[Graphic Omitted]
COLONIAL HIGH INCOME MUNICIPAL TRUST
Annual report
December 31, 1997
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COLONIAL HIGH INCOME MUNICIPAL TRUST HIGHLIGHTS
JANUARY 1, 1997 - DECEMBER 31, 1997
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.
The Fund is Designed to Offer:
o Potential for high tax-free income
o Professional management
o Expert credit analysis
Portfolio Manager Commentary: "In the municipal bond market, 1997 was marked by
continued tight supply and strong demand, although supply did increase somewhat
toward the end of the year. Late in the year, the Trust changed its strategy
with a view towards accumulating more non-cyclical holdings. Our overall
strategy remains based on the guiding principle of prudent risk management. We
continually analyze both our current holdings and new issues across sectors, and
decide to buy or sell a security based on whether it will increase value for
investors." -- Bonny Boatman
Colonial High Income Municipal Trust Performance
Distributions declared per share (1) $0.546
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NAV Market Price
12-month total return, assuming
reinvestment of all distributions 9.57% 11.60%
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Price per share $8.56 $8.63
(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 12/31/97)
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Housing ...................... 16.4%
Nursing ...................... 14.6%
Refunded ..................... 7.9%
Hospital ..................... 7.1%
Industrial ................... 6.0%
Quality Breakdown
(as of 12/31/97)
AAA: 9.6%
AA: 5.0%
A: 10.7%
BBB: 25.7%
BB: 1.5%
B: 0.3%
Non-rated: 46.5%
Short-term obligations & other: 0.7%
Sector and quality breakdowns are calculated as a percent of total investments,
including short-term obligations. 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.
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2
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PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present the annual report for Colonial High Income Municipal
Trust. This report reflects on the investment environment for the 12 months
ended December 31, 1997 and on the performance of your Fund.
The year just ended saw continued strong economic growth in the United States,
reflected by record highs in the stock market and the lowest unemployment rate
in a generation. In the first half of the year, concerns that this growth would
lead to renewed inflation led the Federal Reserve Board to raise short-term
interest rates. Inflation remained under control, and interest rates declined
through the second half of 1997, fueling a rally in the bond market. Our
economic expectations for 1998 include slowing economic growth and continued
subdued inflation.
In the area of municipal bonds, yield spreads between high and low quality bonds
tightened as the year progressed. That meant investors were not being rewarded
for taking on the additional risk associated with lower quality, non-rated
issues. These bonds also remained in short supply for most of the year,
resulting in higher prices. Even when the supply increased at the end of the
year, the price of lower quality bonds kept rising as investors increasingly
"reached" for yield. This benefited the types of bonds held by your Fund.
Municipal bond funds such as Colonial High Income Municipal Trust offer
investors a number of attractive benefits including tax-exempt income that
compares favorably to inflation, and diversification of your fixed-income
portfolio.
We look forward to updating you on the Fund's performance six months from now,
in the semiannual report.
Respectfully,
/S/ Harold W. Cogger
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Harold W. Cogger
President
February 9, 1998
Because market conditions change frequently, there can be no assurance that the
trends described herein will continue.
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3
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INVESTMENT PORTFOLIO
DECEMBER 31, 1997 (IN THOUSANDS)
MUNICIPAL BONDS - 99.4% PAR VALUE
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EDUCATION - 3.9%
Education - 1.1%
CA Statewide Communities Development Corp.,
J. Paul Getty Trust Center,
5.000% 10/01/23 (a) $ 3,000 $ 2,925
---------
Local General Obligations - 2.8%
CA Roseville Unified High School District,
Series B,
(b) 06/01/20 (a) 6,000 1,875
NY New York City:
Series 1997-A,
7.000% 08/01/07 1,000 1,164
Series C,
5.000% 08/01/23 (c) 700 663
5.375% 11/15/17 1,880 1,873
Series 1997-H,
6.000% 08/01/17 1,400 1,477
TX Irving Independent School District,
(b) 02/15/18 1,000 360
---------
7,412
---------
................................................................................
HEALTHCARE - 24.2%
Hospital - 7.1%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare,
Series 1989,
11.000% 10/01/19 3,375 3,442
CA State Health Facilities Financing
Authority, Kaiser Permanente,
Series 1989-A,
(b) 10/01/12 5,500 2,571
CT Health Facilities Authority,
Special Care Hospital,
5.375% 07/01/17 500 496
GA Clayton Hospital Authority,
The Woodlands Foundation Inc.,
Series 1991-A,
9.750% 05/01/21 2,500 1,625
IL State Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 07/01/24 2,000 2,455
4
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Investment Portfolio/December 31, 1997
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MN St. Paul Housing & Redevelopment
Authority, Healtheast Project,
Series A,
5.700% 11/01/15 $ 1,000 $ 1,016
MS Lowndes County,
Golden Triangle Regional Medical Center,
Series 1990,
8.500% 02/01/10 250 270
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/27 1,000 1,092
PA Allegheny County Hospital Development
Authority, Ohio Valley General Hospital,
5.450% 01/01/28 (c) 700 704
PA Delaware County Authority,
Southeastern Pennsylvania Obligated Group,
Series 1996:
6.000% 12/15/16 1,400 1,472
6.000% 12/15/26 1,000 1,048
PA Mount Pleasant Business District Authority,
Frick Hospital,
5.750% 12/01/27 1,300 1,313
VT State Educational & Health
Buildings Authority,
Springfield Hospital,
Series A,
7.750% 01/01/13 1,115 1,256
--------
18,760
--------
Intermediate Care Facilities - 1.7%
IL Champaign,
Hoosier Care Inc., 1st Mortgage,
Series 1989-A,
9.750% 08/01/19 1,445 1,543
MA State Health & Educational
Facilities Authority,
Corporation for Independent Living,
8.100% 07/01/18 730 798
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 930 1,107
Series 1992-C,
9.750% 08/01/19 905 1,077
---------
4,525
---------
5
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Investment Portfolio/December 31, 1997
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MUNICIPAL BONDS - CONT. PAR VALUE
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HEALTHCARE - CONT.
Lifecare - 0.2%
TN Metropolitan Government Nashville & Davidson
County, Richland Place Inc. Project,
5.500% 05/01/23 (c) $ 500 $ 500
----------
Nursing Home - 15.2%
CO Health Care Facilities Authority:
American Housing Foundation Inc.,
Series 1990-A,
10.250% 12/01/20 1,400 1,400
Pioneer Health Care,
Series 1989,
10.500% 05/01/19 2,000 2,073
FL Flagler County Industrial
Development Authority,
South Florida Properties,
Series 1988,
10.500% 12/01/18 (d) 2,420 1,936
FL Gadsden County Industrial
Development Authority,
Florida Properties, Inc.,
Series 1988-A,
10.450% 10/01/18 1,890 1,942
FL Jacksonville Industrial Development
Beverly Enterprises,
9.750% 10/01/11 875 946
FL Leon County,
Beverly Enterprises, Inc.,
Series 1985,
9.800% 06/01/11 785 881
IA State Finance Authority,
Care Initiatives Project,
Series 1996,
9.250% 07/01/25 1,000 1,348
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987-A,
11.500% 10/01/17 1,480 1,529
IN Michigan City Health Facilities,
Metropolitan Health Foundation
Inc., Project,
10.000% 11/01/22 3,085 3,085
MA Boston,
St. Joseph Nursing Care Center, Inc.
Series 1990,
10.000% 01/01/20 950 1,034
6
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Investment Portfolio/December 31, 1997
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MA State Industrial Finance Agency,
American Health Foundation Inc.,
Series 1989,
10.125% 03/01/19 $ 2,005 $ 1,504
MO Saint Louis County Industrial
Development Authority,
10.250% 12/01/16 1,760 1,806
NJ State Economic Development Authority,
Geriatric & Medical Service, Inc.,
Series B,
10.500% 05/01/20 2,000 2,122
NM City of Clovis,
Retirement Ranches Project:
10.750% 04/01/19 210 225
10.750% 04/01/19 2,115 2,268
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc., 1st Mortgage,
Series 1989,
10.125% 05/01/19 2,583 2,506
PA Washington County Industrial
Development Authority, Central States,
Series 1989,
10.250% 11/01/19 1,835 1,876
TN Metropolitan Government, Nashville
& Davidson Counties Health &
Education Facilities, Central States, 1st Mortgage,
Series 1989,
10.250% 11/01/19 1,725 1,764
TX Bell County Health Facilities
Development Corp., Heartway Corp. Project:
(b) 03/01/19 255 63
9.500% 03/01/19 1,500 1,526
TX Kirbyville Heartway 3:
Series A,
10.000% 03/20/18 (c) 744 743
Series B,
(b) 03/20/04 (c) 106 53
TX Whitehouse Health Facilities
Development Corporation, Oak Brook
Health Care Center,
Series 1989,
10.000% 12/01/19 1,780 1,865
VA Virginia Beach Development Authority,
Beverly Enterprises,
Series 1985,
10.000% 04/01/10 1,670 1,837
7
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Investment Portfolio/December 31, 1997
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MUNICIPAL BONDS - CONT. PAR VALUE
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HEALTHCARE - CONT.
Nursing Home - Cont.
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
7.100% 02/20/36 $ 1,000 $ 1,145
WI State Health & Educational Facilities
Authority, Metro Health Foundation, Inc.,
Series 1993,
10.000% 11/01/22 (e) 2,775 2,775
-----------
40,252
-----------
................................................................................
HOUSING - 16.3%
Assisted Living/Senior - 3.3%
FL Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 05/01/24 2,500 2,684
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 1,300 1,438
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 1,740 1,757
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility,
Series 1993-A,
8.250% 05/01/23 860 917
TX Bell County Health Facilities
Development Corp., Care Institutions, Inc.,
9.000% 11/01/24 1,800 2,016
----------
8,812
----------
Multi-Family - 9.9%
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 1,000 800
GA Augusta Housing Authority,
Mountain Ridge Holdings II Project,
Series A,
8.960% 09/01/24 (d) 1,880 1,222
8
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Investment Portfolio/December 31, 1997
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MN Lakeville,
Southfork Apartments Project:
Series 1989-A,
9.875% 02/01/20 $ 2,570 $ 2,605
Series 1989-B,
(f) 02/01/20 1,099 2,454
MN Washington County Housing &
Redevelopment Authority,
Cottages of Aspen,
Series 1992,
9.250% 06/01/22 1,075 1,196
MN White Bear Lake,
Birch Lake Townhome Project:
Series 1989-A,
10.250% 07/15/19 2,200 2,236
Series 1989-B,
(f) 7/15/2019 (g) 747 1,402
NC Eastern Carolina Regional Housing
Authority, New River Apartments-Jacksonville,
Series 1994,
8.250% 09/01/14 1,900 1,995
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
7.375% 06/01/21 (e) 421 422
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993-A,
8.500% 12/01/16 (e) 5,098 5,321
TN Franklin Industrial Board,
Landings Apartment Project,
Series 1996-B,
8.750% 04/01/27 950 973
TX Galveston Pass Health Facilities Center
Pass Through Certificates,
8.000% 08/01/23 1,000 1,073
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments,
Series 1990-A,
10.000% 01/01/21 1,500 1,537
-----------
26,086
-----------
Single-Family - 3.1%
LA Louisiana Housing Finance Agency,
Residual Lien Mortgage,
Series 1992,
7.375% 09/01/13 715 752
9
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Investment Portfolio/December 31, 1997
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MUNICIPAL BONDS - CONT. PAR VALUE
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HOUSING - CONT.
Single-Family - Cont.
NE State Investment Finance Authority,
Single-Family Mortgage, RIB (variable rate),
Series 1990-B,
11.155% 03/15/22 $ 1,500 $ 1,678
OH State Housing Finance Agency,
Single-Family Mortgage, RIB (variable rate),
Series B-4,
9.517% 03/31/31 975 1,090
TX Bexar County Housing Finance Corp.
GNMA Collateralized Mortgage,
Series 1989-A,
8.200% 04/01/22 2,760 2,901
TX Harris County Housing Finance Corp.,
Series 1987,
8.875% 12/01/17 435 446
WA State Housing Finance Commission,
Series 1992 D-1,
6.150% 01/01/26 1,200 1,335
-----------
8,202
-----------
................................................................................
OTHER - 7.9%
Refunded/Escrowed (h)
AZ Apache County School District
Number 010 Round Valley
Project of 1987,
Series 1990-C,
9.875% 07/01/05 2,000 2,195
CA Colton Public Financing Authority,
Series 1995,
7.500% 10/01/20 2,000 2,343
CO Denver City and County Airport:
Series B,
7.250% 11/15/23 580 661
Series C,
6.125% 11/15/25 2,280 2,559
DE State Economic Development Authority,
Riverside Hospital,
Series 1992-A,
9.500% 01/01/22 880 1,147
ID State Health Facilities Authority,
IHC Hospitals, Inc.,
8.290% 02/15/21 1,750 2,034
IL State Health Facilities Authority,
Hinsdale Hospital,
Series 1990-C,
9.500% 11/15/19 650 752
10
<PAGE>
Investment Portfolio/December 31, 1997
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MA State Industrial Finance Agency,
Series 1990,
9.000% 10/01/20 $ 2,315 $ 2,648
MN Mille Lacs Capital Improvement Authority,
Mille Lacs Bond of Chippewa,
Series 1992-A,
9.250% 11/01/12 1,055 1,306
MO Hannibal Industrial Development Authority,
Regional Healthcare Systems,
Series 1992,
9.500% 03/01/22 2,250 2,751
NC Lincoln County,
Lincoln County Hospital,
9.000% 05/01/07 490 593
WA State Health Care Facilities Authority,
Grays Harbor Community Hospital:
Series 1993,
7.200% 07/01/03 170 186
Series 1993,
8.025% 07/01/20 1,480 1,661
-----------
20,836
-----------
................................................................................
OTHER REVENUE - 16.1%
Chemicals - 4.3%
LA Saint Charles Parish,
Union Carbide Corp.,
Series 1992,
7.350% 11/01/22 3,000 3,338
SC York County,
Hoechst Celanese Corp.,
Series 1994,
5.700% 01/01/24 4,000 4,110
TX Port Corpus Christi Authority,
Hoechst Celanese Corp,
7.500% 08/01/12 3,500 3,850
-----------
11,298
-----------
Hotels - 1.0%
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 2,500 2,522
-----------
Industrial - 6.0%
CO Mesa County Industrial Development
Joy Technologies Incorporated,
Series 1992,
8.500% 09/15/06 1,000 1,139
11
<PAGE>
Investment Portfolio/December 31, 1997
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MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
OTHER REVENUE - CONT.
Industrial - Cont.
IL State Development Finance Authority,
Armstrong World Industries, Inc. Project,
5.950% 12/01/24 $ 1,000 $ 1,076
IL Will-Kankakee Regional Development
Authority, Flanders Corp.,
6.500% 12/15/17 1,000 1,020
IN State Development Finance Authority,
Inland Steel,
Series A,
5.750% 10/01/11 750 776
LA Southern Louisiana Port Commission,
Cargill, Inc. Project,
5.850% 04/01/17 1,000 1,071
MA State Industrial Finance Agency,
House of Bianchi Inc.,
8.750% 06/01/18 335 344
MN Brooklyn Park,
TL Systems Corp.,
Series 1991,
10.000% 09/01/16 770 955
OH Cuyahoga County,
Joy Technologies, Inc.,
Series 1992,
8.750% 09/15/07 550 631
TN McKenzie Individual Development Board,
American Lantern Co.,
10.500% 05/01/16 2,107 2,107
TX Trinity River Authority,
Texas Instruments Project,
Series 1996,
6.200% 03/01/20 1,000 1,063
WA Pilchuck Public Development Corp.,
Goodrich (B.F.) Co. Tramco Project,
Series 1993,
6.000% 08/01/23 5,420 5,603
-----------
15,785
-----------
Oil & Gas - 0.5%
NY State Environmental Facilities Corp.,
Occidental Petroleum Corp. Project,
Series 1995,
6.100% 11/01/30 1,300 1,360
-----------
12
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Investment Portfolio/December 31, 1997
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Other - 2.0%
DC District of Columbia,
Carnegie Endowment,
Series 1996,
5.750% 11/15/10 $ 2,000 $ 2,142
IN Hammond,
Sewer and Solid Waste Disposal,
American Maize Products Co.,
Series 1994,
8.000% 12/01/24 2,000 2,350
MD Baltimore,
Park Charles Project,
Series 1986,
8.000% 01/01/10 840 923
-----------
5,415
-----------
Paper Products - 1.5%
GA Rockdale County Development Authority,
Solid Waste Disposal, Visy Paper, Inc.,
Series 1993,
7.500% 01/01/26 3,600 3,938
-----------
Retail - 0.8%
OH Lake County,
North Madison Properties,
Series 1993,
8.819% 09/01/11 765 830
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/01/10 1,260 1,391
-----------
2,221
-----------
................................................................................
RESOURCE RECOVERY - 2.8%
Disposal - 1.2%
CT State Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/01/06 1,050 1,106
MA State Industrial Finance Agency:
Massachusetts Environmental Services,
Series 1994-A,
8.750% 11/01/21 (d) 975 731
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 1,215 1,355
-----------
3,192
-----------
13
<PAGE>
Investment Portfolio/December 31, 1997
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MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
RESOURCE RECOVERY - CONT.
Resource Recovery - 1.6%
PA Delaware County Industrial
Development Authority, Series A,
6.200% 07/01/19 $ 4,000 $ 4,300
-----------
................................................................................
TAX-BACKED - 6.7%
Special Non-Property Tax - 2.1%
IL Metropolitan Pier & Exposition
Authority, McCormick Place Expansion
Project, Series A,
(b) 06/15/16 (a) 10,000 3,850
IL State Development Finance Authority,
City of Marion Project,
Series 1991,
9.625% 09/15/21 2,425 1,819
-----------
5,669
-----------
Special Property Tax - 0.6%
CA Carson,
Series 1992,
7.375% 09/02/22 185 200
CA Fontana Redevelopment Agency
Tax Allocation,
5.500% 10/01/27 700 699
CA Riverside County Public Financing Authority
Redevelopment Projects,
Series A,
5.500% 10/01/22 650 657
-----------
1,556
-----------
State Appropriated - 2.7%
NY Metropolitan Transportation Authority,
Commuter Facilities Board, Project:
Series 7,
5.625% 07/01/16 4,000 4,075
Series 1997-8,
5.250% 07/01/17 3,240 3,208
-----------
7,283
-----------
State General Obligations - 1.3%
PR Commonwealth of Puerto Rico,
5.375% 07/01/22 1,250 1,269
VI Virgin Islands Public Financing,
Series 1992-A,
7.250% 10/01/18 2,000 2,257
-----------
3,526
-----------
14
<PAGE>
Investment Portfolio/December 31, 1997
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TRANSPORTATION - 8.8%
Air Transportation - 3.0%
CO Denver City & County Airport,
United Airlines Inc.,
Series 1992-A,
6.875% 10/01/32 $ 1,645 $ 1,805
TN Memphis-Shelby County Airport Authority,
Federal Express Corp.,
5.350% 09/01/12 1,200 1,229
TX Alliance Airport Authority:
American Airlines Project,
7.500% 12/01/29 1,600 1,750
Federal Express Corp.,
Series 1996,
6.375% 04/01/21 3,000 3,251
-----------
8,035
-----------
Airport - 2.1%
CO Denver City and County Airport:
Series B,
7.250% 11/15/23 2,275 2,542
Series C,
6.125% 11/15/25 2,840 2,968
-----------
5,510
-----------
Toll Facilities - 3.7%
CA San Joaquin Hills Transportation
Corridor Agency,
Series 1993:
5.000% 01/01/33 6,130 5,839
6.750% 01/01/32 1,500 1,691
7.000% 01/01/30 775 883
NY State Throughway Authority,
5.000% 04/01/17 1,500 1,451
-----------
9,864
-----------
................................................................................
UTILITY - 12.7%
Individual Power Producer - 3.8%
FL Martin County Industrial
Development Authority,
Indiantown Cogeneration Project, Series 1994 A,
7.875% 12/15/25 1,000 1,169
15
<PAGE>
Investment Portfolio/December 31, 1997
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
UTILITY - CONT.
Individual Power Producer - Cont.
NY New York City Industrial Development Agency,
Brooklyn Navy Yard Bonds,
5.750% 10/01/36 $ 1,200 $ 1,207
NY Port Authority of New York & New Jersey,
KIAC Partners,
Series 1996 IV,
6.750% 10/01/11 2,000 2,230
PA State Economic Development Finance
Authority:
Colver Project,
Series D,
7.125% 12/01/15 4,000 4,440
Northampton Generating,
Series A,
6.500% 01/01/13 1,000 1,059
-----------
10,105
-----------
Investor Owned - 5.4%
AZ Pima County Industrial Development
Authority, Tucson Electric Power Co.,
Series A,
6.100% 09/01/25 750 765
IL Bryant,
Central Illinois Light Co.,
Series 1993,
5.900% 08/01/23 5,000 5,200
IL Chicago,
Peolple's Gas, Light & Coke Co.,
Series 1990-A,
8.100% 05/01/20 2,000 2,197
NM Farmington,
San Juan Public Service Co. Project,
Series D,
6.375% 04/01/22 1,300 1,396
NY State Energy Research & Development
Authority,
Consolidated Edison Co.,
Series 1991-A,
7.500% 01/01/26 2,000 2,140
PA Beaver County Industrial
Development Authority,
Ohio Edison Co.,
Series 1989-A,
7.750% 09/01/24 2,500 2,647
-----------
14,345
-----------
16
<PAGE>
Investment Portfolio/December 31, 1997
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Municipal Electric - 1.2%
VI Water and Power Authority Electric
Systems,
Series 1991-A,
7.400% 07/01/11 $ 960 $ 1,037
WA Chelan County Public Utilities District No. 1,
Columbia River Rock Hydroelectric,
(b) 06/01/14 (a) 5,000 2,219
-----------
3,256
-----------
Water & Sewer - 2.3%
LA Public Facility Belmont Water,
Authority,
9.000% 03/15/24 (e) 760 684
MS Five Lakes Utility District,
8.250% 07/15/24 500 400
NJ State Economic Development
Authority, Hills Development Co.,
10.500% 09/01/08 2,000 2,045
NY New York City Municipal Water
Finance Authority,
Series B,
5.250% 06/15/29 3,000 2,970
-----------
6,099
-----------
TOTAL MUNICIPAL BONDS (cost of $250,331) 263,589
-----------
OPTIONS - 0.0% CONTRACTS
- -------------------------------------------------------------------------------
March 1998 Treasury Bond Calls,
Strike price 120, expiration 02/21/98
(cost of $65) 6,500 124
-----------
TOTAL INVESTMENTS (cost of $250,396)(i) 263,713
-----------
SHORT-TERM OBLIGATIONS - 0.7% PAR
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (j)
IL State Development Finance Authority,
Ulich Children's Home Project,
4.150% 04/01/07 $ 500 500
IN Portage,
Pedcor Investments,
Series B,
4.250% 08/01/30 350 350
17
<PAGE>
Investment Portfolio/December 31, 1997
- --------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - CONT. PAR VALUE
- --------------------------------------------------------------------------------
MI Flint Hospital Building Authority,
Hurley Medical Center,
Series 1995-B,
4.150% 07/01/15 $ 900 $ 900
-----------
TOTAL SHORT-TERM OBLIGATIONS 1,750
-----------
OTHER ASSETS & LIABILITIES, NET - (0.1%) (273)
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $265,190
===========
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of
$9,058 are being used to collateralize the delayed delivery purchases
indicated in note (c) below, open futures contracts and options.
(b) Zero coupon bond.
(c) These securities have been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement time
(d) This issuer is in default of certain debt covenants. Income is not being
accrued.
(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 December 31,
1997, the value of these securities amounted to $9,202 or 3.5% of net
assets.
(f) Accrued interest accumulates in the value of the security and is payable
at redemption.
(g) The value of this security represents fair value as determined in good
faith under the direction of the trustees.
(h) 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.
(i) Cost for federal income tax purposes is $250,441.
(j) 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, 1997.
Acronym Name
-------------- ----------------------------
RIB Residual Interest Bond
Long futures contracts open at December 31, 1997:
Par value Unrealized
covered by Expiration appreciation
Type contracts month at 12/31/97
- -------------------------------------------------------------------------------
Treasury bond $ 4,500 March $ 36
See notes to financial statements.
18
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1997
(in thousands except for per share amount)
ASSETS
Investments at value (cost $250,396) $ 263,713
Short-term obligations 1,750
-----------
265,463
Cash $ 94
Receivable for:
Interest 5,341
Investments sold 91
Variation margin on futures 27
Other 15 5,568
-------------- -----------
Total Assets 271,031
LIABILITIES
Payable for:
Investments purchased 4,393
Distributions 1,410
Accrued:
Deferred Trustees fees 4
Other 34
--------------
Total Liabilities 5,841
-----------
NET ASSETS at value for 30,990
shares of beneficial interest outstanding $ 265,190
===========
Net asset value per share $ 8.56
===========
COMPOSITION OF NET ASSETS
Capital paid in $ 287,254
Undistributed net investment income 261
Accumulated net realized loss (35,678)
Net unrealized appreciation on:
Investments 13,317
Open futures contracts 36
-----------
$ 265,190
===========
See notes to financial statements.
19
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands)
INVESTMENT INCOME
Interest $ 19,494
EXPENSES
Management fee $ 2,091
Transfer agent 66
Bookkeeping fee 67
Trustees fee 19
Custodian fee 12
Audit fee 35
Legal fee 109
Reports to shareholders 16
Other 85 2,500
-------------- -----------
Net Investment Income 16,994
-----------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments (4,770)
Closed futures contracts 106
--------------
Net Realized Loss (4,664)
Net unrealized appreciation
during the period on:
Investments 11,345
Open futures contracts 36
--------------
Net Unrealized Appreciation 11,381
-----------
Net Gain 6,717
-----------
Increase in Net Assets from Operations $ 23,711
===========
See notes to financial statements.
20
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended December 31
--------------------------
INCREASE (DECREASE) IN NET ASSETS 1997 1996
Operations:
Net investment income $ 16,994 $ 17,414
Net realized loss (4,664) (4,094)
Net unrealized appreciation (depreciation) 11,381 (1,987)
---------- -----------
Net Increase from Operations 23,711 11,333
Distributions from net investment income (16,893) (18,032)
---------- -----------
6,818 (6,699)
Fund share transactions
Value of distributions reinvested 604 --
---------- -----------
Total Increase (Decrease) 7,422 (6,699)
NET ASSETS
Beginning of period 257,768 264,467
---------- -----------
End of period (including undistributed
net investment income of $261 and $71,
respectively) $ 265,190 $ 257,768
=========== ===========
NUMBER OF FUND SHARES
Issued for distributions reinvested 71 --
Outstanding at
Beginning of period 30,919 30,919
---------- -----------
End of period 30,990 30,919
=========== ===========
See notes to financial statements.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and asking price.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available 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 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 income, no
federal income tax has been accrued.
22
<PAGE>
Notes to Financial Statements/December 31, 1997
- --------------------------------------------------------------------------------
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, 1997, purchases and
sales of investments, other than short-term obligations, were $46,963,497 and
$42,846,610, respectively.
Unrealized appreciation (depreciation) at December 31, 1997, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 18,311,164
Gross unrealized depreciation (5,039,467)
-----------------
Net unrealized appreciation $ 13,271,697
=================
23
<PAGE>
Notes to Financial Statements/December 31, 1997
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
................................................................................
Capital loss carryforwards: At December 31, 1997, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
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
2004 2,815,000
2005 5,981,000
---------------------
$ 35,584,000
=====================
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.
The Fund may purchase or sell municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund will invest in these instruments
to hedge against the effects of changes in value of portfolio securities due to
anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks, which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out positions due to
different trading hours or the temporary absence of a liquid market for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Adviser of the future direction of interest rates. Any of these risks may
involve amounts exceeding the amount recorded in the Fund's Statement of Assets
and Liabilities at any given time.
24
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows:
Year ended December 31
-----------------------------------------
1997 1996 1995
---------- ---------- ----------
Net asset value -
Beginning of period $ 8.340 $ 8.550 $ 7.960
---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.552 0.566 0.597
Net realized and
unrealized gain (loss) 0.214 (0.193) 0.583
---------- ---------- ----------
Total from Investment
Operations 0.766 0.373 1.180
---------- ---------- ----------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.546) (0.583) (0.590)
---------- ----------- ----------
Net asset value -
End of period $ 8.560 $ 8.340 $ 8.550
========== ========== ==========
Market price per share $ 8.630 $ 8.250 $ 7.380
========== ========== ==========
Total return based on net
asset value (a) 9.57% 4.71% 15.70%
========== ========== ==========
Total return based on market
value (b) 11.60% 20.09% 15.65%
========== ========== ==========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.96% (c) 1.00% (c) 1.06% (c)
Net investment income 6.54% (c) 6.74% (c) 7.15% (c)
Portfolio turnover 17% 15% 23%
Net assets at end
of period (000) $265,190 $257,768 $264,467
(a) Total return at net asset value assuming all distributions reinvested.
(b) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(c) The benefits 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 income distributions will be treated as exempt income for federal income tax
purposes.
- ------------------------------------------------------------------------------
25
<PAGE>
FINANCIAL HIGHLIGHTS - Coont.
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows:
Year
ended December 31
--------------------------
1994 1993
------- ------
$ 8.670 $ 8.780
--------- ---------
0.616 0.671
(0.716) (0.106)
--------- ---------
(0.100) 0.565
--------- ---------
(0.610) (0.675)
--------- ---------
$ 7.960 $ 8.670
========== ==========
$ 6.880 $ 8.250
========== ==========
(0.75)% 6.57%
========== ==========
(9.83)% 7.96%
========== ==========
1.03% 0.97%
7.44% 7.58%
20% 29%
$245,967 $268,130
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES AND THE SHAREHOLDERS OF COLONIAL HIGH INCOME MUNICIPAL TRUST
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations, and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial High Income Municipal
Trust at December 31, 1997, 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, 1997
by correspondence with the custodian and brokers and the application of
alternative audit procedures where confirmations from brokers were not received,
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 9, 1998
27
<PAGE>
DIVIDEND REINVESTMENT PLAN
As a shareholder in the Fund you are eligible to participate in the 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 30 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.
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
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>
- --------------------------------------------------------------------------------
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.
Retired (formerly Chairman of the Board and 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
Retired Partner, Peat Marwick Main & Co. (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
HI-02/689E-1297 M (2/98)
- --------------------------------------------------------------------------------
