<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
COLONIAL
HIGH INCOME
MUNICIPAL TRUST
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1994
[COLONIAL MUTUAL FUNDS LOGO]
One Financial Center, Boston, Massachusetts 02111-2621
Printed on recycled paper
HI-02/620A-1294
<PAGE>
LETTER FROM THE PRESIDENT
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Dear Shareholder:
I am pleased to present Colonial High Income Municipal Trust's annual
report for the 12 months ended December 31, 1994. During the fiscal year your
Fund provided investors with a high level of tax-exempt income and maintained a
relatively stable net asset value through investments in rated and non-rated
municipal bonds.
Rated bonds are selected for their relative value and expected return.
These characteristics may have a positive impact on the Fund's net asset value.
Non-rated bonds, on the other hand, are perceived by investors as being somewhat
more volatile because they have not been rated by the major bond rating
agencies. These bonds may therefore provide superior yields to rated bonds of
similar quality.
<TABLE>
FUND PERFORMANCE (1/1/94 - 12/31/94)
<S> <C>
Distributions declared
per share(1) $ 0.61
- ----------------------------------------------------
Annualized distribution rate on
12/31/94, based on market price 8.73%
- ----------------------------------------------------
Taxable-equivalent distribution
rate on 12/31/94, based on
market price(2) 14.45%
- ----------------------------------------------------
12-month total return, based on
12/31/94 NAV, assuming
reinvestment of all distributions -0.75%
- ----------------------------------------------------
12-month total return, based on
12/31/94 market price, assuming
reinvestment of all distributions -9.83%
- ----------------------------------------------------
Net asset value per share
on 12/31/94 $ 7.96
- ----------------------------------------------------
Market price per share
on 12/31/94 $6.875
- ----------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
The U.S. economy expanded at a robust pace during 1994, as indicated by the
preliminary 12-month GDP of 4.0%. Although this was a welcome development after
several years of often lackadaisical growth, the new-found economic vigor also
rekindled the Federal Reserve Board's concerns about inflation. The Fed,
determined to keep a tight rein on inflation, raised short-term interest rates
six times during the fiscal year. As a result, yields moved higher across the
bond market.
As was the case for most fixed-income securities, prices for investment-grade
municipal bonds declined as interest rates increased. However, because of the
tax-exempt income these municipal securities provide, they remained more popular
with investors than their taxable counterparts. This, in turn, helped support
municipal bond prices.
SUPPLY AND DEMAND
As interest rates moved higher, the refinancing activity that had generated
record volumes of municipal securities in 1992 and 1993 subsided -- during 1994
new issue supply was down 44% nationally. Colonial management believes this
trend will continue in 1995 -- supply was expected to drop to $135 billion, down
from $291 billion in 1993. Low supply should be complemented by strong demand
for tax-exempt securities. The combination of coupon payments and maturing bonds
will generate more than $200 billion that will likely be reinvested in the
municipal market. This supply/demand dynamic should have a favorable impact on
prices.
[John A. McNeice, Jr./President Photo]
INVESTMENT STRATEGY
On December 31, the Fund owned 141 individual issues in 12 public sectors.
Almost 70% of the securities in the portfolio were non-rated, and over 30% were
rated. Among these rated bonds were some higher-yielding, lower-rated
securities.
The Fund held significant investments in nursing homes to take advantage of
positive demographic trends in that sector. The Fund also benefited from its
holdings in Massachusetts, a state currently in the midst of an economic
recovery. Healthcare has not done quite as well as some other sectors of the
municipal market. Although this performance is the result of a combination of
factors, it primarily reflects the nonresolution of the national health
insurance debate. We monitor this sector closely, and future acquisitions will
be carefully analyzed for potential problems in the payment of principal and
interest.
Management believes the Fund should continue to perform well in the months
ahead. As we move further into the economic cycle, however, individual sector
weightings may be altered to place additional emphasis on interest rate
sensitive securities.
Sincerely,
/s/ John A. McNeice, Jr.
- ------------------------
John A. McNeice, Jr.
President
February 10, 1995
(1) A portion of the Fund's income may be subject to the alternative minimum
tax. (2) Taxable-equivalent distribution rate is based on the maximum federal
income tax rate of 39.6%.
<PAGE>
INVESTMENT PORTFOLIO (IN THOUSANDS) DECEMBER 31, 1994
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<TABLE>
<CAPTION>
MUNICIPAL BONDS - 98.5% PAR VALUE
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<S> <C> <C>
CONSUMER PRODUCTS - 2.0%
IA Ellsworth Industrial Development,
Bagel Works Project, Series 1990,
10.500% 01/15/12. . . . . . . . . . . $ 960 $ 868
LA Port New Orleans Industrial
Development, Continental Grain Co.,
Series 1993,
7.500% 07/01/13. . . . . . . . . . . 1,500 1,404
MA Industrial Finance Authority,
House of Bianchi, Inc.,
8.750% 06/01/18. . . . . . . . . . . 350 335
TN McKenzie Individual Development
Board,
10.500% 05/01/16. . . . . . . . . . . 2,210 2,204
--------
4,811
- -------------------------------------------------------------------------------
EDUCATION - 1.7%
AZ Apache County School District,
Number 010 Round Valley,
Project of 1987, Series 1990-C,
9.875% 07/01/05. . . . . . . . . . . 2,000 2,000
NY State Dormitory Authority,
City University Consolidated Bonds,
Series 1993-F,
5.000% 07/01/20. . . . . . . . . . . 2,900 2,146
--------
4,146
- -------------------------------------------------------------------------------
ELECTRIC - 2.1%
FL Martin County, Indiantown
Development Authority,
7.875% 12/15/25. . . . . . . . . . . 1,000 1,006
NC Municipal Power Agency,
Catawba Electric Utilities System,
Series 1993,
5.000% 01/01/15. . . . . . . . . . . 5,000 3,825
NY State Energy Research and
Development Authority, Electrical
Facilities, Long Island Lighting Co.,
Series 1992-C,
6.900% 08/01/22. . . . . . . . . . . 500 437
--------
5,268
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GENERAL OBLIGATIONS - 0.3%
PR Puerto Rico Commonwealth,
Series 1993,
3.260% 07/01/08(a) . . . . . . . . . 1,920(b) 706
- -------------------------------------------------------------------------------
HOSPITALS & HEALTH CARE - 13.4%
AL Special Care Facilities Authority,
Montgomery Health Care, Series 1989,
11.000% 10/01/19. . . . . . . . . . . 3,375 3,299
DE State Economic Development,
Riverside Hospital, Series 1992-A,
9.500% 01/01/22. . . . . . . . . . . 910 979
DE Wilmington, Riverside Hospital,
Series 1988-A,
10.000% 10/01/03. . . . . . . . . . . 250 296
GA Clayton Hospital Authority,
The Woodlands Foundation, Inc.,
Series 1991-A,
9.800% 05/01/21(c) . . . . . . . . . 2,500 1,625
GA Savannah Hospital Authority,
Candler Hospital, Series 1992,
7.000% 01/01/11. . . . . . . . . . . 1,000 928
IA Des Moines Hospital, Des Moines
General Hospital, Series 1983,
10.125% 12/01/11. . . . . . . . . . . 1,890 1,892
IL Health Facilities Authority:
Edgewater Medical Center, Series A,
9.250% 07/01/24. . . . . . . . . . . 3,000 2,828
Hinsdale Hospital, Series 1990-C,
9.500% 11/15/19. . . . . . . . . . . 1,255 1,509
MA State Health and Educational
Facilities Authority, St. Joseph's
Hospital, Series C,
9.500% 10/01/20. . . . . . . . . . . 3,855 4,525
MI State Hospital Finance Authority:
Detroit Osteopathic Hospital,
Series 1987-A,
7.500% 11/01/10. . . . . . . . . . . 2,235 2,062
Saratoga Community Hospital,
Series 1992,
8.750% 06/01/10. . . . . . . . . . . 2,650 2,716
MN St. Louis Park Health Care Facilities,
Park Nicollet Medical Center,
Series 1990-A,
9.250% 01/01/20. . . . . . . . . . . 1,500 1,749
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22. . . . . . . . . . . 2,250 2,534
MS Lowndes County Hospital,
Golden Triangle Regional Medical,
Series 1990,
8.500% 02/01/10. . . . . . . . . . . 250 259
NC Lincoln County Hospital,
9.000% 05/01/07. . . . . . . . . . . 550 580
</TABLE>
See notes to investment portfolio.
2
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
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<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
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<S> <C> <C>
HOSPITALS & HEALTH CARE - CONT.
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/27 . . . . . . . . . . . . $ 1,000 $ 880
TX Tarrant County, Health Facilities
Development Corp.,
10.125% 04/01/21 . . . . . . . . . . . . 1,600 1,628
VT Educational & Health Buildings
Financing Agency,
7.750% 01/01/13 . . . . . . . . . . . . 1,185 1,077
WA Washington State Health Care
Facility, Grays Harbor Community
Hospital, Series 1993:
7.200% 07/01/03 . . . . . . . . . . . . 320 298
8.025% 07/01/20 . . . . . . . . . . . . 1,480 1,400
--------
33,064
- -------------------------------------------------------------------------------
HOUSING - 22.8%
FL Clearwater Housing Authority,
Hampton Apartments,
8.250% 05/01/24 . . . . . . . . . . . . 2,500 2,516
FL Dade County Housing Finance
Authority, Multi-family, Arena Square,
Series 1989,
10.250% 05/01/19(c) . . . . . . . . . . 3,000 450
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 . . . . . . . . . . . . 3,000 3,004
FL Housing Finance Agency,
10.000% 10/01/20 . . . . . . . . . . . . 915 891
FL Housing Finance Authority,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19 . . . . . . . . . . . . 1,000 962
FL Palm Beach County Housing
Development, Multi-family Housing,
Riviera Beach, Series 1988-A,
9.750% 07/15/18(c)(d) . . . . . . . . . 1,530 535
FL Walton County, Industrial
Development, Villa Bay Gardens,
Series 1986,
10.500% 01/01/17(e) . . . . . . . . . . 1,500 525
FL West Palm Beach Housing Inc.,
Multi-family Housing, Cypress Run,
10.500% 03/15/19(c)(d) . . . . . . . . . 3,000 1,050
GA Augusta Housing Authority
Mortgage, Mountain Ridge Holdings II,
Series A,
8.960% 09/01/24 . . . . . . . . . . . . 1,880 1,821
LA Housing Finance Agency, Residual
Lien Mortgage, stepped coupon,
Series 1992,
(7.500% 03/01/95) 09/01/13(f). . . . . . 1,000 969
MA Health and Educational Facilities
Corp., Independent Living Bonds,
Series 1993-A,
8.100% 07/01/18 . . . . . . . . . . . . 750 689
MN Lakeville Multi-family Housing,
Southfork Apartments Project:
Series 1989-A,
9.875% 02/01/20 . . . . . . . . . . . . 2,570 2,483
Series 1989-B,
10.000% 02/01/20(g). . . . . . . . . . . 1,150 1,684
MN Roseville Elderly Care Facility,
Care Institute, Inc., Series 1993,
7.750% 11/01/23 . . . . . . . . . . . . 1,740 1,570
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen Project,
9.250% 06/01/22 . . . . . . . . . . . . 1,105 1,054
MN White Bear Lake Multi-family Housing
Revenue, Birch Lake Townhomes Project:
Series 1989-A,
10.250% 07/15/19 . . . . . . . . . . . . 2,200 2,238
Series 1989-B,
10.000% 07/15/19(g). . . . . . . . . . . 800 1,109
NC Durham Urban Development Authority,
Durham Hosiery Mill Project,
7.500% 08/01/29 . . . . . . . . . . . . 1,595 1,623
NC Eastern Carolina Regional Housing,
Multi-family Mortgage, New Apartments
Jacksonville,
8.250% 09/01/14 . . . . . . . . . . . . 2,000 1,932
NE Investment Finance Authority,
Single-family Mortgage,
Series 1990-B,
10.660% 03/15/22 . . . . . . . . . . . . 2,000 2,102
NY Nyack Housing Assistance
Corp., Plaza Apartments,
7.375% 06/01/21 . . . . . . . . . . . . 469 438
NY Yorktown Housing Corp.,
Beaveridge Apartments,
7.375% 06/01/21 . . . . . . . . . . . . 487 477
OH Housing Finance Agency,
Single-family Mortgage Revenue,
RIB (variable rate), Series B-4,
9.213% 03/31/31 . . . . . . . . . . . . 1,030 986
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
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<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23. . . . . . . . . . . . $ 870 $ 801
PA Philadelphia Redevelopment
Authority, Multi-family Housing,
School Lane House Apartments,
Series 1988, stepped coupon,
9.000% 10/01/09(c)(h). . . . . . . . . 2,000 600
Pass Through Certificates,
Series 1993-A,
8.500% 12/01/16(i) . . . . . . . . . . 5,098 4,983
TN Memphis Center City Finance Corp.,
Multi-family Housing Board, Riverset
Apartments-Phase II Project,
Series 1989-A,
9.500% 10/01/19. . . . . . . . . . . . 3,300 3,193
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19. . . . . . . . . . . . 960 1,026
Series 1992-C,
9.750% 08/01/19. . . . . . . . . . . . 935 1,005
TX Bell County Health Facility,
Elderly Care,
9.000% 11/01/24. . . . . . . . . . . . 1,800 1,809
TX Bexar County Housing Finance Corp.,
GNMA Collateralized Mortgage,
Series 1989-A,
8.200% 04/01/22. . . . . . . . . . . . 7,390 7,528
TX Galveston Pass Through Certificates,
Health Facilities Center,
8.000% 08/01/23. . . . . . . . . . . . 1,000 959
TX Harris County Housing Finance Corp.,
Single-family, Series 1987,
8.875% 12/01/17. . . . . . . . . . . . 680 692
VA Alexandria Redevelopment & Housing,
Multi-family Housing, Courthouse
Commons Apartments, Series 1990 A,
10.000% 01/01/21. . . . . . . . . . . . 1,500 1,457
VA Roanoke Redevelopment & Housing
Authority, First Mortgage, Mountain Ridge,
9.250% 11/01/22. . . . . . . . . . . . 1,000 975
--------
56,136
- -------------------------------------------------------------------------------
IN-SUBSTANCE DEFEASED (J) - 1.2%
AL Marshall County Health Care Authority
Hospital, Guntersville-Arab Medical
Center, Series 1988,
10.250% 10/01/13. . . . . . . . . . . . $ 2,000 $ 2,270
IL Health Facilities Authority,
Hinsdale Hospital, Series 1990-C,
9.500% 11/15/19. . . . . . . . . . . . 725 787
--------
3,057
- -------------------------------------------------------------------------------
NURSING HOMES - 24.0%
AZ Tucson Industrial Development
Authority, Villa Maria Care Center,
10.125% 11/01/21. . . . . . . . . . . . 500 475
CO Health Care Facilities Authority:
American Housing Foundation l,
Series 1990,
10.250% 12/01/20. . . . . . . . . . . . 1,500 1,517
Denver Health Care, Inc.,
10.500% 05/01/19(c) . . . . . . . . . . 1,400 1,260
Pioneer Health Care, Series 1989,
10.500% 05/01/19. . . . . . . . . . . . 2,000 1,800
FL Flagler County Industrial,
Redevelopment Authority, South
Florida Properties, Series 1988,
10.500% 12/01/18. . . . . . . . . . . . 2,480 2,480
FL Gadsden County Industrial
Development, Florida Housing
Properties, Inc., Series 1988 A,
10.450% 10/01/18. . . . . . . . . . . . 1,970 1,999
FL Jacksonville Industrial Development,
Beverly Enterprises,
9.750% 10/01/11. . . . . . . . . . . . 970 1,061
FL Leon County Industrial Development,
Series 1985,
9.800% 06/01/11. . . . . . . . . . . . 830 905
FL Volusia County Industrial
Development Authority, Beverly
Enterprises, Series 1987,
9.800% 12/01/07. . . . . . . . . . . . 910 959
IA Finance Authority Health Care Facility,
Mercy Health Initiatives, Series 1989,
9.950% 07/01/19. . . . . . . . . . . . 1,900 1,862
IL Champaign First Mortgage,
Hoosier Care Inc., Series 1989-A,
9.750% 08/01/19. . . . . . . . . . . . 1,500 1,526
</TABLE>
See notes to investment portfolio.
4
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
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<S> <C> <C>
NURSING HOMES - CONT.
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/01/17. . . . . . . . . . . . $ 1,500 $ 1,425
IN Michigan City Health Facilities,
Metropolitan Health Foundation
Inc., Project,
10.000% 11/01/22. . . . . . . . . . . . 3,085 3,177
MA Boston Nursing Home, St. Joseph's
Project,
10.000% 01/01/20(k) . . . . . . . . . . 990 1,062
MA Industrial Finance Agency,
Health Care Revenue Bonds:
American Health Foundation Inc.,
Series 1989,
10.125% 03/01/19. . . . . . . . . . . . 2,060 2,070
Mary Ann Morse Nursing Home, 1991-I,
10.000% 01/01/21. . . . . . . . . . . . 1,100 1,350
MN Brooklyn Park Industrial Development,
TL Systems Corp., Series 1991,
10.000% 09/01/16. . . . . . . . . . . . 805 778
MO Grove Industrial Development Authority,
First Mortgage Health Care Facility,
Heritage Manor, Series 1988,
10.250% 11/01/13. . . . . . . . . . . . 1,840 1,886
MO St. Louis County Industrial
Development Authority,
10.250% 12/01/16. . . . . . . . . . . . 1,855 1,855
MO University City Industrial Development
Authority Health Facilities, University
Forest Nursing Care, Series 1989-A,
11.000% 03/01/19. . . . . . . . . . . . 3,060 3,129
NJ Economic Development Authority,
Geriatric and Medical Service Inc.,
Series B,
10.500% 05/01/20. . . . . . . . . . . . 2,000 2,155
NM Bloomfield First Mortgage Medical
Facilities, Pilot Development Northwest,
Series 1989,
10.125% 06/01/14. . . . . . . . . . . . 2,665 2,265
NM Clovis Industrial,
10.750% 04/01/19. . . . . . . . . . . . 2,420 2,463
NM Espanola, First Mortgage Medical
Facilities, Pilot Development Southwest,
Series 1988,
10.250% 05/01/13. . . . . . . . . . . . 1,865 1,585
NM Silver City First Leasehold Mortgage,
Medical Facilities Development,
Series 1988,
10.250% 11/01/13. . . . . . . . . . . . 970 805
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19. . . . . . . . . . . . 2,800 2,814
PA Philadelphia Authority for Industrial
Development, First Mortgage
Nursing Home, Series 1988,
10.250% 11/01/18. . . . . . . . . . . . 1,485 1,490
PA Washington County Industrial
Development Authority, Central
States, Series 1989,
10.250% 11/01/19. . . . . . . . . . . . 2,000 1,940
TN Metropolitan Government, Nashville
& Davidson Counties, Health &
Education Facilities, Central States,
Series 1989
10.250% 11/01/19. . . . . . . . . . . . 1,810 1,756
TX Bexar County Health Facilities
Development, Heartway Corp.,
Series 1989-A-1,
10.250% 03/01/19. . . . . . . . . . . . 1,925 2,019
TX Whitehouse Health Facilities
Development Corp., Oak Brook Health
Care Center, Series 1989,
10.000% 12/01/19. . . . . . . . . . . . 1,845 1,847
WI State Health and Educational Facilities,
Metro Health Foundation Inc.,
10.000% 11/01/22. . . . . . . . . . . . 2,775 2,837
WV Lewis County, Crestview Manor,
Series 1989 A,
10.375% 08/01/19. . . . . . . . . . . . 2,500 2,531
--------
59,083
- -------------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 2.5%
LA St. Charles Parish Pollution Control,
7.350% 11/01/22. . . . . . . . . . . . 3,000 2,910
OH Lake County Economic Development,
North Madison Properties, Series 1993,
8.819% 09/01/11. . . . . . . . . . . . 765 749
PA Beaver County Industrial Development
Pollution Control, Beaver Valley,
Series 1989-A,
7.750% 09/01/24. . . . . . . . . . . . 2,500 2,456
--------
6,115
- -------------------------------------------------------------------------------
PUBLIC FACILITY & IMPROVEMENT - 10.4%
CA Carson Improvement, Series 1992,
7.375% 09/02/22. . . . . . . . . . . . 200 199
</TABLE>
See notes to investment portfolio.
5
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITY & IMPROVEMENT - CONT.
CO Denver City and County:
Series 1992-C,
6.125% 11/15/25. . . . . . . . . . . . $ 5,120 $ 3,949
Series 1992-A,
6.875% 10/01/32. . . . . . . . . . . . 1,645 1,411
CO Mesa County Industrial Development,
Joy Technologies, Inc., Series 1992,
8.500% 09/15/06. . . . . . . . . . . . 1,000 1,015
IL Development Finance Authority,
City of Marion Project, Series 1991,
9.625% 09/15/21. . . . . . . . . . . . 2,500 2,369
IL Hennepin Individual Development,
Methchem Corp., Series 1989,
10.250% 01/01/05(c) . . . . . . . . . . 2,650 371
MD Baltimore Economic Development,
Park Charles Project, Series 1986,
8.000% 01/01/10. . . . . . . . . . . . 990 971
MI Strategic Great Lakes Pulp and
Fibre Project,
10.250% 12/01/16. . . . . . . . . . . . 5,000 4,988
MN Burnsville Commercial Development,
Holiday Inn,
10.600% 06/01/06. . . . . . . . . . . . 2,500 2,519
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12. . . . . . . . . . . . 1,140 1,206
OH Cuyahoga County Industrial
Development Authority, Joy
Technologies, Inc.,
8.750% 09/15/07. . . . . . . . . . . . 550 567
TX Dallas-Fort Worth International
Airport, American Airlines Inc.,
Series 1990,
7.500% 11/01/25. . . . . . . . . . . . 2,000 1,890
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10. . . . . . . . . . . . 1,915 2,099
VI Virgin Islands Public Financing,
Series 1992-A,
7.250% 10/01/18. . . . . . . . . . . . 2,000 1,983
--------
25,537
- -------------------------------------------------------------------------------
TRANSPORTATION - 10.6%
CA San Joaquin Hills Transcorridor
Agency, Senior Toll Road,
Current Interest Bonds, Series 1993:
(l) 01/01/23. . . . . . . . . . . . 14,500 1,341
5.000% 01/01/33. . . . . . . . . . . . 6,130 3,824
6.750% 01/01/32. . . . . . . . . . . . 1,500 1,241
7.000% 01/01/30. . . . . . . . . . . . 865 742
CO DENVER CITY AND COUNTY AIRPORT,
Series 1992 B,
7.250% 11/15/23. . . . . . . . . . . . 2,855 2,566
IN Airport Authority,
7.100% 01/15/17. . . . . . . . . . . . 2,000 1,903
MA Industrial Finance Agency,
Tunnel Revenue Bonds,
Series 1990,
9.000% 10/01/20. . . . . . . . . . . . 2,410 2,506
NY Metropolitan Transportation Authority,
Commuter Facilities Board, Series 7
Project,
5.625% 07/01/16. . . . . . . . . . . . 7,000 5,758
NY New York City Industrial Development
Agency, American Airlines Inc.,
6.900% 08/01/24. . . . . . . . . . . . 2,000 1,848
NY Port Authority of New York and
New Jersey, Consolidated Bonds,
Series 65,
7.000% 09/01/24. . . . . . . . . . . . 1,500 1,541
PR Commonwealth of Puerto Rico,
Highway & Transportation Authority,
3.515% 07/01/09(a) . . . . . . . . . . 640(b) 248
TX Harris County Industrial Development
Corp., Continental Airlines,
7.950% 07/01/19. . . . . . . . . . . . 2,800 2,538
--------
26,056
- -------------------------------------------------------------------------------
WASTE DISPOSAL - 6.2%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper Inc., Series 1993,
7.500% 01/01/26. . . . . . . . . . . . 5,000 4,688
IL Development Financial Authority,
Solid Waste Disposal, Ford Heights
Waste Project, Series 1994,
7.875% 04/01/11. . . . . . . . . . . . 2,500 2,394
IN Hammond Sewer and Solid Waste,
8.000% 12/01/24. . . . . . . . . . . . 2,000 2,008
MA Industrial Finance Agency:
Peabody Landfill,
9.000% 11/01/05. . . . . . . . . . . . 1,260 1,260
Refusetech Inc., Series 1993-A,
6.300% 07/01/05. . . . . . . . . . . . 500 482
MI State Strategic Fund,
Blue Water Fiber Project, Series 1994,
8.000% 01/01/12. . . . . . . . . . . . 2,500 2,350
NJ Economic Development Authority,
Hills Development Company-1987,
Series 1988,
10.500% 09/01/08. . . . . . . . . . . . 2,000 2,000
--------
15,182
- -------------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
6
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
WATER & SEWER - 1.3%
LA Public Facility Belmont Water
Authority,
14.000% 03/15/24. . . . . . . . . . . . $ 820 $ 797
MA Industrial Finance Agency, Septage
Treatment Facility Bonds, Environmental
Service Project, Series 1994A,
8.750% 11/01/21. . . . . . . . . . . . 1,000 939
MS Five Lakes Utility District,
8.250% 07/15/24. . . . . . . . . . . . 500 471
VI Virgin Islands Water and Power
Authority Electric Systems,
Series 1991-A,
7.400% 07/01/11. . . . . . . . . . . . 1,000 1,005
--------
3,212
- -------------------------------------------------------------------------------
Total investments (cost $261,167) (m) 242,373
- -------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 1.5% 3,594
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $245,967
- -------------------------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) This security is a variable-rate instrument; on July 1, 1998, it will
change to a fixed rate instrument. Interest is accrued daily on the
notional amount and the applicable interest rates.
(b) Notional amount.
(c) Non-income producing.
(d) Subsequent to December 31, 1994, this issuer filed under Chapter 11 of the
Federal Bankruptcy Code.
(e) This issuer is in default of certain debt covenants. Income is not being
accrued.
(f) Currently zero coupon. Shown parenthetically is the interest rate to be
paid and the date the Fund will begin accruing this rate.
(g) Accrued interest accumulates in the value of the security and is payable
at redemption.
(h) The interest rate shown is the average rate over the life of the
security.
(i) This is a restricted security, which was acquired on August 27, 1993, at a
cost of $5,203. This security represents 2.0% of the Fund's net assets
at December 31, 1994.
(j) The Fund has been informed that the issuer has placed direct obligations
of the U.S. Government in an irrevocable Trust, solely for the payment of
the interest and principal.
(k) This is a restricted security, which was acquired on June 1, 1990, at a
cost of $997. This security represents 0.4% of the Fund's net assets at
December 31, 1994.
(l) Zero coupon bond.
(m) Cost for federal income tax purposes is the same.
</TABLE>
<TABLE>
<CAPTION>
ACRONYM NAME
------- -------------------------------
<S> <C>
RIB Residual Interest Bonds
</TABLE>
See notes to financial statements.
7
<PAGE>
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
December 31, 1994
(in thousands except for per share amount)
-----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $261,167)............................. $242,373
Receivable for:
Interest........................................... $5,670
Investments sold................................... 762
Other............................................... 3 6,435
------ --------
Total assets.............................................. 248,808
LIABILITIES
Payable for distributions........................... 1,546
Payable to custodian bank........................... 1,217
Accrued:
Deferred Trustees fees............................. 26
Other............................................... 52
------
Total liabilities......................................... 2,841
--------
NET ASSETS at value for 30,919
shares of beneficial interest outstanding....................... $245,967
========
Net asset value per share........................................ $7.96
========
COMPOSITION OF NET ASSETS
Capital paid in................................................. $286,699
Undistributed net investment income............................. 382
Accumulated net realized loss................................... (22,320)
Net unrealized depreciation..................................... (18,794)
--------
$245,967
========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
Year ended December 31, 1994
(in thousands)
-----------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest...................................................... $ 21,703
EXPENSES
Management fee....................................... $2,054
Transfer agent....................................... 90
Bookkeeping fee...................................... 61
Trustees fees........................................ 20
Custodian fee........................................ 15
Audit fee............................................ 45
Legal fee............................................ 254
Reports to shareholders.............................. 11
Other................................................ 100
------
2,650
--------
Net investment income................................. 19,053
--------
NET REALIZED AND UNREALIZED LOSS
ON PORTFOLIO POSITIONS
Net realized loss............................................. (4,036)
Net unrealized depreciation
during the period............................................ (18,320)
--------
Net loss.............................................. (22,356)
Net decrease in net assets from --------
operations................................................... $ (3,303)
========
</TABLE>
See notes to financial statements.
8
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
- ------------------------------------------------------------------------------
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------
<CAPTION>
Year ended
December 31
--------------------------
1994 1993
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income................................................. $ 19,053 $ 20,681
Net realized loss..................................................... (4,036) (5,973)
Net unrealized appreciation (depreciation)............................ (18,320) 2,601
-------- --------
Net increase (decrease) from operations....................... (3,303) 17,309
Distributions
From net investment income............................................ (18,860) (20,807)
-------- --------
(22,163) (3,498)
Fund share transactions
Value of distributions reinvested..................................... 1,780
-------- --------
Total decrease............................................. (22,163) (1,718)
NET ASSETS
Beginning of period................................................... 268,130 269,848
-------- --------
End of period (including undistributed net
investment income of $382 and $187, respectively).................... $245,967 $268,130
======== ========
NUMBER OF FUND SHARES
Issued for distributions reinvested................................... 201
Outstanding at
Beginning of period................................................. 30,919 30,718
-------- --------
End of period....................................................... 30,919 30,919
======== ========
</TABLE>
See notes to financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
Colonial High Income Municipal Trust (the Fund), is a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as a
non-diversified, closed-end, management investment company. The Fund may issue
an unlimited number of shares. The following significant accounting policies are
consistently followed by the Fund in the preparation of its financial statements
and conform to generally accepted accounting principles.
- --------------------------------------------------------------------------------
SECURITY VALUATION AND TRANSACTIONS
Debt securities generally are valued by a pricing service based upon market
transactions for normal institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased or sold.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This
may increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
Consistent with the Fund's policy to qualify as a regulated investment
company and to distribute all of its taxable and tax-exempt income, no federal
income tax has been accrued.
- --------------------------------------------------------------------------------
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM
Interest income is recorded on the accrual basis. Original issue discount is
accreted to interest income over the life of a security with a corresponding
increase in the cost basis; market discount is not accreted. Premium is
amortized against interest income with a corresponding decrease in the cost
basis.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-date.
The amount and character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Colonial Management Associates, Inc. (the Adviser) is the investment adviser
of the Fund and furnishes accounting and other services and office facilities
for a monthly fee equal to 0.80% annually of the Fund's average weekly net
assets.
- --------------------------------------------------------------------------------
BOOKKEEPING FEE
The Adviser provides bookkeeping and pricing services for $18,000 per year
plus 0.0233% of the Fund's average weekly net assets over $50 million.
- --------------------------------------------------------------------------------
OTHER
The Fund pays no compensation to its officers, all of whom are employees of
the Adviser.
The Fund'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 Fund's assets.
- --------------------------------------------------------------------------------
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION
During the year ended December 31, 1994, purchases and sales of investments,
other than short-term obligations, were $50,180,518 and $50,184,354,
respectively.
<TABLE>
Unrealized appreciation (depreciation) at December 31, 1994, based on cost
of investments for both financial statement and federal income tax purposes was:
<S> <C>
Gross unrealized appreciation............... $ 4,752,813
Gross unrealized depreciation............... (23,546,868)
------------
Net unrealized depreciation............... $(18,794,055)
============
</TABLE>
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS
<TABLE>
At December 31, 1994, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<CAPTION>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------- ------------
<S> <C>
1998................ 3,066,000
1999................ 3,140,000
2000................ 3,157,000
2001................ 5,578,000
2002................ 6,551,000
-----------
$21,492,000
===========
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized
gains, it is unlikely that such gains would be distributed since they may be
taxable to shareholders as ordinary income.
- --------------------------------------------------------------------------------
OTHER
There are certain risks arising from geographic concentration in any state.
Certain revenue or tax related events in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
- --------------------------------------------------------------------------------
11
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout each period.
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of period.................. $ 8.670 $ 8.780 $ 8.910 $ 9.000 $ 9.350
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ................................ 0.616 0.671 0.694 0.742 0.784
Net realized and unrealized loss
on investments....................................... (0.716) (0.106) (0.140) (0.074) (0.276)
-------- -------- -------- -------- --------
Total from investment operations.................... (0.100) 0.565 0.554 0.668 0.508
-------- -------- -------- -------- --------
Less distributions declared to shareholders:
From net investment income ........................... (0.610) (0.675) (0.684) (0.758) (0.827)
In excess of net investment income ................... -- -- -- -- (0.031)
-------- -------- -------- -------- --------
Total distributions declared to shareholders........ (0.610) (0.675) (0.684) (0.758) (0.858)
-------- -------- -------- -------- --------
Net asset value - End of period........................ $ 7.960 $ 8.670 $ 8.780 $ 8.910 $ 9.000
======== ======== ======== ======== ========
Total return based on net asset value (a).............. (0.75)% 6.57% 6.61% 7.71% 5.65%
======== ======== ======== ======== ========
Total return based on market value .................... (9.83)% 7.96% 3.51% 5.76% 3.90%
======== ======== ======== ======== ========
Ratios to average net assets:
Expenses ............................................. 1.03% 0.97% 0.96% 0.97% 0.96%
Net investment income ................................ 7.44% 7.58% 7.86% 8.30% 8.56%
Portfolio turnover..................................... 20% 29% 15% 17% 23%
Net assets at end of period (000)...................... $245,967 $268,130 $269,848 $273,207 $273,864
<FN>
(a) Total return at net asset value assuming all distributions reinvested and no initial sales charge.
</TABLE>
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
All of the distributions will be treated as exempt income for federal income tax
purposes.
- --------------------------------------------------------------------------------
12
<PAGE>
<TABLE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------
DECEMBER 31, 1994 SEPTEMBER 30, 1994 JUNE 30, 1994 MARCH 31, 1994
------------------ ------------------ ----------------- ------------------
(000) PER SHARE (000) PER SHARE (000) PER SHARE (000) PER SHARE
------- --------- ------- --------- ------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income............. $ 5,404 $ 0.175 $ 5,298 $ 0.171 $ 5,516 $ 0.178 $ 5,485 $ 0.177
Net investment income............... $ 4,727 $ 0.153 $ 4,645 $ 0.150 $ 4,865 $ 0.157 $ 4,816 $ 0.156
Net realized and
unrealized loss.................. $(6,551) $(0.211) $(1,950) $(0.062) $(2,124) $(0.065) $(11,731) $(0.378)
Market value per share:
High........................... $ 6.375 $ 6.625 $ 8.375 $ 8.750
Low............................ $ 5.500 $ 5.750 $ 7.625 $ 7.875
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------
DECEMBER 31, 1993 SEPTEMBER 30, 1993 JUNE 30, 1993 MARCH 31, 1993
------------------ ------------------ ----------------- ------------------
(000) PER SHARE (000) PER SHARE (000) PER SHARE (000) PER SHARE
------- --------- ------- --------- ------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income............ $ 5,658 $ 0.184 $ 5,748 $ 0.186 $ 5,970 $ 0.194 $ 5,947 $ 0.193
Net investment income.............. $ 5,036 $ 0.163 $ 5,065 $ 0.164 $ 5,287 $ 0.172 $ 5,293 $ 0.172
Net realized and
unrealized gain (loss).......... $(6,778) $(0.219) $ 1,088 $ 0.035 $ 148 $ 0.006 $ 2,170 $ 0.072
Market value per share:
High.......................... $ 9.375 $ 9.500 $ 9.125 $ 9.375
Low........................... $ 8.125 $ 9.000 $ 8.750 $ 8.875
</TABLE>
At December 31, 1994, there were 5,036 shareholder accounts.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND TRUSTEES 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 at December 31, 1994, the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
the financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund'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 generally accepted
auditing standards 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 portfolio positions at December 31, 1994
by correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 10, 1995
14
<PAGE>
DIVIDEND REINVESTMENT PLAN (UNAUDITED)
- --------------------------------------------------------------------------------
The Trust generally distributes net investment income monthly and capital
gains annually. Under the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders may elect to have all distributions reinvested automatically in
additional shares of the Trust. Shareholders not making such election will
receive all distributions in cash, paid by check and mailed directly to the
recordholder, from the dividend paying agent.
Shareholders participating in the Plan will receive distributions in the form
of shares of the Trust. If the market price of the shares on the distribution
payment date is equal to or greater than the net asset value, Plan participants
will be issued shares at the higher of net asset value or 95% of the market
price. In circumstances in which the net asset value of Trust shares is more
than 5% below their market price, Plan participants will be issued shares
through the Plan at a price exceeding net asset value. If net asset value
exceeds the market price, or the distribution is payable only in cash, shares
will be bought in the open market for the accounts of Plan participants. If the
market price surpasses the net asset value before such purchasing is completed,
the average per share price may exceed the net asset value of the shares,
resulting in the acquisition of fewer shares than if the distribution had been
in newly-issued shares.
All Plan accounts receive monthly written confirmations of all transactions.
Shares purchased under the Plan are ordinarily held in uncertificated form,
although participants have the right to receive certificates for whole shares
held in their account.
Each shareholder's proxy includes shares purchased pursuant to the Plan. The
automatic reinvestment of distributions does not relieve participants of any
income tax payable on the distributions. Participants may recognize capital
gains or ordinary income for federal income tax purposes in an amount equal to
the market value of shares received under the Plan.
Fees and expenses of the Plan, other than brokerage charges, will be paid by
the Trust. No brokerage charges are incurred on shares issued directly by the
Trust. Participants will bear a pro-rata share of brokerage charges incurred on
open market purchases.
A Plan participant may terminate his or her participation by written notice
to the Plan administrator. The Plan may be amended or terminated on 90 days
written notice to the Plan participants. Upon withdrawal by any participant or
any termination of the Plan, certificates for whole shares will be issued and
cash payments will be made for any fractional shares. All correspondence
concerning the Plan, including requests for information, should be directed to
The First National Bank of Boston, the Trust's dividend disbursing agent and
administrator of the Plan, at P.O. Box 1681, Boston, Massachusetts 02105,
Attention: Dividend Reinvestment Department.
- --------------------------------------------------------------------------------
ABOUT OUR COVER...
The symbol on the cover of this Report represents the Fund's primary investment
focus on municipal bonds.
- --------------------------------------------------------------------------------
Colonial High Income Municipal Trust mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
TRANSFER AGENT, REGISTRAR AND
DIVIDEND DISBURSING AGENT
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
1-617-575-2900
CUSTODIAN
United Missouri Bank, N.A.
928 Grand Avenue
Kansas City, MO 64106
1-816-860-7000
15
<PAGE>
TRUSTEES
- --------------------------------------------------------------------------------
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England - Worcester)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly Dean,
Simon Graduate School of Business, University of Rochester; Chairman and Chief
Executive Officer, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JOHN A. McNEICE, JR.
Chairman of the Board, Chief Executive Officer and Director, The Colonial Group,
Inc. and Colonial Management Associates, Inc.
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
