<PAGE>
[LOGO]
COLONIAL
HIGH INCOME
MUNICIPAL
TRUST
ANNUAL REPORT
DECEMBER 31, 1996
<PAGE>
COLONIAL HIGH INCOME MUNICIPAL TRUST HIGHLIGHTS
JANUARY 1, 1996 - DECEMBER 31, 1996
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 16, 1996, the Trustees approved a
policy change to eliminate the Trust's 5% limit on investing in zero coupon
tax-exempt bonds.
THE FUND IS DESIGNED TO OFFER:
x Potential for high tax-free income
x Professional management
x Expert credit analysis
CO-PORTFOLIO MANAGER COMMENTARY: "Our efforts to maximize value for investors
included a focus on industrial revenue bonds and broadly diversifying the Trust
across sectors. We believe the supply of high yield bonds will be diminished
over the near term and we will be working harder to identify investments with
strong appreciation potential, such as candidates for credit rating upgrades or
acquisition." -- Peter Andersen
COLONIAL HIGH INCOME MUNICIPAL TRUST PERFORMANCE
Distributions declared per share(1) $0.583
<TABLE>
<CAPTION>
NAV MARKET PRICE
<S> <C> <C>
12-month total return, assuming
reinvestment of all distributions 4.71% 20.09%
Price per share $8.34 $8.25
</TABLE>
(1)A portion of the Trust's income may be subject to the alternative minimum
tax.
The Trust may at times purchase tax-exempt securities at a discount, and some or
all of this discount may be included in the Trust's ordinary income which will
be taxable when distributed.
Top Five Sectors
(as of 12/31/96)
Nursing ..................... 17.5%
Housing ..................... 15.5%
Hospital .................... 9.1%
Paper ....................... 5.4%
Investor Owned Utilities .... 4.8%
Quality Breakdown
(as of 12/31/96)
Net Cash: 0.6%
Non-rated: 53.1%
A 8.1%
AA 5.4%
AAA 7.9%
BB: 0.7%
BBB 24.2%
Sector and quality breakdowns are calculated as a percent of total net assets.
Because the Trust is actively managed, there can be no guarantee the Trust will
continue to maintain these quality weightings or invest in these sectors in the
future. Industry sectors in the following financial statements are based upon
the standard industrial classifications (SIC) published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon Colonial's defined criteria as used in the investment process.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of President]
Harold W. Cogger
I am pleased to present your Fund's annual report for the fiscal year ended
December 31, 1996. This report reflects on the investment environment of the
past 12 months and on the performance of your Fund.
The economy grew at a comfortable pace through the end of 1995 and into 1996.
The Federal Reserve Board lowered short-term interest rates in December 1995 and
again in January 1996, but stronger-than-expected economic indicators in
February 1996 brought the Fed easing trend to a halt. However, recently released
economic data confirm that economic growth has slowed to a pace well within the
"comfort zone" of the Federal Reserve Board, lessening the market's fears of a
Fed tightening. We are hopeful that the volatility that has characterized the
fixed income market during the past year will be somewhat reduced in the months
ahead.
While market conditions put pressure on municipal bond prices, technical
dynamics, such as low supply and strong retail market support, enabled
tax-exempt bonds to outperform Treasury bonds for much of the year. The
post-election conditions should promote a period of stability for the municipal
market as the flat tax initiative is now a receding memory. In this market, the
Fund has been positioned with a long-term outlook and has been focused on
industrial revenue bonds backed by publicly held companies that have good
liquidity characteristics as a result of their "household name" status.
Our economic expectations include growth continuing at a slower, but more
sustainable, rate and our outlook for 1997 is relatively bright. Lower mortgage
rates increased consumer spending power and accelerating exports lead us to
believe that the current economic expansion could continue through the year
ahead.
As always, we thank you for the opportunity to help you meet your investment
goals through the Colonial family of funds.
Respectfully,
/s/ Harold W. Cogger
- ---------------------
Harold W. Cogger
President
February 10, 1997
Because market conditions change frequently, there can be no assurance that the
trends described here will continue, come to pass or affect Trust performance.
3
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 97.8% PAR VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 1.8%
Education - 1.0%
NY State Dormitory Authority,
City University Consolidated Bonds,
Series 1993-F,
5.000% 07/01/20 $ 2,900 $ 2,516
------------
School District General Obligation - 0.8%
AZ Apache County School District
Number 010 Round Valley
Project of 1987, Series 1990-C,
9.875% 07/01/05 2,000 2,212
------------
- ---------------------------------------------------------------------------------------------
HEALTH CARE - 27.6%
Hospital - 8.9%
AL Alabama Special Care Facilities Authority,
Montgomery Health Care,
Series 1989,
11.000% 10/01/19 3,375 3,442
CA State Health Facilities Financing Authority
Kaiser Permanente, Series 1989-A,
(a) 10/01/12 5,500 2,248
DE State Economic Development Authority,
Riverside Osteopathic Hospital,
Series 1992-A,
9.500% 01/01/22 890 1,163
GA Clayton Hospital Authority,
The Woodlands Foundation Inc.,
Series 1991-A,
9.750% 05/01/21 2,500 2,125
ID State Health Facilities Authority,
IHC Hospitals, Inc.,
8.030% 02/15/21 1,750 1,912
IL State Health Facilities Authority:
Edgewater Medical Center,
Series A,
9.250% 07/01/24 2,000 2,195
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Series 1990-C,
9.500% 11/15/19 $ 680 $ 779
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 2,250 2,810
MS Lowndes County,Golden Triangle
Regional Medical Hospital, Series 1990,
8.500% 02/01/10 250 271
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center
7.250% 07/01/27 1,000 1,048
PA Delaware County Authority,
Southeastern Pennsylvania Obligated Group,
Series 1996,
6.000% 12/15/16 1,400 1,386
TX Tarrant County, Health Facilities
Development Corp .,
10.125% 04/01/21 (c) 1,600 344
VT State Educational & Health Buildings
Financial Agency, Springfield Hospital,
Series A,
7.750% 01/01/13 1,115 1,213
WA Washington State Health Care
Facility, Grays Harbor Community
Hospital Series 1993,
7.200% 07/01/03 (b) 180 199
8.250% 07/01/20 (b) 1,480 1,680
------------
22,815
------------
INTERMEDIATE CARE FACILITIES- 1.7%
IL Champaign, First Mortgage ,
Hoosier Care, Inc., Series 1989-A
9.750% 08/01/19 1,465 1,557
MA State Health & Educational
Facilities Authority,
Corporation for Independent Living,
8.100% 07/01/18 740 744
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Cont. PAR VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE - Cont.
Intermediate Care Facilities -Cont.
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A ,
9.750% 08/01/19 $ 940 $ 1,083
Series 1992-C,
9.750% 08/01/19 915 1,055
------------
4,439
------------
NURSING HOMES - 17.0%
CO Health Care Facilities Authority:
Pioneer Health Care, Series 1989,
10.500% 05/01/19 2,000 1,940
CO Health Care Facility Authority:
American Housing Foundation I,
Series 1990-A,
10.250% 12/01/20 1,400 1,400
FL Flagler County Industrial
Redevelopment Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 2,420 2,444
FL Gadsden County Industrial
Development Authority,
Florida Properties, Inc.,
Series 1988-A
10.450% 10/01/18 1,920 1,975
FL Jacksonville Industrial Development
Beverly Enterprises,
9.750% 10/01/11 905 989
FL Leon County Industrial Development,
Beverly Enterprises, Series 1985 ,
9.800% 06/01/11 805 900
FL Volusia County Industrial
Development Authority, Beverly
Enterprises, Series 1987,
9.800% 12/01/07 840 860
IA State Finance Authority,
Care Initiatives Project,
Series 1996,
9.250% 07/01/25 1,000 1,220
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987-A,
11.500% 10/01/17 1,500 1,500
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
IN Michigan City Health Facilities,
Metropolitan Health Foundation,
Inc., Project,
10.000% 11/01/22 $ 3,085 $ 2,776
MA Boston, St. Joseph's Nursing Care
Center, Inc.
10.000% 01/01/20 965 1,057
MA State Industrial Finance Agency,
American Health Foundation, Inc.,
Series 1989,
10.125% 03/01/19 2,035 2,142
MO Grove Industrial Development Authority,
First Mortgage Health Care Facility,
Heritage Mannor, Series 1988,
10.250% 11/01/13 1,755 1,580
MO Saint Louis County Industrial
Development Authority,
10.250% 12/01/16 1,795 1,847
NJ Economic Development Authority,
Geriatric and Medical Service, Inc.,
Series B,
10.500% 05/01/20 2,000 2,137
NM Clovis Industrial Development,
Retirement Ranches Project,
10.750% 04/01/19 215 234
Retirement Ranches Project,
10.750% 04/01/19 2,140 2,332
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 05/01/19 2,615 2,716
PA Philadelphia Authority for Industrial
Development, RHA /Philadelphia Project,
10.250% 11/01/18 1,445 1,492
PA Washington County Industrial
Development Authority, Central
States, Series 1989,
10.250% 11/01/19 1,925 1,913
TN Metropolitan Government, Nashville
& Davidson Counties, Health & Education
Facilities, Central States, Series 1989
10.250% 11/01/19 1,755 1,744
TX Bexar County Health Facilities
Development, Heartway Corp.,
Series 1989-A-1,
10.250% 03/01/19 (c) 1,905 1,333
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Cont. PAR VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE - Cont.
Nursing Homes-Cont.
TX Whitehouse Health Facilities
Development Corp., Oak Brook Health
Care Center, Series 1989,
10.000% 12/01/19 $ 1,805 $ 1,855
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 1,730 1,914
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
7.100% 02/20/36 1,000 1,087
WI State Health and Educational Facilities,
Metro Health Foundation Inc.,
10.000% 11/01/22 (b) 2,775 2,498
------------
43,885
.............................................................................................
HOUSING - 16.3%
Assisted Living/Senior - 2.3%
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 1,300 1,354
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 1,740 1,640
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 870 898
TX Bell County Health Facilities
Development Corp., Care Institutions, Inc.,
9.000% 11/01/24 1,800 1,953
------------
5,845
------------
Multi-Family - 10.6%
FL Clearwater Housing Authority,
Hampton Apartments, Series 1993-C,
8.250% 05/01/24 2,500 2,622
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 3,000 2,850
FL State Housing Finance Agency,
Windsong Apartments, Series 1993-C
9.250% 01/01/19 1,000 1,006
GA Augusta Housing Authority Mortgage,
Mountain Ridge Holdings II, Series A,
8.960% 09/01/24 (c) 1,880 1,222
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
MN Lakeville Multi-family Housing,
Southfork Apartments Project:
Series 1989-A,
9.875% 02/01/20 $ 2,570 $ 2,599
Series 1989-B
(d) 02/01/20 1,150 2,126
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen, Series 1992,
9.250% 06/01/22 1,090 1,180
MN White Bear Lake,
Birch Lake Townhome Project,
Series 1989-A,
10.250% 07/15/19 2,200 2,211
Series 1989-B,
(d) 07/15/19 755 1,352
NC Eastern Carolina Regional Housing
Authority, Jacksonville New River
Apartments, Series 1994,
8.250% 09/01/14 1,950 1,969
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
7.375% 06/01/21 (b) 438 442
Pass Through Certificates, Series 1993-A,
8.500% 12/01/16 (b) 5,098 5,212
TX Galveston Health Facilities Center,
8.000% 08/01/23 1,000 1,026
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990-A,
10.000% 01/01/21 1,500 1,513
------------
27,330
------------
Single Family - 3.4%
LA Louisiana Housing Finance Agency,
Residual Lien Mortgage, Series 1992,
7.375% 09/01/13 840 861
NE Investment Finance Authority,
Single-Family Mortgage, Series 1990-B
11.267% 03/15/22 1,700 1,866
OH Housing Finance Agency Single Family
Mortgage Revenue, RIB (variable rate),
Series B-4,
9.849% 03/31/31 1,025 1,087
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Cont. PAR VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - Cont.
Single Family -Cont.
TX Bexar County Housing Finance Corp.
GNMA Collateralized Mortgage,
Series 1989-A,
8.200% 04/01/22 $ 3,110 $ 3,285
TX Harris County Housing Finance Corp.,
Single Family, Series 1987,
8.875% 12/01/17 500 515
WA State Housing Finance Commission,
Series 1992 D-1,
6.150% 01/01/26 1,200 1,227
------------
8,841
------------
.............................................................................................
OTHER - 4.1%
Public Facilities Improvement - 1.1%
CA Statewide Communities
Development Corp.,
J. Paul Getty Trust Center,
5.000% 10/01/23 3,000 2,734
------------
Public Infrastructure - 0.8%
VI Virgin Islands Public Financing,
Series 1992- A,
7.250% 10/01/18 2,000 2,135
------------
Refunded/Escrow/Special Obligation - 2.2%
MA State Industrial Finance Agency,
Series 1990,
9.000% 10/01/20 2,350 2,752
MI State Hospital Finance Authority,
Detroit Osteopathic Hospital,
Series 1987- A,
7.500% 11/01/10 2,235 2,350
NC Lincoln County Hospital,
9.000% 05/01/07 520 618
------------
5,720
------------
.............................................................................................
OTHER REVENUE - 20.3%
Amusements & Recreation - 0.5%
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 1,085 1,210
------------
Chemicals - 4.3%
LA St. Charles Parish Pollution Control
Revenue, Union Carbide Project,
7.350% 11/01/22 3,000 3,236
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ------------------------------------------------------------------------------------
<S> <C> <C>
SC York County Industrial Revenue,
Hoechst Celanese Corp.,
5.700% 01/01/24 $ 4,000 $ 3,975
TX Corpus Christi Port Authority,
Hoechst Celanese Corp,
7.500% 08/01/12 3,500 3,850
------------
11,061
------------
Hotels/Camps/Lodging - 1.0%
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 2,500 2,541
------------
Justice & Public Order - 0.4%
TN Franklin Industrial Board,
Landings Apartment Project,
Series 1996-B,
8.750% 04/01/27 1,000 995
------------
Manufacturing - 4.5%
CO Mesa County Industrial Development
Joy Technologies Inc., Series 1992
8.500% 09/15/06 1,000 1,087
MA State Industrial Finance Agency,
House of Bianchi, Inc.,
8.750% 06/01/18 345 361
MN Brooklyn Park, TL Systems Corp.,
Series 1991,
10.000% 09/01/16 785 970
OH Cuyahoga County, Joy Technologies, Inc.,
Series 1992,
8.750% 09/15/07 550 604
TN McKenzie Individual Development Board,
American Lantern Co.,
10.500% 05/01/16 2,144 2,281
TX Trinity River Authority, Texas Instrument
Project, Series 1996
6.200% 03/01/20 1,000 1,024
WA Pilchuck Public Development Corp.,
Special Facilities Airport, Tramco Inc., Project,
6.000% 08/01/23 5,420 5,285
------------
11,612
------------
Miscellaneous Retail - 0.9%
OH Lake County Economic Development,
North Madison Properties, Series 1993,
8.819% 09/01/11 765 803
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Cont. PAR VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
OTHER REVENUE -Cont.
Miscellaneous Retail-Cont.
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 $ 1,360 $ 1,454
------------
2,257
------------
Other Revenue - 3.0%
DC District of Columbia,
Carnegie Endowment, Series 1996,
5.750% 11/15/10 2,000 2,022
IL Hennepin Individual Development
Methchem Corp., Series 1989,
10.250% 01/01/05 (c) 2,650 53
IN Hammond, American Maize
Products Co., Series 1994,
8.000% 12/01/24 2,000 2,233
MD Baltimore, Park Charles Project,
Series 1986,
8.000% 01/01/10 895 941
TX Gulf Coast Waste Disposal Authority,
Quaker Oats Co., Series 1994
5.700% 05/01/06 2,500 2,597
------------
7,846
------------
Paper Products - 5.2%
GA Rockdale County Development
Authority, Solid Waste Disposal, Visy
Paper, Inc., Series 1993,
7.500% 01/01/26 3,600 3,717
MI State Strategic Fund Ltd.:
Blue Water Fiber Project, Series 1994,
8.000% 01/01/12 2,500 1,813
Great Lakes Pulp & Fibre Project,
Series 1994,
10.250% 12/01/16 (c) 2,500 1,150
NY New York City Industrial
Development Agency, Visy Paper, Inc.,
Series 1995,
7.950% 01/01/28 2,400 2,562
SC Darlington County, Industrial
Development Authority, SONOCO
Products Co. Project,
6.125% 06/01/25 2,000 2,065
WA Walla Walla Public Corp.,
Ponderosa Fibres Project,
9.125% 01/01/26 2,460 2,248
------------
13,555
------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Petroleum Refining - 0.5%
NY State Environmental Facilities Corp.,
Occidental Petroleum Corp. Project,
Series 1995,
6.100% 11/01/30 $ 1,300 $ 1,255
------------
......................................................................................................
RESOURCE RECOVERY - 2.6%
Co-Generation - 2.1%
FL Martin County Industrial
Development Authority, Indiantown
Co-generation Project,
7.875% 12/15/25 1,000 1,140
MD State Energy Financing Administration,
AES Warrior Co-generation Project,
7.400% 09/01/19 2,000 2,110
NY New York City Port Authority,
Special Obligation Revenue,
Special KIAC Project,
6.750% 10/01/11 2,000 2,063
------------
5,313
------------
Land Fill - 0.5%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 1,215 1,286
------------
.............................................................................................
TAX-BACKED - 3.2%
General Obligation - 0.9%
NY New York City, Series A,
7.000% 08/01/07 1,000 1,099
PR Commonwealth of Puerto Rico,
5.375% 07/01/22 1,250 1,231
------------
2,330
------------
Mello-Roos/1915 Act - 0.1%
CA Carson Improvement, Series 1992,
7.375% 09/02/22 190 198
------------
Sales & Excise Tax - 2.2%
IL Metropolitan Pier & Exposition
Authority, McCormick Place Expansion
Project, Series A,
(a) 06/15/16 10,000 3,275
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Cont. PAR VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
TAX BACKED -Cont.
Sales & Excise Tax-Cont.
IL State Development Finance Authority,
City of Marion Project, Series 1991,
9.625% 09/15/21 $ 2,450 $ 2,520
------------
5,795
.............................................................................................
TRANSPORTATION - 12.2%
Air Transportation - 3.3%
CO Denver City & County
Special Facilities Airport,
United Airlines, Series 1992-A,
6.875% 10/01/32 1,645 1,705
IN Indianapolis Airport Authority,
Federal Express Project,
7.100% 01/15/17 2,000 2,163
TX Alliance Airport Authority:
American Airlines Project,
7.500% 12/01/29 1,600 1,712
Federal Express Corp., Series 1996,
6.375% 04/01/21 3,000 3,004
------------
8,584
------------
Airport - 3.2%
CO Denver City & County Airport
Airport System Series 1992-C,
6.125% 11/15/25 5,120 5,197
CO Denver City and County Airport,
Series 1992 B,
7.250% 11/15/23 2,855 3,116
------------
8,313
------------
Transportation - 1.5%
NY Metropolitan Transportation Authority,
Commuter Facilities Board, Series 7
Project,
5.625% 07/01/16 4,000 3,830
------------
Turnpike/Tollroad/Bridge - 4.2%
CA San Joaquin Hills Transportation
Corridor Agency, Senior Lien Toll Road,
Series 1993:
(a) 01/01/23 14,500 2,882
7.000% 01/01/30 865 928
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
6.750% 01/01/32 $ 1,500 $ 1,588
5.000% 01/01/33 6,130 5,333
------------
10,731
------------
- ---------------------------------------------------------------------------------------------
UTILITY - 9.7%
Individual Power Producer - 1.6%
PA State Economic Development Finance
Authority,
Colver Project, Series D,
7.125% 12/01/15 4,000 4,190
------------
Investor Owned - 4.7%
IL Bryant,
Central Illinois Light Co.,
Series 1993,
5.900% 08/01/23 5,000 5,031
IL Chicago,
Peolple's Gas, Light & Coke Co.,
Series 1990 A,
8.100% 05/01/20 2,000 2,212
NY State Energy Research & Development
Authority,
Consolidated Edison Co., Series 1991 A,
7.500% 01/01/26 2,000 2,149
PA Beaver County Industrial
Development Authority,
Ohio Edison Co., Series 1989 A,
7.750% 09/01/24 2,500 2,622
------------
12,014
------------
Municipal Electric - 1.2%
CA Colton Public Financing Authority,
Series 1995,
7.500% 10/01/20 2,000 2,087
VI Water and Power Authority Electric
Systems, Series 1991-A,
7.400% 07/01/11 1,000 1,060
------------
3,147
------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/December 31, 1996
- ---------------------------------------------------------------------------------------------
MUNICIPAL BONDS - Cont. PAR VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITY -Cont.
Water & Sewer - 2.2%
CT State Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/01/06 $ 1,250 $ 1,270
LA Public Facility Belmont Water,
Authority,
9.000% 03/15/24 (e) 820 854
MA State Industrial Finance Agency,
Massachusetts Environmental Services,
Series 1994 A,
8.750% 11/01/21 985 965
MS V Lakes Utility District,
8.250% 07/15/24 500 513
NJ State Economic Development
Authority,
Hills Development Co.,
10.500% 09/01/08 2,000 2,005
------------
5,607
------------
TOTAL MUNICIPAL BONDS (cost of $250,170)(f) 252,142
------------
SHORT-TERM OBLIGATIONS - 0.6%
- ---------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (G)
WA State Health Care Facilities
Authority
5.250% 01/01/18 400 400
WI State Health Facilities Authority,
Fransican Health Care,
Series A-1,
4.100% 01/01/16 1,200 1,200
------------
TOTAL SHORT-TERM OBLIGATIONS 1,600
------------
OTHER ASSETS & LIABILITIES, NET - 1.6% 4,026
- ---------------------------------------------------------------------------------------------
NET ASSETS-100% $ 257,768
------------
</TABLE>
16
<PAGE>
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) 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 December 31,
1996, the value of these securities amounted to $10,031 or 3.9% of net
assets.
(c) This issuer is in default of certain debt covenants. Income is not being
accrued.
(d) Accrued interest accumulates in the value of the security and is payable
at redemption.
(e) This is a restricted security which was acquired at a cost of $820,000. This
security represents less than 0.3% of the Fund's net assets at December 31,
1996.
(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, 1996.
<TABLE>
<CAPTION>
<S> <C>
Acronym Name
--------------------- ----------------------
RIB Residual Interest Bond
</TABLE>
See notes to financial statements.
17
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
(in thousands except for per share amount)
<S> <C> <C>
ASSETS
Investments at value (cost $250,170) $ 252,142
Short-term obligations 1,600
-----------
253,742
Receivable for:
Interest $ 5,432
Investments sold 131
Other 15 5,578
---------- -----------
Total Assets 259,320
LIABILITIES
Payable for:
Distributions 1,503
Accrued:
Deferred Trustees fees 2
Other 47
----------
Total Liabilities 1,552
-----------
NET ASSETS at value for 30,919
shares of beneficial interest outstanding $ 257,768
===========
Net asset value per share $ 8.34
===========
COMPOSITION OF NET ASSETS
Capital paid in $ 286,694
Undistributed net investment income 71
Accumulated net realized loss (30,969)
Net unrealized appreciation 1,972
-----------
$ 257,768
===========
</TABLE>
See notes to financial statements.
18
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 19,988
EXPENSES
Management fee $ 2,066
Transfer agent 79
Bookkeeping fee 67
Trustees fee 26
Custodian fee 8
Audit fee 42
Legal fee 167
Reports to shareholders 16
Other 103 2,574
------------- ------------
Net Investment Income 17,414
------------
NET REALIZED & UNREALIZED LOSS ON PORTFOLIO POSITIONS
Net realized loss (4,094)
Net unrealized depreciation during
the period (1,987)
------------
Net Loss (6,081)
------------
Net Increase in Net Assets from Operations $ 11,333
============
</TABLE>
See notes to financial statements.
19
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year ended
(in thousands) December 31
-------------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
<S> <C> <C>
Operations:
Net investment income $ 17,414 $ 18,441
Net realized loss (4,094) (4,446)
Net unrealized appreciation (depreciation) (1,987) 22,753
------------ -------------
Net Increase from Operations 11,333 36,748
Distributions:
From net investment income (18,032) (18,248)
------------ -------------
Total Increase (Decrease) (6,699) 18,500
NET ASSETS
Beginning of period 264,467 245,967
------------ -------------
End of period (including undistributed net
investment income of $71 and $598,
respectively) $ 257,768 $ 264,467
============ ==============
NUMBER OF FUND SHARES
Outstanding at end of period 30,919 30,919
============ ==============
</TABLE>
See notes to financial statements.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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 investment objective is to provide high current income, generally
exempt from Federal income taxes, by investing primarily in medium and lower
quality municipal securities. The Fund authorized 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.
21
<PAGE>
Notes to Financial Statements/December 31, 1996
- --------------------------------------------------------------------------------
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. 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
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
Investment activity: During the year ended December 31, 1996, purchases and
sales of investments, other than short-term obligations, were $40,214,290 and
$38,223,068, respectively.
Unrealized appreciation (depreciation) at December 31, 1996, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $ 12,472,406
Gross unrealized depreciation (10,500,795)
------------
Net unrealized appreciation $ 1,971,611
============
</TABLE>
At December 31, 1996, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
22
<PAGE>
Notes to Financial Statements/December 31, 1996
- -------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
------------ ----------------------
<S> <C> <C>
1998 $ 3,066,000
1999 3,140,000
2000 3,157,000
2001 5,578,000
2002 6,579,000
2003 5,268,000
2004 2,815,000
--------------------
$ 29,603,000
--------------------
</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.
23
<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
-----------------------------------------
1996 1995 1994
---------- ---------- -----------
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 8.550 $ 7.960 $ 8.670
---------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.566 0.597 0.616
Net realized and
unrealized gain (loss) (0.193) 0.583 (0.716)
---------- ----------- -----------
Total from Investment
Operations 0.373 1.180 (0.100)
---------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.583) (0.590) (0.610)
---------- ----------- -----------
Net asset value -
End of period $ 8.340 $ 8.550 $ 7.960
========== =========== ===========
Market price per share $ 8.250 $ 7.375 $ 6.875
========== =========== ===========
Total return - based on
market value (a) 20.09% 15.65% (9.83)%
========== =========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00%(b) 1.06%(b) 1.03%
Net investment income 6.74%(b) 7.15%(b) 7.44%
Portfolio turnover 15% 23% 20%
Net assets at end
of period (000) $ 257,768 $ 264,467 $ 245,967
</TABLE>
(a) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(b) Thebenefits derived from custody credits and directed brokerage arrangements
had no impact. Prior years' 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.
- -------------------------------------------------------------------------------
24
<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
----------------------
1993 1992
--------- ---------
<S> <C> <C>
$ 8.780 $ 8.910
--------- ---------
0.671 0.694
(0.106) (0.140)
--------- ---------
0.565 0.554
--------- ---------
(0.675) (0.684)
--------- ---------
$ 8.670 $ 8.780
--------- ---------
$ 8.250 $ 8.250
--------- ---------
7.96% 3.51%
--------- ---------
0.97% 0.96%
7.58% 7.86%
29% 15%
$ 268,130 $ 269,848
</TABLE>
25
<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 (The Fund) at December 31, 1996,
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, 1996 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 10, 1997
26
<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.
27
<PAGE>
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28
<PAGE>
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29
<PAGE>
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30
<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
1-617-575-3120
1-800-730-6001
Colonial High Income Municipal Trust mails one shareholder report to each
shareholder address. If you would like more than one report, please call
Colonial at 1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial High Income Municipal
Trust.
31
<PAGE>
[Colonial Mutual Funds Logo]
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President - Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (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
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; 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
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1997
A Liberty Financial Company (NYSE:L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
HI-02-264D-1296 M (2/97)
