-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AdIUMosH6IgwiuR+Jb7mp9bIWVh2MiT1lkD5by2naIjHBOZDuS77dHP5U5dIB1fT g6vQUx4wIscgwe7YCAAb0g== 0000021847-98-000068.txt : 19980806 0000021847-98-000068.hdr.sgml : 19980806 ACCESSION NUMBER: 0000021847-98-000068 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980805 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLONIAL MUNICIPAL INCOME TRUST CENTRAL INDEX KEY: 0000809844 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04992 FILM NUMBER: 98677636 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 N-30D 1 CMIT SEMI ANNUAL REPORT [Graphic Omitted] - -------------------------------------------------------------------------------- COLONIAL MUNICIPAL INCOME TRUST Semiannual report - -------------------------------------------------------------------------------- May 31, 1998 - -------------------------------------------------------------------------------- COLONIAL MUNICIPAL INCOME TRUST HIGHLIGHTS DECEMBER 1, 1997 - MAY 31, 1998 INVESTMENT OBJECTIVE: Colonial Municipal Income Trust seeks to provide high current income, generally exempt from federal income taxes, by investing primarily in medium and lower-quality municipal securities. The Trust's secondary objective is to preserve its capital. PORTFOLIO MANAGER COMMENTARY: "Based on our long-term outlook for low inflation and modest economic growth, we structured the Fund to take advantage of a potential decline in interest rates, and the Fund benefited. We seized this opportunity to add to our holdings in non-cyclical sectors, such as community hospitals. In general, we think non-cyclicals offer good value and the potential to perform well in an environment characterized by slower economic growth." -- Bonny Boatman COLONIAL MUNICIPAL INCOME TRUST PERFORMANCE Distributions declared per share(1) $0.246 - -------------------------------------------------------------------------------- Six-month total return, assuming reinvestment of all distributions |X| NAV 5.25% |X| Market Price 3.30% - -------------------------------------------------------------------------------- Price per share |X| NAV $7.55 |X| Market Price $7.56 TOP FIVE SECTORS QUALITY BREAKDOWN (as of 5/31/98) (as of 5/31/98) - ------------------------------------ ------------------------------------ Nursing Home ................. 16.7% NON-RATED: ................... 48.5% Housing ...................... 12.6% BBB: ......................... 20.6% Refunded ..................... 11.5% AAA: ......................... 13.1% Hospital ..................... 8.2% A: ........................... 11.0% Industrial ................... 6.0% AA: .......................... 3.7% BB: .......................... 2.7% B: ........................... 0.4% (1) A portion of the Fund's income may be subject to the alternative minimum tax. The Fund may at times purchase tax-exempt securities at a discount, and some or all of this discount may be included in the Fund's ordinary income which will be taxable when distributed. Sector breakdowns are calculated as a percent of total net assets. 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PRESIDENT'S MESSAGE TO FUND SHAREHOLDERS ---------------------------- [Photo of Stephen E. Gibson] ---------------------------- In June 1998, Harold Cogger retired as president of Colonial Municipal Income Trust's Board of Trustees. I would like to take this opportunity to thank him for his guidance over the past few years and wish him well. As the new president of the Fund, I am pleased to present the semiannual report for Colonial Municipal Income Trust for the six months ended May 31, 1998. A variety of factors caused bond prices to seesaw during the period, as different sectors of the economy provided mixed signals to fixed-income investors. The economic turmoil in Southeast Asia, its potential to slow U.S. economic growth, and the possibility of interest rate increases by the Federal Reserve Board were strong contributors to price volatility. By the end of the period, fixed-income investors saw something they liked. With hints that growth might slow, investors' fear of inflation was reduced. As interest rates dropped, bond prices finished on a positive note. The tax-exempt market in which the Fund invests showed a similar pattern. In addition to the trends mentioned above, supply and demand factors contributed towards rising and declining prices during the period. Municipal bond funds such as Colonial Municipal Income Trust offer investors a number of attractive benefits including tax-exempt income that compares favorably to inflation, and diversification of your fixed-income portfolio. Thank you for choosing Colonial Municipal Income Trust and for giving us the opportunity to serve your investment needs. Respectfully, /s/ Stephen E. Gibson Stephen E. Gibson President July 10, 1998 Because market and economic conditions change, there can be no assurance that the trends described above will continue. - -------------------------------------------------------------------------------- INVESTMENT PORTFOLIO MAY 31, 1998 (UNAUDITED, IN THOUSANDS) MUNICIPAL BONDS - 97.2% PAR VALUE - -------------------------------------------------------------------------------- EDUCATION - 2.6% EDUCATION - 1.5% MI Southfield Economic Development Corp., Lawrence University, Series 1998-A, 5.400% 02/01/18 $1,000 $ 996 NY State Dormitory Authority, New York University, Series 1998-A, 5.750% 07/01/27 1,000 1,118 VT State Educational & Health Buildings Finance Agency, Norwich University, Series 1998, 5.500% 07/01/21 1,000 991 -------- 3,105 -------- STUDENT LOAN - 1.1% SD State Student Loan Finance Corp., Series 1996-E, 6.550% 08/01/20 2,000 2,198 -------- ................................................................................ HEALTHCARE - 28.6% HEALTH SERVICES - 0.1% IL Health Facilities Authority, Midwest Physician Group, Ltd., Series 1998, 5.500% 11/15/19 325 316 -------- HOSPITALS - 8.2% AL Alabama Special Care Facilities Authority, Montgomery Healthcare, Series 1989, 11.000% 10/01/19 2,280 2,326 CO Health Care Facilities Authority, National Jewish Medical & Research Center, Series 1998, 5.375% 01/01/23 840 823 CT Health & Educational Facilities Authority, Hospital for Special Care, Series B, 5.375% 07/01/17 500 493 GA Clayton Hospital Authority, The Woodlands Foundation, Inc., Series 1991-A, 9.750% 05/01/21(a) 1,500 975 IL Health Facilities Authority, Thorek Hospital & Medical Center, 5.375% 08/15/28 500 489 MA Health & Educational Facilities Authority, Milford-Whitinsville Regional Hospital, Series C, 5.250% 07/15/18 500 487 MI Flint Hospital Building Authority, Hurley Medical Center, Series 1998-A, 5.375% 07/01/20 625 611 MI Tawas City Finance Authority, St. Joseph Health System, Series 1998-A, 5.750% 02/15/23 450 450 MN Monticello-Big Lake Community Hospital District, 5.750% 12/01/19 1,000 1,036 MN St. Paul Housing & Redevelopment Authority, Healtheast Project, Series A, 5.700% 11/01/15 2,000 2,034 MO Housing Development Commission, Freeman Health Systems, Series 1998: 5.250% 02/15/18 750 732 5.250% 02/15/28 500 482 NC State Medical Care Commission, Annie Penn Memorial Hospital, Series 1998, 5.375% 01/01/22 250 245 NH Higher Educational & Health Facilities Authority, Littleton Hospital Assoc., Inc., Series 1998-A, 6.000% 05/01/28 625 630 NJ Health Care Facilities Financing Authority, Raritan Bay Medical Center, 7.250% 07/01/27 1,000 1,092 NY Dormitory Authority, Bronx-Lebanon Hospital Center, Series 1998-E, 5.200% 02/15/14 1,000 998 OH Sandusky County, Series 1998, 5.150% 01/01/08 270 271 PA Allegheny County Hospital Development, Ohio Valley General Hospital, Series 1998-A, 5.450% 01/01/28 1,050 1,041 PA Pottsville Hospital Authority, 5.625% 07/01/24 755 750 VT Educational & Health Buildings Authority, Springfield Hospital, Series A, 7.750% 01/01/13 1,040 1,178 -------- 17,143 -------- INTERMEDIATE CARE FACILITIES - 1.0% MA State Health & Educational Facilities Authority, Corp. for Independent Living, 8.100% 07/01/18 685 774 TN Shelby County, Health, Education, & Housing Facilities Board, Open Arms Development Center: Series 1992-A, 9.750% 08/01/19 510 606 Series 1992-C, 9.750% 08/01/19 520 618 -------- 1,998 -------- LIFECARE - 2.6% CO Health Care Facilities Authority, National Benevolent Association: Series 1998-A, 5.250% 01/01/27 430 417 Series 1998-B, 5.250% 02/01/18 1,500 1,473 KY Economic Development Finance Authority, Christian Church Homes of Kentucky, Inc., Series 1998, 5.500% 11/15/30 750 741 MN Columbia Heights, Crest View Corp., Series 1998, 6.000% 03/01/33 745 747 PA Philadelphia Authority for Industrial Development, Baptist Home of Philadelphia, Series 1998-A: 5.500% 11/15/18 360 356 5.600% 11/15/28 570 556 TN Metropolitan Government: Nashville & Davidson County, Blakeford at Green Hills, Series 1998, 5.650% 07/01/24 575 565 Richland Place, 5.500% 05/01/23 495 507 -------- 5,362 -------- NURSING HOMES - 16.7% CO Health Facilities Authority, American Housing Foundation, Inc., Series 1990-A, 10.250% 12/01/20 1,500 1,500 DE Economic Development Authority, 12.000% 04/01/25 2,240 2,435 DE Sussex County, Healthcare Facility, Delaware Health Corp., Series 1994-A, 7.600% 01/01/24 1,000 1,051 IA Finance Authority, Care Initiatives Project: Series 1996, 9.250% 07/01/25 1,000 1,346 Series 1998-B: 5.750% 07/01/18 550 543 5.750% 07/01/28 1,475 1,431 IA Gary Industrial Economic Development, West Side Health Care Center, Series 1987-A, 11.500% 10/01/17 2,470 2,552 IN Michigan City Health Facilities, Metropolitan Health Foundation, Inc. Project, 10.000% 11/01/22 4,500 4,500 KS Halstead Industrial Health Care Project, 10.250% 08/01/13(a) 1,330 532 KY Jefferson County First Mortgage Kentucky Iowa, Inc. Project, Series 1990, 10.250% 01/01/20 960 1,006 KY Lexington-Fayette Urban County Government, First Mortgage, AHF Kentucky-Iowa, Inc. Project, Series 1990, 10.250% 01/01/20 960 1,006 MA Boston, St. Joseph Nursing Care Center, Inc., Series 1990, 10.000% 01/01/20 1,915 2,073 MA State Industrial Finance Agency: American Health Foundation, Inc., Series 1989, 10.125% 03/01/19 475 356 GF/Massachusetts, Inc., Series 1994, 8.300% 07/01/23 980 1,019 MI Cheboygan County Economic Development Corp., Metro Health Foundation Project, Series 1993, 10.000% 11/01/22 2,440 2,440 MN Duluth Economic Development Authority, Series A, 5.875% 12/01/28 250 250 MO Springfield Industrial Development Authority, 10.250% 12/01/10 1,150 1,166 NJ Economic Development Authority Geriatric and Medical Service, Inc., Series A, 10.500% 05/01/04 650 692 NM City of Clovis, Retirement Ranches Project, 10.750% 04/01/19 190 206 OH Lucas County, Gericare, Inc., Series 1988-B 10.500% 06/01/18 2,465 2,587 OH Montgomery County, Grafton Oaks Limited Partners, Series 1986, 9.750% 12/01/16 1,480 1,406 OK Muskogee County Economic Development Authority Health Facilities, Heartway Corp.: Series A, 9.500% 03/01/19 1,545 1,580 Series B, (b) 03/01/19 250 63 TN New Tazewell Health Education and Housing Facilities Board, New Tazewell, Series 1987, 10.000% 06/01/17 1,585 1,607 TX Kirbyville Health Facilities Development Corp., Heartway III Project: Series 1997-A, 10.000% 03/20/18 596 600 Series 1997-B, (b) 03/20/04 100 52 WA Kitsap County Housing Authority, Martha & Mary Nursing Home, 7.100% 02/20/36 643 743 -------- 34,742 -------- ................................................................................ HOUSING - 12.6% ASSISTED LIVING/SENIOR - 4.0% IL Clarendon Hills Residential Facilities, Churchill Estate, Series 1998-A: 6.750% 03/01/24 1,050 1,050 6.750% 03/01/31 1,365 1,365 IL State Development Finance Authority, Care Institute, Inc., 8.250% 06/01/25 1,500 1,695 MN Roseville, Care Institute, Inc., Series 1993, 7.750% 11/01/23 1,630 1,650 PA Montgomery County Industrial Development Authority, Assisted Living Facility, Series 1993-A, 8.250% 05/01/23 800 895 TX Bell County Health Facilities Development Corp., Care Institutions, Inc., 9.000% 11/01/24 1,500 1,735 -------- 8,390 -------- MULTI-FAMILY - 7.8% FL State Housing Finance Agency, Windsong Apartments, Series 1993-C, 9.250% 01/01/19 830 664 IL Chicago, Michigan Boulevard Garden Apartment Rehabilitation Project, Series 1985, 12.000% 01/01/00 245 220 MN Washington County Housing & Redevelopment Authority, Cottages of Aspen, Series 1992, 9.250% 06/01/22 1,075 1,193 MN White Bear Lake, Birch Lake Townhomes Project: Series 1989-A, 10.250% 07/15/19 1,770 1,801 Series 1989-B, (c) 07/15/19 674 617 NC Eastern Carolina Regional Housing Authority, New River Apartments, Jacksonville, Series 1994, 8.250% 09/01/14 1,880 2,045 Resolution Trust Corp., Pass Through Certificates, Series 1993-A, 8.500% 12/01/16(d) 4,248 4,418 SC State Housing Finance and Development Multi-family Housing Finance Revenue, Westbridge Apartments, Series A, 9.500% 09/01/20 2,170 2,241 TN Franklin Industrial Board, Landings Apartment Project, Series 1996-B, 8.750% 04/01/27 800 821 TX Galveston Pass Health Facilities Center, Pass Through Certificates, 8.000% 08/01/23 1,000 1,079 VA Alexandria Redevelopment & Housing Authority, Courthouse Commons Apartments, Series 1990-A, 10.000% 01/01/21 1,000 1,026 -------- 16,125 -------- SINGLE-FAMILY - 0.8% AK Housing Finance Corp., Series 1996-A, 6.050% 12/01/17 935 990 KY 1986 County Single-family Mortgage Revenue, Class A, 9.000% 09/01/16 30 31 PA Allegheny County, Residential Financial Authority, Single-family Mortgage, Series 1987-G, 9.500% 12/01/18 590 603 -------- 1,624 -------- ................................................................................ OTHER - 13.6% OTHER - 2.1% IL Hammond, American Maize Products Co., Series 1994, 8.000% 12/01/24 2,000 2,358 LA Port New Orleans Industrial Development, Continental Grain Co., Series 1993, 7.500% 07/01/13 1,000 1,106 MD Baltimore, Park Charles Project, Series 1986, 8.000% 01/01/10 780 849 -------- 4,313 -------- REFUNDED/ESCROWED (E) - 11.5% CA San Joaquin Hills Transportation Corridor Agency, Series 1993, (b) 01/01/25 10,000 2,547 FL Clearwater Housing Authority, Hampton Apartments, Series 1994, 8.250% 05/01/24 2,500 3,075 ID Health Facilities Authority, IHC Hospitals, Inc., 8.320% 02/15/21 2,750 3,339 IL Chicago Public Building Commission, Series 1990-A, 7.000% 01/01/20(f) 2,000 2,531 IL Health Facilities Authority, Edgewater Medical Center, Series A, 9.250% 07/01/24 2,250 2,863 MA State Industrial Finance Agency, Series 1990, 9.000% 10/01/20 935 1,054 MN Mille Lacs Capital Improvement Authority, Mille Lacs Band of Chippewa, Series 1992-A, 9.250% 11/01/12 1,050 1,288 NC Lincoln County, Lincoln County Hospital, 9.000% 05/01/07 470 565 NM City of Clovis, Retirement Ranches Project, 10.750% 04/01/19 1,920 2,081 PA Delaware County Authority: Series 1996, 6.000% 12/15/26 500 561 Southeastern Pennsylvania Obligated Group, 6.000% 12/15/16 1,400 1,571 WA State Health Care Facilities Authority, Grays Harbor Community Hospital, Series 1993: 7.200% 07/01/03 330 359 8.025% 07/01/20 1,770 1,969 -------- 23,803 -------- ................................................................................ OTHER REVENUE - 10.0% CHEMICALS - 1.1% LA St. Charles Parish, Union Carbide Corp., Series 1992, 7.350% 11/01/22 2,000 2,217 -------- INDUSTRIAL - 6.0% CO Mesa County Industrial Development, Joy Technologies, Inc., Series 1992, 8.500% 09/15/06 1,500 1,695 IL State Development Finance Authority, Armstrong World Industries, Inc. Project, 5.950% 12/01/24 1,000 1,101 IL Will-Kankakee Regional Development Authority, Flanders Corp./Precisionaire Project, Series 1997, 6.500% 12/15/17 1,000 1,024 LA Southern Louisiana Port Commission, Cargill, Inc. Project, 5.850% 04/01/17 500 530 MA State Industrial Finance Agency, House of Bianchi, Inc., 8.750% 06/01/18 325 335 MN Brooklyn Park, TL Systems Corp., Series 1991, 10.000% 09/01/16 785 965 OH Cuyahoga County, Joy Technologies, Inc., Series 1992, 8.750% 09/15/07 550 626 TX Trinity River Authority, Texas Instruments Project, Series 1996, 6.200% 03/01/20 750 801 VA Halifax County Industrial Development, Craddock-Terry, Inc., Series 1989, 10.000% 12/01/19(a) 870 322 VA Pittsylvania County Industrial Development, Craddock-Terry, Inc., Series 1989, 10.000% 12/01/19(a) 533 48 VA Prince Edward County Industrial Development, Craddock-Terry, Inc., Series 1989, 10.000% 12/01/19(a) 1,610 805 WA Pilchuck Public Development Corp., Goodrich (B.F.) Co. Tramco Project, Series 1993, 6.000% 08/01/23 4,000 4,133 -------- 12,385 -------- OIL & GAS - 0.7% WA Pierce County Economic Development Corp., Occidental Petroleum Co., 5.800% 09/01/29 1,500 1,517 -------- PAPER PRODUCTS - 1.3% AL Phenix City Industrial Development Board, Mead Boated Board, Inc., Series 1998-A, 5.300% 04/01/27 650 642 SC Darlington County, Industrial Development Authority, SONOCO Products Co. Project, 6.125% 06/01/25 2,000 2,124 -------- 2,766 -------- RECREATION - 0.5% NM Red River Sports, 6.450% 06/01/07 1,000 1,005 -------- RETAIL - 0.4% OH Lake County, North Madison Properties, Series 1993, 8.819% 09/01/11 710 816 -------- ................................................................................ RESOURCE RECOVERY - 3.3% DISPOSAL - 2.8% CT State Development Authority, Sewer Sludge Disposal Facilities, Series 1996, 8.250% 12/01/06 1,250 1,319 GA Fulton County Development Authority, Very, Inc., 10.500% 12/01/07 1,370 1,425 MA Boston Industrial Development Finance Authority, Jet-A-Way, Inc., 10.500% 01/01/11 1,000 1,129 MA State Industrial Finance Agency: Massachusetts Environmental Services, Series 1994-A, 8.750% 11/01/21(a) 975 731 Peabody Monofill Associates, Inc., Series 1995, 9.000% 09/01/05 1,110 1,236 -------- 5,840 -------- RESOURCE RECOVERY - 0.5% PA Delaware County Industrial Development Authority, Series A, 6.200% 07/01/19 1,000 1,089 -------- ................................................................................ TAX-BACKED - 10.8% LOCAL APPROPRIATED - 0.5% CA Compton, Civic Center Project, 5.500% 09/01/15 1,000 1,012 -------- LOCAL GENERAL OBLIGATIONS - 3.8% LA New Orleans, Series 1991, (b) 09/01/15 4,000 1,683 NY New York City: Series 1998-F, 5.000% 08/01/23 $ 700 $ 670 Series C, 5.375% 11/15/17 550 555 Series 1998-D, 5.375% 08/01/17 4,000 4,035 TX Irving Independent School District, Series 1997: (b) 02/15/15 1,500 638 (b) 02/15/16 1,000 401 -------- 7,982 -------- SPECIAL NON-PROPERTY TAX - 5.1% IL Metropolitan Pier & Exposition Authority, Series 1996-A: (b) 12/15/13(f) 5,000 2,279 (b) 12/15/21 8,000 2,334 IL Metropolitan Pier & Exposition Authority, McCormick Project: (b) 06/15/14(f) 5,000 2,204 (b) 06/15/15 3,000 1,246 IL State Development Finance Authority, City of Marion Project, Series 1991, 9.625% 09/15/21 1,460 1,095 PR Commonwealth of Puerto Rico Highway & Transportation Authority, Series 1996-Y, 5.500% 07/01/36 1,300 1,359 -------- 10,517 -------- SPECIAL PROPERTY TAX - 1.0% CA Fontana Redevelopment Agency, Jurupa Hills Project, Series 1997-A, 5.500% 10/01/27 700 709 CA Poway Community Facilities District, No. 88-1 Parkway Business Center, Series 1998, 6.750% 08/15/15 575 627 CA Riverside County Public Financing Authority Redevelopment Projects, Series A, 5.500% 10/01/22 650 658 -------- 1,994 -------- STATE APPROPRIATED - 0.4% NY Metropolitan Transportation Authority, Commuter Facilities, Series 1997-8, 5.250% 07/01/17 945 937 -------- ................................................................................ TRANSPORTATION - 4.9% AIR TRANSPORTATION - 4.0% IN Indianapolis Airport Authority: Federal Express Corp., Series 1994, 7.100% 01/15/17 2,000 2,252 United Airlines Project, Series A, 6.500% 11/15/31 2,000 2,170 KY Kenton County Airport Board, Delta Airlines, Inc., Series 1992-A, 7.500% 02/01/20 2,500 2,753 TX Alliance Airport Authority, Federal Express Corp., Series 1996, 6.375% 04/01/21 1,000 1,077 -------- 8,252 -------- AIRPORT - 0.3% OH Toledo-Lucas County Port Authority, Series 1998, 5.500% 05/15/20 585 568 -------- TOLL FACILITIES - 0.6% CA San Joaquin Hills Transportation Corridor Agency, Series A, (b) 01/15/15 3,000 1,292 -------- ................................................................................ UTILITY - 10.8% INDIVIDUAL POWER PRODUCER - 4.5% FL Martin County Industrial Development Authority, Indiantown Cogeneration Project, Series 1994-A, 7.875% 12/15/25 1,000 1,174 NY New York City Industrial Development Agency, Brooklyn Navy Yard Partners, Series 1997, 5.750% 10/01/36 1,200 1,213 NY Port Authority of New York & New Jersey, KIAC Partners, Series 1996-IV, 6.750% 10/01/11 2,000 2,235 PA Economic Development Finance Authority, Colver Project, Series D: 7.125% 12/01/15 500 558 7.150% 12/01/18 3,750 4,196 -------- 9,376 -------- INVESTOR OWNED - 2.0% AZ Pima County Industrial Development Authority, Tucson Electric Power Co., Series A, 6.100% 09/01/25 750 774 IL Bryant Pollution Control Revenue, Central Illinois Light Co., Series 1993, 5.900% 08/01/23 2,000 2,072 NM Farmington, San Juan Public Service Co. Project, Series D, 6.375% 04/01/22 1,250 1,341 -------- 4,187 -------- MUNICIPAL ELECTRIC - 2.0% TX Austin, Series 1994: (b) 05/15/17(f) 6,600 2,475 (b) 05/15/18 5,000 1,777 -------- 4,252 -------- WATER & SEWER - 2.3% LA Public Facility Belmont Water Authority, 9.000% 03/15/24 730 657 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 2,100 2,177 TX Houston Water & Sewer System, Series C, (b) 12/01/12(f) 3,000 1,455 -------- 4,689 -------- TOTAL MUNICIPAL BONDS (cost of $193,344) (g) 201,812 -------- OTHER ASSETS & LIABILITIES, NET - 2.8% $ 5,891 - -------------------------------------------------------------------------------- NET ASSETS - 100% $207,703 ======== NOTES TO INVESTMENT PORTFOLIO: - -------------------------------------------------------------------------------- (a) This issuer is in default of certain debt covenants. Income is not being accrued. (b) Zero coupon bond. (c) Accrued interest accumulates in the value of the security and is payable at redemption. The value of this security represents fair value as determined under procedures approved by the Trustees. (d) Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At May 31, 1998, the value of this security amounted to $4,418 or 2.1% of net assets. (e) 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. (f) These securities, or a portion thereof, with a total market value of $9,645, are being used to collateralize open future contracts. (g) Cost for federal income tax purposes is $193,372. Unrealized appreciation Par value Expiration (depreciation) Type covered by contracts month at 5/31/98 - -------------------------------------------------------------------------------- Short Municipal Bond $ 3,600 June $ (63) Long Municipal Bond $ 3,500 June 52 -------- $ (11) ======== See notes to financial statements. STATEMENT OF ASSETS & LIABILITIES MAY 31, 1998 (UNAUDITED) (in thousands except for per share amount) ASSETS Investments at value (cost $193,344) $201,812 Receivable for: Interest $ 4,510 Investments sold 2,740 Other 51 7,301 -------- -------- Total Assets 209,113 LIABILITIES Payable for: Distributions 1,128 Investments purchased 250 Accrued: Deferred Trustees fees 4 Other 28 -------- Total Liabilities 1,410 -------- NET ASSETS at value for 27,514 shares of beneficial interest outstanding $207,703 ======== Net asset value per share $ 7.55 ======== COMPOSITION OF NET ASSETS Capital paid in $245,423 Undistributed net investment income 330 Accumulated net realized loss (46,507) Net unrealized appreciation (depreciation) on: Investments 8,468 Open futures contracts (11) -------- $207,703 ======== See notes to financial statements. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED) (in thousands) INVESTMENT INCOME Interest $ 7,419 EXPENSES Management fee $ 674 Transfer agent 40 Bookkeeping fee 27 Trustees fee 9 Custodian fee 5 Audit fee 20 Legal fee 52 Reports to shareholders 5 Other 43 875 ----- --------- Net Investment Income 6,544 --------- NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS Net realized gain 3,572 Net unrealized appreciation (depreciation) during the period on: Investments 373 Open futures contracts (44) ----- Net unrealized appreciation 329 --------- Net Gain 3,901 --------- Increase in Net Assets from Operations $ 10,445 ========= See notes to financial statements. STATEMENT OF CHANGES IN NET ASSETS (Unaudited) Six months ended Year ended May 31 November 30 (in thousands) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS 1998 1997 Operations: Net investment income $ 6,544 $ 13,806 Net realized gain (loss) 3,572 (7,104) Net unrealized appreciation 329 7,312 ----------- ------------ Net Increase from Operations 10,445 14,014 Distributions: From net investment income (6,762) (13,887) ----------- ------------ 3,683 127 Fund Share Transactions: Value of distributions reinvested 487 613 ----------- ------------ Total Increase 4,170 740 NET ASSETS Beginning of period 203,533 202,793 ----------- ------------ End of period (including undistributed net investment income of $330 and $510, respectively) $ 207,703 $ 203,533 =========== ============ NUMBER OF FUND SHARES Issued for distributions reinvested 65 82 Outstanding at Beginning of period 27,449 27,367 ----------- ------------ End of period 27,514 27,449 ----------- ------------ See notes to financial statements. NOTES TO FINANCIAL STATEMENTS MAY 31, 1997 (UNAUDITED) NOTE 1. INTERIM FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- In the opinion of management of Colonial Municipal Income Trust (the Fund), the accompanying financial statements contain all normal and recurring adjustments necessary for the fair presentation of the financial position of the Fund at May 31, 1998, and the results of its operations, the changes in its net assets and the financial highlights for the six months then ended. NOTE 2. ACCOUNTING POLICIES - ------------------------------------------------------------------------------- ORGANIZATION: 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 primary 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's secondary objective is to preserve its capital. 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 is a summary of significant accounting policies that 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 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 Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. NOTE 3. 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 0.65% 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 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 out of the Fund's assets. NOTE 4. PORTFOLIO INFORMATION - ------------------------------------------------------------------------------- INVESTMENT ACTIVITY: During the six months ended May 31, 1998, purchases and sales of investments, other than short-term obligations, were $39,718,048 and $39,977,751, respectively. Unrealized appreciation (depreciation) at May 31, 1998, based on cost of investments for federal income tax purposes was: Gross unrealized appreciation $14,020,060 Gross unrealized depreciation (5,580,520) ----------- Net unrealized appreciation $ 8,439,540 =========== CAPITAL LOSS CARRYFORWARDS: At November 30, 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 $ 6,551,000 1999 6,352,000 2000 9,103,000 2001 7,979,000 2002 5,301,000 2003 7,499,000 2004 4,000 2005 7,197,000 ----------- $49,986,000 =========== 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 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 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 a position 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 variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. NOTE 5. RESULTS OF ANNUAL SHAREHOLDER MEETING (UNAUDITED) - ------------------------------------------------------------------------------- On April 29, 1998, the Annual Meeting of Shareholders of the Fund was held to elect two Trustees and to ratify the selection of Price Waterhouse LLP as independent accountants for the fiscal year ending November 30, 1998. On February 2, 1998, the record date for the Meeting, the Fund had outstanding 27,475,276 shares of beneficial interest. The votes cast at the Meeting were as follows: Election of two Trustees: AUTHORITY BROKER FOR WITHHELD NON-VOTES William E. Mayer 23,256,480 516,215 0 Robert L. Sullivan 23,247,388 525,307 0 The Board of Trustees also consists of Robert J. Birnbaum, Thomas Bleasdale, James E. Grinnell, James L. Moody, Jr., Lora S. Collins, Richard W. Lowry and John J. Neuhauser. Ratification of the selection of Price Waterhouse LLP as independent accountants: FOR: 23,261,850 shares of beneficial interest being a majority of the shares represented at the Meeting AGAINST: 147,287 shares of beneficial interest ABSTAIN: 363,558 shares of beneficial interest BROKER NON-VOTES: 0 FINANCIAL HIGHLIGHTS Selected per share data, total return, ratios and supplemental data throughout each period are as follows: (Unaudited) Six months ended May 31 Year ended November 30 ------------ ------------------------ 1998 1997 1996 Net asset value - Beginning of period $ 7.410 $ 7.410 $ 7.480 --------- -------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.239 0.509 0.508 Net realized and unrealized gain (loss) 0.147 (0.002) (0.068) --------- -------- --------- Total from Investment Operations 0.386 0.507 0.440 --------- -------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.246) (0.507) (0.510) In excess of net investment income - - - --------- -------- --------- Total Distributions Declared to Shareholders (0.246) (0.507) (0.510) --------- -------- --------- Net asset value - End of period $ 7.550 $ 7.410 $ 7.410 ========= ======== ========= Market price per share - End of period $ 7.562 $ 7.560 $ 7.250 ========= ======== ========= Total return - based on net asset value (a) 5.25%(b) 7.07% 6.38% ========= ======== ========= Total return - based on market value (c) 3.30%(b) 11.67% 15.36% ========= ======== ========= RATIOS TO AVERAGE NET ASSETS Expenses 0.84%(d)(e) 0.86%(e) 0.91%(e) Net investment income 6.32%(d)(e) 6.83%(e) 6.87%(e) Portfolio turnover 20%(b) 15% 22% Net assets at end of period (000) $ 207,703 $203,533 $202,793 (a) Total return at net asset value assuming all distributions reinvested. (b) Not annualized. (c) Total return at market value assuming all distributions reinvested and excluding brokerage commissions. (d) Annualized. (e) The benefits derived from custody credits and directed brokerage arrangements had no impact. Prior years' ratios are net of benefits received, if any. FINANCIAL HIGHLIGHTS - CONT. Year ended November 30 -------------------------------------------- 1995 1994 1993 $ 7.150 $ 7.830 $ 7.890 --------- -------- --------- 0.547 0.609 0.639 0.335 (0.707) (0.063) --------- -------- --------- 0.882 (0.098) 0.576 --------- -------- --------- (0.552) (0.582) (0.632) - - (0.004) --------- -------- --------- (0.552) (0.582) (0.636) --------- -------- --------- $ 7.480 $ 7.150 $ 7.830 ========= ======== ========= $ 6.750 $ 6.750 $ 8.000 ========= ======== ========= 12.96% (0.42)% 7.42% ========= ======== ========= 8.04% (10.06)% 11.56% ========= ======== ========= 0.98% 0.90% 0.87% 7.47% 8.12% 8.03% 24% 24% 21% $ 204,666 $195,444 $213,292 - -------------------------------------------------------------------------------- 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 and Cash Purchase 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 mailed directly to the record holder by 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. For shares issued at a discount from market value, the difference between market value and issue price may represent taxable income at the time of issuance. Any portion of the discount includable in income will increase the basis of the shares issued. If net asset value exceeds the market price, or the distribution is payable only in cash, shares will be bought in the open market for the accounts of Plan participants. If the market price surpasses the net asset value before such purchasing is completed, the average per share price paid may exceed the net asset value of the shares, resulting in the acquisition of fewer shares than if the distribution had been in newly-issued shares. Participants in the Plan have the option of making additional cash payments to the Plan administrator semiannually, for investment in the Trust's shares. Such payments may be made in any amount from $100 to $500. The administrator will use all funds received from participants (as well as any dividends and distributions received in cash) to purchase Trust shares in the open market semiannually. Interest will not be paid on any uninvested cash payments. Please refer to the Dividend Reinvestment and Cash Purchase Plan pamphlet for further details. All Plan accounts receive monthly written confirmations of all transactions. Shares purchased under the Plan are ordinarily held in uncertified form, although participants have the right to receive certificates for whole shares issued to them. 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 gain 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 agent. 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 should be directed to State Street Bank and Trust Company, the Trust's dividend disbursing agent and administrator of the Plan, at P.O. Box 8200, Boston, Massachusetts 02266-8200. - -------------------------------------------------------------------------------- IMPORTANT INFORMATION ABOUT THIS REPORT The Transfer Agent for Colonial Municipal Income Trust is: State Street Bank and Trust Company P.O. Box 8200 Boston, MA 02266-8200 1-800-426-5523 Colonial Municipal Income 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 Municipal Income Trust. 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) 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, 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 and Chief Executive Officer, Hannaford Bros. Co.) JOHN J. NEUHAUSER Dean, Boston College School of Management ROBERT L. SULLIVAN Retired Partner, KPMG Peat Marwick 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) IT-03/453F-0598 M (7/98) 98/677 -----END PRIVACY-ENHANCED MESSAGE-----