UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-5754
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Colonial High Income Municipal Trust
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Vincent Pietropaolo, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3698
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Date of fiscal year end: 11/30/2004
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Date of reporting period: 11/30/2004
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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. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
COLONIAL HIGH INCOME MUNICIPAL TRUST ANNUAL REPORT
NOVEMBER 30, 2004
[photo of colonial-style building]
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GURANTEE
PRESIDENT'S MESSAGE
Dear Shareholder:
In 2004, Colonial Funds became part of the Bank of America family, one of the
largest, most respected financial institutions in the United States. As a direct
result of this merger, a number of changes are in the works that we believe
offer significant potential benefits for our shareholders. First, some funds may
be merged in order to eliminate redundancies, others may be liquidated and fund
management teams will be aligned to maximize performance potential. You will
receive more detailed information about these changes if your fund is affected
and you may be asked to vote on certain fund changes. In this matter, your
timely response will enable us to implement the changes in 2005.
As a result of these changes, we believe we will offer shareholders an even
stronger lineup of investment options. What will not change as we enter this
next phase of consolidation is our commitment to the highest standards of
performance and our dedication to superior service. Change for the good has
another name: it's called improvement. It helps move us forward, and we believe
that it represents progress for all our shareholders in their quest for
long-term financial success.
In the pages that follow, you'll find a detailed report from the fund's manager
or managers on key factors that influenced your fund's performance. We hope that
you will read the manager reports carefully and discuss any questions you might
have with your financial advisor.
As always, we thank you for choosing Colonial Funds. We appreciate your
continued confidence. And, we look forward to helping you keep your long-term
financial goals on target in the years to come.
Sincerely,
/s/ Christopher L. Wilson
Christopher L. Wilson
Head of Mutual Funds, Columbia Management
Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible
for the day-to-day delivery of mutual fund services to the firm's investors.
With the exception of distribution, Chris oversees all aspects of the mutual
fund services operation, including treasury, investment accounting and
shareholder and broker services. Chris serves as Columbia Management's liaison
to the mutual fund boards of trustees.
Chris joined Bank of America in August 2004.
Economic and market conditions change frequently. There is no assurance that
trends described in this report will continue or commence.
PORTFOLIO MANAGER'S REPORT
PRICE PER SHARE AS OF 11/30/04 ($)
Net asset value 6.39
-----------------------------
Market price 6.43
-----------------------------
1-YEAR TOTAL RETURN AS
OF 11/30/04 (%)
Net asset value 4.80
-----------------------------
Market price 7.44
-----------------------------
Lipper High Yield Municipal
Debt Funds Category average 7.64
----------------------------------
All results shown assume reinvestment of distributions.
DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/01/03- 11/30/04 ($)
0.48
-----------------------------
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 11/30/04 (%)
Local general obligations 13.2
-------------------------------
Hospitals 11.7
-------------------------------
Multi-family 8.0
-------------------------------
Continuing care retirement 6.7
-------------------------------
Investor owned utilities 6.4
-------------------------------
QUALITY BREAKDOWN
AS OF 11/30/04 (%)
AAA 27.9
-----------------------------
AA 2.2
-----------------------------
A 11.2
-----------------------------
BBB 22.5
-----------------------------
BB 4.1
-----------------------------
B 0.7
-----------------------------
CCC 0.2
-----------------------------
CC 0.1
-----------------------------
Non-rated 29.8
-----------------------------
Cash equivalents 1.3
-----------------------------
Sector and quality breakdowns are calculated as a percentage of total
investments. Ratings shown in the quality breakdown represent the lowest rating
assigned to a particular bond by one of the following nationally-recognized
rating agencies: Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., Moody's Investors Service, Inc. or Fitch Ratings Ltd. The majority of the
bonds that are non-rated are considered by the advisor to be of non-investment
grade quality.
Because the trust is actively managed, there is no guarantee that the trust will
continue to invest in these sectors or maintain this quality breakdown in the
future.
For the 12-month period ended November 30, 2004, Colonial High Income Municipal
Trust generated a total return of 7.44%, based on its market price. Changes in
the market price of the trust's shares reflect investor demand and are not
necessarily linked directly to changes in the trust's net asset value. The trust
returned 4.80%, based on investment at net asset value. The trust came out
behind its peer group, the Lipper High Yield Municipal Debt Funds Category,
which averaged a 7.64% return.1 The trust's return at net asset value also
trailed a customized peer group consisting of nine leveraged closed-end
high-yield municipal funds, which on average returned 6.81% over the period.
High-yield municipals were top performers as investors searched for yield in a
low interest rate environment.
We sold Treasury futures early in the period to help keep the trust's
sensitivity to interest rate changes in line with its Lipper peer group. When
yields on 10- and 30-year Treasuries fell--and prices rose--this strategy hurt
the trust because the Treasury futures fell in value more than the increase in
the value of the hedged municipal bonds. Most of this underperformance occurred
early in the year. As the year progressed, the trust made up some of its first
quarter underperformance.
Leverage increases the duration (sensitivity to interest rates) of the common
shares because the trust borrows at a short term rate and invests in long term
assets - the duration of those assets is borne by the common shares. Because
many of the funds in the Lipper High Yield Municipal Debt Funds Category are not
leveraged, we used futures contracts to reduce the duration of the trust to
bring its overall sensitivity to interest rates more in line with the average of
the Lipper Category. The customized peer group that only includes leveraged
closed-end high yield funds has a longer average duration than the Lipper High
Yield Municipal Debt Funds Category. Therefore, the trust will have a longer
duration but will be less reliant on hedging to bring its duration in line with
its peer group and thus will be less subject to volatility related to relative
performance of the Treasury market versus the municipal market.
GAINS FROM HIGHER-YIELDING SECTORS
The trust benefited from its holdings in investor owned utilities, which did
well as investor concerns finally eased following the Enron scandal. Nevada
Power Co. (0.4% of total investments) was one of the trust's top performers,
benefiting from a ruling that allowed it to increase the rates it charges
customers.2 Pooled multi-family housing and health care also continued to make a
positive contribution to performance. In the continuing care retirement sector,
bonds such as Kahala Nui Project (0.3% of total investments), a project in
Hawaii, rallied nicely as new construction neared completion and residents
prepared to move in. However, our
-----------
1 Lipper Inc., a widely respected data provider in the industry, calculates
an average total return based on net asset value for mutual funds with
similar investment objectives as those of the trust.
2 Holdings are disclosed as of November 30, 2004.
3 On December 14, 2004, the federal funds rate was increased to 2.25%.
1
PORTFOLIO MANAGER'S REPORT (CONTINUED)
holdings of the Woodlawn Nursing Home bonds (0.3% of total investments)
underperformed due to reduced cash flow from the project.
USING LEVERAGE TO ADD INCOME
The trust's leverage, which comes from its preferred shares, helped boost
income. The trust issued preferred shares in 1999, which allow it to borrow
against its underlying investments. We invest the proceeds from the preferred
shares in longer maturity, higher-yielding bonds, and then pay out to preferred
shareholders a short-term rate influenced by the federal funds rate--the
overnight rate at which banks lend each other money. Although the fed funds rate
rose from 1.00% to 2.00% during the period,3 the trust benefited because
short-term interest rates were still relatively low. We were able to keep the
trust's dividend yield stable even as short-term interest rates rose. However,
this could change in 2005. In addition, the use of leverage increases the
likelihood of share price volatility and market risk.
ENVIRONMENT CONTINUES TO FAVOR HIGH-YIELD BONDS
If the economy continues to grow at a reasonable rate and interest rates rise
slightly, we believe that the environment for high-income municipal bonds will
remain positive. Bonds with high coupons (or stated interest rates) tend to
perform well even when interest rates rise because so much of their total return
comes from income. In general, high coupon bonds tend to be less sensitive to
interest rate changes. Also, high-yield bonds tend to perform well during
periods of economic recovery. We plan to continue trimming AAA-rated bonds,
while adding BBB-rated issues in an effort to boost income. Going forward, we
also expect to continue to reduce the trust's reliance on Treasury futures.
/s/ Maureen G. Newman
Maureen G. Newman has been the portfolio manager of Colonial High Income
Municipal Trust since August 1998. Ms. Newman has managed various other
municipal funds for Columbia Management Advisors, Inc. or its predecessors or
affiliate organizations since May 1996.
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results.
The values of fixed-income securities generally move inversely with changes in
interest rates such that when interest rates rise, bond values fall and vice
versa. 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. Please see Federal Income Tax Information.
2
INVESTMENT PORTFOLIO
November 30, 2004
MUNICIPAL BONDS - 153.3% PAR (S) VALUE (S)
-----------------------------------------------------------
EDUCATION - 4.9%
EDUCATION - 3.6%
CA Educational Facilities Authority,
Loyola Marymount University,
Series 2001,
Insured: MBIA
(a) 10/01/19 2,025,000 988,868
CA Public Works Board, Lease
Revenue, UCLA
Series 2002 A,
Insured: FSA
5.375% 10/01/15 1,010,000 1,110,414
MA Development Finance Agency
Western New England College,
Series 2002,
6.125% 12/01/32 300,000 313,605
MI Southfield Economic Development
Corp., Lawrence University,
Series 1998 A,
5.400% 02/01/18 1,000,000 1,016,770
NC Capital Facilities Finance
Authority, Meredith College,
Series 2001,
Insured: AMBAC
5.125% 06/01/16 1,000,000 1,074,730
PA State Higher Education Facilities Authority,
Philadelphia University,
Series 2004 A,
5.125% 06/01/25 600,000 584,040
VT Educational & Health Buildings
Finance Agency, Norwich University,
Series 1998,
5.500% 07/01/21 1,500,000 1,546,800
WV University, Series 2000 A,
Insured: AMBAC
(a) 04/01/19 1,000,000 503,790
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Education Total 7,139,017
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PREP SCHOOL - 1.3%
CA Statewide Community Development
Authority, Crossroads School for
Arts & Sciences, Series 1998,
6.000% 08/01/28 (b) 1,250,000 1,294,738
IL Development Finance Authority
Latin School of Chicago, Series 1998,
5.650% 08/01/28 230,000 233,376
MA Industrial Finance Agency:
Cambridge Friends School,
Series 1998,
5.800% 09/01/28 1,000,000 951,690
St. John's High School,
Series 1998,
5.350% 06/01/28 150,000 150,801
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Prep School Total 2,630,605
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EDUCATION TOTAL 9,769,622
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PAR (S) VALUE (S)
-----------------------------------------------------------
HEALTH CARE - 40.6%
CONTINUING CARE RETIREMENT - 10.6%
CA Association of Bay Area Governments
Finance Authority for Nonprofit Corps.,
Eskaton Gold River Lodge,
Series 1998:
6.375% 11/15/15 660,000 685,938
6.375% 11/15/28 550,000 557,150
CA La Verne Certificate of
Partnership, Brethren
Hillcrest Home, Series 2003 B,
6.625% 02/15/25 690,000 699,101
CA Statewide Community Development
Authority, Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 (b) 990,000 1,084,337
CT Development Authority, First
Mortgage Gross Revenue Health Care,
The Elim Park Baptist, Inc. Project,
Series 2003,
5.850% 12/01/33 660,000 674,725
FL Capital Projects Finance Authority,
Continuing Care Retirement,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 750,000 776,355
FL Lee County Industrial Development
Authority, Shell Point Village Project,
Series 1999 A,
5.500% 11/15/29 600,000 581,004
GA Fulton County Residential Care
Facilities, Canterbury Court Project,
Series 2004 A,
6.125% 02/15/34 750,000 752,843
GA Savannah Economic Development
Authority, 1st Mortgage, Marshes of
Skidaway, Series 2003 A,
7.400% 01/01/34 465,000 468,343
HI Department of Budget and Finance,
Kahala Nui Project, Series 2003 A,
8.000% 11/15/33 1,000,000 1,066,960
IL Health Facilities Authority,
Lutheran Senior Ministries,
Series 2001,
7.375% 08/15/31 300,000 301,977
IL Health Facilities Authority,
Washington & Jane Smith Community,
Series 2003 A,
7.000% 11/15/32 725,000 729,415
KS Manhattan, Meadowlark Hills Retirement
Home, Series 1999 A,
6.375% 05/15/20 650,000 667,862
MA Boston Industrial Development Financing
Authority, Springhouse, Inc.,
Series 1988,
5.875% 07/01/20 255,000 255,852
See Accompanying Notes to Financial Statements.
3
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
CONTINUING CARE RETIREMENT (CONTINUED)
MA Development Finance Agency,
Loomis Communities:
Series 1999 A,
5.625% 07/01/15 400,000 395,680
Series 2002 A,
6.900% 03/01/32 100,000 105,834
MD Westminister Economic Development,
Carroll Lutheran Village, Inc.,
Series 2004 A:
5.875% 05/01/21 500,000 507,575
6.250% 05/01/34 250,000 255,065
NH Higher Educational & Health
Facilities Authority, Rivermead at
Peterborough, Series 1998:
5.625% 07/01/18 500,000 487,825
5.750% 07/01/28 500,000 475,790
NJ Economic Development Authority:
Seabrook Village, Inc., Series 2000 A,
8.250% 11/15/30 625,000 681,581
First Mortgage Winchester Gardens,
Series 2004 A,
5.750% 11/01/24 750,000 770,032
PA County Authority, Dunwoody
Village, Series 2003 A,
5.375% 04/01/17 600,000 633,984
PA Lancaster Industrial Development
Authority, Garden Spot Village,
Series 2000 A,
7.625% 05/01/31 500,000 529,435
TN Johnson City Health &
Educational Facilities,
Appalachian Christian Village,
Series 2004 A,
6.250% 02/15/32 250,000 247,505
TN Metropolitan Government,
Nashville & Davidson Counties,
Blakeford at Green
Hills, Series 1998,
5.650% 07/01/24 600,000 565,890
TN Shelby County Health, Educational &
Housing Facilities Board, Germantown
Village, Series 2003 A,
7.250% 12/01/34 450,000 464,166
TX Abilene Health Facilities Development
Corp., Sears Methodist Retirement
Obligation Group:
Series 1998 A,
5.900% 11/15/25 1,000,000 968,240
Series 2003 A,
7.000% 11/15/33 500,000 519,810
TX Houston Health Facilities
Development Corp., Buckingham
Senior Living Community, Inc.,
Series 2004 A,
7.125% 02/15/34 500,000 519,235
PAR (S) VALUE (S)
-----------------------------------------------------------
WI Health & Educational
Facilities Authority:
Attic Angel Obligated Group,
Series 1998,
5.750% 11/15/27 1,000,000 922,080
Clement Manor, Series 1998,
5.750% 08/15/24 1,300,000 1,262,274
Three Pillars Senior Living Communities,
Series 2003,
5.750% 08/15/26 500,000 503,150
United Lutheran Program for Aging, Inc.,
Series 1998,
5.700% 03/01/28 1,000,000 929,280
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Continuing Care Retirement Total 21,046,293
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HEALTH SERVICES - 1.7%
CO Health Facilities Authority,
National Jewish Medical &
Research Center:
Series 1998,
5.375% 01/01/23 330,000 320,694
Series 1998 B,
5.375% 01/01/29 750,000 707,475
MA Development Finance Agency,
Boston Biomedical Research Institute,
Series 1999:
5.650% 02/01/19 200,000 193,364
5.750% 02/01/29 450,000 443,601
MA Health & Educational Facilities
Authority, Civic Investments, Inc.,
Series 1999 A,
9.000% 12/15/15 1,000,000 1,140,250
MN Minneapolis & St. Paul Housing &
Redevelopment Authority, Healthpartners
Project, Series 2003,
6.000% 12/01/21 500,000 527,730
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Health Services Total 3,333,114
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HOSPITALS - 18.6%
AR Conway Health Facilities Board,
Conway Regional Medical Center:
Series 1999 A,
6.400% 08/01/29 425,000 448,792
Series 1999 B,
6.400% 08/01/29 1,000,000 1,054,830
CA Health Facilities Financing
Authority, Cedars-Sinai Medical Center,
Series 1999 A,
6.125% 12/01/30 750,000 799,995
CA Rancho Mirage Joint Powers
Financing Authority, Eisenhower
Medical Center, Series 2004,
5.625% 07/01/29 1,000,000 1,034,770
CO Health Facilities Authority:
Parkview Medical Center, Inc.,
Series 2001,
6.600% 09/01/25 300,000 326,493
See Accompanying Notes to Financial Statements.
4
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
Vail Valley Medical Center,
Series 2004,
5.000% 01/15/20 (c) 750,000 756,428
FL Orange County Health Facilities
Authority, Orlando Regional Healthcare,
Series 2002,
5.750% 12/01/32 200,000 210,346
FL South Lake County Hospital District,
South Lake Hospital Inc., Series 2003,
6.375% 10/01/34 500,000 511,290
FL Tampa, H. Lee Moffitt Cancer
Center, Series 1999 A,
5.750% 07/01/29 2,000,000 2,060,080
FL West Orange Healthcare District,
Series 2001 A,
5.650% 02/01/22 525,000 546,079
GA Coffee County Hospital Authority,
Coffee Regional Medical Center, Inc.,
Series 2004,
5.000% 12/01/26 600,000 584,454
IL Health Facilities Authority:
Swedish American Hospital,
Series 2000,
6.875% 11/15/30 500,000 549,990
Thorek Hospital & Medical Center,
Series 1998,
5.250% 08/15/18 600,000 602,298
IL Southwestern Illinois Development
Authority, Anderson Hospital,
Series 1999,
5.500% 08/15/20 225,000 226,332
IN Health Facility Authority, Community
Foundation, Northwest Indiana, Inc.,
Series 2004 A,
6.000% 03/01/34 575,000 567,905
LA Public Facilities Authority,
Touro Infirmary, Series 1999,
5.625% 08/15/29 350,000 353,279
MA Health & Educational
Facilities Authority:
Jordan Hospital, Series 2003 E,
6.750% 10/01/33 500,000 524,330
Milford-Whitinsville Regional Hospital,
Series 2002 D,
6.350% 07/15/32 1,000,000 1,037,040
MD Health & Higher Education
Facilities Authority, Adventist Healthcare,
Series 2003 A:
5.000% 01/01/16 400,000 407,292
5.750% 01/01/25 600,000 621,864
MI Dickinson County Healthcare System,
Series 1999,
5.700% 11/01/18 750,000 745,410
PAR (S) VALUE (S)
-----------------------------------------------------------
MI Flint Hospital Building Authority,
Hurley Medical Center, Series 1998 A,
5.375% 07/01/20 450,000 439,313
MN St. Paul Housing & Redevelopment
Authority, HealthEast Project,
Series 1997 A,
5.700% 11/01/15 1,000,000 987,850
MN Washington County Housing &
Redevelopment Authority,
HealthEast, Inc., Series 1998,
5.250% 11/15/12 1,300,000 1,287,546
NC Medical Care Commission,
Stanly Memorial Hospital, Series 1999,
6.375% 10/01/29 1,915,000 2,050,314
NH Higher Education Facilities Authority:
Hospital Revenue, Catholic
Medical Center,
Series 2002,
6.125% 07/01/32 400,000 410,468
Littleton Hospital Association, Inc.,
Series 1998 A,
6.000% 05/01/28 625,000 591,094
Series 1998 B,
5.900% 05/01/28 780,000 728,317
NJ Health Care Facilities
Financing Authority Revenue, Capital
Health Systems Obligated Group,
Series, 2003 A,
5.000% 07/01/23 650,000 686,680
NV Henderson Healthcare Facility
Revenue, Catholic Healthcare West,
Series 1998,
5.375% 07/01/26 500,000 502,725
NY State Dormitory Authority Revenue,
North Shore - Long Island Jewish
Medical Center, Series 2003,
5.500% 05/01/33 300,000 308,532
OH Belmont County, East Ohio
Regional Hospital, Series 1998,
5.700% 01/01/13 900,000 837,459
OH Highland County Joint Township
Hospital District, Series 1999,
6.750% 12/01/29 950,000 914,347
OH Lakewood Hospital Improvement
Revenue, Lakewood Hospital
Association, Series 2003,
5.500% 02/15/14 600,000 643,524
OH Miami County, Upper Valley
Medical Center, Inc., Series 1996 A,
6.375% 05/15/26 1,000,000 1,042,010
OH Sandusky County, County
Memorial Hospital,
Series 1998,
5.150% 01/01/10 250,000 254,123
See Accompanying Notes to Financial Statements.
5
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
PA Allegheny County Hospital
Development, Ohio Valley General
Hospital, Series 1998 A,
5.450% 01/01/28 1,000,000 944,560
SC Jobs-Economic Development
Authority, Bon Secours Health
Systems, Inc.,
Series 2002 A,
5.500% 11/15/23 1,750,000 1,788,500
SC Lexington County Health Services
District, Inc., Hospital Improvement,
Series 2003,
5.500% 11/01/23 750,000 780,083
SD State Health & Educational
Facilities Authority Revenue,
Sioux Valley Hospitals & Health Systems,
Series 2004 A,
5.250% 11/01/34 800,000 797,208
TX Comal County Health Facilities
Development, McKenna Memorial,
Series 2002 A,
6.250% 02/01/32 500,000 512,435
TX Richardson Hospital Authority,
Baylor Richardson Medical Center,
Series 1998,
5.625% 12/01/28 1,000,000 1,018,630
TX Tyler Health Facilities Development
Corp., Mother Frances Hospital,
Series 2001,
6.000% 07/01/31 1,000,000 1,038,150
VA Prince William County Industrial
Development Authority, Potomac Hospital
Corp., Series 2003,
5.200% 10/01/30 650,000 662,909
VT Educational & Health Buildings
Finance Agency, Brattleboro
Memorial Hospital,
Series 1998,
5.375% 03/01/28 1,075,000 1,023,948
WA Health Care Facilities Authority,
Kadlec Medical Center,
Series 2001,
Insured: RAD
5.875% 12/01/21 600,000 656,964
WI Health & Educational
Facilities Authority:
Aurora Health Care Inc.,
Series 2003,
6.400% 04/15/33 525,000 556,763
Wheaton Franciscan Services,
Series 2002,
5.750% 08/15/30 600,000 625,842
PAR (S) VALUE (S)
-----------------------------------------------------------
WI Health & Educational Facilities
Authority Revenue, Fort HealthCare, Inc.
Project, Series 2004,
5.750% 05/01/29 1,000,000 1,017,400
-----------
Hospitals Total 37,076,991
-----------
INTERMEDIATE CARE FACILITIES - 1.3%
IL Health Facilities Financing Authority,
Hoosier Care, Inc., Series 1999 A,
7.125% 06/01/34 1,195,000 1,015,284
IN Health Facilities Financing
Authority, Hoosier Care, Inc.,
Series 1999 A,
7.125% 06/01/34 150,000 127,442
PA Economic Development
Financing Authority, Northwestern
Human Services Inc., Series 1998 A,
5.250% 06/01/14 1,500,000 1,368,915
-----------
Intermediate Care Facilities Total 2,511,641
-----------
NURSING HOMES - 8.4%
AK Juneau, St. Ann's Care Center,
Series 1999,
6.875% 12/01/25 1,250,000 1,254,088
CO Health Facilities Authority:
American Housing Foundation I, Inc.
Project, Series 2003,
8.500% 12/01/31 470,000 460,060
Pioneer Healthcare, Series 1989,
10.500% 05/01/19 1,790,000 1,438,605
Volunteers of America:
Series 1998 A:
5.450% 07/01/08 200,000 198,010
5.750% 07/01/20 865,000 792,686
Series 1999 A,
6.000% 07/01/29 350,000 318,990
IA Finance Authority,
Care Initiatives Project:
Series 1996,
9.250% 07/01/25 965,000 1,166,048
Series 1998 B:
5.750% 07/01/18 550,000 513,166
5.750% 07/01/28 1,475,000 1,287,410
IN Gary Industrial Economic
Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/01/17 (d) 1,330,000 665,000
IN Michigan City Health Facilities,
Metro Health Foundation, Inc. Project,
Series 1993,
11.000% 11/01/22 (f) 2,548,643 99,397
MA Development Finance Agency:
Alliance Health Care Facilities,
Series 1999,
7.100% 07/01/32 1,285,000 1,261,831
See Accompanying Notes to Financial Statements.
6
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
NURSING HOMES (CONTINUED)
American Health Woodlawn Manor, Inc.:
Series 2000 A,
7.750% 12/01/27 1,533,135 828,292
Series 2000 B,
10.250% 06/01/27 (d)(m) 475,907 71,386
MN Sartell, Foundation for Healthcare,
Series 1999 A,
6.625% 09/01/29 1,145,000 1,164,076
PA Chester County Industrial
Development Authority, RHA Nursing
Home, Series 2002,
8.500% 05/01/32 1,595,000 1,549,590
PA Washington County Industrial
Development Authority, AHF Project,
Series 2003,
7.750% 01/01/29 1,211,000 1,144,068
TN Metropolitan Government,
Nashville & Davidson Counties
Health & Education Facilities,
AHF Project, Series 2003,
7.750% 01/01/29 1,141,000 1,077,937
TX Kirbyville Health Facilities
Development Corp.,
Heartway III Project, Series 1997 A,
10.000% 03/20/18 (e) 668,626 213,960
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
Series 1996,
Insured: GNMA
7.100% 02/20/36 1,000,000 1,166,670
WI Health & Educational Facilities
Authority, Metro Health
Foundation, Inc.,
Series 1993,
11.000% 11/01/22 (f) 2,292,618 89,412
-----------
Nursing Homes Total 16,760,682
-----------
HEALTH CARE TOTAL 80,728,721
-----------
-----------------------------------------------------------
HOUSING - 13.8%
ASSISTED LIVING/SENIOR - 4.4%
DE Kent County, Heritage at Dover,
Series 1999, AMT
7.625% 01/01/30 1,690,000 1,499,892
GA Columbus Housing Authority, The
Gardens at Calvary, Series 1999,
7.000% 11/15/19 495,000 435,666
IL Development Finance Authority,
Care Institute, Inc., Series 1995,
8.250% 06/01/25 1,220,000 1,183,205
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 (d) 1,740,000 1,131,000
PAR (S) VALUE (S)
-----------------------------------------------------------
NC Medical Care Commission,
DePaul Community Facilities Project,
Series 1999,
7.625% 11/01/29 1,445,000 1,490,070
NY Huntington Housing Authority, Gurwin
Jewish Senior Center, Series 1999:
5.875% 05/01/19 700,000 665,840
6.000% 05/01/29 775,000 726,803
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
Series 1994,
9.000% 11/01/24 1,670,000 1,533,478
-----------
Assisted Living/Senior Total 8,665,954
-----------
MULTI-FAMILY - 9.4%
AZ Maricopa County Industrial Development
Authority, National Health Facilities,
Series 1998 A,
Insured: FSA
5.100% 01/01/33 4,500,000 4,504,905
DE Wilmington, Electra Arms Senior
Association Project, Series 1998, AMT,
6.250% 06/01/28 925,000 735,911
FL Broward County Housing Finance
Authority, Chaves Lake Apartment Project,
Series 2000, AMT,
7.500% 07/01/40 750,000 741,945
FL Clay County Housing Finance Authority,
Madison Commons Apartments,
Series 2000 A, AMT,
7.450% 07/01/40 740,000 736,581
MN Lakeville, Southfork Apartments Project:
Series 1989 A,
9.875% 02/01/20 2,570,000 2,575,525
Series 1989 B,
(a) 02/01/20 903,000 251,865
MN Robbinsdale Economic Development
Authority, Broadway Court,
Series 1999 A,
6.875% 01/01/26 500,000 452,530
MN Washington County Housing &
Redevelopment Authority, Cottages
of Aspen, Series 1992, AMT,
9.250% 06/01/22 980,000 1,002,275
MN White Bear Lake, Birch Lake
Townhome Project:
Series 1989 A, AMT,
10.250% 07/15/19 2,200,000 2,201,804
Series 1989 B, AMT,
(a) 07/15/19 690,000 317,359
NC Medical Care Community,
Health Care Housing,
Series 2004 A,
5.800% 10/01/34 500,000 494,220
See Accompanying Notes to Financial Statements.
7
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
HOUSING (CONTINUED)
MULTI-FAMILY (CONTINUED)
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
Series 1979,
Insured: FHA
7.375% 06/01/21 253,005 258,465
Resolution Trust Corp., Pass-Through
Certificates, Series 1993 A,
8.500% 12/01/16 (g) 546,075 530,282
TN Franklin Industrial Board, Landings
Apartment Project, Series 1996 B,
8.750% 04/01/27 825,000 844,627
TX Affordable Housing Corp.,
NHT/GTEX Project, Series 2001 C,
10.000% 10/01/31 (d) 870,000 30,450
TX Department of Housing &
Community Affairs, Pebble Brooks
Apartments, Series 1998, AMT,
Guarantor: FNMA
5.500% 12/01/18 1,000,000 1,048,340
TX El Paso County Housing
Finance Corp.,
American Village Communities:
Series 2000 C,
8.000% 12/01/32 385,000 395,033
Series 2000 D,
10.000% 12/01/32 415,000 425,973
VA Alexandria Redevelopment & Housing
Authority, Courthouse Commons
Apartments, Series 1990 A, AMT,
10.000% 01/01/21 1,500,000 1,244,115
-----------
Multi-Family Total 18,792,205
-----------
HOUSING TOTAL 27,458,159
-----------
-----------------------------------------------------------
INDUSTRIAL - 7.8%
FOOD PRODUCTS - 1.9%
GA Cartersville Development Authority,
Anheuser Busch Project,
Series 1989 A, AMT,
5.950% 02/01/32 1,000,000 1,043,350
IN Hammond, American Maize Products Co.,
Series 1994, AMT,
8.000% 12/01/24 510,000 534,898
LA Southern Louisiana Port Commission,
Cargill, Inc. Project, Series 1997,
5.850% 04/01/17 1,000,000 1,050,910
MI Strategic Fund, Michigan
Sugar Co., Sebewaing Project,
Series 1998 A,
6.250% 11/01/15 1,250,000 1,237,050
-----------
Food Products Total 3,866,208
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
FOREST PRODUCTS - 3.1%
AL Camden Industrial Development
Board, Weyerhaeuser Co.,
Series 2003 B, AMT,
6.375% 12/01/24 550,000 590,475
AL Courtland Industrial Development
Board Environmental Improvement
Revenue, International Paper Co.,
Series 2003 B, AMT,
6.250% 08/01/25 1,000,000 1,054,250
AL Phenix City Industrial Development
Board Environmental Improvement
Revenue, Meadwestvaco Corp.,
Series 2002 A, AMT,
6.350% 05/15/35 550,000 574,678
AR Camden Environmental Improvement,
International Paper Co.,
Series 2004 A, AMT,
5.000% 11/01/18 250,000 247,643
GA Rockdale County Development
Authority, Solid Waste Disposal,
Visy Paper, Inc., Series 1993, AMT,
7.500% 01/01/26 1,800,000 1,853,154
MI Delta County Economic
Development Corp., Environmental
Import, Mead Westvaco-Escanaba,
Series 2002 B, AMT,
6.450% 04/15/23 450,000 474,066
MS Lowndes County Solid Waste
Disposal & Pollution Control,
Weyerhaeuser Co. Project,
Series 1992 B,
6.700% 04/01/22 850,000 999,252
VA Bedford County Industrial Development
Authority, Nekoosa Packaging Corp.,
Series 1998, AMT,
5.600% 12/01/25 400,000 389,596
-----------
Forest Products Total 6,183,114
-----------
MANUFACTURING - 1.0%
IL Will-Kankakee Regional Development
Authority, Flanders Corp. Precisionaire
Project, Series 1997, AMT,
6.500% 12/15/17 820,000 824,420
TX Trinity River Authority, Texas
Instruments Project, Series 1996, AMT,
6.200% 03/01/20 1,000,000 1,037,720
-----------
Manufacturing Total 1,862,140
-----------
METALS & MINING - 0.6%
NV State Department of Business &
Industry, Wheeling-Pittsburg Steel Corp.,
Series 1999 A, AMT,
8.000% 09/01/14 (g) 893,387 798,697
See Accompanying Notes to Financial Statements.
8
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
INDUSTRIAL (CONTINUED)
METALS & MINING (CONTINUED)
VA Greensville County Industrial
Development Authority,
Wheeling-Pittsburg Steel Corp.,
Series 1999 A, AMT,
7.000% 04/01/14 500,000 446,995
-----------
Metals & Mining Total 1,245,692
-----------
OIL & GAS - 1.2%
NJ Middlesex County Pollution
Control Authority
Revenue, Amerada Hess,
Series 2004,
6.050% 09/15/34 285,000 297,315
TX Gulf Coast Industrial Development
Authority, Solid Waste Disposal,
Citgo Petroleum, Series 1998, AMT,
8.000% 04/01/28 500,000 552,595
VI Government Refinery Facilities,
Hovensa Coker
Project, Series 2002, AMT,
6.500% 07/01/21 (b) 375,000 406,957
VI Public Finance Authority, Refinery
Facilities Revenue, Hovensa Refinery:
Series 2003, AMT,
6.125% 07/01/22 525,000 559,550
Series 2004, AMT
5.875% 07/01/22 600,000 630,102
-----------
Oil & Gas Total 2,446,519
-----------
INDUSTRIAL TOTAL 15,603,673
-----------
-----------------------------------------------------------
OTHER - 11.5%
OTHER - 0.7%
NY Convention Center Operating Corp.,
Yale Building Project, Series 2003,
(a) 06/01/08 1,700,000 1,457,155
-----------
Other Total 1,457,155
-----------
POOL/BOND BANK - 0.4%
MI Municipal Bond Authority, Local
Government Loan Project,
Series 2001 A,
Insured: AMBAC
5.375% 11/01/17 750,000 824,557
-----------
Pool/Bond Bank Total 824,557
-----------
REFUNDED/ESCROWED (H) - 8.2%
CO Denver City & County Airport,
Series 1992 C, AMT,
6.125% 11/15/25 5,120,000 5,477,739
CT Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996, AMT,
8.250% 12/01/06 480,000 511,742
PAR (S) VALUE (S)
-----------------------------------------------------------
GA Forsyth County Hospital Authority,
Georgia Baptist Healthcare System,
Series 1998,
6.000% 10/01/08 625,000 670,213
ID Health Facilities Authority,
IHC Hospitals, Inc., Series 1992,
6.650% 02/15/21 1,750,000 2,229,658
IL University of Illinois, Series 2001 A,
Insured: AMBAC
5.500% 08/15/17 685,000 774,331
NC Lincoln County, Lincoln County
Hospital, Series 1991,
9.000% 05/01/07 190,000 206,572
NY New York City,
Series 1997 A,
7.000% 08/01/07 40,000 43,700
PA Delaware County, Health Facilities,
Series 1996:
6.000% 12/15/16 1,400,000 1,514,156
6.000% 12/15/26 1,000,000 1,076,330
PR Commonwealth of Puerto Rico Public
Finance Corp., Series 2002 E,
6.000% 08/01/26 155,000 181,959
TN Shelby County, Health, Education &
Housing Facilities Board, Open Arms
Development Center:
Series 1992 A,
9.750% 08/01/19 805,000 972,496
Series 1992 C,
9.750% 08/01/19 785,000 948,335
TX Board of Regents, University of Texas,
Series 2001 B,
5.375% 08/15/18 650,000 729,086
WV Hospital Finance Authority, Charleston
Medical Center, Series 2000 A,
6.750% 09/01/30 805,000 958,852
-----------
Refunded/Escrowed Total 16,295,169
-----------
TOBACCO - 2.2%
CA Golden State Tobacco Securitization
Authority, Asset Backed:
Series 2003 A-1,
6.250% 06/01/33 1,800,000 1,752,174
Series 2003 B,
5.500% 06/01/43 750,000 776,768
NJ Tobacco Settlement Financing Corp.,
Series 2003,
6.750% 06/01/39 1,500,000 1,496,010
WA Tobacco Settlement Authority,
Series 2002,
6.625% 06/01/32 250,000 245,350
-----------
Tobacco Total 4,270,302
-----------
OTHER TOTAL 22,847,183
-----------
See Accompanying Notes to Financial Statements.
9
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
OTHER REVENUE - 4.1%
HOTELS - 0.5%
PA Philadelphia Authority for Industrial
Development, Doubletree Project A,
Series 1997 A,
6.500% 10/01/27 1,000,000 1,014,470
-----------
Hotels Total 1,014,470
-----------
RECREATION - 2.7%
CA Agua Caliente, Band of Cahuilla
Indians Revenue, Series 2003,
5.600% 07/01/13 1,000,000 1,013,200
CA Cabazon Band Mission Indians,
Series 2004:
8.375% 10/01/15 (g) 275,000 274,453
8.750% 07/01/19 (g) 970,000 968,041
CT Gaming Authority, Mohegan Tribe,
Series 2001,
6.250% 01/01/31 (g) 275,000 290,851
CT Mashantucket Western Pequot
Tribe, Series 1999 B,
(a) 09/01/16 (g) 1,000,000 532,770
FL Capital Trust Agency, Seminole Tribe
Convention Center, Series 2002 A,
10.000% 10/01/33 (g) 1,350,000 1,654,250
NM Red River Sports Facility, Red River
Ski Area Project, Series 1998,
6.450% 06/01/07 595,000 602,896
-----------
Recreation Total 5,336,461
-----------
RETAIL - 0.9%
NJ Economic Development Authority,
Glimcher Properties LP Project,
Series 1998, AMT,
6.000% 11/01/28 1,250,000 1,223,462
OH Lake County, North
Madison Properties,
Series 1993,
8.819% 09/01/11 655,000 654,286
-----------
Retail Total 1,877,748
-----------
OTHER REVENUE TOTAL 8,228,679
-----------
-----------------------------------------------------------
RESOURCE RECOVERY - 2.6%
DISPOSAL - 0.9%
CA Pollution Control Financing Authority,
Solid Waste Disposal, Republic Services,
Series 2002 C, AMT,
5.250% 06/01/23 500,000 515,710
MA Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 435,000 442,795
UT Carbon County, Laidlaw Environmental:
Series 1995 A, AMT,
7.500% 02/01/10 250,000 255,398
Series 1997 A, AMT,
7.450% 07/01/17 500,000 513,165
-----------
Disposal Total 1,727,068
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
RESOURCE RECOVERY - 1.7%
MA Development Finance Agency,
Ogden Haverhill Project,
Series 1999 A, AMT,
6.700% 12/01/14 250,000 265,920
MA Industrial Finance Agency,
Ogden Haverhill Project,
Series 1998 A, AMT:
5.500% 12/01/13 500,000 504,595
5.600% 12/01/19 500,000 500,060
PA Delaware County Industrial
Development Authority, BFI Project,
Series 1997 A,
6.200% 07/01/19 2,000,000 2,120,640
-----------
Resource Recovery Total 3,391,215
-----------
RESOURCE RECOVERY TOTAL 5,118,283
-----------
-----------------------------------------------------------
TAX-BACKED - 39.9%
LOCAL APPROPRIATED - 0.9%
CA Compton Certificates of Participation,
Civic Center & Capital Improvements,
Series 1997 A,
5.500% 09/01/15 1,000,000 1,046,690
SC Dorchester County School
District No. 2,
Installment Purchase Revenue,
Series 2004,
5.250% 12/01/29 650,000 654,524
-----------
Local Appropriated Total 1,701,214
-----------
LOCAL GENERAL OBLIGATIONS - 20.9%
CA East Side Union High School District,
Series 2003 B,
Insured: MBIA
5.100% 02/01/20 1,000,000 1,100,160
CA Fresno Unified School District,
Series 2002 A,
Insured: MBIA
6.000% 02/01/18 2,000,000 2,385,860
CA Los Angeles Unified School District,
Series 2002,
Insured: MBIA
5.750% 07/01/16 700,000 815,500
CA Montebello Unified School District,
Series 2001, Insurer FSA:
(a) 08/01/21 1,435,000 625,904
(a) 08/01/23 1,505,000 578,221
CA San Juan Unified School District,
Series 2001,
Insured: FSA
(a) 08/01/19 2,210,000 1,087,939
IL Chicago Board of Education,
Series 1997 A,
Insured: AMBAC
5.250% 12/01/30 (i) 14,470,000 14,865,176
See Accompanying Notes to Financial Statements.
10
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
LOCAL GENERAL OBLIGATIONS (CONTINUED)
IL Cook County, Series 1997 A,
Insured: MBIA
5.625% 11/15/22 4,200,000 4,568,214
NY New York City:
Series 1997 A,
7.000% 08/01/07 960,000 1,040,832
Series 1997 H,
6.000% 08/01/17 1,400,000 1,509,480
TX Dallas County Flood Control,
District No. 1,
Series 2002,
7.250% 04/01/32 1,000,000 1,036,560
TX Irving Independent School District,
Series 1997,
Insured: PSFG
(a) 02/15/18 1,000,000 531,700
TX San Antonio Independent
School District,
Series 1997,
Insured: PSFG
5.000% 08/15/27 9,000,000 9,055,890
WA Clark County School District No. 37,
Series 2001 C,
Insured: FGIC
(a) 12/01/18 5,000,000 2,569,900
-----------
Local General Obligations Total 41,771,336
-----------
SPECIAL NON-PROPERTY TAX - 4.7%
CA San Diego Redevelopment Agency,
Series 2001,
Insured: FSA
(a) 09/01/22 1,910,000 770,446
FL Northern Palm Beach County
Improvement District, Series 1999,
Insured: MBIA
6.000% 08/01/29 750,000 820,642
IL Metropolitan Pier & Exposition
Authority, McCormick Place
Expansion Project,
Series 1993 A,
Insured: FGIC
(a) 06/15/16 10,000,000 5,922,800
NJ Economic Development Authority,
Cigarette Tax,
Series 2004:
5.750% 06/15/29 1,000,000 1,021,320
5.500% 06/15/31 150,000 150,459
PR Commonwealth Highway &
Transportation Authority,
Series 2003 AA:
Insured: MBIA
5.500% 07/01/18 500,000 575,735
-----------
Special Non-Property Tax Total 9,261,402
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
SPECIAL PROPERTY TAX - 7.9%
CA Carson, Series 1992,
7.375% 09/02/22 35,000 35,142
CA Huntington Beach Community
Facilities District, Grand Coast Resort,
Series 2001-1,
6.450% 09/01/31 750,000 774,158
CA Lincoln Special Tax,
Community Facilities District 2003-1,
Series 2004,
5.900% 09/01/24 500,000 499,370
CA Oakdale Public Financing Authority,
Tax Allocation Revenue, Central
City Redevelopment Project,
Series 2004,
5.375% 06/01/33 1,375,000 1,368,042
CA Orange County Community Facilities
District, Ladera Ranch,
Series 1999 A,
6.700% 08/15/29 500,000 546,175
CA Orange County Improvement Bond
Act 1915, Phase IV, No. 01-1-B,
Series 2003
5.750% 09/02/33 500,000 506,460
CA Placer Unified High School District,
Series 2000 A,
Insured: FGIC
(a) 08/01/19 1,700,000 838,083
CA Redwood City Community Facilities
District, 1 Redwood, Series 2003 B,
5.950% 09/01/28 600,000 615,552
CA Riverside County Public Financing
Authority, Redevelopment Projects,
Series 1997 A,
5.500% 10/01/22 650,000 663,669
CA Temecula Valley Unified School
District, No. 02-1, Series 2003,
6.125% 09/01/33 400,000 405,628
FL Celebration Community Development
District, Special Assessment,
Series 2003 A,
6.400% 05/01/34 1,000,000 1,033,810
FL Colonial Country Club Community
Development, Capital Improvement,
Series 2003,
6.400% 05/01/33 740,000 770,503
FL Double Branch Community
Development District, Special
Assessment, Series 2002 A,
6.700% 05/01/34 700,000 747,068
FL Heritage Palms Community
Development District, Series 1999,
6.250% 11/01/07 315,000 317,029
See Accompanying Notes to Financial Statements.
11
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
SPECIAL PROPERTY TAX (CONTINUED)
FL Islands at Doral Southwest
Community Development District,
Series 2003,
6.375% 05/01/35 380,000 395,823
FL Lexington Oaks Community
Development District:
Series 1998 A,
6.125% 05/01/19 345,000 350,175
Series 1998 B,
5.500% 05/01/05 15,000 15,041
Series 2000 A,
7.200% 05/01/30 285,000 298,680
Series 2002 A,
6.700% 05/01/33 250,000 262,807
FL Orlando, Conroy Road Interchange
Project, Series 1998 A:
5.500% 05/01/10 180,000 185,571
5.800% 05/01/26 300,000 303,675
FL Seven Oaks Community
Development District:
Series 2004 A,
5.875% 05/01/35 295,000 292,587
Series 2004 B,
5.000% 05/01/09 1,000,000 1,000,990
FL Stoneybrook Community
Development District:
Series 1998 A,
6.100% 05/01/19 315,000 319,832
Series 1998 B,
5.700% 05/01/08 25,000 25,401
FL Westchester Community Development
District No. 1 Special Assessment,
Series 2003,
6.125% 05/01/35 425,000 428,906
IL Chicago Tax Increment,
Pilsen Redevelopment,
Series 2004 B,
6.750% 06/01/22 450,000 457,691
IL Lincolnshire Special Services
Area No. 1,
Sedgebrook Project,
Series 2004,
Insured: AMBAC
6.250% 03/01/34 500,000 495,300
MI Pontiac Finance Authority,
Development Area No. 3, Series 2002,
6.375% 06/01/31 550,000 557,078
MI Taylor Tax Increment
Finance Authority,
Series 2001,
Insured: FSA
5.375% 05/01/17 1,220,000 1,336,510
-----------
Special Property Tax Total 15,846,756
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
STATE APPROPRIATED - 2.1%
CA State Public Works Board,
Department of Mental Health,
Series 2004 A,
5.500% 06/01/19 1,000,000 1,094,440
NY State Urban Development Corp.,
University Facilities Grants,
Series 1995,
5.875% 01/01/21 1,000,000 1,167,470
PR Commonwealth of Puerto Rico
Public Finance Corp.,
Series 2002 E,
6.000% 08/01/26 1,645,000 1,892,013
-----------
State Appropriated Total 4,153,923
-----------
STATE GENERAL OBLIGATIONS - 3.4%
CA, Series 2003,
5.250% 02/01/23 380,000 409,682
DC District of Columbia,
Series 1999 A,
Insured: FSA
5.375% 06/01/18 1,700,000 1,847,509
TX, Series 1999 ABC,
5.500% 08/01/35 4,200,000 4,486,020
-----------
State General Obligations Total 6,743,211
-----------
TAX-BACKED TOTAL 79,477,842
-----------
-----------------------------------------------------------
TRANSPORTATION - 8.2%
AIR TRANSPORTATION - 4.1%
CA Los Angeles Regional Airport,
LAXFuel Corp., Series 2001, AMT,
Insured: AMBAC
5.250% 01/01/23 750,000 762,382
CO Denver City & County Airport,
United Airlines, Inc.,
Series 1992 A, AMT,
6.875% 10/01/32 (f) 1,645,000 1,254,313
FL Capital Trust Agency Revenue,
Air Cargo - Orlando Project,
Series 2003, AMT,
6.750% 01/01/32 500,000 480,110
IN Indianapolis Airport
Authority Revenue,
Fed Ex Corp.,
Series 2004, AMT,
5.100% 01/15/17 250,000 258,985
KY Kenton County Airport Board,
Delta Air Lines, Inc.,
Series 1992 A, AMT,
7.500% 02/01/12 500,000 409,660
MN Minneapolis & St. Paul
Metropolitan Airport Commission,
Northwest Airlines, Inc.:
Series 2001 A, AMT,
7.000% 04/01/25 1,050,000 899,619
Series 2001 B, AMT,
6.500% 04/01/25 250,000 250,905
See Accompanying Notes to Financial Statements.
12
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
TRANSPORTATION (CONTINUED)
AIR TRANSPORTATION (CONTINUED)
NC Charlotte Special Facilities Revenue,
Douglas International Airport,
US Airways, Inc.:
Series 1998, AMT,
5.600% 07/01/27 (j) 250,000 115,465
Series 2000, AMT,
7.750% 02/01/28 (j) 750,000 366,705
NJ Economic Development Authority,
Continental Airlines, Inc. Project:
Series 1999, AMT,
6.250% 09/15/29 250,000 193,887
Series 2003, AMT,
9.000% 06/01/33 750,000 765,465
TX Alliance Airport Authority:
American Airlines Project,
Series 1990, AMT,
7.500% 12/01/29 850,000 625,388
Federal Express Corp. Project,
Series 1996, AMT,
6.375% 04/01/21 1,000,000 1,046,500
TX Houston Industrial Development Corp.,
Air Cargo, Perot Development,
Series 2002, AMT,
6.000% 03/01/23 731,283 747,408
-----------
Air Transportation Total 8,176,792
-----------
AIRPORTS - 0.5%
MA Port Authority, Series 1998 D,
Insured: FSA
5.000% 07/01/28 1,000,000 1,008,760
-----------
Airports Total 1,008,760
-----------
TOLL FACILITIES - 3.1%
CO Northwest Parkway Public
Highway Authority, Series 2001 D,
7.125% 06/15/41 1,250,000 1,315,787
CO Public Highway Authority,
Arapahoe Authority, E-470,
Series 2000 B,
Insured: MBIA
(a) 09/01/18 3,000,000 1,566,900
(a) 09/01/35 8,750,000 909,038
VA Richmond Metropolitan Authority,
Series 1998,
Insured: FGIC
5.250% 07/15/22 2,000,000 2,225,120
-----------
Toll Facilities Total 6,016,845
-----------
TRANSPORTATION - 0.5%
NV Department of Business &
Industry, Las Vegas Monorail Project,
Series 2000,
7.375% 01/01/40 1,000,000 1,014,230
-----------
Transportation Total 1,014,230
-----------
TRANSPORTATION TOTAL 16,216,627
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
UTILITIES - 19.9%
INDEPENDENT POWER PRODUCERS - 4.3%
MI Midland County Economic
Development Corp., Series 2000, AMT,
6.875% 07/23/09 1,250,000 1,299,000
NY Port Authority of New York & New
Jersey, KIAC Partners,
Series 1996 IV, AMT,
6.750% 10/01/11 2,000,000 2,098,580
NY Suffolk County, Industrial
Development Revenue, Cogen
Partners Facility,
Series 1998, AMT,
5.500% 01/01/23 550,000 523,754
PA Carbon City Industrial Development
Panther Creek Partners Project,
Series 2000, AMT,
6.650% 05/01/10 275,000 296,403
PA Economic Development
Finance Authority:
Colver Project, Series 1994 D, AMT,
7.125% 12/01/15 1,500,000 1,534,950
Northampton Generating,
Series 1994 A, AMT,
6.500% 01/01/13 1,000,000 1,011,340
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical &
Environmental Cogeneration Facilities,
AES Project, Series 2000, AMT,
6.625% 06/01/26 645,000 695,123
VA Pittsylvania County Industrial
Development Authority, Multi-trade
of Pittsylvania, Series 1994 A, AMT,
7.450% 01/01/09 1,000,000 1,023,380
-----------
Independent Power Producers Total 8,482,530
-----------
INVESTOR OWNED - 10.2%
AZ Maricopa County Pollution Control,
El Paso Electric Co., Series 2002 A,
6.250% 05/01/37 1,000,000 1,023,660
AZ Pima County Industrial Development
Authority, Tucson Electric Power Co.,
Series 1997 A, AMT,
6.100% 09/01/25 750,000 749,850
CA Chula Vista Industrial Development
Revenue, San Diego Gas & Electric Co.,
Series 1996 B, AMT,
5.500% 12/01/21 625,000 652,088
FL Polk County Industrial Development
Authority, Tampa Electric Co. Project,
Series 1996, AMT,
5.850% 12/01/30 1,200,000 1,223,568
IL Bryant, Pollution Control Revenue,
Central Illinois Light Co.,
Series 1993,
5.900% 08/01/23 2,650,000 2,700,218
See Accompanying Notes to Financial Statements.
13
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR (S) VALUE (S)
-----------------------------------------------------------
UTILITIES (CONTINUED)
INVESTOR OWNED (CONTINUED)
IN Petersburg Pollution Control Revenue,
Indianapolis Power & Light Project,
Series 1995,
6.625% 12/01/24 1,000,000 1,025,900
LA Calcasieu Parish Industrial Development
Board, Entergy Gulf States, Inc.,
Series 1999,
5.450% 07/01/10 500,000 506,015
LA West Feliciana Parish, Entergy
Gulf States, Inc., Series 1999 B,
6.600% 09/01/28 500,000 510,100
MS State Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 04/01/22 2,000,000 2,010,300
MT Forsyth Pollution Control, Portland
General, Series 1998 A,
5.200% 05/01/33 300,000 316,404
NV Clark County Industrial Development
Revenue, Nevada Power Co.,
Series 1995 B, AMT,
5.900% 10/01/30 1,250,000 1,222,413
OH Air Quality Development
Authority, Pollution Control,
Cleveland Electric, Series 2002 A,
6.000% 12/01/13 900,000 953,865
TX Brazos River Authority,
Pollution Control,
TXU Electric Co.:
Series 2001 C, AMT,
5.750% 05/01/36 280,000 302,224
Series 2003 C, AMT,
6.750% 10/01/38 645,000 697,935
VA Chesterfield County Industrial
Development Authority, Pollution
Control Revenue, Virginia
Electric & Power Co.,
Series 1987 B,
5.875% 06/01/17 250,000 272,098
WV Pleasant County, Western
Pennsylvania Power Co.,
Series 1999 E, AMT,
Insured: AMBAC
5.500% 04/01/29 4,750,000 4,893,307
WY Campbell County Pollution Control,
Black Hills Power, Inc.,
Series 2004,
5.350% 10/01/24 1,250,000 1,243,250
-----------
Investor Owned Total 20,303,195
-----------
JOINT POWER AUTHORITY - 0.4%
NC Eastern Municipal Power Agency:
Series 1999 D:
5.500% 01/01/16 285,000 304,326
6.700% 01/01/19 500,000 558,205
-----------
Joint Power Authority Total 862,531
-----------
PAR (S) VALUE (S)
-----------------------------------------------------------
MUNICIPAL ELECTRIC - 4.2%
CA Department of Water Resources,
Power Supply Revenue Bonds,
Series 2002 A,
Insured: AMBAC
5.500% 05/01/14 2,000,000 2,259,420
PR Electric Power Authority,
Series 1998 II,
Insured: FSA
5.125% 07/01/26 2,000,000 2,089,300
WA Chelan County Public
Utilities District No. 1, Columbia
River Rock Hydroelectric,
Series 1997,
Insured: MBIA
(a) 06/01/14 5,000,000 3,291,050
WA Seattle Light & Power,
Series 2001,
Insured: FSA
5.500% 03/01/17 750,000 821,475
-----------
Municipal Electric Total 8,461,245
-----------
WATER & SEWER - 0.8%
MO Water & Sewer, Lee's Summit,
Series 2002,
Insured: AMBAC
5.250% 07/01/15 500,000 543,700
MS V Lakes Utility District, Series 1994,
8.250% 07/15/24 500,000 490,110
NH Industrial Development Authority,
Pennichuck Water Works, Inc.,
Series 1988, AMT,
7.500% 07/01/18 440,000 499,576
-----------
Water & Sewer Total 1,533,386
-----------
UTILITIES TOTAL 39,642,887
-----------
TOTAL MUNICIPAL BONDS
(Cost of $306,187,565) 305,091,676
-----------
INVESTMENT COMPANY - 0.0% SHARES
-----------------------------------------------------------
Federated Tax-Free Obligations Fund 329 329
-----------
TOTAL INVESTMENT COMPANY
(Cost of $329) 329
-----------
MUNICIPAL PREFERRED STOCKS - 3.3% PAR (S)
-----------------------------------------------------------
HOUSING - 3.3%
MULTI-FAMILY - 3.3%
Charter Mac Equity Issue Trust:
AMT, 6.625% 06/30/09 (g) 2,000,000 2,210,880
6.300% 04/30/19 (g) 1,000,000 1,066,850
GMAC Municipal Mortgage Trust,
5.600% 10/31/39 (g) 1,000,000 995,960
See Accompanying Notes to Financial Statements.
14
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL
PREFERRED STOCKS (CONTINUED) PAR ($) VALUE (S)
-----------------------------------------------------------
HOUSING (CONTINUED)
MULTI-FAMILY (CONTINUED)
MuniMae Equity Issue Trust, AMT,
7.750% 06/30/50 (g) 2,000,000 2,336,120
TOTAL MUNICIPAL PREFERRED STOCKS
(Cost of $6,000,000) 6,609,810
-----------
SHORT-TERM OBLIGATIONS - 2.1%
-----------------------------------------------------------
VARIABLE RATE DEMAND NOTES (K) - 2.1%
FL Alachua County Florida Health
Facilities, Continuing Care, Oak
Hammock University Project,
Series 2002 A,
1.670% 10/01/32 600,000 600,000
IL Health Facilities Authority,
OSF Healthcare Systems,
Series 2002,
1.700% 11/15/27 700,000 700,000
IN Health Facilities Financing Authority,
Golden Years Homestead,
Series 2002 A,
1.350% 06/01/25 600,000 600,000
MO State Health & Educational
Facilities Authority,
Educational Facilities Revenue,
Washington University,
Series 1996 D,
1.680% 09/01/30 800,000 800,000
NM Farmington Pollution Control,
Arizona Public Service Co.,
Series 1994 B,
1.680% 09/01/24 800,000 800,000
WY Lincoln County Pollution
Control Revenue,
Exxon Project,
Series 1984 A,
1.590% 11/01/14 600,000 600,000
WY Uinta County Pollution
Control Revenue,
Chevron U.S.A. Inc. Project,
Series 1992,
1.680% 12/01/22 100,000 100,000
-----------
Variable Rate Demand Notes Total 4,200,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Cost of $4,200,000) 4,200,000
-----------
TOTAL INVESTMENTS - 158.7%
(Cost of $316,387,894)(l) 315,901,815
-----------
VALUE (S)
-----------------------------------------------------------
AUCTION PREFERRED SHARES PLUS
CUMULATIVE UNPAID DISTRIBUTIONS - (60.3)% (120,037,050)
OTHER ASSETS & LIABILITIES, NET - 1.6% 3,233,440
-----------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS - 100.0% 199,098,205
===========
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) Denotes a restricted security, which is subject to restrictions
on resale under federal securities laws. At November 30, 2004, these
securities amounted to $2,786,032, which represents 1.4% 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 $1,250,000
Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 09/08/00 990,000
VI Government Refinery
Facilities, Hovensa
Coker Project,
Series 2002, AMT,
6.500% 07/01/21 11/15/02 375,000
----------
$2,615,000
(c) Security purchased on a delayed delivery basis.
(d) The issuer is in default of certain debt covenants. Income is
not being accrued. As of November 30, 2004, the value of these securities
amounted to $1,897,836, which represents 1.0% of net assets.
(e) The issuer is in default of certain debt covenants. Income is not being
fully accrued. As of November 30, 2004, the value of this security
represents 0.1% of net assets.
(f) The issuer has filed for bankruptcy protection under Chapter 11, and is in
default of certain debt covenants. Income is not being accrued. As of
November 30, 2004, the value of these securities amounted to $1,443,122,
which represents 0.7% of net assets.
(g) Security exempt from registration pursuant to Rule 144A under
the Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
November 30, 2004, these securities amounted to $11,659,154, which
represents 5.9% of net assets.
(h) The Trust has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
the principal and interest.
(i) A portion of this security with a market value of $3,092,203 is pledged as
collateral for open futures contracts.
(j) The issuer has filed for bankruptcy protection under Chapter 11. Income is
being accrued. As of November 30, 2004, the value of these securities
amounted to $482,170, which represents 0.2% of net assets.
(k) Variable rate demand notes. These securities are payable upon demand and are
secured by letters of credit or other credit support agreements from banks.
The interest rates change periodically and the interest rates shown reflect
the rates as of November 30, 2004.
(l) Cost for federal income tax purposes is $316,064,674.
(m) Represents fair value as determined in good faith under procedures approved
by the Board of Trustees.
See Accompanying Notes to Financial Statements.
15
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
--------------------------------------------------------------------------------
At November 30, 2004, the Trust held the following open short futures contracts:
UNREALIZED
AGGREGATE EXPIRATION APPRECIATION/
TYPE CONTRACTS VALUE FACE VALUE DATE (DEPRECIATION)
--------------------------------------------------------------------------------
U.S. Treasury
Note 10-Year 269 $29,791,750 $29,739,610 Mar - 2005 $(52,140)
U.S. Treasury
Bond 20-Year 330 36,341,250 36,360,060 Mar - 2005 18,810
----------
$(33,330)
----------
ACRONYM NAME
--------------------------------------------------------------------------------
AMBAC Ambac Assurance Corp.
AMT Alternative Minimum Tax
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FNMA Federal National Mortgage Association
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
MBIA MBIA Insurance Corp.
PSFG Permanent School Fund Guaranteed
RAD Radian Asset Assurance, Inc.
At November 30, 2004, the Trust held investments in the following sectors:
% OF
HOLDINGS BY REVENUE SOURCE (UNAUDITED) NET ASSETS
--------------------------------------------------------------
Health Care 40.6
Tax-Backed 39.9
Utilities 19.9
Housing 17.1
Other 11.5
Transportation 8.2
Industrial 7.8
Education 4.9
Other Revenue 4.1
Resource Recovery 2.6
Short-Term Obligations 2.1
Auction Preferred Shares (60.3)
Other Assets & Liabilities, Net 1.6
------
100.0
------
See Accompanying Notes to Financial Statements.
16
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2004
ASSETS:
Investments, at cost $316,387,894
------------
Investments, at value $315,901,815
Cash 46,623
Receivable for:
Interest 5,356,523
Futures variation margin 112,735
Deferred Trustees' compensation plan 15,554
------------
Total Assets 321,433,250
------------
LIABILITIES:
Payable for:
Investments purchased on a
delayed delivery basis 755,880
Distributions-- common shares 1,246,082
Distributions-- preferred shares 37,050
Preferred shares remarketing commissions 5,400
Investment advisory fee 195,137
Pricing and bookkeeping fees 17,010
Trustees' fees 637
Custody fee 1,554
Audit fee 31,070
Deferred Trustees' fees 15,554
Other liabilities 29,671
------------
Total Liabilities 2,335,045
------------
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 $260,540,772
Undistributed net investment income 908,419
Accumulated net realized loss (61,831,577)
Net unrealized depreciation on:
Investments (486,079)
Futures contracts (33,330)
------------
Net assets at value applicable to 31,152,060
common shares of beneficial interest
outstanding $199,098,205
============
Net asset value per common share $ 6.39
============
STATEMENT OF OPERATIONS
For the Year Ended November 30, 2004
INVESTMENT INCOME:
Interest $ 19,322,281
Dividends 1,789
------------
Total Investment Income 19,324,070
------------
EXPENSES:
Investment advisory fee 2,403,509
Transfer agent fee 54,983
Pricing and bookkeeping fees 159,520
Trustees' fees 16,222
Preferred shares remarketing commissions 301,217
Custody fee 21,733
Other expenses 215,435
------------
Total Expenses 3,172,619
Custody earnings credit (1,031)
------------
Net Expenses 3,171,588
------------
Net Investment Income 16,152,482
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES CONTRACTS:
Net realized gain (loss) on:
Investments 388,045
Futures contracts (4,444,766)
------------
Net realized loss (4,056,721)
------------
Net change in unrealized
appreciation/depreciation on:
Investments (1,348,400)
Futures contracts (128,680)
------------
Net change in unrealized depreciation (1,477,080)
------------
Net Loss (5,533,801)
------------
Net Increase in Net Assets from Operations 10,618,681
------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (1,308,975)
------------
Net Increase in Net Assets from
Operations Applicable to Common Shares $ 9,309,706
------------
See Accompanying Notes to Financial Statements.
17
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED
NOVEMBER 30,
--------------------------------
INCREASE (DECREASE) IN NET ASSETS: 2004 2003
-------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 16,152,482 $ 16,652,711
Net realized loss on investments and futures contracts (4,056,721) (6,269,389)
Net change in unrealized appreciation/depreciation
on investments and futures contracts (1,477,080) 7,635,696
------------ ------------
Net Increase from Operations 10,618,681 18,019,018
------------ ------------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (1,308,975) (1,158,676)
------------ ------------
Increase in Net Assets from Operations Applicable to Common Shares 9,309,706 16,860,342
------------ ------------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (14,944,635) (15,243,036)
------------ ------------
SHARE TRANSACTIONS:
Distributions reinvested 226,803 124,151
------------ ------------
Total Increase (Decrease) in Net Assets Applicable to Common Shares (5,408,126) 1,741,457
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 204,506,331 202,764,874
------------ ------------
End of period (including undistributed net investment income
of $908,419 and $1,057,736, respectively) $199,098,205 $204,506,331
============ ============
NUMBER OF TRUST SHARES:
Common Shares:
Issued for distributions reinvested 34,786 19,292
------------ ------------
Outstanding at:
Beginning of period 31,117,274 31,097,982
------------ ------------
End of period 31,152,060 31,117,274
------------ ------------
Preferred Shares:
Outstanding at End of Period 4,800 4,800
------------ ------------
See Accompanying Notes to Financial Statements.
18
NOTES TO FINANCIAL STATEMENTS
November 30, 2004
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 pricing services approved by the Trust's
Board of Trustees, based upon market transactions for normal, institutional-size
trading units of similar securities. The services may use various pricing
techniques which take into account appropriate factors such as yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other data, as
well as broker quotes. Debt securities for which quotations are readily
available are valued at an over-the-counter or exchange bid quotation. Certain
debt securities, which tend to be more thinly traded and of lesser quality, are
priced based on fundamental analysis of the financial condition of the issuer
and the estimated value of any collateral. Valuations developed through pricing
techniques may vary from the actual amounts realized upon sale of the
securities, and the potential variation may be greater for those securities
valued using fundamental analysis.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Investments in other investment companies are valued at net asset value.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
FUTURES CONTRACTS
The Trust may invest in municipal and U.S. Treasury futures contracts. The Trust
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 receivable or payable
and offset in unrealized gains or losses. The Trust also identifies portfolio
securities as segregated with the custodian in a separate account in an amount
equal to the futures contract. The Trust recognizes a realized gain or loss when
the contract is closed or expires.
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from registration. In
some cases, the issuer of restricted securities has agreed to register such
securities for resale at the issuer's expense either upon demand by the Trust or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Board of Trustees. The Trust will not
incur any registration costs upon such resale.
DELAYED DELIVERY SECURITIES
The Trust may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. This may increase the
risk if the other party to the transaction fails to deliver and causes the Trust
to subsequently invest at less advantageous prices. The Trust identifies cash or
liquid portfolio securities as segregated with the custodian in an amount equal
to the delayed delivery commitment.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Premium and discount are
amortized and accreted, respectively, on all debt securities. Corporate actions
and dividend income are recorded on the ex-date.
FEDERAL INCOME TAX STATUS
The Trust intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its tax exempt or taxable income, if any, for its tax year,
and as such will not be subject to federal income taxes. In addition, the Trust
intends to distribute in each calendar year substantially all of its net
investment income, capital gains and certain other amounts, if any, such that
the Trust should not be subject to federal excise tax. Therefore, no federal
income or excise tax provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to common shareholders are recorded on the ex-date. Distributions
to Auction Preferred shareholders are recorded daily and payable at the end of
each dividend period. Each dividend payment period for the APS is generally
seven days. The applicable dividend rate for the APS on November 30, 2004 was
1.57% for Series T and 1.61% for Series W. For the year ended November 30, 2004,
the Trust declared dividends to Auction Preferred shareholders amounting to
$1,308,975, representing an average dividend rate of 1.09% per APS.
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, 2004, permanent book and tax basis differences
resulting primarily from differing treatments for expired capital loss
carryforwards, discount accretion/premium amortization on debt securities and
market discount reclassifications were identified and reclassified among the
components of the Trust's net assets as follows:
UNDISTRIBUTED
NET INVESTMENT ACCUMULATED
INCOME NET REALIZED LOSS PAID-IN CAPITAL
------------------- -------------- -----------
$(48,189) $2,863,576 $(2,815,387)
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, 2004
and November 30, 2003 was as follows:
NOVEMBER 30, 2004 NOVEMBER 30, 2003
----------------- -----------------
Distributions paid from:
Tax-Exempt Income $16,226,738 $16,377,912
Ordinary Income 26,872 23,800
Long-Term Capital Gains -- --
20
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
As of November 30, 2004, the components of distributable earnings on a tax basis
were as follows:
UNDISTRIBUTED UNDISTRIBUTED NET UNREALIZED
UNDISTRIBUTED ORDINARY LONG-TERM APPRECIATION
TAX-EXEMPT INCOME INCOME CAPITAL GAINS (DEPRECIATION)*
---------------- --------- ------------ -------------
$2,668,986 $-- $-- $(162,859)
* The differences between book-basis and tax-basis net unrealized
appreciation/depreciation are primarily due to discount accretion/premium
amortization on debt securities.
Unrealized appreciation and depreciation at November 30, 2004, based on cost of
investments for federal income tax purposes was:
Unrealized appreciation $ 18,694,489
Unrealized depreciation (18,857,348)
------------
Net unrealized depreciation $ (162,859)
============
The following capital loss carryforwards, determined as of November 30, 2004,
may be available to reduce taxable income arising from future net realized gains
on investments, if any, to the extent permitted by the Internal Revenue Code:
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- -------------
2005 $ 5,926,653
2007 3,941,668
2008 14,340,573
2009 4,198,716
2010 12,980,738
2011 4,761,736
2012 4,055,363
-----------
$50,205,447
-----------
Capital loss carryforwards of $2,815,387 expired during the year ended November
30, 2004 for the Trust.
Expired capital loss carryforwards are recorded as a reduction of paid-in
capital.
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the
Trust. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary
of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004,
FleetBoston, including the Trust's investment advisor, was acquired by Bank of
America Corporation ("BOA"). The acquisition did not change the way the Trust is
managed, the investment personnel assigned to manage the Trust or the fees paid
by the Trust.
INVESTMENT ADVISORY FEE
Columbia provides administrative and other services to the Trust in addition to
investment advisory services. Columbia receives a monthly investment advisory
fee at the annual rate of 0.75% of the Trust's average weekly net assets,
including assets applicable to the APS.
PRICING AND BOOKKEEPING FEES
Columbia is responsible for providing pricing and bookkeeping services to the
Trust under a pricing and bookkeeping agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Corporation ("State Street"). As a result, Columbia pays the total fees received
to State Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Trust, Columbia receives
from the Trust an annual flat fee of $10,000 paid monthly, and in any month that
the Trust's average weekly net assets, including assets applicable to APS,
exceed $50 million, an additional monthly fee. The additional fee rate is
calculated by taking into account the fees payable to State Street under the
Outsourcing Agreement. This rate is applied to the average weekly net assets,
including assets applicable to APS, of the Trust for that month. The Trust also
pays additional fees for pricing services based on the number of securities held
by the Trust. For the year ended November 30, 2004, the Trust's effective
pricing and bookkeeping fee rate, inclusive of out-of-pocket expenses, was
0.050% of the Trust's average weekly net assets, including assets applicable to
APS.
CUSTODY CREDITS
The Trust has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. These credits are recorded as a reduction of
total expenses on the Statement of Operations. The Trust could have invested a
portion of the assets utilized in connection with the expense offset arrangement
in an income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
With the exception of one officer, all officers of the Trust are employees of
Columbia or its affiliates and receive no compensation from the Trust. Effective
August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to
the Trust in accordance with federal securities regulations. The Trust, along
with other affiliated trusts, will pay its pro-rata share of the expenses
associated with the Office of the Chief Compliance Officer. The Trust's fee will
not exceed $15,000 per year.
21
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
The Trust's Trustees may participate in a deferred compensation plan which may
be terminated at any time. Obligations of the plan will be paid solely out of
the Trust's assets.
OTHER
Columbia provides certain services to the Trust related to Sarbanes-Oxley
compliance. For the year ended November 30, 2004, the Trust paid $1,603 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
NOTE 5. PORTFOLIO INFORMATION
For the year ended November 30, 2004, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $41,390,938 and
$48,634,859, respectively.
NOTE 6. PREFERRED SHARES
The Trust currently has outstanding 4,800 APS (2,400 shares each of Series T and
W). The APS are redeemable at the option of the Trust on any dividend payment
date at the redemption price of $25,000 per share, plus an amount equal to any
dividends accumulated on a daily basis unpaid through the redemption date
(whether or not such dividends have been declared).
Under the Act, the Trust is required to maintain asset coverage of at least 200%
with respect to the APS as of the last business day of each month in which any
APS are outstanding. Additionally, the Trust is required to meet more stringent
asset coverage requirements 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, 2004, there were no such restrictions on the Trust.
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS
AND CONTINGENCIES
CONCENTRATION OF CREDIT RISK
The Trust holds investments that are insured by private insurers who guarantee
the payment of principal and interest in the event of default or that are
supported by a letter of credit. Each of the Trust's insurers is rated AAA by
Moody's Investor Services Inc., except for Radian Asset Assurance, Inc., which
is rated AA by Standard and Poor's. At November 30, 2004, investments supported
by private insurers that represent greater than 5% of the total investments of
the Trust were as follows:
% OF TOTAL
INSURER INVESTMENTS
--------------------------------------------------------
Ambac Assurance Corp. 8.5%
MBIA Insurance Corp. 5.1
Financial Security Assurance, Inc. 5.0
GEOGRAPHIC CONCENTRATION
The Trust has greater than 5% of its total investments at November 30, 2004
invested in debt obligations issued by the states of California, Colorado,
Florida, Illinois and Texas and their respective political subdivisions,
agencies and public authorities. The Trust is more susceptible to economic and
political factors adversely affecting issuers of these states municipal
securities than are municipal bond funds that are not concentrated to the same
extent in these issuers.
HIGH-YIELD SECURITIES
Investing in high-yield securities may involve greater credit risk and
considerations not typically associated with investing in U.S. government bonds
and other higher quality fixed income securities. These securities are
non-investment grade securities, often referred to as "junk bonds." Economic
downturns 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 to the extent
there is no established secondary market.
INDUSTRY FOCUS
The Trust may focus its investments in certain industries, subjecting it to
greater risk than a trust that is more diversified.
LEGAL PROCEEDINGS
Columbia, Columbia Funds Distributor, Inc. ("CFDI"), and certain of their
affiliates (collectively, "the Columbia Group") have received information
requests and subpoenas from various regulatory and law enforcement authorities
in connection with their investigations of late trading and market timing in
mutual funds as well as other industry wide issues. The Columbia Group has not
uncovered any instances where Columbia or CFDI were knowingly involved in late
trading of mutual fund shares.
22
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and CFDI, alleging that they had violated certain
provisions of the federal securities laws in connection with trading activity in
mutual fund shares. Also on February 24, 2004, the New York Attorney General
("NYAG") filed a civil complaint in New York Supreme Court, County of New York
against Columbia and CFDI alleging that Columbia and CFDI had violated certain
New York anti-fraud statutes. If either Columbia or CFDI is unsuccessful in its
defense of these proceedings, it could be barred from serving as an investment
advisor or distributor for any investment company registered under the
Investment Company Act of 1940, as amended (a "registered investment company").
Such results could prevent Columbia, CFDI or any company that is an affiliated
person of Columbia and CFDI from serving as an investment advisor or distributor
for any registered investment company, including your fund. Your fund has been
informed by Columbia and CFDI that, if these results occur, they will seek
exemptive relief from the SEC to permit them to continue to serve as your fund's
investment advisor and distributor. There is no assurance that such exemptive
relief will be granted. On March 15, 2004, Columbia and CFDI entered into
agreements in principle with the SEC Division of Enforcement and NYAG in
settlement of the charges. Under the agreements, Columbia and CFDI agreed, among
other things, to the following conditions: payment of $70 million in
disgorgement; payment of $70 million in civil penalties; an order requiring
Columbia and CFDI to cease and desist from violations of the antifraud
provisions and other provisions of the federal securities laws; governance
changes designed to maintain the independence of the mutual fund boards of
trustees and ensure compliance with securities laws and their fiduciary duties;
and retention of an independent consultant to review Columbia's and CFDI's
compliance policies and procedures. The agreement requires the final approval of
the SEC. In a separate agreement with the NYAG, the Columbia Group and its
affiliate Banc of America Capital Management, LLC have agreed to collectively
reduce mutual fund fees by $160 million over a five-year period.
In connection with the events described in detail above, various parties have
filed suit against certain funds, their Boards and/or FleetBoston (and
affiliated entities). More than 300 cases (including those filed against
entities unaffiliated with the funds, their Boards and/or FleetBoston and its
affiliated entities) have been consolidated in a multi-district proceeding and
transferred to the Federal District Court in Maryland. Recently, certain
Columbia funds and affiliated entities have been named as defendants in several
derivative actions under various sections of the Investment Company Act of 1940,
as amended, alleging, among other things, that the fees and expenses paid by
those funds are excessive. The funds and the other defendants to these actions,
including Columbia and various of its affiliates, certain other mutual funds
advised by Columbia and its affiliates, and various directors of such funds,
have denied these allegations and are contesting the plaintiffs' claims. These
suits and certain regulatory investigations are ongoing, however, based on
currently available information, Columbia believes that these lawsuits are
without merit, that the likelihood they will have a material adverse impact on
any fund is remote, and that the lawsuits are not likely to materially affect
its ability to provide investment management services to its clients, including
the funds.
23
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise stated):
PERIOD
YEAR ENDED NOVEMBER 30, ENDED YEAR ENDED DECEMBER 31,
------------------------------------------------------------ NOVEMBER 30, -------------------------
2004 2003 2002 2001 2000 1999 (a) 1998 1997
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 6.57 $ 6.52 $ 6.93 $ 6.92 $ 7.49 $ 8.49 $ 8.56 $ 8.34
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.52(b) 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 (0.18) 0.04 (0.42)(c) (0.04) (0.54) (0.92) (0.07) 0.22
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations 0.34 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) (0.04) (0.06) (0.12) (0.16) (0.04) -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations Applicable
to Common Shareholders 0.30 0.54 0.09 0.45 (0.08) (0.50) 0.45 0.77
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO
COMMON SHAREHOLDERS:
From net investment income (0.48) (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 $ 6.39 $ 6.57 $ 6.52 $ 6.93 $ 6.92 $ 7.49 $ 8.49 $ 8.56
========== ========== ========== ========== ========== ========== ========== ==========
Market price per share --
common shares $ 6.43 $ 6.45 $ 6.26 $ 6.38 $ 5.75 $ 6.13 $ 8.31 $ 8.63
========== ========== ========== ========== ========== ========== ========== ==========
Total return-- based on market
value-- common shares (e) 7.44% 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) 1.58% 1.54% 1.49% 1.59% 1.60% 1.13%(i) 0.93% 0.96%
Net investment income before
preferred stock dividend (g)(h) 8.04% 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) 7.39% 7.72% 7.53%(c) 7.00% 6.37% 5.67%(i) 6.02% 6.54%
Portfolio turnover rate 13% 14% 15% 15% 10% 16%(f) 29% 17%
Net assets, end of
period (000's)--
common shares $ 199,098 $ 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.
24
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise stated):
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.55 $ 7.96 $ 8.67
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.56 0.60 0.62
Net realized and unrealized gain (loss) on investments and futures contracts (0.19) 0.58 (0.72)
---------- ---------- ----------
Total from Investment Operations Applicable to Common Shareholders 0.37 1.18 (0.10)
---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.58) (0.59) (0.61)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 8.34 $ 8.55 $ 7.96
---------- ---------- ----------
Market price per share-- common shares $ 8.25 $ 7.38 $ 6.88
---------- ---------- ----------
Total return-- based on market value-- common shares (a) 20.09% 15.65% (9.83)%
---------- ---------- ----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (b) 1.00% 1.06% 1.03%
Net investment income (b) 6.74% 7.15% 7.44%
Portfolio turnover rate 15% 23% 20%
Net assets, end of period (000's) - common shares $ 257,768 $ 264,467 $ 245,967
(a)Total return at market value assuming all distributions reinvested at prices
calculated in accordance with the Dividend Reinvestment Plan.
(b)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE* PER SHARE PER SHARE
-----------------------------------------------------------------------------------------------------------------
11/30/04 $120,000,000 $66,479 $25,008 $25,000
11/30/03 120,000,000 67,605 25,003 25,000
11/30/02 120,000,000 67,243 25,002 25,000
11/30/01 120,000,000 69,864 25,004 25,000
11/30/00 120,000,000 69,786 25,009 25,000
11/30/99 ** 120,000,000 73,466 25,021 25,000
* Calculated by subtracting the Trust's total liabilities from the Trust's
total assets and dividing the amount by the number of APS outstanding.
** On August 26, 1999, the Trust began offering Auction Preferred Shares.
25
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004, 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 the standards of the Public Company
Accounting Oversight Board (United States), 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, 2004 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 19, 2005
26
UNAUDITED INFORMATION
FEDERAL INCOME TAX INFORMATION
99.83% of distributions from net investment income will be treated as exempt
income for federal income tax purposes.
--------------------------------------------------------------------------------
As of December 31, 2004, 19.64% of distributions from net investment income is
subject to the alternative minimum tax.
27
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.
28
TRUSTEES AND OFFICERS
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Trust 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
Trust in the Columbia Funds Complex.
NAME, ADDRESS AND AGE,
POSITION WITH FUNDS,
YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS
APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
DOUGLAS A. HACKER (age 49) Executive Vice President-Strategy of United Airlines (airline) since December 2002 (formerly
P.O. Box 66100 President of UAL Loyalty Services (airline) from September 2001 to December 2002; Executive Vice
Chicago, IL 60666 President and Chief Financial Officer of United Airlines from March 1999 to September 2001; Senior
Trustee (since 1996) Vice President-Finance from March 1993 to July 1999). Oversees 118, None
JANET LANGFORD KELLY (age 47) Adjunct Professor of Law, Northwestern University, since September 2004; Private Investor since
9534 W. Gull Lake Drive March 2004 (formerly Chief Administrative Officer and Senior Vice President, Kmart Holding
Richland, MI 49083-8530 Corporation (consumer goods), from September 2003 to March 2004; Executive Vice President-Corporate
Trustee (since 1996) 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). Oversees 118, None
RICHARD W. LOWRY (age 68) Private Investor since August 1987 (formerly Chairman and Chief Executive Officer, U. S. Plywood
10701 Charleston Drive Corporation (building products manufacturer)). Oversees 120(3), None
Vero Beach, FL 32963
Trustee (since 1995)
CHARLES R. NELSON (age 62) Professor of Economics, University of Washington, since January 1976; Ford and Louisa Van Voorhis
Department of Economics Professor of Political Economy, University of Washington, since September 1993 (formerly Director,
University of Washington Institute for Economic Research, University of Washington from September 2001 to June 2003) Adjunct
Seattle, WA 98195 Professor of Statistics, University of Washington, since September 1980; Associate Editor, Journal
Trustee (since 1981) of Money Credit and Banking, since September 1993; consultant on econometric and statistical
matters. Oversees 118, None
JOHN J. NEUHAUSER (age 61) Academic Vice President and Dean of Faculties since August 1999, Boston College (formerly Dean,
84 College Road Boston College School of Management from September 1977 to September 1999). Oversees 121(3), (4),
Chestnut Hill, MA 02467-3838 Saucony, Inc. (athletic footwear)
Trustee (since 1985)
PATRICK J. SIMPSON (age 60) Partner, Perkins Coie LLP (law firm). Oversees 118, None
1120 N.W. Couch Street
Tenth Floor
Portland, OR 97209-4128
Trustee (since 2000)
29
TRUSTEES AND OFFICERS (CONTINUED)
NAME, ADDRESS AND AGE,
POSITION WITH FUNDS,
YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS
APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES (continued)
THOMAS E. STITZEL (age 68) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, College of
2208 Tawny Woods Place Business, Boise State University); Chartered Financial Analyst. Oversees 118, None.
Boise, ID 83706
Trustee (since 1998)
THOMAS C. THEOBALD (age 67) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) since September 2004
303 W. Madison (formerly Managing Director, William Blair Capital Partners (private equity investing) from
Suite 2500 September 1994 to September 2004). Oversees 118, Anixter International (network support equipment
Chicago, IL 60606 distributor); Ventas, Inc. (real estate investment trust); Jones Lang LaSalle (real estate
Trustee and Chairman management services) and Ambac Financial Group (financial guaranty insurance)
of the Board(5)
(since 1996)
ANNE-LEE VERVILLE (age 59) Retired since 1997 (formerly General Manager, Global Education Industry, IBM Corporation (computer
359 Stickney Hill Road and technology) from 1994 to 1997). Oversees 119(4), Chairman of the Board of Directors, Enesco
Hopkinton, NH 03229 Group, Inc. (designer, importer and distributor of giftware and collectibles)
Trustee (since 1998)
RICHARD L. WOOLWORTH (age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, The Regence Group
100 S.W. Market Street #1500 (regional health insurer); Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon;
Portland, OR 97207 Certified Public Accountant, Arthur Young & Company). Oversees 118, Northwest Natural Gas Co.
Trustee (since 1991) (natural gas service provider)
INTERESTED TRUSTEE
WILLIAM E. MAYER(2) (age 64) Partner, Park Avenue Equity Partners (private equity) since February 1999 (formerly Partner,
399 Park Avenue Development Capital LLC from November 1996 to February 1999). Oversees 120(3), Lee Enterprises
Suite 3204 (print media), WR Hambrecht + Co. (financial service provider); First Health (healthcare); Reader's
New York, NY 10022 Digest (publishing); OPENFIELD Solutions (retail industry technology provider)
Trustee (since 1994)
(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.
(3) Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the
Liberty 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. Theobald was appointed as Chairman of the Board effective December 10,
2003.
30
TRUSTEES AND OFFICERS (CONTINUED)
NAME, ADDRESS AND AGE,
POSITION WITH COLUMBIA FUNDS,
YEAR FIRST ELECTED OR
APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
-------------------------------------------------------------------------------------------------------------------
OFFICERS
CHRISTOPHER L. WILSON (age 47) Head of Mutual Funds for the Advisor since August 2004; President of the Columbia Funds since
One Financial Center October 2004 (formerly President and Chief Executive Officer, CDC IXIS Asset Management Services,
Boston, MA 02111 Inc. from September 1998 to August 2004).
President (since 2004)
J. KEVIN CONNAUGHTON (age 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December 2000; Vice
One Financial Center President of the Advisor since April 2003 (formerly President of the Columbia Funds from February
Boston, MA 02111 2004 to October 2004; Chief Accounting Officer and Controller of the Liberty Funds and of the
Treasurer (since 2000) Liberty All-Star Funds from February 1998 to October 2000); Treasurer of the Galaxy Funds since
September 2002; (formerly Treasurer from December 2002 to December 2004 and President from February
2004 to December 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of
Colonial Management Associates, Inc. from February 1998 to October 2000).
MARY JOAN HOENE (age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds and of the Liberty All-Star
40 West 57th Street Funds since August 2004 (formerly Partner, Carter, Ledyard & Milburn LLP from January 2001 to August
New York, NY 10019 2004; Counsel, Carter, Ledyard & Milburn LLP from November 1999 to December 2000; Vice President and
Chief Compliance Officer Counsel, Equitable Life Assurance Society of the United States Senior Vice President and from April
(since 2004) 1998 to November 1999).
MICHAEL G. CLARKE (age 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star Funds since October 2004
One Financial Center (formerly Controller of the Columbia Funds and of the Liberty All-Star Funds from May 2004 to
Boston, MA 02111 October 2004; Assistant Treasurer from June, 2002 to May 2004; Vice President, Product Strategy &
Chief Accounting Officer Development of the Liberty Funds Group from February 2001 to June 2002; Assistant Treasurer of the
(since 2004) Liberty Funds and of the Liberty All-Star Funds from August 1999 to February 2001; Audit Manager,
Deloitte & Touche LLP from May 1997 to August 1999).
JEFFREY R. COLEMAN (age 35) Controller of the Columbia Funds and of the Liberty All-Star Funds since October 2004 (formerly Vice
One Financial Center President of CDC IXIS Asset Management Services, Inc. and Deputy Treasurer of the CDC Nvest Funds
Boston, MA 02111 and Loomis Sayles Funds from February 2003 to September 2004; Assistant Vice President of CDC IXIS
Controller (since 2004) Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to
February 2003; Tax Manager of PFPC Inc. from November 1996 to August 2000).
R. SCOTT HENDERSON (age 45) Secretary of the Columbia Funds since December 2004 (formerly Of Counsel, Bingham McCutchen from
One Financial Center April 2001 to September 2004; Executive Director and General Counsel, Massachusetts Pension Reserves
Boston, MA 02111 Investment Management Board from September 1997 to March 2001).
Secretary (since 2004)
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32
TRANSFER AGENT
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial High Income Municipal Trust is:
EquiServe Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
The trust mails one shareholder report to each shareholder address. Shareholders
can order additional reports by calling 800-730-6001. In addition,
representatives at that number can provide shareholders information about the
trust.
Financial advisors who want additional information about the trust may speak to
a representative at 800-426-3750.
A description of the trust's proxy voting policies and procedures is available
(i) at www.columbiamanagement.com; (ii) on the Securities and Exchange
Commission's website at www.sec.gov, and (iii) without charge, upon request, by
calling 800-730-6001. Information regarding how the trust voted proxies relating
to portfolio securities during the 12-month period ended June 30, 2004 is
available from the SEC's website. Information regarding how the trust voted
proxies relating to portfolio securities is also available at
www.columbiamanagement.com.
The trust files file a complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The trust's Form
N-Q is available on the SEC's website at www.sec.gov and may be reviewed and
copied at the SECPublic Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
This report has been prepared for shareholders of Colonial High Income Municipal
Trust.
COLONIAL HIGHINCOME MUNICIPAL TRUST ANNUAL REPORT
120-02/740T-1104 (01/05) 05/3931
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.
(a) Aggregate Audit Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are approximately as follows:
2004 2003
$26,670 $28,460
Audit Fees include amounts related to the audit of the registrant's annual
financial statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Aggregate Audit-Related Fees billed by the principal accountant for
professional services rendered during the fiscal years ended November 30, 2004
and November 30, 2003 are approximately as follows:
2004 2003
$7,100 $7,400
Audit-Related Fees include amounts for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported in Audit Fees
above. In both fiscal years 2004 and 2003, Audit-Related Fees include certain
agreed-upon procedures performed for semi-annual shareholder reports.
(c) Aggregate Tax Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are approximately as follows:
2004 2003
$3,110 $3,071
Tax Fees in both fiscal years 2004 and 2003 consist primarily of the review of
annual tax returns and include amounts for professional services by the
principal accountant for tax compliance, tax advice and tax planning.
(d) Aggregate All Other Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are as follows:
2004 2003
$0 $0
All Other Fees include amounts for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) above.
None of the amounts described in paragraphs (a) through (d) above were approved
pursuant to the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X.
(e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
I. GENERAL OVERVIEW
The Audit Committee of the registrant has adopted a formal policy (the "Policy")
which sets forth the procedures and the conditions pursuant to which the Audit
Committee will pre-approve (i) all audit and non-audit (including audit related,
tax and all other) services
provided by the registrant's independent auditor to the registrant and
individual funds (collectively "Fund Services"), and (ii) all non-audit services
provided by the registrant's independent auditor to the funds' adviser or a
control affiliate of the adviser, that relate directly to the funds' operations
and financial reporting (collectively "Fund-related Adviser Services"). A
"control affiliate" is an entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the funds, and the
term "adviser" is deemed to exclude any unaffiliated sub-adviser whose role is
primarily portfolio management and is sub-contracted or overseen by another
investment adviser. The adviser and control affiliates are collectively referred
to as "Adviser Entities."
The Audit Committee uses a combination of specific (on a case-by-case basis as
potential services are contemplated) and general (pre-determined list of
permitted services) pre-approvals. Unless a type of service has received general
pre-approval, it will require specific pre-approval by the Audit Committee if it
is to be provided by the independent auditor.
The Policy does not delegate the Audit Committee's responsibilities to
pre-approve services performed by the independent auditor to management.
II. GENERAL PROCEDURES
On an annual basis, the Fund Treasurer and/or Director of Trustee Administration
shall submit to the Audit Committee a schedule of the types of Fund Services and
Fund-related Adviser Services that are subject to general pre-approval.
These schedules will provide a description of each type of service that is
subject to general pre-approval and, where possible, will provide estimated fees
for each instance of providing each service. This general pre-approval and
related fees (where provided) will generally cover a one-year period (for
example, from June 1 through May 31 of the following year). The Audit
Committee will review and approve the types of services and review the projected
fees for the next one-year period and may add to, or subtract from, the list of
general pre-approved services from time to time, based on subsequent
determinations. This approval acknowledges that the Audit Committee is in
agreement with the specific types of services that the independent auditor will
be permitted to perform. The fee amounts will be updated to the extent necessary
at other regularly scheduled meetings of the Audit Committee.
In addition to the fees for each individual service, the Audit Committee has the
authority to implement a fee cap on the aggregate amount of non-audit services
provided to an individual fund.
If, subsequent to general pre-approval, a fund, its investment adviser or a
control affiliate determines that it would like to engage the independent
auditor to perform a service that requires pre-approval and that is not included
in the general pre-approval list, the specific pre-approval procedure shall be
as follows:
o A brief written request shall be prepared by management detailing the
proposed engagement with explanation as to why the work is proposed to
be performed by the independent auditor;
o The request should be addressed to the Audit Committee with copies to
the Fund Treasurer and/or Director of Trustee Administration;
o The Fund Treasurer and/or Director of Trustee Administration will
arrange for a discussion of the service to be included on the agenda
for the next regularly scheduled Audit Committee meeting, when the
Committee will discuss the proposed engagement and approve or deny the
request.
o If the timing of the project is critical and the project needs to
commence before the next regularly scheduled meeting, the Chairperson
of the Audit Committee may approve or deny the request on behalf of
the Audit Committee, or, in the Chairperson's discretion, determine to
call a special meeting of the Audit Committee for the purpose of
considering the proposal. Should the Chairperson of the Audit
Committee be unavailable, any other member of the Audit Committee may
serve as an alternate for the purpose of approving or denying the
request. Discussion with the Chairperson (or alternate, if necessary)
will be arranged by the Fund Treasurer and/or Director of Trustee
Administration. The independent auditor will not commence any such
project unless and until specific approval has been given.
III. CERTAIN OTHER SERVICES PROVIDED TO ADVISER ENTITIES
The Audit Committee recognizes that there are cases where services proposed to
be provided by the independent auditor to the adviser or control affiliates are
not Fund-related Adviser Services within the meaning of the Policy, but
nonetheless may be relevant to the Audit Committee's ongoing evaluation of the
auditor's independence and objectivity with respect to its audit services to the
funds. As a result, in all cases where an Adviser Entity engages the independent
auditor to provide audit or non-audit services that are not Fund Services or
Fund-related Adviser Services, were not subject to pre-approval by the Audit
Committee, and the projected fees for any such engagement (or the aggregate of
all such engagements during the period covered by the Policy) exceeds a
pre-determined threshold established by the Audit Committee; the independent
auditor, Fund Treasurer and/or Director of Trustee Administration will notify
the Audit Committee not later than its next meeting. Such notification shall
include a general description of the services provided, the entity that is to be
the recipient of such services, the timing of the engagement, the entity's
reasons for selecting the independent auditor, and the projected fees. Such
information will allow the Audit Committee to consider whether non-audit
services provided to the adviser and Adviser Entities, which were not subject to
Audit Committee pre-approval, are compatible with maintaining the auditor's
independence with respect to the Funds.
IV. REPORTING TO THE AUDIT COMMITTEE
The Fund Treasurer or Director of Trustee Administration shall report to the
Audit Committee at each of its regular meetings regarding all Fund Services or
Fund-related Adviser Services initiated since the last such report was rendered,
including:
o A general description of the services, and
o Actual billed and projected fees, and
o The means by which such Fund Services or Fund-related Adviser Services
were pre-approved by the Audit Committee.
In addition, the independent auditor shall report to the Audit Committee
annually, and no more than 90 days prior to the filing of audit reports with the
SEC, all non-audit services provided to entities in the funds' "investment
company complex," as defined by SEC rules, that did not require pre-approval
under the Policy.
V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE
The Policy may be amended from time to time by the Audit Committee. Prompt
notice of any amendments will be provided to the independent auditor, Fund
Treasurer and Director of Trustee Administration. The Policy shall be reviewed
and approved at least annually by the Audit Committee.
*****
(e)(2) The percentage of services described in paragraphs (b) through (d) of
this Item approved pursuant to the "de minimis" exception under paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X during both fiscal years ended
November 30, 2004 and November 30, 2003 was zero.
(f) Not applicable.
(g) All non-audit fees billed by the registrant's accountant for services
rendered to the registrant for the fiscal years ended November 30, 2004 and
November 30, 2003 are disclosed in (b) through (d) of this Item.
During the fiscal years ended November 30, 2004 and November 30, 2003, there
were no Audit-Related Fees, Tax Fees or All Other Fees that were approved for
services to the investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser) and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant under
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of Audit-Related Fees, Tax Fees and All Other Fees required to be
approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were
approved under the "de minimis" exception during both fiscal years ended
November 30, 2004 and November 30, 2003 was zero.
(h) The registrant's Audit Committee of the Board of Directors has considered
whether the provision of non-audit services that were rendered to the
registrant's adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X, is compatible with maintaining the principal accountant's
independence. The Audit Committee determined that the provision of such services
is compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C.
78c(a)(58)(A)). Douglas A. Hacker, Thomas E. Stitzel, Anne-Lee Verville and
Richard L. Woolworth are each independent trustees and collectively constitute
the entire Audit Committee.
ITEM 6. SCHEDULE OF INVESTMENTS
The registrant's "Schedule I - Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form
N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
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. The
Advisor's Proxy Committee is composed of representatives of the Advisor's equity
investments, equity research, compliance, legal and fund administration
functions. In addition to the responsibilities described above, the Proxy
Committee has the responsibility to review, on a semi-annual basis, the
Advisor's proxy voting policies to ensure consistency with internal policies and
regulatory agency policies and to develop additional voting guidelines to assist
in the review of proxy proposals.
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. 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 retained 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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Registrant Purchases of Equity Securities*
(a) (b) (c) (d)
Total Number of Maximum Number of
Shares Purchased as Shares that May Yet
Period Total Number Average Price Part of Publically Be Purchased Under
of Shares Paid Per Share Announced Plans the Plans or Programs
------------------------------------------------------------------------------------------------------------------------------------
06/01/04 through 06/30/04 9,532 $6.13 9,532 N/A
07/01/04 through 07/31/04 9,270 $6.33 9,270 N/A
08/01/04 through 08/31/04 9,349 $6.35 9,349 N/A
09/01/04 through 09/30/04 0 $0.00 0 N/A
10/01/04 through 10/31/04 0 $0.00 0 N/A
11/01/04 through 11/30/04 8,519 $6.49 8,519 N/A
------------------------------------------------------------------------------------------------------------------------------------
Total 36,670 $6.32 36,670 N/A
------------------------------------------------------------------------------------------------------------------------------------
* Includes shares purchased by the Dividend Reinvestment Agent pursuant to
the Registrant's Dividend Reinvestment Plan.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have not been any material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of directors, since those
procedures were last disclosed in response to the requirements of Item
7(d)(2)(ii)(G) of Schedule 14A or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officers, based on their evaluation of the registrant's disclosure
controls and procedures as of a
date within 90 days of the filing of this report, have concluded that
such controls and procedures are adequately designed to ensure that
information required to be disclosed by the registrant in Form N-CSR
is accumulated and communicated to the registrant's management,
including the principal executive officer and principal financial
officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR
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/ Christopher L. Wilson
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Christopher L. Wilson, President
Date January 26, 2005
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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/ Christopher L. Wilson
--------------------------------------------------------
Christopher L. Wilson, President
Date January 26, 2005
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By (Signature and Title) /S/ J. Kevin Connaughton
--------------------------------------------------------
J. Kevin Connaughton, Treasurer
Date January 26, 2005
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