applicable at this time.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer, based on their evaluation of the registrant's disclosure controls
and procedures as of a
date within 90 days of the filing of this report, have concluded that such
controls and procedures are adequately designed to ensure that information
required to be disclosed by the registrant in Form N-CSR is accumulated
and communicated to the registrant's management, including the principal
executive officer and principal financial officer, or persons performing
similar functions, as appropriate to allow timely decisions regarding
required disclosure.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's 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
attached hereto as Exhibit 99.CODE ETH
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Colonial High Income Municipal Trust
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By (Signature and Title) /s/ JOSEPH R. PALOMBO
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Joseph R. Palombo, President
Date February 4, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ JOSEPH R. PALOMBO
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Joseph R. Palombo, President
Date February 4, 2004
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By (Signature and Title) /s/ J. KEVIN CONNAUGHTON
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J. Kevin Connaughton, Treasurer
Date February 4, 2004
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