<PAGE>
[graphic omitted]
- --------------------------------------------------
COLONIAL HIGH INCOME MUNICIPAL TRUST ANNUAL REPORT
- --------------------------------------------------
DECEMBER 31, 1998
<PAGE>
COLONIAL HIGH INCOME MUNICIPAL TRUST HIGHLIGHTS
JANUARY 1, 1998 - DECEMBER 31, 1998
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: "During the past 12 months, investors were
challenged by significant interest rate volatility. In addition, tax-exempt
credit-quality spreads were very narrow for much of the year, indicating that
investors were not recognizing the relatively higher risk of lower-rated
municipal bonds. In response, we shifted our emphasis away from cyclical sectors
such as steel, paper and airlines, whose prices did not appear to reflect their
risk. During the final months of the year, this strategy was rewarded when
quality spreads began to widen, and prices of some bonds in those sectors
declined." -- Maureen Newman
COLONIAL HIGH INCOME MUNICIPAL TRUST PERFORMANCE
12-month distributions declared per share(1) $0.523
- --------------------------------------------------------------------------------
NAV Market Price
12-month total return, assuming
reinvestment of all distributions 5.45% 2.47%
- --------------------------------------------------------------------------------
Price per share on 12/31/98 $8.49 $8.31
Top Five Sectors(2) Quality Breakdown(2)
(as of 12/31/98) (as of 12/31/98)
- ------------------------------------ -------------------------------------
Nursing 14.1% AA: 3.4%
Refunded 12.9% A: 8.0%
Hospital 11.9% AAA: 12.1%
Multi Family 8.5% BBB: 25.4%
Industrial 5.1% Short-term obligations & other: 0.2%
BB: 3.1%
B: 0.3%
Non-rated: 47.5%
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.
(1) A portion of the Trust's income may be subject to the alternative minimum
tax.
(2) 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.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
I am pleased to present the annual report for Colonial High Income Municipal
Trust for the 12 months ended December 31, 1998.
Conditions for fixed-income investments varied considerably during the period.
While overall the environment for bonds was positive, a variety of domestic and
international factors created a volatile climate for bond fund investors. In the
U.S., the periodic fears of inflation that existed early in the period all but
vanished during the second half, as an increasing number of signs pointed toward
a gradually slowing U.S. economy. This environment set the stage for a series of
interest rate cuts by the Federal Reserve Board in the fall of 1998, helping
bond values end the period on a positive note.
The tax-exempt market generated a gain over the period, although it also
experienced volatility much like the broader bond market. In addition to the
trends mentioned above, supply and demand factors contributed to periods of
weakness in municipal bond prices as many tax-exempt issuers rushed to take
advantage of lower interest rates, increasing the amount of issuance. At times,
the market found it difficult to absorb this unusually high level of supply.
For investors seeking competitive levels of tax-free income as well as an
opportunity to diversify their fixed-income portfolio, Colonial High Income
Municipal Trust provides a solid investment option. Thank you for choosing
Colonial High Income Municipal Trust and for giving us the opportunity to serve
your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
February 11, 1999
Because market and economic conditions change, there can be no assurance that
the trends described above will continue.
<PAGE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1998 (IN THOUSANDS)
MUNICIPAL BONDS - 99.0% PAR VALUE
- -------------------------------------------------------------------------------
EDUCATION - 3.7%
EDUCATION
CA Statewide Communities Development Corp.,
J. Paul Getty Trust Center,
5.000% 10/1/23 (a) $ 2,250 $ 2,228
CA Statewide Communities Development Authority,
Crossroads School for Arts & Sciences,
Series 1998,
6.000% 8/1/28 (j) 1,400 1,426
IL State Development Finance Authority,
Latin School of Chicago,
Series 1998:
5.600% 8/1/18 350 354
5.650% 8/1/28 730 738
MA State Industrial Finance Agency:
Cambridge Friends School,
Series 1998,
5.800% 9/1/28 1,000 1,028
St. John's High School,
Series 1998,
5.350% 6/1/28 300 298
Wentworth Institute of Technology,
Series 1998,
5.750% 10/1/28 1,000 1,034
MI Southfield Economic Development Corp.,
Lawrence University,
Series 1998 A,
5.400% 2/1/18 1,000 997
NM Santa Fe,
College of Santa Fe,
Series 1998 A,
5.500% 10/1/28 250 252
VT State Educational & Health Buildings Finance Agency,
Norwich University,
Series 1998,
5.500% 7/1/21 1,500 1,511
--------
9,866
--------
...............................................................................
HEALTHCARE - 30.2%
HEALTH SERVICES - 0.1%
IL State Health Facilities Authority,
Midwest Physician Group Ltd.,
Series 1998,
5.500% 11/15/19 350 342
--------
HOSPITAL - 11.7%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare,
Series 1989,
11.000% 10/1/19 3,335 3,385
CA State Health Facilities Financing Authority,
Kaiser Permanente,
Series 1989 A,
(b) 10/1/12 (a) 5,500 2,873
CO State Health Care Facilities Authority,
National Jewish Medical & Research Center,
Series 1998,
5.375% 1/1/23 830 817
GA Baldwin County Hospital Authority,
Oconee Regional Medical Center,
Series 1998,
5.250% 12/1/22 500 483
GA Clayton Hospital Authority,
The Woodlands Foundation, Inc.,
Series 1991 A,
9.750% 5/1/21 (c) 2,500 1,625
GA Forsyth County Hospital Authority,
Georgia Baptist Healthcare System,
Series 1998,
6.000% 10/1/08 1,000 998
IL Health Facilities Authority,
Thorek Hospital & Medical Center,
5.250% 8/15/18 600 585
LA State Public Facilities Authority,
Pendleton Memorial Methodist Hospital,
Series 1998,
5.250% 6/1/17 1,250 1,213
MI Flint Hospital Building Authority,
Hurley Medical Center,
Series 1998 A,
5.375% 7/1/20 625 618
MN St. Paul Housing & Redevelopment Authority,
Healtheast Project,
Series A,
5.700% 11/1/15 1,000 1,019
MN Washington County Housing
& Redevelopment Authority,
Healtheast, Inc.,
Series 1998,
5.250% 11/15/12 1,500 1,478
MO State Housing Development Commission,
Freeman Health Systems,
Series 1998,
5.250% 2/15/18 750 737
MS Lowndes County,
Golden Triangle Regional Medical Center,
Series 1990,
8.500% 2/1/10 235 249
MS State Business Finance Corp.,
Medical Foundation, Inc.,
Series 1998,
5.625% 7/1/23 1,450 1,452
NH State Higher Educational & Health Facilities Authority,
Littleton Hospital Assoc., Inc.:
5.900% 5/1/28 780 776
Series 1998 A,
6.000% 5/1/28 625 633
OH Belmont County,
East Ohio Regional Hospital,
Series 1998,
5.700% 1/1/13 1,875 1,854
OH Doctors OhioHealth Corp.,
5.600% 12/1/28 (d) 2,150 2,101
OH Sandusky County,
Series 1998,
5.150% 1/1/10 250 253
PA Allegheny County Hospital Development,
Ohio Valley General Hospital,
Series 1998 A,
5.450% 1/1/28 1,000 994
PA Mount Pleasant Business District Authority,
Frick Hospital,
5.750% 12/1/27 1,300 1,322
PA Pottsville Hospital Authority,
5.500% 7/1/18 1,000 995
TX Baylor Richardson Hospital,
5.625% 12/1/28 (d) 750 739
TX Lufkin Health Facilities Development Corp.,
Memorial Health Systems of East Texas,
Series 1998,
5.700% 2/15/28 1,120 1,131
VT State Educational & Health Buildings Authority,
Springfield Hospital,
Series A,
7.750% 1/1/13 1,115 1,253
VT State Educational & Health Buildings Finance Agency,
Brattleboro Memorial Hospital,
5.375% 3/1/28 1,325 1,297
--------
30,880
--------
INTERMEDIATE CARE FACILITIES - 1.8%
IL Champaign,
Hoosier Care, Inc.,
Series 1989-A,
9.750% 8/1/19 1,425 1,489
MA State Health & Educational Facilities Authority,
Corp. for Independent Living,
8.100% 7/1/18 725 816
PA Economic Development Northwestern
Human Services, Series 1998-A,
5.250% 6/1/14 2,510 2,453
--------
4,758
--------
LIFECARE - 2.7%
CO State Health Care Facilities Authority,
National Benevolent Association,
Series 1998-B,
5.250% 2/1/28 750 738
KY State Economic Development Finance Authority,
Christian Church Homes of Kentucky, Inc.,
Series 1998,
5.500% 11/15/30 750 746
MI State Strategic Fund,
Holland Home,
Series 1998,
5.750% 11/15/28 400 397
MN Columbia Heights,
Crest View Corp.,
Series 1998,
6.000% 3/1/33 740 742
NH State Higher Educational & Health Facilities Authority,
Rivermead at Peterborough,
Series 1998:
5.625% 7/1/18 500 493
5.750% 7/1/28 500 498
PA Philadelphia Authority for Industrial Development,
Baptist Home of Philadelphia, Series 1998 A:
5.500% 11/15/18 360 356
5.600% 11/15/28 570 555
TN Metropolitan Government,
Nashville & Davidson County,
Blakeford at Green Hills,
Series 1998,
5.650% 7/1/24 600 590
TX Abilene Health Facilities Development Corp.,
Sears Methodist Retirement Obligation Group,
Series 1998 A,
5.900% 11/15/25 1,000 991
WI State Health & Educational Facilities Authority,
Attic Angel Obligated Group,
5.750% 11/15/27 1,000 978
--------
7,084
--------
NURSING HOME - 13.9%
CO State Health Facilities Authority:
American Housing Foundation, Inc.,
Series 1990 A,
10.250% 12/1/20 1,300 1,300
Pioneer Health Care,
Series 1989,
10.500% 5/1/19 2,000 2,086
CO State Health Facilities Authority, Volunteers of
America Care Facilities, Inc., Series 1998 A:
5.450% 7/1/08 300 300
5.750% 7/1/20 865 852
FL Gadsden County Industrial Development Authority,
Florida Properties, Inc.,
Series 1988 A,
10.450% 10/1/18 1,865 1,894
IA State Finance Authority,
Care Initiatives Project:
Series 1996,
9.250% 7/1/25 1,000 1,350
Series 1998 B:
5.750% 7/1/18 550 550
5.750% 7/1/28 1,475 1,468
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/1/17 1,455 1,498
IN Metro Health,
6.400% 12/1/33 1,210 1,201
IN Michigan City Health Facilities,
Metro Health Foundation, Inc. Project,
10.000% 11/1/22 3,085 3,085
KS Washington County Industrial Development Authority,
Central States, Series 1989,
10.250% 11/1/19 1,835 1,872
MA Boston,
St. Joseph Nursing Care Center, Inc.,
Series 1990,
10.000% 1/1/20 (e) 935 1,002
MA State Industrial Finance Agency,
American Health Foundation, Inc.,
Series 1989,
10.125% 3/1/19 (c) 1,975 1,481
MN Minneapolis,
Walker Methodist Senior Services Group,
Series 1998 A,
6.000% 11/15/28 1,200 1,209
NJ State Economic Development Authority,
Geriatric & Medical Service, Inc.,
Series B,
10.500% 5/1/20 2,000 2,111
NM State Hospital Equipment Loan Council,
Memorial Medical Center,
Series 1998,
5.500% 6/1/28 1,220 1,203
PA Chester County Industrial Development,
Pennsylvania Nursing Home, Inc.,
Series 1989,
10.125% 5/1/19 (c) 2,548 2,344
TN Metropolitan Government,
Nashville & Davidson Counties Health
& Education Facilities, Central States,
Series 1989,
10.250% 11/1/19 1,705 1,739
TX Bell County Health Facilities Development Corp.,
Heartway Corp. Project:
(b) 3/1/19 255 64
9.500% 3/1/19 1,500 1,528
TX Kirbyville Health Facilities Development Corp.,
Heartway III Project:
Series 1997 A,
10.000% 3/20/18 732 736
Series 1997 B,
(b) 3/20/04 106 58
TX Whitehouse Health Facilities Development Corp.,
Oak Brook Health Care Center,
Series 1989,
10.000% 12/1/19 1,755 1,865
WA Kitsap County Housing Authority,
Martha & Mary Nursing Home,
7.100% 2/20/36 1,000 1,184
WI State Health & Educational Facilities Authority,
Metro Health Foundation, Inc.,
Series 1993,
8.000% 11/1/22 2,775 2,775
--------
36,755
--------
...............................................................................
HOUSING - 15.7%
ASSISTED LIVING/SENIOR - 4.6%
CA Abag Finance Authority for
Non-Profit Corps.,
Eskaton Gold River Lodge,
Series 1998:
6.375% 11/15/15 (k) 750 743
6.375% 11/15/28 (k) 550 540
IL Clarendon Hills Residential Facilities,
Churchill Estate,
Series 1998 A:
6.750% 3/1/24 1,050 1,068
6.750% 3/1/31 1,370 1,394
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 6/1/25 1,300 1,463
MA Boston Industrial Development Finance Authority,
Springhouse, Inc.,
Series 1988,
5.875% 7/1/20 605 603
MN Roseville,
Care Institute, Inc.,
Series 1993,
7.750% 11/1/23 1,740 1,760
PA Montgomery County Industrial Development Authority,
Assisted Living Facility,
Series 1993-A,
8.250% 5/1/23 850 942
TX Bell County Health Facilities Development Corp.,
Care Institute, Inc.,
9.000% 11/1/24 1,800 2,063
WI State Health & Educational Facilities Authority:
Clement Manor, Series 1998,
5.750% 8/15/24 600 581
United Lutheran Program for Aging, Inc.,
5.700% 3/1/28 1,000 989
--------
12,146
--------
MULTI-FAMILY - 9.0%
DE Wilmington,
Electra Arms Senior Association Project,
6.250% 6/1/28 1,000 980
FL State Housing Finance Agency,
Windsong Apartments,
Series 1993 C,
9.250% 1/1/19 1,000 900
GA Augusta Housing Authority,
Mountain Ridge Holdings II Project,
Series A,
8.960% 9/1/24 (c) 1,880 1,060
MN Lakeville,
Southfork Apartments Project:
Series 1989 A,
9.875% 2/1/20 2,570 2,583
Series 1989 B,
(f) 2/1/20 1,056 1,268
MN Washington County Housing & Redevelopment Authority,
Cottages of Aspen,
Series 1992,
9.250% 6/1/22 1,065 1,174
MN White Bear Lake,
Birch Lake Townhome Project:
Series 1989-A,
10.250% 7/15/19 2,200 2,233
Series 1989-B,
(f) 7/15/19 735 220
NC Eastern Carolina Regional Housing Authority,
New River Apartments-Jacksonville,
Series 1994,
8.250% 9/1/14 1,845 1,995
NY Nyack Housing Assistance Corp.,
Nyack Plaza Apartments,
7.375% 6/1/21 (g) 394 395
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993 A,
9.250% 12/1/16 (g) 5,098 5,251
TN Franklin Industrial Board,
Landings Apartment Project,
Series 1996 B,
8.750% 4/1/27 935 957
TX Galveston Health Facilities Center,
Pass Through Certificates,
8.000% 8/1/23 1,000 1,076
TX State Department of Housing & Community Affairs,
Pebble Brooks Apartments,
Series 1998,
5.500% 12/1/18 1,000 1,024
VA Alexandria Redevelopment & Housing Authority,
Courthouse Commons Apartments,
Series 1990-A,
10.000% 1/1/21 1,500 1,530
WA Vancouver Housing Authority,
Series I,
5.500% 3/1/28 1,000 1,015
--------
23,661
--------
SINGLE FAMILY - 2.1%
LA Louisiana Housing Finance Agency,
Residual Lien Mortgage, Series 1992,
7.375% 9/1/13 (f) 505 536
OH State Housing Finance Agency,
Series B-4, IFRN (variable rate),
10.226% 3/31/31 875 977
TX Bexar County Housing Finance Corp.,
GNMA Collateralized Mortgage,
Series 1989-A,
8.200% 4/1/22 2,340 2,423
TX Harris County Housing Finance,
Corp. Single Family, Series 1987,
8.875% 12/1/17 270 275
WA State Housing Finance Commission,
Series 1992 D-1,
6.150% 1/1/26 1,165 1,287
--------
5,498
--------
...............................................................................
OTHER - 14.0%
OTHER - 1.2%
IN Hammond,
American Maize Products Co.,
Series 1994,
8.000% 12/1/24 2,000 2,328
MD Baltimore,
Park Charles Project,
Series 1986,
8.000% 1/1/10 810 875
--------
3,203
--------
REFUNDED/ESCROWED (h) - 12.8%
CA Colton Public Financing Authority,
Series 1995,
7.500% 10/1/20 2,000 2,335
CA San Joaquin Hills Transportation Corridor Agency,
Series 1993:
6.750% 1/1/32 (a) 1,500 1,699
7.000% 1/1/30 775 885
CO Denver City and County Airport:
Series B,
7.250% 11/15/23 580 662
Series C,
6.125% 11/15/25 2,280 2,504
FL Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 5/1/24 2,500 3,072
ID State Health Facilities Authority,
IHC Hospitals, Inc.,
8.470% 2/15/21 1,750 2,151
IL State Health Facilities Authority:
Edgewater Medical Center,
Series A,
9.250% 7/1/24 1,985 2,521
Hinsdale Hospital,
Series 1990 C,
9.500% 11/15/19 620 698
MA State Industrial Finance Agency,
Tunnel Revenue, Series 1990,
9.000% 10/1/20 2,280 2,534
MN Mille Lacs Capital Improvement Authority,
Mille Lacs Band of Chippewa,
Series 1992 A,
9.250% 11/1/12 1,020 1,242
NC Lincoln County,
Lincoln County Hospital,
9.000% 5/1/07 455 550
NM City of Clovis,
Retirement Ranches Project:
10.750% 4/1/19 2,300 2,409
PA Delaware County Authority,
Southeastern Pennsylvania Obligated Group,
Series 1996:
6.000% 12/15/26 1,000 1,139
6.000% 12/15/16 1,400 1,582
TN Shelby County, Health, Education,
& Housing Facilities Board,
Open Arms Development Center:
Series 1992-A,
9.750% 8/1/19 920 1,298
Series 1992-C,
9.750% 8/1/19 895 1,263
VI Virgin Islands Public Financing,
Series 1992 A,
7.250% 10/1/18 2,000 2,285
VI Water and Power Authority Electric Systems,
Series 1991-A,
7.400% 7/1/11 920 1,008
WA State Health Care Facilities Authority,
Grays Harbor Community Hospital,
Series 1993:
7.200% 7/1/03 170 181
8.025% 7/1/20 1,480 1,630
--------
33,648
--------
...............................................................................
OTHER REVENUE - 9.2%
CHEMICALS - 1.2%
LA Saint Charles Parish,
Union Carbide Corp.,
Series 1992,
7.350% 11/1/22 3,000 3,289
--------
INDUSTRIAL - 5.0%
CO Mesa County Industrial Development Revenue,
Joy Technologies, Inc. Project,
Series 1992,
8.500% 9/15/06 1,000 1,111
IL State Development Finance Authority,
Armstrong World Industries, Inc. Project,
5.950% 12/1/24 1,000 1,112
IL Will-Kankakee Regional Development Authority,
Flanders Corp./Precisionaire Project,
Series 1997,
6.500% 12/15/17 975 1,032
LA Southern Louisiana Port Commission,
Cargill, Inc. Project,
5.850% 4/1/17 1,000 1,070
MA State Industrial Finance Agency,
House of Bianchi, Inc.,
8.750% 6/1/18 335 345
MI State Strategic Fund,
Michigan Sugar Co., Sebewaing Project,
Series 1998 A,
6.250% 11/1/15 1,250 1,248
MN Brooklyn Park,
TL Systems Corp.,
Series 1991,
10.000% 9/1/16 755 918
NV Henderson Public Improvement Trust,
Dongsung America Co., Inc., Series 1998,
7.000% 11/1/10 500 502
OH Cuyahoga County,
Joy Technologies, Inc.,
Series 1992,
8.750% 9/15/07 550 615
TN McKenzie Individual Development Board,
American Lantern Co.,
10.500% 5/1/16 (c) 2,086 1,252
TX Trinity River Authority,
Texas Instruments Project,
Series 1996,
6.200% 3/1/20 1,000 1,088
VA Dongsung America,
7.250% 11/1/15 500 501
WA Pilchuck Public Development Corp.,
Goodrich (B.F.) Co. Tramco Project,
Series 1993,
6.000% 8/1/23 2,420 2,490
--------
13,284
--------
OIL & GAS - 0.5%
NY State Environmental Facilities Corp.,
Occidental Petroleum Corp. Project,
Series 1995,
6.100% 11/1/30 1,300 1,363
--------
PAPER PRODUCTS - 0.7%
GA Rockdale County Development Authority,
Solid Waste Disposal, Visy Paper, Inc.,
Series 1993,
7.500% 1/1/26 1,800 1,917
--------
RECREATION - 0.5%
NM Red River Sports Facility,
Red River Ski Area Project,
Series 1998,
6.450% 6/1/07 1,180 1,187
--------
RETAIL - 1.3%
NJ State Economic Development Authority,
Glimcher Properties L.P. Project,
6.000% 11/1/28 1,250 1,254
OH Lake County,
North Madison Properties,
Series 1993,
8.819% 9/1/11 765 878
VA Virginia Beach Development Authority,
SC Diamond Associates, Inc.,
8.000% 12/1/10 1,180 1,316
--------
3,448
--------
...............................................................................
RESOURCE RECOVERY - 3.0%
DISPOSAL - 1.2%
CT State Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/1/06 965 1,107
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 9/1/05 1,125 1,245
MA State Industrial Finance Agency,
Massachusetts Environmental Services,
Series 1994 A,
8.750% 11/1/21 (c) 975 780
--------
3,132
--------
RESOURCE RECOVERY - 1.8%
MA State Industrial Finance Agency,
Ogden Hill Project,
Series 1998 A,
5.500% 12/1/13 500 511
PA Delaware County Industrial Development Authority,
Series A,
6.200% 7/1/19 4,000 4,261
--------
4,772
--------
TAX-BACKED - 7.4%
LOCAL GENERAL OBLIGATIONS - 1.2%
NY New York City:
Series 1997 A,
7.000% 8/1/07 1,000 1,187
Series 1997 H,
6.000% 8/1/17 1,400 1,526
TX Irving Independent School District,
Series 1997,
(b) 2/15/18 (a) 1,000 378
--------
3,091
--------
SPECIAL NON-PROPERTY TAX - 2.3%
IL Metropolitan Pier & Exposition Authority,
McCormick Place Expansion Project,
Series A,
(b) 6/15/16 (a) 10,000 4,138
IL State Development Finance Authority,
City of Marion Project, Series 1991,
9.625% 9/15/21 2,400 1,800
--------
5,938
--------
SPECIAL PROPERTY TAX - 1.5%
CA Carson,
Series 1992,
7.375% 9/2/22 185 199
CA Poway Community Facilities District No. 88-1,
Parkway Business Center,
Series 1998,
6.750% 8/15/15 600 656
CA Riverside County Public Financing Authority,
Redevelopment Projects,
Series A,
5.500% 10/1/22 650 659
FL Lexington Oaks Community Development District:
Series 1998 A,
6.125% 5/1/19 400 403
Series 1998 B,
5.500% 5/1/05 750 747
FL Orlando,
Conroy Road Interchange Project,
Series 1998 A:
5.500% 5/1/10 180 179
5.800% 5/1/26 500 499
FL Stoney Brook Community Development,
5.700% 5/1/08 600 599
--------
3,941
--------
STATE APPROPRIATED - 2.4%
NY Metropolitan Transportation Authority,
Commuter Facilities Board Project:
Series 7,
5.625% 7/1/16 2,000 2,076
Series 1997-8,
5.250% 7/1/17 3,240 3,261
NY State Urban Development Corp.,
University Facilities Grants, Series 1995,
5.875% 1/1/21 1,000 1,119
--------
6,456
--------
...............................................................................
TRANSPORTATION - 5.6%
AIR TRANSPORTATION - 2.5%
CO Denver City & County Airport,
United Airlines Inc., Series 1992 A,
6.875% 10/1/32 1,645 1,768
TX Alliance Airport Authority:
American Airlines Project,
7.500% 12/1/29 1,600 1,719
Federal Express Corp., Series 1996,
6.375% 4/1/21 3,000 3,222
--------
6,709
--------
AIRPORT - 2.3%
CO Denver City and County Airport:
Series B,
7.250% 11/15/23 2,275 2,512
Series C,
6.125% 11/15/25 2,840 2,989
OH Toledo-Lucas County Port Authority,
Series 1998,
5.500% 5/15/20 585 575
--------
6,076
--------
TOLL FACILITIES - 0.8%
VA Richmond Metropolitan Authority,
Series 1998,
5.250% 7/15/22 2,000 2,093
--------
...............................................................................
UTILITY - 10.2%
INDEPENDENT POWER PRODUCER - 3.4%
FL Martin County Industrial Development Authority,
Indiantown Cogeneration Project,
Series 1994 A,
7.875% 12/15/25 1,000 1,148
NY Port Authority of New York & New Jersey,
KIAC Partners,
Series 1996 IV,
6.750% 10/1/11 2,000 2,238
PA State Economic Development Finance Authority:
Colver Project, Series D,
7.125% 12/1/15 4,000 4,425
Northampton Generating, Series A,
6.500% 1/1/13 1,000 1,059
--------
8,870
--------
INVESTOR OWNED - 4.7%
AZ Pima County Industrial Development Authority,
Tucson Electric Power Co.,
Series A,
6.100% 9/1/25 750 748
CT State Development Authority,
Connecticut Light & Power Co.,
Series 1993 B,
5.950% 9/1/28 400 402
IL Bryant,
Central Illinois Light Co.,
Series 1993,
5.900% 8/1/23 (a) 5,000 5,221
MS State Business Finance Corp.,
Systems Energy Resources Project,
Series 1998,
5.875% 4/1/22 2,000 1,995
NM Farmington,
San Juan Public Service Co. Project,
Series D,
6.375% 4/1/22 1,300 1,386
PA Beaver County Industrial Development Authority,
Ohio Edison Co., Series 1989 A,
7.750% 9/1/24 2,500 2,599
--------
12,351
--------
MUNICIPAL ELECTRIC - 0.9%
WA Chelan County Public Utilities District No. 1,
Columbia River Rock Hydroelectric,
(b) 6/1/14 (a) 5,000 2,349
--------
WATER & SEWER - 1.2%
LA Public Facility Belmont Water Authority,
9.000% 3/15/24 (i) 760 684
MS Five Lakes Utility District,
8.250% 7/15/24 500 400
NJ State Economic Development Authority,
Hills Development Co.,
10.500% 9/1/08 2,000 2,050
--------
3,134
--------
TOTAL MUNICIPAL BONDS (cost of $253,178) (l) 261,241
--------
SHORT-TERM OBLIGATIONS - 0.2%
- -------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (m)
IN State Housing Finance Authority,
Pedcor Investments,
Series 1997 M-A,
4.100% 1/1/29 500 500
--------
TOTAL SHORT-TERM OBLIGATIONS 500
--------
OTHER ASSETS & LIABILITIES, NET - 0.8% 1,964
- -------------------------------------------------------------------------------
NET ASSETS - 100% $263,705
--------
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) These securities, or a portion thereof, with a total market value of
$17,528, are being used to collateralize the delayed delivery purchases
indicated in note (d) below and open futures contracts.
(b) Zero coupon bond.
(c) This issuer is in default of certain debt covenants. Income is not being
accrued.
(d) These securities have been purchased on a delayed delivery basis for
settlement at a future date beyond the customary settlement date.
(e) This is a restricted security which was acquired at a cost of $942. This
security represents 0.4% of the Fund's net assets at December 31, 1998.
(f) Accrued interest accumulates in the value of the security and is payable at
redemption.
(g) 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,
1998, the value of these securities amounted to $5,646 or 2.1% of net
assets.
(h) The Fund has been informed that each issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of the
principal and interest.
(i) This is a restricted security which was acquired at a cost of $820. This
security represents 0.3% of the Fund's net assets at December 31, 1998.
(j) This is a restricted security which was acquired at a cost of $1,400. This
security represents 0.5% of the Fund's net assets at December 31, 1998.
(k) This is a restricted security which was acquired at a cost of $1,287. This
security represents 0.5% of the Fund's net assets at December 31, 1998.
(l) Cost for federal income tax purposes is $253,306.
(m) 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, 1998.
Long and short futures contracts open at December 31, 1998:
Unrealized
Par value appreciation
covered by Expiration (depreciation)
Type contracts month at 12/31/98
- -------------------------------------------------------------------------------
Municipal Bond $ 5,500 March $ (76)
Treasury Bond $ 4,800 March ( 1)
Treasury Bond $ 300 March 58
-----
$ 19)
-----
Acronym Name
------- ----
IFRN Inverse Floating Rate Note
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1998
(in thousands except for per share amount)
ASSETS
Investments at value (cost $253,178) $261,241
Short-term obligations 500
---------
261,741
Cash $ 1,382
Receivable for:
Interest 4,772
Investments sold 293
Other 48 6,495
-------- ---------
Total Assets 268,236
LIABILITIES
Payable for:
Investments purchased 2,882
Distributions 1,305
Variation margin on futures 9
Accrued:
Deferred Trustees fees 5
Other 330
--------
Total Liabilities 4,531
---------
NET ASSETS at value for 31,059
shares of beneficial interest outstanding $263,705
---------
Net asset value per share $ 8.49
---------
COMPOSITION OF NET ASSETS
Capital paid in 287,776
Undistributed net investment income 115
Accumulated net realized loss (32,230)
Net unrealized appreciation on:
Investments 8,063
Open futures contracts (19)
---------
$263,705
---------
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(in thousands)
INVESTMENT INCOME
Interest $ 18,444
EXPENSES
Management fee $ 2,123
Transfer agent 45
Bookkeeping fee 68
Trustees fee 15
Custodian fee 2
Audit fee 28
Legal fee 106
Reports to shareholders 17
Registration fee 31
Other 37 2,472
------- --------
Net Investment Income 15,972
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 3,446
Closed futures contracts 29
-------
Net Realized Gain 3,475
Change in net unrealized depreciation
during the period on:
Investments (5,254)
Open futures contracts (55)
-------
Net Unrealized Depreciation (5,309)
--------
Net Loss (1,834)
--------
Increase in Net Assets from Operations $ 14,138
--------
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended December 31
------------------------
INCREASE (DECREASE) IN NET ASSETS 1998 1997
Operations:
Net investment income $ 15,972 $ 16,994
Net realized gain (loss) 3,475 (4,664)
Net unrealized appreciation (depreciation) (5,309) 11,381
-------- --------
Net Increase from Operations 14,138 23,711
Distributions:
From net investment income (16,218) (16,893)
-------- --------
(2,080) 6,818
Fund share transactions
Value of distributions reinvested 595 604
-------- --------
Total Increase (Decrease) (1,485) 7,422
NET ASSETS
Beginning of period 265,190 257,768
-------- --------
End of period (including undistributed
net investment income of $115 and $261,
respectively) $263,705 $265,190
-------- --------
NUMBER OF FUND SHARES
Issued for distributions reinvested 69 71
Outstanding at
Beginning of period 30,990 30,919
--------- --------
End of period 31,059 30,990
--------- --------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1. ACCOUNTING POLICIES
...............................................................................
ORGANIZATION: Colonial High Income Municipal Trust (the Trust), is a
Massachusetts business trust registered under the Investment Company Act of
1940, as amended, as a diversified, closed-end, management investment company.
The Trust'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 Trust 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 Trust 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 Trust 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 Trust to subsequently invest at less advantageous prices.
FEDERAL INCOME TAXES: Consistent with the Trust's policy to qualify as a
regulated investment company and to distribute all of its taxable and tax-exempt
income, no federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Trust's capital
accounts to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
OTHER: The Trust had an agreement with its custodian bank under which custodian
fees were reduced by balance credits of $560 applied during the year ended
December 31, 1998. The Trust could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an income
producing asset if it had not entered into such agreements.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
...............................................................................
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Advisor) is the
investment Advisor of the Trust and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.80% annually of the Trust's
average weekly net assets.
BOOKKEEPING FEE: The Advisor provides bookkeeping and pricing services for
$18,000 per year plus 0.0233% of the Trust's average weekly net assets over $50
million.
OTHER: The Trust pays no compensation to its officers, all of whom are employees
of the Advisor.
The Trust's Trustees may participate in a deferred compensation plan which may
be terminated at any time. Obligations of the plan will be paid solely out of
the Trust's assets.
NOTE 3. PORTFOLIO INFORMATION
...............................................................................
INVESTMENT ACTIVITY: During the year ended December 31, 1998, purchases and
sales of investments, other than short-term obligations, were $75,813,488 and
$77,606,186, respectively.
Unrealized appreciation (depreciation) at December 31, 1998, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $15,897,472
Gross unrealized depreciation (7,962,825)
-----------
Net unrealized appreciation $ 7,934,647
-----------
Capital loss carryforwards: At December 31, 1998, 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
------------- ------------
1999 $ 2,751,000
2000 3,157,000
2001 5,578,000
2002 6,579,000
2003 5,268,000
2004 2,815,000
2005 5,927,000
------------
$ 32,075,000
------------
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 Trust may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Trust may purchase or sell municipal and Treasury bond futures contracts and
purchase and write options on futures. The Trust will invest in these
instruments to hedge against the effects of changes in the value of portfolio
securities due to anticipated changes in interest rates and/or market
conditions, for duration management, or when the transactions are economically
appropriate to the reduction of risk inherent in the management of the Trust and
not for trading purposes. The use of futures contracts 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 Advisor of the future direction of interest rates.
Any of these risks may involve amounts exceeding the amount recorded in the
Trust's Statement of Assets and Liabilities at any given time.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows:
Year ended December 31
-------------------------------
1998 1997
--------- ---------
Net asset value -
Beginning of period $ 8.560 $ 8.340
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.519 0.552
Net realized and
unrealized gain (loss) (0.066) 0.214
--------- ---------
Total from Investment
Operations 0.453 0.766
--------- ---------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.523) (0.546)
--------- ---------
Net asset value -
End of period $ 8.490 $ 8.560
--------- ---------
Market price per share $ 8.312 $ 8.630
--------- ---------
Total return based on net
asset value (a) 5.45% 9.57%
--------- ---------
Total return based on market
value (b) 2.47% 11.60%
--------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.93% (c) 0.96% (c)
Net investment income 6.02% (c) 6.54% (c)
Portfolio turnover 29% 17%
Net assets at end
of period (000) $ 263,705 $ 265,190
(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.
----------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows:
Year ended December 31
----------------------------------------------------
1996 1995 1994
--------- --------- ---------
$ 8.550 $ 7.960 $ 8.670
--------- --------- ---------
0.566 0.597 0.616
(0.193) 0.583 (0.716)
--------- --------- ---------
0.373 1.180 (0.100)
--------- --------- ---------
(0.583) (0.590) (0.610)
--------- --------- ---------
$ 8.340 $ 8.550 $ 7.960
--------- --------- ---------
$ 8.250 $ 7.380 $ 6.880
--------- --------- ---------
4.71% 15.70% (0.75)%
--------- --------- ---------
20.09% 15.65% (9.83)%
--------- --------- ---------
1.00% (c) 1.06% (c) 1.03%
6.74% (c) 7.15% (c) 7.44%
15% 23% 20%
$ 257,768 $ 264,467 $ 245,967
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND THE TRUSTEES OF COLONIAL HIGH
INCOME MUNICIPAL TRUST FUND
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations, changes in
net assets and the financial highlights present fairly, in all material
respects, the financial position of Colonial High Income Municipal Trust (the
"Trust") at December 31, 1998, 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 Trust 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, 1998
by correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 1999
<PAGE>
DIVIDEND REINVESTMENT PLAN
As a shareholder in the Trust 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.
<PAGE>
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<PAGE>
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<PAGE>
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<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.
<PAGE>
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN CARBERRY
Senior Vice President of Liberty Financial Companies, Inc.
(formerly Managing Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
HI-02/474G-1298 (2/99) 99/109
