<PAGE>
[FLAG GRAPHIC]
COLONIAL
HIGH INCOME
MUNICIPAL
TRUST
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE>
COLONIAL HIGH INCOME MUNICIPAL TRUST HIGHLIGHTS
JANUARY 1, 1995 - DECEMBER 31, 1995
INVESTMENT OBJECTIVE: Colonial High Income Municipal Trust seeks to provide
high current income, generally exempt from federal income taxes, by investing
primarily in medium and lower quality municipal securities.
POLICY CHANGE: At a meeting held on February 17, 1995, the Trustees approved a
policy change to allow the segregation of high-quality debt securities, in
addition to cash and cash equivalents, for futures trading. Subject to Trustee
approval on February 16, 1996, the Trust's 5% limit on investing in zero coupon
tax-exempt bonds will be eliminated.
THE FUND IS DESIGNED TO OFFER:
(check) Potential for high tax-free income
(check) Professional management
(check) Expert credit analysis
PORTFOLIO MANAGER COMMENTARY: "Despite recent developments that may have a
negative impact on the municipal bond market, including discussions about
tax-reform, we remain confident about the long-term prospects for this market.
If demand remains strong and supply continues to decline, the municipal bond
market should continue to be a source of attractive returns for investors."
COLONIAL HIGH INCOME MUNICIPAL TRUST PERFORMANCE
Distributions declared per share $0.591
12-month total return, assuming
reinvestment of all distributions
(check) NAV 15.70%
(check) Market Price 15.65%
Price per share:
(check) NAV $8.55
(check) Market Price $7.375
QUALITY BREAKDOWN
(as of 12/31/95)
AAA...................... 7.5%
AA....................... 5.7%
A........................ 5.4%
BBB...................... 18.5%
BB....................... 1.6%
B........................ 0.0%
Non-rated................ 58.9%
Other.................... 2.4%
<TABLE>
<CAPTION>
(arrow) Label A
- -------------------------------------------
<S> <C> <C>
Label CHIMT pie chart
- -------------------------------------------
1 aaa 7.5
- -------------------------------------------
2 aa 5.7
- -------------------------------------------
3 a 5.4
- -------------------------------------------
4 bbb 18.5
- -------------------------------------------
5 bb 1.6
- -------------------------------------------
6 non 58.9
- -------------------------------------------
7 other 2.4
- -------------------------------------------
8
- -------------------------------------------
</TABLE>
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to maintain these quality weightings in the future.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF JOHN A. McNEICE, JR.]
As your Fund's fiscal year ends, it is a good time to examine some facts that
contributed to a memorable year for most mutual fund investors.
In general, equity investors were rewarded with unexpectedly strong corporate
earnings that sent the stock market to new highs in 1995. 1996 is likely to
be a good year as well, although a more modest one.
Conditions in the fixed-income and municipal markets were also favorable. Those
investors who stayed the course through 1994's difficult environment were amply
rewarded.
Falling interest rates and controlled inflation helped the economy to grow at a
comfortable pace -- a positive environment for financial markets. We expect
this rate of growth and low inflation to continue into 1996. It is likely that
further reductions in interest rates will take place in the first half of this
year as the Federal Reserve keeps a watchful eye on inflation.
We do expect some sluggishness in the economy in the first half of the year,
with some pickup in the second half of 1996. This will reflect several factors.
Housing should benefit from lower interest rates and excess inventories of
consumer and manufactured goods should be liquidated. Secondly, the pace of
exports is likely to improve due to anticipated economic growth in Europe and
Japan.
In foreign markets, we continue to find that the Pacific Rim offers the best
combination of value and continued good earnings. In general, foreign markets
lagged the U.S. market last year. In 1996, we could see that gap narrow.
This year, investors will pay close attention to the 1996 Presidential
election. Usually, during an election year, incumbents will try to stimulate
economic growth, although this familiar pattern may be altered by the current
budget controversy.
Please remember that bull markets are a normal part of investing, but so are
bear markets. By leaving your money invested over the long term and following a
regular investment plan, you can avoid the difficulties of trying to predict
short-term market movements.
With this update, I encourage you to read the following report on your Fund. We
appreciate the opportunity to help you meet your investment goals.
Respectfully,
/s/ John A. McNeice, Jr.
John A. McNeice, Jr.
President
February 9, 1996
Because market conditions change frequently, there can be no assurance that the
trends described here will continue.
3
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 96.5% PAR VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 0.8%
AGRICULTURE - CROPS
IN Hammond, American Maize
Products Co., Series 1994,
8.000% 12/01/24 $ 2,000 $ 2,257
--------
- ------------------------------------------------------------------------------------------
CERTIFICATES OF PARTICIPATION - 1.4%
CA Statewide Communities
Development Corp.,
5.000% 10/01/23 3,000 2,861
MA Health and Educational Facilities,
Independent Living Bonds,
Series 1993-A,
8.100% 07/01/18 745 758
--------
3,619
--------
- ------------------------------------------------------------------------------------------
EDUCATION - 1.0%
NY State Dormitory Authority,
City University Consolidated Bonds,
Series 1993-F,
5.000% 07/01/20 2,900 2,592
---------
- ------------------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 0.4%
REAL ESTATE
MD Baltimore, Park Charles Project
Series 1986,
8.000% 01/01/10 945 1,018
--------
- ------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS - 1.3%
AZ Apache County School District,
Number 010, Round Valley
Project of 1987, Series 1990-C,
9.875% 07/01/05 2,000 2,235
PR Commonwealth of Puerto Rico,
5.375% 07/01/22 1,250 1,245
--------
3,480
--------
- ------------------------------------------------------------------------------------------
HEALTH - 29.9%
HOSPITALS - 11.5%
AL Alabama Special Care Facilities Authority,
Montgomery Health Care,
Series 1989,
11.000% 10/01/19 3,375 3,324
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
CA Health Facility Financing Authority,
Kaiser Permanente, Series 1989-A,
(a) 10/01/12 $ 10,990 $ 4,272
DE State Economic Development Authority,
Riverside Hospital, Series 1992-A,
9.500% 01/01/22 900 1,089
GA Clayton Hospital Authority,
The Woodlands Foundation, Inc.,
Series 1991-A,
9.750% 05/01/21 (b) 2,500 2,125
ID State Health Facilities Authority,
IHC Hospitals, Inc.,
8.190% 02/15/21 1,750 2,019
IL Health Facilities Authority:
Edgewater Medical Center,
Series A,
9.250% 07/01/24 3,000 3,169
Hinsdale Hospital, Series 1990-C,
9.500% 11/15/19 700 816
MI State Hospital Finance Authority:
Detroit Osteopathic Hospital,
Series 1987-A,
7.500% 11/01/10 2,235 2,414
Saratoga Community Hospital,
Series 1992,
8.750% 06/01/10 2,445 2,637
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 2,250 2,632
MS Lowndes County, Golden Triangle
Regional Medical Hospital, Series 1990,
8.500% 02/01/10 250 275
NC Lincoln County,
Lincoln County Hospital Project,
9.000% 05/01/07 550 691
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/27 1,000 1,019
TX Tarrant County, Health Facilities
Development Corp.,
10.125% 04/01/21 1,600 800
VT Educational & Health Buildings
Financing Agency, Springfield Hospital,
Series A,
7.750% 01/01/13 1,145 1,197
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
HOSPITALS - CONT.
WA Washington State Health Care
Facility, Grays Harbor Community
Hospital, Series 1993:
7.200% 07/01/03 $ 220 $ 237
8.025% 07/01/20 1,480 1,609
--------
30,325
--------
HUMAN SERVICES PROVIDERS - 1.4%
IL Champaign, First Mortgage,
Hoosier Care, Inc., Series 1989-A,
9.750% 08/01/19 1,485 1,596
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 950 1,114
Series 1992-C,
9.750% 08/01/19 925 1,085
--------
3,795
--------
NURSING HOMES - 17.0%
AZ Tucson Industrial Development
Authority, Villa Maria Care Center,
10.125% 11/01/21 490 459
CO Health Care Facilities Authority:
American Housing Foundation I,
Series 1990,
10.250% 12/01/20 1,500 1,682
Denver Health Care, Inc.,
10.500% 05/01/19 (c) 1,400 964
Pioneer Health Care, Series 1989,
10.500% 05/01/19 2,000 1,940
FL Flagler County Industrial
Redevelopment Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 2,450 2,462
FL Gadsden County Industrial
Development Authority,
Florida Housing Properties, Inc.,
Series 1988-A,
10.450% 10/01/18 1,945 2,017
FL Jacksonville Industrial Development,
Beverly Enterprises,
9.750% 10/01/11 940 1,049
FL Leon County Industrial Development,
Beverly Enterprises, Series 1985,
9.800% 06/01/11 830 937
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FL Volusia County Industrial
Development Authority, Beverly
Enterprises, Series 1987,
9.800% 12/01/07 $ 870 $ 913
IA Finance Authority Health Care Facility,
Mercy Health Initiatives,
Series 1989,
9.950% 07/01/19 1,900 1,938
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 (b) 3,085 2,159
PA Washington County Industrial
Development Authority, Central
States, Series 1989,
10.250% 11/01/19 1,925 1,867
MA Boston, St. Joseph's Nursing Care
Center, Inc.,
10.000% 01/01/20 980 1,088
MA State Industrial Finance Agency,
American Health Foundation, Inc.,
Series 1989,
10.125% 03/01/19 2,060 2,181
MO Grove Industrial Development Authority,
First Mortgage Health Care Facility,
Heritage Manor, Series 1988,
10.250% 11/01/13 1,840 1,656
MO Saint Louis County Industrial
Development Authority,
10.250% 12/01/16 1,825 1,880
NJ Economic Development Authority,
Geriatric and Medical Service, Inc.,
Series B,
10.500% 05/01/20 2,000 2,162
NM Clovis Industrial Development,
Retirement Ranches Project,
10.750% 04/01/19 2,380 2,645
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 2,645 2,754
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
NURSING HOMES - CONT.
PA Philadelphia Authority for Industrial
Development, RHA/ Philadelphia Project,
10.250% 11/01/18 $ 1,465 $ 1,522
TN Metropolitan Government, Nashville
& Davidson Counties, Health & Education
Facilities, Central States, Series 1989,
10.250% 11/01/19 1,785 1,731
TX Bexar County Health Facilities
Development, Heartway Corp.,
Series 1989-A-1,
10.250% 03/01/19 1,905 1,714
TX Whitehouse Health Facilities
Development Corp., Oak Brook Health
Care Center, Series 1989,
10.000% 12/01/19 1,825 1,871
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 1,785 2,006
WI State Health & Educational Facilities,
Metro Health Foundation, Inc.,
10.000% 11/01/22 (b) 2,775 1,942
--------
44,964
--------
- ------------------------------------------------------------------------------------------
HOUSING - 19.1%
ASSISTED LIVING/SENIOR - 2.2%
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 1,300 1,344
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 1,740 1,623
TX Bell County Health Facilities
Development Corp., Care Institute, Inc.,
9.000% 11/01/24 1,800 1,930
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 870 881
--------
5,778
--------
MULTI-FAMILY - 13.6%
FL Clearwater, Hampton Apartments,
8.250% 05/01/24 2,500 2,666
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 3,000 3,158
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FL Palm Beach County Housing, Inc.,
Multi-family Housing:
Cypress Run,
10.500% 03/15/19 (b) $ 3,000 $ 1,440
Riviera Beach, Series 1988-A,
9.750% 07/15/18 (b) 1,530 734
FL State Housing Finance Agency,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19 1,000 1,019
GA Augusta Housing Authority Mortgage,
Mountain Ridge Holdings II, Series A,
8.960% 09/01/24 (b) 1,880 1,410
MN Lakeville Multi-family Housing,
Southfork Apartments Project:
Series 1989-A,
9.875% 02/01/20 2,570 2,621
Series 1989-B,
(d) 02/01/20 1,150 1,988
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen Project,
9.250% 06/01/22 1,100 1,133
MN White Bear Lake,
Birch Lake Townhome Project:
Series 1989-A,
10.250% 07/15/19 2,200 2,230
Series 1989-B,
(d) 07/15/19 800 1,317
NC Durham Urban Development Authority,
Durham Hosiery Mill Project,
7.500% 08/01/29 1,595 1,753
NC Eastern Carolina Regional Housing
Authority, Jacksonville New River
Apartments,
8.250% 09/01/14 2,000 2,042
NY Nyack Housing Assistance
Corp., Plaza Apartments,
7.375% 06/01/21 (e) 454 458
NY Yorktown Housing Corp.,
Beaveridge Apartments,
7.375% 06/01/21 (e) 480 485
Resolution Trust Corp.,
Pass Through Certificates, Series 1993-A,
8.500% 12/01/16 (e) 5,098 5,276
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
MULTI-FAMILY - CONT.
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 $ 2,995
TX Galveston Health Facilities Center,
8.000% 08/01/23 1,000 1,047
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990-A,
10.000% 01/01/21 1,500 1,526
VA Roanoke Redevelopment & Housing
Authority, First Mortgage, Mountain
Ridge,
9.250% 11/01/22 960 991
--------
36,289
--------
SINGLE-FAMILY - 3.3%
LA Louisiana Housing Finance Agency,
Residual Lien Mortgage, Series 1992,
7.375% 09/01/13 990 1,030
NE Investment Finance Authority,
Single-family Mortgage, Series 1990-B,
10.781% 03/15/22 1,900 2,190
OH Housing Finance Agency, Single-family
Mortgage Revenue, RIB (variable rate),
Series B-4,
9.477% 03/31/31 1,025 1,115
TX Bexar County Housing Finance Corp.,
GNMA Collateralized Mortgage,
Series 1989-A,
8.200% 04/01/22 3,390 3,682
TX Harris County Housing Finance Corp.,
Single-family, Series 1987,
8.875% 12/01/17 545 568
--------
8,585
--------
- ------------------------------------------------------------------------------------------
MANUFACTURING - 7.8%
FURNITURE & FIXTURES - 0.9%
TN McKenzie Individual Development Board,
American Lantern Co.,
10.500% 05/01/16 2,177 2,340
--------
MEASURING & ANALYZING INSTRUMENTS - 0.4%
MN Brooklyn Park, TL Systems Corp.,
Series 1991,
10.000% 09/01/16 795 947
--------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
PAPER PRODUCTS - 6.5%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 $ 5,000 $ 5,112
MI State Strategic Fund:
Blue Water Fibre Project, Series 1994,
8.000% 01/01/12 2,500 2,403
Great Lakes Pulp & Fibre Project,
10.250% 12/01/16 5,000 5,169
NY New York City Industrial
Development Agency,
Visy Paper, Inc.,
7.950% 01/01/28 2,400 2,448
SC Darlington County Industrial
Development Authority, SONOCO
Products Co. Project,
6.125% 06/01/25 2,000 2,088
--------
17,220
--------
- ------------------------------------------------------------------------------------------
MINING - 1.1%
CRUDE PETROLEUM & NATURAL GAS - 0.5%
NY State Environmental Facilities Corp.,
Series 1995,
6.100% 11/01/30 1,300 1,315
--------
METAL MINING - 0.6%
CO Mesa County Industrial Development,
Joy Technologies, Inc., Series 1992,
8.500% 09/15/06 1,000 1,079
OH Cuyahoga County, Joy Technologies, Inc.,
8.750% 09/15/07 550 600
--------
1,679
--------
- ------------------------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 5.7%
IL Bryant Pollution Control Revenue,
Central Illinois Light Co. Project,
5.900% 08/01/23 5,000 5,156
LA St. Charles Parish Pollution Control
Revenue, Union Carbide Project,
7.350% 11/01/22 3,000 3,263
PA Beaver County, Industrial Development
Pollution Control, Beaver Valley,
Series 1989-A,
7.750% 09/01/24 2,500 2,694
SC York County Industrial Revenue,
Hoechst Celanese Corp.,
5.700% 01/01/24 4,000 4,015
--------
15,128
--------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- ---------------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
PUBLIC FACILITIES IMPROVEMENT - 3.9%
CO Denver City & County Airport:
Series 1992-C,
6.125% 11/15/25 $ 5,120 $ 5,133
United Air Lines, Series 1992-A,
6.875% 10/01/32 1,645 1,701
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 1,115 1,268
VI Virgin Islands Public Financing,
Series 1992-A,
7.250% 10/01/18 2,000 2,148
--------
10,250
--------
- ----------------------------------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 7.0%
AIRPORTS - 2.0%
CO Denver City and County Airport,
Series 1992-B,
7.250% 11/15/23 2,855 3,087
IN Indianapolis Airport Authority,
Federal Express Project,
7.100% 01/15/17 2,000 2,188
--------
5,275
--------
TURNPIKES/TOLL ROADS/BRIDGES - 5.0%
CA San Joaquin Hills Transportation
Corrider Agency, Senior Lien Toll Road,
Series 1993:
(a) 01/01/23 14,500 2,737
5.000% 01/01/33 6,130 5,264
6.750% 01/01/32 1,500 1,571
7.000% 01/01/30 865 920
MA State Industrial Finance Agency,
Series 1990,
9.000% 10/01/20 2,380 2,734
--------
13,226
--------
- ----------------------------------------------------------------------------------------------------
RETAIL TRADE - 1.0%
APPAREL & ACCESSORY STORES - 0.1%
MA State Industrial Finance Agency,
House of Bianchi, Inc.,
8.750% 06/01/18 345 366
--------
MISCELLANEOUS RETAIL - 0.9%
OH Lake County Economic Development,
North Madison Properties, Series 1993,
8.819% 09/01/11 765 816
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 $ 1,490 $ 1,540
--------
2,356
--------
- ------------------------------------------------------------------------------------------
SERVICES - 1.0%
HOTELS, CAMPS & LODGING
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 2,500 2,567
--------
- ------------------------------------------------------------------------------------------
SOLID WASTE - 2.7%
LAND FILL - 2.1%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc. Project,
9.000% 09/01/05 1,260 1,353
WA Walla Walla Public Corp.,
Ponderosa Fibres Project,
9.125% 01/01/26 4,000 4,225
--------
5,578
--------
RESOURCE RECOVERY - 0.6%
MA State Industrial Finance Agency,
Refusetech, Series 1993-A,
6.300% 07/01/05 500 529
VI Water and Power Authority, Electric
Systems, Series 1991-A,
7.400% 07/01/11 1,000 1,073
--------
1,602
--------
- ------------------------------------------------------------------------------------------
TAX ALLOCATION - 2.3%
CA Carson Improvement, Series 1992,
7.375% 09/02/22 195 207
IL Development Finance Authority,
City of Marion Project, Series 1991,
9.625% 09/15/21 2,475 2,580
IL Metropolitan Pier & Exposition
Authority, McCormick Place Expansion
Project, Series A,
(a) 06/15/16 10,000 3,188
--------
5,975
--------
- ------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION,
ELECTRIC, GAS & SANITARY SERVICES - 3.7%
AIR TRANSPORTATION - 0.8%
NY New York City Industrial
Development Agency, American
Airlines,
6.900% 08/01/24 2,000 2,158
--------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- -------------------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION,
ELECTRIC, GAS & SANITARY SERVICES - CONT.
GAS SERVICES - 0.1%
IL Hennepin Individual Development,
Methchem Corp., Series 1989,
10.250% 01/01/05 (b) $ 2,650 $ 159
--------
TRANSPORTATION - 2.8%
CA Foothill Eastern Transportation Corridor
Agency, State Toll Road, Senior Lien,
Series A,
6.000% 01/01/34 500 498
NY Metropolitan Transportation Authority,
Commuter Facilities Board, Series 7
Project,
5.625% 07/01/16 7,000 6,886
--------
7,384
--------
- ------------------------------------------------------------------------------------------
UTILITY - 4.7%
CO-GENERATION - 1.2%
FL Martin County Industrial
Development Authority, Indiantown
Co-Generation Project,
7.875% 12/15/25 1,000 1,149
MD State Energy Financing Administration,
AES Warrior Co-Generation Project,
7.400% 09/01/19 2,000 2,098
--------
3,247
--------
INDIVIDUAL POWER PRODUCER - 0.8%
PA State Economic Development Finance
Authority, Colver Project, Series D,
7.125% 12/01/15 2,000 2,153
--------
MUNICIPAL ELECTRIC - 2.7%
CA Colton Public Finance Authority,
7.500% 10/01/20 2,000 2,038
IL Chicago Gas Supply, Series A,
8.100% 05/01/20 2,000 2,273
MN Southern Minnesota Municipal Power
Agency, Series 1994-A,
(a) 01/01/20 10,000 2,813
--------
7,124
--------
- ------------------------------------------------------------------------------------------
WATER & SEWER - 1.7%
LA Public Facility Belmont Water
Authority,
9.000% 03/15/24 820 866
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
MA State Industrial Finance Agency,
Environmental Service Project,
Series 1994-A,
8.750% 11/01/21 $ 1,000 $ 1,039
MS Five Lakes Utility District,
8.250% 07/15/24 500 520
NJ State Economic Development
Authority, Hills Development Co.,
Series 1988,
10.500% 09/01/08 2,000 2,090
--------
4,515
--------
TOTAL MUNICIPAL BONDS (cost of $251,307) (f) 255,266
--------
SHORT-TERM OBLIGATIONS - 2.4%
------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (g)
MS Perry County Forest,
5.900% 03/01/02 900 900
NY New York City Finance Authority,
Water & Sewer System, Series 1995-A:
5.150% 02/01/20 2,000 2,000
5.500% 06/15/25 2,100 2,100
SC Greenville,
Series A,
5.000% 05/01/23 1,300 1,300
--------
TOTAL SHORT-TERM OBLIGATIONS 6,300
--------
OTHER ASSETS & LIABILITIES, NET - 1.1% 2,901
-----------------------------------------------------------------------------------------
NET ASSETS -100% $264,467
--------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) This issuer is in default of certain debt covenants. Income is not being
accrued.
(c) The Fund and the other bondholders caused foreclosure on the underlying
assets. A portion of the proceeds of the foreclosure were received prior
to December 31, 1995, and were applied against the interest receivable on
the bonds, with the remainder credited to an other liability account. Once
final proceeds of the foreclosure are received, the bond will be removed
from the portfolio, a loss representing the cost less the total
non-interest proceeds received will be recorded, and the other liability
will be reversed at that time.
(d) Accrued interest accumulates in the value of the security and is payable
at redemption.
15
<PAGE>
NOTES TO INVESTMENT PORTFOLIO - CONT:
- -------------------------------------------------------------------------------
(e) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At year end,
the value of these securities amounted to $6,219 or 2.4% of net assets.
(f) Cost for federal income tax purposes is the same.
(g) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of December 31,
1995.
Acronym Name
------- ----
RIB Residual Interest Bonds
See notes to financial statements.
16
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
(in thousands except for per share amount)
<S> <C> <C>
ASSETS
Investments at value (cost $251,307) $255,266
Short-term obligations 6,300
--------
261,566
Receivable for:
Interest $5,022
Investments sold 116
Other 91 5,229
------ --------
Total Assets 266,795
LIABILITIES
Payable for Distributions 1,503
Accrued:
Deferred Trustees fees 2
Other 823
------
Total Liabilities 2,328
--------
NET ASSETS at value for 30,919
shares of beneficial interest outstanding $264,467
========
Net asset value per share $ 8.55
========
COMPOSITION OF NET ASSETS
Capital paid in $286,698
Undistributed net investment income 598
Accumulated net realized loss (26,788)
Net unrealized appreciation 3,959
--------
$264,467
========
</TABLE>
See notes to financial statements.
17
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $21,185
EXPENSES
Management fee $ 2,063
Transfer agent 99
Bookkeeping fee 66
Trustees fee 27
Custodian fee 29
Audit fee 44
Legal fee 335
Reports to shareholders 16
Other 65 2,744
------- -------
Net Investment Income 18,441
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (4,446)
Net unrealized appreciation during
the period 22,753
-------
Net Gain 18,307
-------
Net Increase in Net Assets from Operations $36,748
=======
</TABLE>
See notes to financial statements.
18
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) December 31
-------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS 1995 1994
Operations:
Net investment income $ 18,441 $ 19,053
Net realized loss (4,446) (4,036)
Net unrealized appreciation (depreciation) 22,753 (18,320)
-------- --------
Net Increase (Decrease) from Operations 36,748 (3,303)
Distributions:
From net investment income (18,248) (18,860)
-------- --------
Total Increase (Decrease) 18,500 (22,163)
NET ASSETS
Beginning of period 245,967 268,130
-------- --------
End of period (including undistributed net investment
income of $598 and $382, respectively) $264,467 $245,967
======== ========
NUMBER OF FUND SHARES
Outstanding at end of period 30,919 30,919
======== ========
</TABLE>
See notes to financial statements.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1. ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
ORGANIZATION: Colonial High Income Municipal Trust (the Fund), is a
Massachusetts business trust registered under the Investment Company Act of
1940, as amended, as a diversified, closed-end, management investment company.
The Fund's objective is to provide high current income, generally exempt from
Federal income taxes, by investing primarily in medium and lower quality bonds
and notes issued by or on behalf of state and local governmental units whose
interest is exempt from Federal income tax. The Fund may issue an unlimited
number of shares.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following significant
accounting policies are consistently followed by the Fund in the preparation of
its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Debt securities generally are valued by a
pricing service based upon market transactions for normal, institutional-size
trading units of similar securities. 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, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The 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 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.
20
<PAGE>
Notes to Financial Statements/December 31, 1995
- -------------------------------------------------------------------------------
The character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the Fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryforwards) under income tax regulations.
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
the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- -------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended December 31, 1995, purchases and
sales of investments, other than short-term obligations, were $57,001,263 and
$63,229,708, respectively.
Unrealized appreciation (depreciation) at December 31, 1995, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $14,619,476
Gross unrealized depreciation (10,660,964)
-----------
Net unrealized appreciation $ 3,958,512
===========
</TABLE>
At December 31, 1995, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
<TABLE>
<CAPTION>
<S> <C>
Year of Capital loss
expiration carryforward
---------- ------------
1998 $ 3,066,000
1999 3,140,000
2000 3,157,000
2001 5,578,000
2002 6,579,000
2003 5,268,000
-----------
$26,788,000
===========
</TABLE>
21
<PAGE>
Notes to Financial Statements/December 31, 1995
- -------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
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.
22
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows:
<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.960 $ 8.670 $ 8.780 $ 8.910 $ 9.000
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.597 0.616 0.671 0.694 0.742
Net realized and
unrealized gain (loss) 0.583 (0.716) (0.106) (0.140) (0.074)
-------- -------- -------- -------- --------
Total from Investment
Operations 1.180 (0.100) 0.565 0.554 0.668
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.590) (0.610) (0.675) (0.684) (0.758)
-------- -------- -------- -------- --------
Net asset value -
End of period $8.550 $ 7.960 $ 8.670 $ 8.780 $ 8.910
======== ======== ======== ======== ========
Market price per share $7.375 $ 6.875 $ 8.250 $ 8.250 $ 8.625
======== ======== ======== ======== ========
Total return - based on
market value (a) 15.65% (9.83)% 7.96% 3.51% 5.76%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.06% (b) 1.03% 0.97% 0.96% 0.97%
Net investment income 7.15% (b) 7.44% 7.58% 7.86% 8.30%
Portfolio turnover 23% 20% 29% 15% 17%
Net assets at end
of period (000) $264,467 $245,967 $268,130 $269,848 $273,207
</TABLE>
(a) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits
received, if any.
- --------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
All of the distributions will be treated as exempt income for federal income
tax purposes.
- --------------------------------------------------------------------------------
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
T0 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 at December 31, 1995, 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, 1995
by correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 9, 1996
24
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------------
DECEMBER 31, 1995 SEPTEMBER 30, 1995 JUNE 30, 1995 MARCH 31, 1995
(000) Per share (000) Per share (000) Per share (000) Per share
------- --------- ------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income $ 5,116 $ 0.165 $ 5,083 $ 0.164 $ 5,567 $ 0.180 $ 5,419 $ 0.175
Net investment income $ 4,236 $ 0.137 $ 4,452 $ 0.145 $ 4,936 $ 0.160 $ 4,817 $ 0.155
Net realized and
unrealized gain (loss) $ 6,183 $ 0.198 $ 2,160 $ 0.068 $ (886) $(0.032) $10,850 $ 0.349
Market value per share:
High $ 8.000 $ 8.000 $ 8.000 $ 8.000
Low $ 7.375 $ 7.500 $ 7.625 $ 6.875
<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>
At December 31, 1995, there were 4,446 shareholder accounts.
25
<PAGE>
DIVIDEND REINVESTMENT PLAN
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 on 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
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.
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial High Income Municipal Trust is:
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
1-617-575-2900
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.
This report has been prepared for shareholders of Colonial High Income
Municipal Trust.
27
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
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
JAMES E. GRINNEL
Private Investor (formerly Senior Vice President--Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England--Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
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)
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 (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
--------- -----------------
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
--------- -----------------
COLONIAL INVESTMENT SERVICES, INC., Distributor(C) 1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
HI-02/712B-1296 (2/96)
