-----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, KbcGPE8GXI4OeOCR3fO3GE/xDDCpG9pTRDenRxZR0H9B88Wcwd5r965+ZMxSMzgD N+8eYw/gSVCF9jjEfrS/0w== 0000021847-97-000015.txt : 19970129 0000021847-97-000015.hdr.sgml : 19970129 ACCESSION NUMBER: 0000021847-97-000015 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970128 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: 1940 Act SEC FILE NUMBER: 811-04992 FILM NUMBER: 97512498 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 N-30D 1 COLONIAL MUNICIPAL INCOME TRUST ANNUAL REPORT [logo] COLONIAL MUNICIPAL INCOME TRUST ANNUAL REPORT NOVEMBER 30, 1996 COLONIAL MUNICIPAL INCOME TRUST HIGHLIGHTS DECEMBER 1, 1995 - NOVEMBER 30, 1996 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 FUND IS DESIGNED TO OFFER: |X| Potential for high tax-free income |X| Experienced professional management |X| Expert credit analysis PORTFOLIO MANAGER COMMENTARY: "We continue to try to increase value for investors by focusing on industrial revenue bonds and by broadly diversifying the Trust across sectors. We believe the supply of high yield bonds will diminish over the near term and we will be working harder to identify unconventional total return opportunities, such as candidates for credit rating upgrades or acquisition. Additionally, with the election year behind us and a balance of Democrats and Republicans in Congress, we believe that political conditions will promote stability in the municipal bond market." -- Peter Andersen COLONIAL MUNICIPAL INCOME TRUST PERFORMANCE Distributions declared per share(1) $0.510 12-month total return, assuming reinvestment of all distributions |X| NAV 6.38% |X| Market Price 15.36% Price per share |X| NAV $7.41 |X| Market Price $7.25 (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. TOP FIVE SECTORS QUALITY BREAKDOWN (as of 11/30/96) (as of 11/30/96) Nursing Home.................. 20.0% NET CASH: 1.0% Housing....................... 13.3% AAA: 11.6% Hospital....................... 9.4% AA: 2.6% Manufacturing.................. 5.0% NON-RATED: 59.4% Air Transportation............. 4.9% A: 5.3% BBB: 18.7% BB: 1.4% Sector and quality breakdowns are calculated as a percent of total net assets. Because the Trust is actively managed, there can be no guarantee the Trust will continue to maintain these quality weightings or invest in theses 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 Howard W. Cogger] I am pleased to present your Fund's annual report for the fiscal year ended November 30, 1996. This report provides us with the opportunity to reflect on the investment environment of the past 12 months. The economy grew at a comfortable pace through the end of 1995 and into 1996. The Federal Reserve Board lowered short-term interest rates in December 1995 and again in January 1996, but stronger-than-expected economic indicators in February 1996 brought the Fed easing trend to a halt. However, recently released economic data confirm that economic growth has slowed to a pace well within the "comfort zone" of the Federal Reserve Board, lessening the market's fears of a Fed tightening. We are hopeful that the volatility that has characterized the fixed income market during the past year will be somewhat reduced in the months ahead. While market conditions put pressure on municipal bond prices, technical dynamics, such as low supply and strong retail market support, enabled tax-exempt bonds to outperform Treasury bonds for much of the year. The post-election conditions should promote a period of stability for the municipal market as the flat tax initiative is now a receding memory. In this market, your management team has maintained a long-term outlook and has focused on industrial revenue bonds backed by publicly held companies that have good liquidity characteristics as a result of their "household name" status. Our economic expectations include growth continuing at a slower, but more sustainable, rate and our outlook for 1997 is relatively bright. Lower mortgage rates, increased consumer spending power and accelerating exports lead us to believe that the current economic expansion could continue through the year ahead. As always, we thank you for the opportunity to help you meet your investment goals through the Colonial family of funds. Respectfully, /s/ Howard W. Cogger Howard W. Cogger President January 10, 1997 Because market conditions change frequently, there can be no assurance that the trends described here will continue, come to pass or affect Fund performance. INVESTMENT PORTFOLIO NOVEMBER 30, 1996 (IN THOUSANDS) MUNICIPAL BONDS - 96.0% PAR VALUE - ------------------------------------------------------------------------------- EDUCATION - 3.9% EDUCATION - 1.8% CT HEFA University of New Haven, 6.625% 07/01/16 $ 1,000 $ 1,024 NY State Dormitory Authority, State University, Series 1995-A, 5.300% 07/01/24 2,700 2,643 -------- 3,667 -------- SCHOOL DISTRICT GENERAL OBLIGATION - 1.1% AZ Apache County School District Number 010 Round Valley Project of 1987, Series 1990-C, 9.875% 07/01/05 2,000 2,220 -------- STUDENT LOAN - 1.0% SD State Student Loan Finance Corp., Series 1996-E, 6.550% 08/01/20 2,000 2,028 -------- - ------------------------------------------------------------------------------- HEALTH - 30.4% HOSPITAL - 9.5% AL Special Care Facilities Authority, Montgomery Healthcare, Series 1989, 11.000% 10/01/19 2,280 2,326 DE State Economic Development Authority, Riverside Hospital, Series 1992-A, 9.500% 01/01/22 895 1,183 GA Clayton Hospital Authority, The Woodlands Foundation Inc., Series 1991-A, 9.750% 05/01/21 1,500 1,275 ID State Health Facilities Authority, IHC Hospitals, Inc., 8.420% 02/15/21 2,750 3,083 IL Health Facilities Authority, Edgewater Medical Center, Series A, 9.250% 07/01/24 2,250 2,481 MO Hannibal Industrial Development, Medical Systems of Northeast Missouri, Series 1992, 9.500% 03/01/22 2,000 2,518 NJ Health Care Facilities Financing Authority, Raritan Bay Medical Center 7.250% 07/01/27 1,000 1,052 VA Dickenson County Industrial Development Authority, Volunteer Healthcare Systems, Inc., Series 1988 A 10.750% 06/01/18 (a) 5,500 1,650 VT Educational & Health Buildings Financing Agency, Springfield Hospital, Series A, 7.750% 01/01/13 1,050 1,148 WA State Health Care Facility, Grays Harbor Community Hospital, Series 1993, 7.200% 07/01/03 (b) 375 417 8.025% 07/01/20 (b) 1,770 2,024 -------- 19,157 -------- INTERMEDIATE CARE FACILITIES - 0.9% MA State Health & Educational Facilities Authority, Corp. for Independent Living, 8.100% 07/01/18 690 697 TN Shelby County, Health, Education, & Housing Facilities Board, Open Arms Development Center: Series 1992-A, 9.750% 08/01/19 520 602 Series 1992-C, 9.750% 08/01/19 530 613 -------- 1,912 -------- NURSING HOME - 20.0% CO Health Facility, American Housing Foundation I, Series 1990, 10.250% 12/01/20 1,500 1,500 DE State Economic Development Authority, 12.000% 04/01/25 2,270 2,500 DE Sussex County, Healthcare Facility, Delaware Health Corp., Series 1994-A, 7.600% 01/01/24 1,000 996 FL Flagler County Industrial Development Authority, South Florida Properties, Series 1988, 10.500% 12/01/18 1,470 1,487 IA State Finance Authority, Care Initiatives Project, Series 1996, 9.250% 07/01/25 1,000 1,220 IN Gary Industrial Economic Development, West Side Health Care Center, Series 1987-A, 11.500% 10/01/17 2,500 2,500 IN Michigan City Health Facilities, Metropolitan Health Foundation Inc. Project, 5.000% 11/01/22 4,500 4,050 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% 01/01/20 990 1,025 KY Lexington-Fayette Urban County Government, First Mortgage, AHF Kentucky-Iowa, Inc. Project, Series 1990, 10.250% 01/01/20 990 1,025 MA Boston, St. Joseph Nursing Care Center, Inc. Series 1990, 10.000% 01/01/20 (c) 1,960 2,151 MA State Industrial Finance Agency, GF/Massachusetts Inc., Series 1994, 8.300% 07/01/23 990 990 MI Cheboygan County Economic Development Corp., Metro Health Foundation Project, Series 1993, 11.000% 11/01/22 (b) 2,440 2,196 MO Grove Industrial Development Authority, First Mortgage Health Care Facility, Heritage Manor GR, Series 1988, 10.250% 11/01/13 520 468 MO Saint Louis County Industrial Development Authority, 10.250% 12/01/16 1,860 1,916 MO Springfield Industrial Development Authority, 10.250% 12/01/10 1,215 1,242 NJ Economic Development Authority Geriatric and Medical Service, Inc., Series A, 10.500% 05/01/04 790 847 NM City of Clovis, Retirement Ranches Project: 10.750% 04/01/19 2,155 2,354 OH Lucas County, Gericare, Inc., Series 1988-B, 10.500% 06/01/18 2,500 2,519 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 1989 A-3, 10.250% 03/01/19 (a) 1,970 1,379 PA Philadelphia Authority for Industrial Development: First Mortgage, The Care Pavilion, Series 1988, 10.250% 02/01/18 975 995 RHA/Philadelphia Project, 10.250% 11/01/18 1,450 1,499 TN New Tazewell Health Education and Housing Facilities Board, New Tazewell Series 1987, 10.000% 06/01/17 1,640 1,673 VA Beach Development Authority, Beverly Enterprises, Series 1985, 10.000% 04/01/10 1,860 2,062 -------- 40,532 -------- - ------------------------------------------------------------------------------- HOUSING - 13.3% ASSISTED LIVING/SENIOR - 2.7% IL State Development Finance Authority, Care Institute, Inc., 8.250% 06/01/25 1,500 1,562 MN Roseville, Care Institute, Inc., Series 1993, 7.750% 11/01/23 1,630 1,536 PA Montgomery County Industrial Development Authority, Assisted Living Facility, Series 1993-A, 8.250% 05/01/23 820 847 TX Bell County Health Facilities Development Corp., Care Institutions, Inc. 9.000% 11/01/24 1,500 1,629 -------- 5,574 -------- MULTI-FAMILY - 9.7% FL Clearwater Housing Authority, Hampton Apartments, Series 1994, 8.250% 05/01/24 2,500 2,641 FL Hialeah Housing Authority, Series 1991, 9.500% 11/01/21 1,000 950 FL State Housing Finance Agency, Windsong Apartments, Series 1993-C, 9.250% 01/01/19 830 838 IL Chicago, Michigan Boulevard Garden Apartment Rehabilitaion Project, Series 1985, 12.000% 01/01/00 390 395 MN Washington County Housing & Redevelopment Authority, Cottages of Aspen, Series 1992, 9.250% 06/01/22 1,095 1,185 MN White Bear Lake, Birch Lake Townhomes Project: Series 1989-A, 10.250% 07/15/19 1,770 1,781 Series 1989-B, 07/15/19 (d) 687 1,187 NC Eastern Carolina Regional Housing Authority, New River Apartments, Jacksonville, Series 1994, 8.250% 09/01/14 1,960 1,984 Resolution Trust Corp., Pass Through Certificates, Series 1993-A, 8.500% 12/01/16 (b) 4,248 4,360 SC State Housing Finance and Development Multi-family Housing Finance Revenue, Westbridge Apartments, Series A, 9.500% 09/01/20 2,200 2,241 TX Galveston Health Facilities Center, Pass Through Certificates, 8.000% 08/01/23 1,000 1,038 VA Alexandria Redevelopment & Housing Authority, Courthouse Commons Apartments, Series 1990-A, 10.000% 01/01/21 1,000 1,010 -------- 19,610 -------- SINGLE-FAMILY - 0.9% AK State Housing Finance Corp., Series 1996-A, 6.050% 12/01/17 1,000 1,006 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% 12/01/18 710 732 -------- 1,769 -------- - ------------------------------------------------------------------------------- OTHER - 4.2% PUBLIC FACILITIES IMPROVEMENT - 0.9% CA Statewide Communities Development Corp., J. Paul Getty Trust Center, 5.000% 10/01/23 2,000 1,858 -------- REFUNDED/ESCROW/SPECIAL OBLIGATION - 3.3% IL Chicago Public Building Commission, Series 1990-A, 7.000% 01/01/20 2,000 2,400 MA State Industrial Finance Agency: Mary Ann Morse Nursing Home, Inc., Series 1991-I, 10.000% 01/01/21 1,200 1,476 Series 1990, 9.000% 10/01/20 950 1,120 MI State Hospital Finance Authority, Detroit Osteopathic Hospital, Series 1987-A, 7.500% 11/01/10 950 1,003 NC Lincoln County, Lincoln County Hospital, 9.000% 05/01/07 530 635 -------- 6,634 -------- - ------------------------------------------------------------------------------- OTHER REVENUE - 19.2% AMUSEMENTS & RECREATION - 0.6% MN Mille Lacs Capital Improvement Infrastructure, Band of Chippewa, Series 1992-A, 9.250% 11/01/12 1,085 1,215 -------- CHEMICALS - 3.5% LA St. Charles Parish Pollution Control Revenue, Union Carbide Project, 7.350% 11/01/22 2,000 2,170 SC York County Industrial Revenue, Hoechst Celanese Corp., 5.700% 01/01/24 5,000 4,975 -------- 7,145 -------- HOTELS/CAMPS/LODGING - 2.0% MN Burnsville Commercial Development, Holiday Inn Project, 10.600% 06/01/06 2,500 2,546 MN Minneapolis Commercial Development, Hometel Associates, Ltd., Series 1988, 10.500% 06/01/03 1,500 1,517 -------- 4,063 -------- JUSTICE & PUBLIC ORDER - 0.4% TN Franklin Industrial Board, Landings Apartment Project, Series 1996-B, 8.750% 04/01/27 800 802 -------- MANUFACTURING - 5.0% CO Mesa County Industrial Development, Joy Technologies Inc., Series 1992, 8.500% 09/15/06 1,000 1,091 MA State Industrial Finance Agency, House of Bianchi Inc., 8.750% 06/01/18 330 347 MN Brooklyn Park, TL Systems Corp., Series 1991, 10.000% 09/01/16 795 988 OH Cuyahoga County, Joy Technologies, Inc., Series 1992, 8.750% 09/15/07 550 606 VA Halifax County Industrial Development Craddock-Terry Inc., Series 1989, 10.000% 12/01/19 1,010 1,087 VA Pittsylvania County Industrial Development, Craddock-Terry Inc., Series 1989, 10.000% 12/01/19 1,085 1,161 VA Prince Edward County Industrial Development, Craddock-Terry, Inc., Series 1989, 10.000% 12/01/19 1,860 1,990 WA Pilchuck Public Development Corp., Goodrich (B.F.) Co. Tramco Project, Series 1993, 6.000% 08/01/23 3,000 2,966 -------- 10,236 -------- MISCELLANEOUS RETAIL - 0.4% OH Lake County, North Madison Properties, Series 1993, 8.819% 09/01/11 710 749 -------- OTHER REVENUE - 2.1% IN Hammond, American Maize Products Co., Series 1994, 8.000% 12/01/24 2,000 2,255 LA Port New Orleans Industrial Development, Continental Grain Co., Series 1993, 7.500% 07/01/13 1,000 1,075 MD Baltimore, Park Charles Project, Series 1986, 8.000% 01/01/10 855 904 -------- 4,234 -------- PAPER PRODUCTS - 4.5% MI State Strategic Fund, Blue Water Fiber Project, Series 1994, 8.000% 01/01/12 2,000 1,498 MI State Strategic Fund, Great Lakes Pulp & Fibre Project, Series 1994, 10.250% 12/01/16 (e) 4,000 2,040 NY New York City Industrial Development Agency, Visy Paper, Inc., Series 1995, 7.950% 01/01/28 2,200 2,362 SC Darlington County, Industrial Development Authority, SONOCO Products Co. Project, 6.125% 06/01/25 2,000 2,080 WA Walla Walla Public Corp., Ponderosa Fibres Project, 9.125% 01/01/26 1,230 1,147 -------- 9,127 -------- PETROLEUM REFINING - 0.7% WA Pierce County Economic Development Corp., Occidental Petroleum Co., 5.800% 09/01/29 1,500 1,436 -------- - ------------------------------------------------------------------------------- RESOURCE RECOVERY - 4.4% CO-GENERATION - 2.5% FL Martin County Industrial Development Authority, Indiantown Co-generation Project, 7.875% 12/15/25 1,000 1,147 MD State Energy Financing Administration, AES Warrior Co-generation Project, 7.400% 09/01/19 1,750 1,855 NY Port Authority of New York & New Jersey, KIAC Partners, Series 1996 IV, 6.750% 10/01/11 2,000 2,083 -------- 5,085 -------- LAND FILL - 0.6% MA State Industrial Finance Agency, Peabody Monofill Associates, Inc., Series 1995, 9.000% 09/01/05 1,110 1,181 -------- MISCELLANEOUS DISPOSAL - 0.6% MA Boston Industrial Development Finance Authority, Jet-A-Way, Inc., 10.500% 01/01/11 1,000 1,116 -------- RECYCLING - 0.7% GA Fulton County Development Authority, Very, Inc., 10.500% 12/01/07 1,445 1,517 -------- - ------------------------------------------------------------------------------- TAX-BACKED - 5.3% GENERAL OBLIGATION - 1.2% LA New Orleans, Series 1991, (f) 09/01/15 4,000 1,400 NY New York City, Series 1997-A, 7.000% 08/01/07 1,000 1,106 -------- 2,506 -------- SALES & EXCISE TAX - 4.1% IL Development Finance Authority, City of Marion Project, Series 1991, 9.625% 09/15/21 1,475 1,525 IL Metropolitan Pier & Exposition Authority, Series 1996-A, (f) 12/15/13 5,000 1,931 (f) 12/15/21 8,000 1,930 IL Metropolitan Pier & Exposition Authority, McCormick Project: (f) 06/15/14 5,000 1,875 (f) 06/15/15 3,000 1,054 -------- 8,315 -------- - ------------------------------------------------------------------------------- TRANSPORTATION - 7.5% AIR TRANSPORTATION - 4.9% IN Indianapolis Airport Authority: United Airlines Project, Series A, 6.500% 11/15/31 2,000 2,033 Federal Express Project, 7.100% 01/15/17 2,000 2,170 KY Kenton County Airport Board, Delta Airlines, Inc., Series 1992-A, 7.500% 02/01/20 2,500 2,697 OH Dayton, Emery Air Freight Facilities, Series 1993-E, 6.050% 10/01/09 1,000 1,022 TX Alliance Airport Authority: American Airlines Project, 7.500% 12/01/29 1,000 1,075 Federal Express Corp., Series 1996, 6.375% 04/01/21 1,000 1,010 -------- 10,007 -------- TURNPIKE/TOLLROAD/BRIDGE - 2.6% CA San Joaquin Hills Transncorridor Agency Senior Toll Road, Series 1993: (f) 01/01/25 10,000 1,788 5.000% 01/01/33 2,480 2,182 PR Commonwealth of Puerto Rico Highway & Transportation Authority, Series 1996-Y, 5.500% 07/01/36 1,300 1,277 -------- 5,247 -------- - ------------------------------------------------------------------------------- UTILITY - 7.8% INDIVIDUAL POWER PRODUCER - 2.2% PA Economic Development Finance Authority, Colver Project, Series D: 7.125% 12/01/15 500 525 7.150% 12/01/18 3,750 3,933 -------- 4,458 -------- INVESTOR OWNED - 1.0% IL Bryant Pollution Control Revenue, Central Illinois Light Co. Project, 5.900% 08/01/23 2,000 2,025 -------- MUNICIPAL ELECTRIC - 1.8% TX Austin: Series 1994, (f) 05/15/17 6,600 2,104 (f) 05/15/18 5,000 1,506 -------- 3,610 -------- WATER & SEWER - 2.8% CT State Development Authority, Sewer Sludge Disposal Facilities, Series 1996, 8.250% 12/01/06 1,250 1,277 LA Public Facility Belmont Water Authority, 9.000% 03/15/24 (b) 790 826 MA State Industrial Finance Agency, Massachusetts Environmental Services, Series 1994 A, 8.750% 11/01/21 990 970 MS V Lakes Utility District, 8.250% 07/15/24 500 516 NJ State Economic Development Authority, Hills Development Co., 10.500% 09/01/08 2,100 2,110 -------- 5,699 -------- TOTAL MUNICIPAL BONDS (cost of $193,918) (g) 194,734 -------- - ------------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS - 0.9% PAR VALUE - ------------------------------------------------------------------------------- VARIABLE RATE DEMAND NOTES (h) CA Irvine Ranch Water District, 3.900% 01/01/21 900 900 MI Farmington Hills Hospital Finance Authority, Botsford General Hospital, Series 1991 B, 4.100% 02/15/16 1,000 1,000 -------- TOTAL SHORT-TERM OBLIGATIONS 1,900 -------- OTHER ASSETS & LIABILITIES, NET - 3.1% 6,159 - ------------------------------------------------------------------------------- NET ASSETS - 100.0% $202,793 ======== NOTES TO INVESTMENT PORTFOLIO: - ------------------------------------------------------------------------------- (a) This issuer is in default of certain debt covenants. Income is not being accrued. (b) 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 November 30, 1996 the value of these securities amounted to $9,823 or 4.8% of net assets. (c) This is a restricted security which was acquired at a cost of $1,940. This security represents 1.1% of the Fund's net assets at November 30, 1996. (d) Accrued interest accumulates in the value of the security and is payable at redemption. (e) Subsequent to November 30, 1996, this issuer is in default of certain debt covenants. Income is not being accrued. (f) Zero coupon bond. (g) Cost for federal income tax purposes is $194,004. (h) 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 November 30, 1996. See notes to financial statements. STATEMENT OF ASSETS & LIABILITIES NOVEMBER 30, 1996 (in thousands except for per share amount) ASSETS Investments at value (cost $193,918) $ 194,734 Short-term obligations 1,900 ---------- 196,634 Receivable for: Interest $ 5,281 Investments sold 2,095 Other 34 7,410 ---------- ---------- Total Assets 204,044 LIABILITIES Payable for: Distributions 1,163 Accrued: Deferred Trustees fees 3 Other 85 ---------- Total Liabilities 1,251 ---------- NET ASSETS at value for 27,367 shares of beneficial interest outstanding $ 202,793 ========== Net asset value per share $ 7.41 ========== COMPOSITION OF NET ASSETS Capital paid in $ 246,821 Undistributed net investment income 467 Accumulated net realized loss (45,311) Net unrealized appreciation 816 ---------- $ 202,793 ========== See notes to financial statements. STATEMENT OF OPERATIONS FOR THE YEAR ENDED NOVEMBER 30, 1996 (in thousands) INVESTMENT INCOME Interest $ 15,697 EXPENSES Management fee $ 1,311 Transfer agent 105 Bookkeeping fee 53 Trustees fee 19 Custodian fee 5 Audit fee 44 Legal fee 198 Reports to shareholders 12 Other 97 1,844 ---------- ---------- Net Investment Income 13,853 ---------- NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS Net realized gain 70 Net unrealized depreciation during the period (1,839) ---------- Net Loss (1,769) ---------- Net Increase in Net Assets from Operations $ 12,084 ========== See notes to financial statements. STATEMENT OF CHANGES IN NET ASSETS (in thousands) Year ended November 30 ---------------------------- INCREASE (DECREASE) IN NET ASSETS 1996 1995 Operations: Net investment income $ 13,853 $ 14,955 Net realized gain (loss) 70 (7,350) Net unrealized appreciation (depreciation) (1,839) 16,568 ----------- ----------- Net Increase from Operations 12,084 24,173 Distributions: From net investment income (13,957) (15,104) ----------- ----------- (1,873) 9,069 Fund Share Transactions: Value of distributions reinvested -- 153 ----------- ----------- Total Increase (Decrease) (1,873) 9,222 NET ASSETS Beginning of period 204,666 195,444 ----------- ----------- End of period (including undistributed net investment income of $467 and $511, respectively) $ 202,793 $ 204,666 =========== =========== NUMBER OF FUND SHARES Issued for distributions reinvested -- 21 Outstanding at Beginning of period 27,367 27,346 ----------- ----------- End of period 27,367 27,367 ----------- ----------- See notes to financial statements. NOTES TO FINANCIAL STATEMENTS November 30, 1996 NOTE 1. ACCOUNTING POLICIES ............................................................................... ORGANIZATION: Colonial Municipal Income 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. The Fund may issue an unlimited number of shares. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following 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 are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Portfolio positions which cannot be valued as set forth above are valued at fair value under procedures approved by the Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. The Fund may trade securities on other than normal settlement terms. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable 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 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 0.65% 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 of the Fund's assets. NOTE 3. PORTFOLIO INFORMATION ............................................................................... INVESTMENT ACTIVITY: During the year ended November 30, 1996, purchases and sales of investments, other than short-term obligations, were $43,444,372 and $44,714,481, respectively. Unrealized appreciation (depreciation) at November 30, 1996, based on cost of investments for federal income tax purposes was: Gross unrealized appreciation $ 10,402,432 Gross unrealized depreciation (9,672,930) -------------- Net unrealized appreciation $ 729,502 ============== CAPITAL LOSS CARRYFORWARDS: At November 30, 1996, 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 ------------ ----------------- 1997 $ 2,498,000 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 -------------- $ 45,287,000 ============== 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. FINANCIAL HIGHLIGHTS Selected per share data, total return, ratios and supplemental data throughout each period are as follows: Year ended November 30 ---------------------------------------- 1996 1995 1994 Net asset value - Beginning of period $ 7.480 $ 7.150 $ 7.830 -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.508 0.547 0.609 Net realized and unrealized gain (loss) (0.068) 0.335 (0.707) -------- -------- -------- Total from Investment Operations 0.440 0.882 (0.098) -------- -------- -------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.510) (0.552) (0.582) -------- -------- -------- Net asset value - End of period $ 7.410 $ 7.480 $ 7.150 ======== ======== ======== Market price per share - End of period $ 7.250 $ 6.750 $ 6.750 ======== ======== ======== Total return - based on market value (a) 15.36% 8.04% (10.06)% ======== ======== ======== RATIOS TO AVERAGE NET ASSETS: Expenses 0.91%(b) 0.98%(b) 0.90% Net investment income 6.87%(b) 7.47%(b) 8.12% Portfolio turnover 22% 24% 24% Net assets at end of period (000) $202,793 $204,666 $195,444 (a) Total return at market value assuming all distributions reinvested and excluding brokerage commissions. (b) The benefits derived from custody credits and directed brokerage arrangements had no impact. Prior years' ratios are net of benefits received, if any. - -------------------------------------------------------------------------------- Federal income tax information (unaudited) All of the distributions will be treated as exempt income for federal income tax purposes. FINANCIAL HIGHLIGHTS - CONT. Year ended November 30 ---------------------------- 1993 1992 Net asset value - Beginning of period $ 7.890 $ 8.060 --------- --------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.639 0.636 Net realized and unrealized loss (0.063) (0.170) --------- --------- Total from Investment Operations 0.576 0.466 --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.632) (0.636) In excess of net investment income (0.004) -- --------- --------- Total Distributions Declared to Shareholders (0.636) (0.636) --------- --------- Net asset value - End of period $ 7.830 $ 7.890 ========= ========= Market price per share - End of period $ 8.000 $ 7.875 ========= ========= Total return - based on market value (a) 11.56% 1.82% ========= ========= RATIOS TO AVERAGE NET ASSETS: Expenses 0.87% 0.87% Net investment income 8.03% 7.99% Portfolio turnover 21% 10% Net assets at end of period (000) $ 213,292 $ 213,420 (a) Total return at market value assuming all distributions reinvested and excluding brokerage commissions. REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS AND TRUSTEES OF COLONIAL MUNICIPAL INCOME 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 Municipal Income Trust at November 30, 1996, the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and the financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of portfolio positions at November 30, 1996 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Boston, Massachusetts January 10, 1997 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. 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 90 days written notice to the Plan participants. Upon withdrawal by any participant or any termination of the Plan, certificates for whole shares will be issued and cash payments will be made for any fractional shares. All correspondence concerning the Plan 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. THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK 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 Colonial at 1-800-426-3750 and additional reports will be sent to you. This report has been prepared for shareholders of Colonial Municipal Income Trust. [logo] COLONIAL MUTUAL FUNDS Mutual Funds for Planned Portfolios TRUSTEES ROBERT J. BIRNBAUM Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief Operating Officer, New York Stock Exchange, Inc.) TOM BLEASDALE Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank & Trust Company) LORA S. COLLINS Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel) JAMES E. GRINNELL Private Investor (formerly Senior Vice President-Operations, The Rockport Company) WILLIAM D. IRELAND, JR. Retired (formerly Chairman of the Board, Bank of New England-Worcester) RICHARD W. LOWRY Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood Corporation) WILLIAM E. MAYER Partner, Development Capital, L.L.C. (formerly Dean, College of Business and Management, University of Maryland; Dean, Simon Graduate School of Business, University of Rochester; Chairman and Chief Executive Officer, C.S. First Boston Merchant Bank; and President and Chief Executive Officer, The First Boston Corporation) JAMES L. MOODY, JR. Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer, Hannaford Bros. Co.) JOHN J. NEUHAUSER Dean, Boston College School of Management GEORGE L. SHINN Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant, The First Boston Corporation) ROBERT L. SULLIVAN Management Consultant (formerly Management Consultant, Saatchi and Saatchi Consulting Ltd. and Principal and International Practice Director, Management Consulting, Peat Marwick Main & Co.) SINCLAIR WEEKS, JR. Chairman of the Board, Reed & Barton Corporation COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1997 One of the Liberty Financial Companies (NYSE:L) One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750 IT-02/139D-1196 M (1/97) [recycle symbol] Printed on recycled paper -----END PRIVACY-ENHANCED MESSAGE-----