-----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, JUIELCZxkhB2MK7f/rwyzBSUpHYP7c4VhD6f+uloprYi2ZYhhazqh/XFeHmSeXVT W5wO++iQfFOUyuDNxx0sXg== 0000950156-02-000037.txt : 20020414 0000950156-02-000037.hdr.sgml : 20020414 ACCESSION NUMBER: 0000950156-02-000037 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011130 FILED AS OF DATE: 20020129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLONIAL MUNICIPAL INCOME TRUST CENTRAL INDEX KEY: 0000809844 FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04992 FILM NUMBER: 02520612 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 N-30D 1 d573291.txt COLONIAL MUNICIPAL INCOME TRUST - 11-30-01 COLONIAL MUNICIPAL INCOME TRUST Annual Report NOVEMBER 30, 2001 [graphic omitted] PRESIDENT'S MESSAGE DEAR SHAREHOLDER: I wanted to take this opportunity to let you know that the sale of Liberty Financial's asset management companies - including Colonial Management Associates - to FleetBoston Financial was completed effective November 1, 2001. In light of this change and recent turmoil in the markets, I think it is important to assure you that only the ownership of Colonial has changed. The trust will continue to be guided by Maureen Newman, following the same investment principles which attracted you in the first place. The past year has been an interesting time for US investment markets. At the beginning of 2001, the Federal Reserve began lowering interest rates in hopes of stimulating the sagging economy. In total, we saw ten rate cuts in the first 11 months of the year, bringing the short-term interest rate down from 6.5% to 2.0%. An additional cut in December brought rates to a historic low of 1.75%. These aggressive rate cuts raised some concerns that inflationary pressures could surface, but inflation has thus far been kept in check. At the same time, economic weakness and stock market volatility has prompted investors to shift assets into the bond market - a move which has benefited municipal bond prices. The following report will provide you with more detailed information about the trust's performance and the strategies used by portfolio manager Maureen Newman. As always, we thank you for choosing Colonial Municipal Income Trust and for giving us the opportunity to serve your investment needs. Sincerely, /s/ Keith T. Banks Keith T. Banks President - -------------------------------------------------------------------------------- MEET THE NEW PRESIDENT Effective November 1, 2001,Mr.Keith Banks has taken on the position of president of Colonial Municipal Income Trust. Mr. Banks is currently chief investment officer of Fleet Asset Management, a position he has held since 2000. Prior to joining Fleet, he was managing director and head of US equity for J.P. Morgan Investment Management from 1996 to 2000. He began his investment career in 1981 as an equity analyst at Home Insurance. A chartered financial analyst,Mr. Banks earned his BA from Rutgers University and his MBA from Columbia Business School. - -------------------------------------------------------------------------------- - -------- ----------------- Economic and market conditions change NOT FDIC MAY LOSE VALUE frequently. There is no assurance that trends INSURED NO BANK GUARANTEE described herein will continue or commence. - -------- ----------------- - -------------------------------------------------------------------------------- PORTFOLIO MANAGER'S REPORT - -------------------------------------------------------------------------------- During the 12 months ended November 30, 2001, the generally weak economy caused investors to seek out more defensive investments, and demand for bonds increased.This increased demand benefited Colonial Municipal Income Trust, which delivered a total return of 7.93% (based on net asset value) for the 12 months ended November 30, 2001. However, this return falls short of the trust's benchmark, the Lehman Brothers Municipal Bond Index, which returned 8.75% for the same period. The trust benefited from its holdings of longer-maturity bonds, as well as holdings in the multi-family housing sector. On the negative side, the trust was hurt by defaults of certain nursing home bonds and by the bankruptcy of Bethlehem Steel (0.02% of net assets). The income available for distribution to common shareholders was helped as the short-term rates paid out to preferred shareholders dropped. If short-term rates rise,we could see a decline in the income available for distribution to common shareholders. While the issuance of preferred shares provides the possibility of higher tax-exempt income, it also adds price volatility to the portfolio.We try to manage that added price volatility by hedging with futures contracts. We believe that the economic recovery is forthcoming, but the process may be long and slow with little measurable improvement until late 2002. Consumer spending remains cautious, but consumer confidence has begun to increase and inflation remains in check. We expect bonds to perform well in the coming months, and we have positioned the portfolio to take advantage of continued low interest rates and a slow economic recovery. /s/ Maureen G. Newman Maureen G. Newman Maureen G.Newman is portfolio manager of Colonial Municipal Income Trust and a senior vice president of Colonial Management Associates, Inc. (CMA).Prior to joining Colonial, she worked at Fidelity Investments for 11 years, managing several mutual funds. Ms.Newman received her BA in economics from Boston College and her MBA from Babson College. She is a chartered financial analyst, a member of the Boston Security Analysts Society and former chairman of the National Federation of Municipal Analysts. Tax-exempt investing offers current tax-free income but also involves certain risks. The value of the trust will be affected by interest rate changes and the creditworthiness of issues held in the trust. The municipal bond management team identifies problems and opportunities and reacts quickly to market changes. Interest income from certain tax-exempt bonds may be subject to the federal alternative minimum tax for individuals and corporations. TWELVE-MONTH TOTAL RETURN, ASSUMING REINVESTMENT OF ALL DISTRIBUTIONS FOR THE PERIOD ENDED 11/30/01 (%) NAV 7.93 - --------------------------------------- Market price 12.05 - --------------------------------------- DISTRIBUTIONS DECLARED PER COMMON SHARE 12/1/00-11/30/01 ($) 0.39 - --------------------------------------- A portion of the trust's income may be subject to the alternative minimum tax. The trust may at times purchase tax-exempt securities at a discount from their original issue price. Some or all of this discount may be included in the trust's ordinary income, and any market discount is taxable when distributed. PRICE PER SHARE AS OF 11/30/01 ($) NAV 6.12 - --------------------------------------- Market price 5.65 - --------------------------------------- QUALITY BREAKDOWN AS OF 11/30/01 (%) AAA 33.1 - --------------------------------------- AA 1.5 - --------------------------------------- A 2.4 - --------------------------------------- BBB 17.7 - --------------------------------------- BB 4.5 - --------------------------------------- CCC 0.2 - --------------------------------------- Non-rated 37.6 - --------------------------------------- Cash equivalents 3.1 - --------------------------------------- Quality breakdowns are calculated as a percentage of total investments, including short-term obligations. Ratings shown in the quality breakdown represent the highest rating assigned to a particular bond by one of the following nationally recognized rating agencies: Standard & Poor's Corporation, Moody's Investors Service, Inc. or Fitch Investors Service, Inc. Because the trust is actively managed, there can be no guarantee the trust will continue to maintain these quality breakdowns in the future. - -------------------- INVESTMENT PORTFOLIO - -------------------- November 30, 2001
MUNICIPAL BONDS - 95.8% PAR VALUE - -------------------------------------------------------------------------------------- EDUCATION - 4.5% EDUCATION - 4.5% CA Educational Facilities Authority, Loyola Marymount University, Series 2001, (a) 10/01/14 $1,250,000 $ 673,188 CA Statewide Communities Development Authority, Crossroads School for Arts & Sciences, Series 1998, 6.000% 08/01/28 (b) 1,160,000 1,184,232 IL University Of Illinois, 5.500% 08/15/17 600,000 625,614 MA Industrial Finance Agency, St. John's High School, Series 1998, 5.350% 06/01/28 300,000 282,456 MI Southfield Economic Development Corp., Lawrence University, Series 1998 A, 5.400% 02/01/18 750,000 715,103 NC Capital Facilities Finance Authority, Meredith College, Series 2001, 5.125% 06/01/15 1,000,000 1,027,440 VT Educational & Health Buildings Finance Agency: Middlebury College, Series 1999, 5.000% 11/01/38 1,000,000 964,100 Norwich University, Series 1998, 5.500% 07/01/21 1,000,000 966,230 WA Higher Education Facilities Authority, Puget Sound University, Series 1998, 5.375% 10/01/30 5,000,000 5,058,200 WV University, Series 2000 A, (a) 04/01/25 750,000 210,953 ------------ 11,707,516 ------------ - ---------------------------------------------------------------------------------------- HEALTHCARE - 25.0% CONGREGATE CARE RETIREMENT - 4.2% CA Statewide Community Development Authority, Eskaton Village - Grass Valley, Series 2000, 8.250% 11/15/31 (b) 750,000 796,875 IL Health Facilities Authority, Lutheran Senior Ministries, Series 2001, 7.375% 08/15/31 250,000 252,500 KS Manhattan, Meadowlark Hills Retirement Home, Series 1999 A: 6.375% 05/15/20 250,000 248,750 6.500% 05/15/28 1,500,000 1,501,875 KY Economic Development Finance Authority, Christian Church Homes of Kentucky, Inc., Series 1998, 5.500% 11/15/30 200,000 174,050 MA Boston Industrial Development Finance Authority, Springhouse, Inc., Series 1988, 5.875% 07/01/20 500,000 422,500 MA Development Finance Agency, Loomis Comm., Series 1999 A, 5.625% 07/01/15 250,000 230,443 MN Columbia Heights, Crest View Corp., Series 1998, 6.000% 03/01/33 745,000 650,944 NH Higher Educational & Health Facilities Authority, Rivermead at Peterborough, Series 1998, 5.750% 07/01/28 500,000 429,375 NJ Economic Development Authority, Seabrook Village, Inc., Series 2000 A, 8.250% 11/15/30 500,000 535,625 PA Chartiers Valley Industrial & Commercial Development Authority, Asbury Health Center, Series 1999, 6.375% 12/01/24 1,000,000 913,750 PA Lancaster Industrial Development Authority, Garden Spot Village, Series 2000 A, 7.625% 05/01/31 325,000 335,563 PA Philadelphia Authority for Industrial Development, Baptist Home of Philadelphia, Series 1998 A: 5.500% 11/15/18 360,000 305,550 5.600% 11/15/28 500,000 408,750 TN Metropolitan Government, Nashville and Davidson County, Blakeford at Green Hills, Series 1998, 5.650% 07/01/24 575,000 494,500 TX Abilene Health Facilities Development Corp., Sears Methodist Retirement Obligation Group: Series 1998 A, 5.900% 11/15/25 750,000 625,313 Series 1999, 5.875% 11/15/18 500,000 439,375 WI Health & Educational Facilities Authority: Attic Angel Obligated Group, 5.750% 11/15/27 875,000 707,656 Clement Manor, Series 1998, 5.750% 08/15/24 1,000,000 847,500 United Lutheran Program for Aging, Inc., 5.700% 03/01/28 750,000 630,000 ------------ 10,950,894 ------------ HEALTH SERVICES - 0.1% IL Health Facilities Authority, Midwest Physician Group, Ltd., Series 1998, 5.500% 11/15/19 90,000 73,696 MA Development Finance Agency, Boston Biomedical Research Institute, Series 1999, 5.650% 02/01/19 120,000 113,742 ------------ 187,438 ------------ HOSPITALS - 9.7% AR Conway Health Facilities Board, Conway Regional Medical Center: Series 1999 A, 6.400% 08/01/29 350,000 364,711 Series 1999 B, 6.400% 08/01/29 850,000 885,726 CA Health Facilities Financing Authority, Cedars-Sinai Medical Center, Series 1999 A, 6.125% 12/01/30 650,000 697,132 CO Health Care Facilities Authority, National Jewish Medical & Research Center, Series 1998: 5.375% 01/01/16 1,500,000 1,414,335 5.375% 01/01/23 840,000 756,286 FL West Orange Healthcare District, Series 2001 A, 5.650% 02/01/22 400,000 402,424 GA Forsyth County Hospital Authority, Georgia Baptist Heathcare System, Series 1998, 6.000% 10/01/08 1,000,000 1,005,000 IL Health Facilities Authority: Swedish American Hospital, Series 2000, 6.875% 11/15/30 500,000 537,185 Thorek Hospital & Medical Center, 5.375% 08/15/28 500,000 430,210 IL Southwestern Development Authority, Anderson Hospital, Series 1999: 5.375% 08/15/15 500,000 468,810 5.500% 08/15/20 550,000 511,687 LA Public Facilities Authority, Touro Infirmary, Series 1999: 5.500% 08/15/19 250,000 246,088 5.625% 08/15/29 1,275,000 1,250,329 MA Health & Educational Facilities Authority, Milford- Whitinsville Regional Hospital, Series C, 5.250% 07/15/18 500,000 439,315 MI Dickinson County Healthcare System, Series 1999, 5.700% 11/01/18 770,000 725,348 MI Flint Hospital Building Authority, Hurley Medical Center, Series 1998 A, 5.375% 07/01/20 460,000 415,624 MI Hospital Finance Authority, Detroit Medical Center, Series 1998 A, 5.250% 08/15/28 600,000 494,346 MN St. Paul Housing & Redevelopment Authority, Healtheast Project, Series A, 5.700% 11/01/15 2,000,000 1,540,000 MN Washington County Housing & Redevelopment Authority, Healtheast, Inc., Series 1998, 5.250% 11/15/12 1,250,000 1,014,063 MS Business Finance Corp., Rush Medical Foundation, Inc., Series 1998, 5.625% 07/01/23 715,000 606,313 NH Higher Educational & Health Facilities Authority: Littleton Hospital Association, Inc., Series 1998 A: 5.900% 05/01/18 500,000 405,625 5.900% 05/01/28 675,000 518,063 6.000% 05/01/28 625,000 486,719 NY Staten Island University Hospital, 6.375% 07/01/31 500,000 498,775 OH Belmont County, East Ohio Regional Hospital, Series 1998, 5.700% 01/01/13 1,500,000 1,346,250 OH Highland County Joint Township Hospital District, Series 1999, 6.750% 12/01/29 735,000 677,119 OH Miami County, Upper Valley Medical Center, Inc., Series 1996 A, 6.250% 05/15/16 665,000 675,620 OH Sandusky County, County Memorial Hospital, Series 1998, 5.150% 01/01/08 270,000 268,817 PA Allegheny County Hospital Development, Ohio Valley General Hospital, Series 1998 A, 5.450% 01/01/28 1,050,000 926,615 PA Pottsville Hospital Authority, Pottsville Hospital & Warner Clinic, Series 1998, 5.625% 07/01/24 755,000 639,500 TX Mother Frances Hospital Regional Center, 6.000% 07/01/31 750,000 737,715 TX Lufkin Health Facilities Development Corp., Memorial Health Systems of East Texas, Series 1998, 5.700% 02/15/28 750,000 586,845 TX Richardson Hospital Authority, Baylor Richardson Medical Center, Series 1998, 5.625% 12/01/28 850,000 821,959 VT Educational & Health Buildings Authority: Brattleboro Memorial Hospital, 5.375% 03/01/28 500,000 443,860 Springfield Hospital, Series A, 7.750% 01/01/13 1,040,000 1,090,762 WV Hospital Finance Authority, Charlestown Medical Center, Series 2000 A, 6.750% 09/01/30 750,000 809,258 ------------ 25,138,434 ------------ INTERMEDIATE CARE FACILITIES - 1.1% IN Health Facilities Financing Authority, Hoosier Care, Inc., Series 1999 A, 7.125% 06/01/34 1,080,000 946,350 PA Economic Development Financing Authority, Northwestern Human Services, Inc., Series 1998 A, 5.250% 06/01/14 2,150,000 1,790,413 ------------ 2,736,763 ------------ NURSING HOMES - 9.9% AK Juneau, St. Ann's Care Center, Series 1999, 6.875% 12/01/25 1,000,000 985,000 CO Health Facilities Authority: AHF, Series 1990 A, 10.250% 12/01/20 (c) 1,500,000 555,000 Volunteers of America Care Facilities, Inc.: Series 1998 A: 5.450% 07/01/08 250,000 236,875 5.750% 07/01/20 700,000 594,125 Series 1999 A, 6.000% 07/01/29 350,000 294,875 DE Economic Development Authority, Georgetown Health Center, 12.000% 04/01/25 2,120,000 2,222,905 DE Sussex County, Healthcare Facility, Delaware Health Corporation, Series 1994 A, 7.600% 01/01/24 985,000 884,038 IA Finance Authority, Care Initiatives Project: Series 1996, 9.250% 07/01/25 1,000,000 1,233,750 Series 1998 B: 5.750% 07/01/18 550,000 495,688 5.750% 07/01/28 1,475,000 1,268,500 IN Gary Industrial Economic Development, West Side Health Care Center, Series 1987 A, 11.500% 10/01/17 2,290,000 2,310,518 IN Health Facilities Financing Authority, Metro Health Indiana, Inc., Series 1998, 6.400% 12/01/33 1,000,000 650,000 IN Michigan City Health Facilities, Metropolitan Health Foundation Inc., Project, 10.000% 11/01/22 4,500,000 1,710,000 KY Jefferson County First Mortgage, AHF, Kentucky-Iowa, Inc., Project Series 1990, 10.250% 01/01/20 910,000 546,000 KY Lexington-Fayette Urban County Government, First Mortgage, AHF, Kentucky-Iowa, Inc., Project Series 1990, 10.250% 01/01/20 920,000 552,000 MA Development Finance Agency, Alliance Health Care Facilities, Series 1999, 7.100% 07/01/32 1,150,000 1,137,063 MA Industrial Finance Agency: American Health Woodlawn Manor, Inc.: Series A, 7.750% 01/01/28 385,000 344,575 Series B, 10.250% 07/01/27 80,000 76,100 GF/Massachusetts Inc., Series 1994, 8.300% 07/01/23 930,000 956,738 MI Cheboygan County Economic Development Corp., Metro Health Foundation Project, Series 1993, 10.000% 11/01/22 (c) 2,440,000 927,200 MN Carlton Inter-Faith Social Services, Inc., Series 2000: 7.500% 04/01/19 250,000 255,625 7.750% 04/01/29 250,000 258,125 MN Minneapolis, Walker Methodist Senior Services Group, Series 1998 A, 6.000% 11/15/28 500,000 443,750 MN New Hope, North Ridge Care Center, Inc., Series 1999, 5.875% 03/01/29 500,000 433,125 MN Sartell, Foundation for Healthcare, Series 1999 A, 6.625% 09/01/29 2,025,000 1,868,063 NJ Economic Development Authority Geriatric and Medical Service, Inc., Series A, 10.500% 05/01/04 375,000 375,938 OH Montgomery County, Grafton Oaks Limited Partners, Series 1986, 9.750% 12/01/16 1,450,000 1,377,500 TN New Tazwell Health Education and Housing Facilities Board, New Tazwell Project, Series 1987, 10.000% 06/01/17 1,495,000 1,516,573 TX Kirbyville Health Facilities Development Corp., Heartway III Project: Series 1997 A, 10.000% 03/20/18 556,025 511,543 Series 1997 B, 6.000% 03/20/04 (c) 100,000 5,000 WA Kitsap County Housing Authority, Martha & Mary Nursing Home, 7.100% 02/20/36 643,000 725,593 ------------ 25,751,785 ------------ - ---------------------------------------------------------------------------------------- HOUSING - 10.6% ASSISTED LIVING/SENIOR - 3.8% DE Kent County, Heritage at Dover, Series 1999, 7.625% 01/01/30 1,250,000 1,115,625 GA Columbus Housing Authority, The Gardens at Calvary, Series 1999, 7.000% 11/15/19 500,000 444,375 IL Clarendon Hills Residential Facilities, Churchill Estate, Series 1998 A: 6.750% 03/01/24 1,050,000 787,500 6.750% 03/01/31 1,365,000 1,023,750 IL Development Finance Authority, Care Institute, Inc., 8.250% 06/01/25 1,480,000 1,498,500 MN Roseville, Care Institute, Inc., Series 1993, 7.750% 11/01/23 (c) 1,630,000 1,375,313 NC Medical Care Commission, DePaul Community Facilities Project, Series 1999, 7.625% 11/01/29 1,000,000 1,005,000 NY Huntington Housing Authority, Gurwin Jewish Senior Center, Series 1999: 5.875% 05/01/19 420,000 375,375 6.000% 05/01/29 650,000 572,000 TX Bell County Health Facilities Development Corp., Care Institutes, Inc., 9.000% 11/01/24 1,465,000 1,530,925 ------------ 9,728,363 ------------ MULTI-FAMILY - 6.6% DE Wilmington, Electra Arms Senior Association Project, 6.250% 06/01/28 975,000 798,281 FL Broward County Housing Finance Authority, Chaves Lake Apartment Project, Series 2000, 7.500% 07/01/40 500,000 511,875 FL Clay County Housing Finance Authority, Madison Commons Apartments, Series 2000 A, 7.450% 07/01/40 500,000 511,875 GA Clayton County Housing Authority, Magnolia Park Apartments, Series 1999 A, 6.250% 06/01/30 750,000 693,495 IL Chicago, Michigan Boulevard Garden Apartment Rehabilitation Project, Series 1985, 12.000% 01/01/50 (c) 70,000 49,000 MN Washington County Housing & Redevelopment Authority, Cottages of Aspen, Series 1992, 9.250% 06/01/22 1,030,000 1,071,200 MN White Bear Lake, Birch Lake Townhomes Project: Series 1989 A, 10.250% 07/15/19 1,770,000 1,827,525 Series 1989 B, (a) 07/15/19 649,000 286,638 NC Eastern Carolina Regional Housing Authority: New River Apartments-Jacksonville, Series 1994, 8.250% 09/01/14 1,655,000 1,677,756 Resolution Trust Corp., Pass Through Certificates, Series 1993 A, 8.750% 12/01/16 3,462,446 3,480,554 SC Housing Finance and Development Multi-Family Housing Finance Revenue, Westbridge Apartments, Series A, 9.500% 09/01/20 2,036,000 2,038,545 TN Franklin Industrial Development Board, Landings Apartment Project, Series 1996 B, 8.750% 04/01/27 745,000 787,838 TX El Paso County Housing Finance Corp., American Village Communities: Series 2000 C, 8.000% 12/01/32 300,000 303,375 Series 2000 D, 10.000% 12/01/32 300,000 303,000 TX Galveston Health Facilities Center, Driftwood Apartments, 8.000% 08/01/23 1,000,000 1,041,250 TX National Housing Trust Project, 10.000% 10/01/31 700,000 695,863 VA Alexandria Redevelopment & Housing Authority, Courthouse Commons Apartments, Series 1990 A, 10.000% 01/01/21 1,000,000 900,000 ------------ 16,978,070 ------------ SINGLE FAMILY - 0.2% AK Housing Finance Corp., Series 1996 A, 6.050% 12/01/17 560,000 584,601 KY Kentucky County Single Family Mortgage Revenue, Class A, 9.000% 09/01/16 30,000 30,072 ------------ 614,673 ------------ - ---------------------------------------------------------------------------------------- INDUSTRIAL - 4.9% FOOD PRODUCTS - 1.5% IN Hammond, American Maize Products Co., Series 1994, 8.000% 12/01/24 1,760,000 1,821,987 LA Port of New Orleans Industrial Development Continental Grain Company, Series 1993, 7.500% 07/01/13 1,000,000 1,041,250 LA Southern Louisiana Port Commission, Cargill, Inc., Project, 5.850% 04/01/17 500,000 522,485 MI Strategic Fund, Michigan Sugar Co., Sebewaing Project, Series 1998 A, 6.250% 11/01/15 1,000,000 610,000 ------------ 3,995,722 ------------ FOREST PRODUCTS - 1.5% AL Courtland Industrial Development Board, Champion International Corp., Series 1999, 6.000% 08/01/29 2,000,000 1,970,600 GA Effingham County Industrial Development Authority, Georgia Pacific Corp., Series 2001, 6.500% 06/01/31 1,000,000 1,033,030 GA Rockdale County Development Authority, Solid Waste Disposal, Visy Paper, Inc., Series 1993, 7.500% 01/01/26 800,000 812,000 ------------ 3,815,630 ------------ MANUFACTURING - 1.0% IL Will-Kankakee Regional Development Authority, Flanders Corp., Precisionaire Project, Series 1997, 6.500% 12/15/17 925,000 866,031 MA Industrial Finance Agency, House of Bianchi, Inc., 8.750% 06/01/18 (b) 180,000 176,400 MN Brooklyn Park, TL Systems Corp., Series 1991, 10.000% 09/01/16 715,000 788,288 TX Trinity River Authority, Texas Instruments Project, Series 1996, 6.200% 03/01/20 750,000 782,903 ------------ 2,613,622 ------------ METALS & MINING - 0.2% MD Baltimore County, Bethlehem Steel Corp., Project, Series B, 7.500% 06/01/15 (c) 500,000 60,000 NV Department of Business & Industry, Wheeling-Pittsburgh Steel Corp., Series 1999 A, 8.000% 09/01/14 (h) 250,000 200,000 VA Greensville County Industrial Development Authority, Wheeling-Pittsburgh Steel Corp., Series 1999 A: 6.375% 04/01/04 70,000 56,000 7.000% 04/01/14 375,000 292,031 ------------ 608,031 ------------ OIL AND GAS - 0.7% CA Los Angeles Airport Fuel Corp., 5.250% 01/01/23 500,000 488,755 WA Pierce County Economic Development Corp., Occidental Petroleum Co., 5.800% 09/01/29 1,500,000 1,441,920 ------------ 1,930,675 ------------ - ---------------------------------------------------------------------------------------- OTHER - 7.6% OTHER - 0.3% MD Baltimore, Park Charles Project, Series 1986, 8.000% 01/01/15 645,000 652,630 ------------ POOL/BOND BANK - 1.0% IN Indianapolis Local Public Improvement Bond Bank, Series 1999 E, 5.750% 02/01/29 2,000,000 2,009,460 MI Municipal Bond Authority, Local Government Loan Project, Series 2001 A, 5.375% 11/01/17 550,000 570,306 ------------ 2,579,766 ------------ REFUNDED/ESCROWED (D) - 6.3% CA San Joaquin Hills Transportation Corridor Agency, Series 1993, (a) 01/01/25 10,000,000 2,955,600 CT Development Authority, Sewer Sludge Disposal Facilities, Series 1996, 8.250% 12/01/06 855,000 960,806 FL Clearwater Housing Authority, Hampton Apartments, Series 1994, 8.250% 05/01/24 2,430,000 2,761,088 ID Health Facilities Authority, IHC Hospitals, Inc., 6.650% 02/15/21 2,750,000 3,321,120 MA Health & Educational Facilities Authority, Corp. for Independent Living, 8.100% 07/01/18 640,000 708,800 MN Mille Lacs Capital Improvement Authority, Mille Lacs Band of Chippewa, Series 1992 A, 9.250% 11/01/12 935,000 1,018,589 NC Lincoln County, Lincoln County Hospital, 9.000% 05/01/07 350,000 405,125 PA Delaware County Authority, Southeastern Pennsylvania Obligated Group, Series 1996: 6.000% 12/15/16 1,400,000 1,539,468 6.000% 12/15/26 500,000 530,880 PA Montgomery County Industrial Development Authority, Assisted Living Facility, Series 1993 A, 8.250% 05/01/23 765,000 834,806 TN Shelby County, Health, Education and Housing Facilities Board, Open Arms Development Center: Series 1992 A, 9.750% 08/01/19 485,000 623,225 Series 1992 C, 9.750% 08/01/19 490,000 629,650 ------------ 16,289,157 ------------ OTHER REVENUE - 1.8% HOTELS - 0.8% PA Philadelphia Authority for Industrial Development, Doubletree Project, 6.500% 10/01/27 2,000,000 2,005,000 ------------ RECREATION - 0.4% CT Mohegan Tribe Indians, 6.250% 01/01/31 200,000 198,422 NM Red River Sports Facility, Red River Ski Area Project, Series 1998, 6.450% 06/01/07 830,000 824,813 ------------ 1,023,235 ------------ RETAIL - 0.6% NJ Economic Development Authority, Glimcher Properties L.P. Project, 6.000% 11/01/28 1,000,000 977,500 OH Lake County, North Madison Properties, Series 1993, 8.819% 09/01/11 710,000 681,600 ------------ 1,659,100 ------------ - ---------------------------------------------------------------------------------------- RESOURCE RECOVERY - 1.3% DISPOSAL - 0.5% MA Industrial Finance Agency, Peabody Monofill Associates, Inc., Series 1995, 9.000% 09/01/05 690,000 729,675 UT Carbon County, Laidlaw Environmental, Series A, 7.450% 07/01/17 500,000 518,750 ------------ 1,248,425 ------------ RESOURCE RECOVERY - 0.8% MA Industrial Finance Agency, Ogden Haverhill Project, Series 1998 A, 5.500% 12/01/13 1,000,000 996,520 PA Delaware County Industrial Development Authority BFI, Series A, 6.200% 07/01/19 1,000,000 1,035,000 ------------ 2,031,520 ------------ - ---------------------------------------------------------------------------------------- TAX-BACKED - 9.6% LOCAL APPROPRIATED - 0.4% CA Compton, Civic Center Project, 5.500% 09/01/15 1,000,000 1,031,730 ------------ LOCAL GENERAL OBLIGATIONS - 3.2% LA New Orleans, Series 1991, (a) 09/01/15 4,000,000 2,001,080 NY New York City, Series 1998 H, 5.125% 08/01/25 5,000,000 4,948,900 TX Irving Independent School District, Series 1997: (a) 02/15/15 1,500,000 769,290 (a) 02/15/16 1,000,000 482,200 ------------ 8,201,470 ------------ SPECIAL NON-PROPERTY TAX - 2.9% CA San Diego Redevelopment Agency, (a) 09/01/18 1,015,000 423,935 IL Metropolitan Pier & Exposition Authority, McCormick Project: (a) 06/15/14 5,000,000 2,691,400 (a) 06/15/15 3,000,000 1,516,860 Series 1996 A, (a) 12/15/13 5,000,000 2,791,300 ------------ 7,423,495 ------------ SPECIAL PROPERTY TAX - 2.6% CA Orange County Community Facilities District, Ladera Ranch, Series 1999 A, 6.500% 08/15/21 1,000,000 1,048,750 CA Yorba Linda Redevelopment Agency, Series 1998 A, (a) 09/01/24 1,325,000 387,258 FL Heritage Palms Community Development District, Series 1999, 6.250% 11/01/04 940,000 952,925 FL Heritage Springs Community Development District, Series 1999 B, 6.250% 05/01/05 430,000 436,450 FL Lexington Oaks Community Development District: Series 1998 A, 6.125% 05/01/19 760,000 762,850 Series 2000 D, 6.700% 05/01/07 345,000 356,644 FL Northern Palm Beach County Improvement District, Series 1999, 5.900% 08/01/19 500,000 504,375 FL Orlando, Conroy Road Interchange Project, Series 1998 A: 5.500% 05/01/10 125,000 124,688 5.800% 05/01/26 300,000 289,500 FL Stoneybrook Community Development District: Series 1998 A, 6.100% 05/01/19 250,000 250,938 Series 1998 B, 5.700% 05/01/08 560,000 563,500 MI Taylor Tax Increment Finance Authority, Series 2001, 5.375% 05/01/17 1,000,000 1,031,640 ------------ 6,709,518 ------------ STATE APPROPRIATED - 0.4% MI Building Authority, Series 2001 I, 5.000% 10/15/24 1,000,000 981,230 ------------ STATE GENERAL OBLIGATIONS - 0.1% TX Board Of Regents University, 5.375% 08/15/18 350,000 360,241 ------------ - ---------------------------------------------------------------------------------------- TRANSPORTATION - 13.4% AIR TRANSPORTATION - 2.6% IN Indianapolis Airport Authority: Federal Express Corp., Series 1994, 7.100% 01/15/17 2,000,000 2,118,800 United Airlines Project, Series A, 6.500% 11/15/31 1,000,000 652,500 KY Kenton County Airport Board, Delta Airlines, Inc., Series 1992 A, 7.500% 02/01/20 2,500,000 2,429,750 MN Minneapolis & St.Paul Metropolitan Airports Commission, Northwest Airlines: Series 2001 A, 7.000% 04/01/25 325,000 255,531 Series 2001 B, 6.500% 04/01/25 250,000 239,063 NC Charlotte, Special Facilities Revenue, US Airways, Inc.: Series 1998, 5.600% 07/01/27 250,000 104,375 Series 2000, 7.750% 02/01/28 500,000 218,750 PA Philadelphia Authority for Industrial Development, Aero Philadelphia LLC, Series 1999, 5.250% 01/01/09 450,000 410,063 WA Port Seattle, Northwest Airlines, Inc., Series 2000, 7.250% 04/01/30 425,000 340,000 ------------ 6,768,832 ------------ AIRPORT - 7.9% MI Wayne Charter County, Detroit Metropolitan Airport, Series 1998 A, 5.000% 12/01/28 1,250,000 1,186,163 OH Cleveland, Series 2001 A, 5.000% 01/01/31 11,165,000 10,864,215 PA Philadelphia Authority for Industrial Development, Series 1998 A, 5.125% 07/01/28 8,750,000 8,475,600 ------------ 20,525,978 ------------ TOLL FACILITIES - 2.6% CA San Joaquin Hills Transportation Corridor Agency, Series A, (a) 01/15/15 3,000,000 1,571,010 CO Northwest Parkway Public Highway Authority, Series 2001 D, 7.125% 06/15/41 750,000 763,125 CO Public Highway Authority, Arapahoe County, E 470 Series 2000 B: (a) 09/01/18 3,000,000 1,244,850 (a) 09/01/35 8,750,000 735,875 MA Turnpike Authority, Series 1999 A, 5.000% 01/01/39 2,500,000 2,386,500 ------------ 6,701,360 ------------ TRANSPORTATION - 0.3% NV Department of Business & Industry, Las Vegas Monorail Project, Series 2000, 7.375% 01/01/40 750,000 759,375 ------------ - ---------------------------------------------------------------------------------------- UTILITY - 17.1% INDEPENDENT POWER PRODUCER - 3.1% MI Midland County Economic Development Corp., Series 2000, 6.875% 07/23/09 1,000,000 1,042,500 NY Port Authority of New York & New Jersey, KIAC Partners, Series 1996 IV, 6.750% 10/01/11 2,000,000 2,092,500 PA Economic Development Finance Authority, Colver Project, Series D: 7.125% 12/01/15 500,000 520,940 7.150% 12/01/18 2,750,000 2,850,155 PR Commonwealth of Puerto Rico Industrial, Educational, Medical & Environmental Cogeneration Facilities, AES Project, Series 2000, 6.625% 06/01/26 325,000 352,768 VA Pittsylvania County Industrial Development Authority, Multitrade of Pittsylvania, Series 1994 A: 7.450% 01/01/09 1,000,000 1,008,750 7.550% 01/01/19 250,000 251,250 ------------ 8,118,863 ------------ INVESTOR OWNED - 3.5% AZ Pima County Industrial Development Authority, Tucson Electric Power Co., Series A, 6.100% 09/01/25 750,000 729,375 CT Development Authority, Connecticut Light & Power Co., Series 1993 B, 5.950% 09/01/28 300,000 303,555 IL Bryant Pollution Control Revenue, Central Illinois Light Co., Series 1993, 5.900% 08/01/23 2,000,000 2,033,640 LA Calcasieu Parish Industrial Development Board, Entergy Gulf States, Inc., Series 1999, 5.450% 07/01/10 500,000 493,125 LA West Feliciana Parish, Entergy Gulf States, Inc., Series 1999 B, 6.600% 09/01/28 500,000 505,000 MS Business Finance Corp., Systems Energy Resources Project, Series 1998, 5.875% 04/01/22 1,500,000 1,466,250 NV Clark County, Nevada Power Co., Series 1997 A, 5.900% 11/01/32 3,000,000 2,814,150 TX Brazos River Authority Pollution Control, 5.750% 05/01/36 800,000 799,360 ------------ 9,144,455 ------------ MUNICIPAL ELECTRIC - 3.4% NY Long Island Power Authority, Series 1998 A, 5.250% 12/01/26 1,550,000 1,557,378 TX Austin, Series 1994: (a) 05/15/17 6,600,000 2,948,946 (a) 05/15/18 5,000,000 2,093,600 WA Seattle, Series 2001, 5.500% 03/01/17 2,250,000 2,337,413 ------------ 8,937,337 ------------ WATER & SEWER - 7.1% CA Castaic Lake Water Agency, Series 1999 A: (a) 08/01/25 10,445,000 2,898,488 (a) 08/01/26 10,445,000 2,739,097 LA Public Facility Belmont Water, Authority, 9.000% 03/15/24 (c) 730,000 584,000 MA Water Resources Authority, Series 1997 D, 5.000% 08/01/24 (e) 10,000,000 9,839,400 MS Five Lakes Utility District, 8.250% 07/15/24 500,000 463,125 TX Houston Water & Sewer System, Series C, (a) 12/01/12 3,000,000 1,780,154 ------------ 18,304,264 ------------ TOTAL MUNICIPAL BONDS (cost of $254,780,283) 248,214,597 ------------ MUNICIPAL PREFERRED STOCKS - 0.2% SHARES - ---------------------------------------------------------------------------------------- MULTI-FAMILY Charter Municipal Mortgage Acceptance Co., 7.600% 11/30/10 (h) (cost of $500,000) 500,000 533,750 ------------ SHORT-TERM OBLIGATIONS - 3.1% PAR - ---------------------------------------------------------------------------------------- VARIABLE RATE DEMAND NOTES - 3.1% (f) CO Denver Health & Hospital Authority, 1.600% 12/01/31 $ 100,000 $ 100,000 IA Ottumwa, Ottumwa Regional Health Center, Inc., Series 1998, 1.550% 10/01/06 400,000 400,000 IA Higher Education Loan Authority, American Institute of Business Series 1998, 1.650% 11/01/13 300,000 300,000 IL Sauget, Monsanto Co., Series 1993, 1.600% 05/01/28 900,000 900,000 IN Allen County, Golden Years Homestead, Inc., Series 1996, 1.550% 08/01/21 900,000 900,000 KS Development Finance Authority, Series 2000, 1.600% 05/15/26 1,700,000 1,700,000 MN Minneapolis, Series 1994 A, 1.400% 12/01/05 270,000 270,000 MO Development Finance Board, St. Louis Convention Center, Series 2000, 1.650% 12/01/20 500,000 500,000 MO Environmental Improvement & Energy Resource Authority, Monsanto Co., Series 1993, 1.500% 06/01/23 600,000 600,000 NV Washoe County, Sierra Nevada College Project, Series 2000, 1.650% 07/01/25 1,195,000 1,195,000 WI Health & Educational Facilities Authority Riverview Hospital Association, 1.650% 10/01/30 1,100,000 1,100,000 ------------ TOTAL SHORT-TERM OBLIGATIONS (cost of $7,965,000) 7,965,000 ------------ TOTAL INVESTMENTS - 99.1% (cost of $263,245,283) (g) 256,713,347 ------------ OTHER ASSETS & LIABILITIES, NET - 0.9% 2,366,451 - ---------------------------------------------------------------------------------------- NET ASSETS - 100.0% $259,079,798 ------------
NOTES TO INVESTMENT PORTFOLIO: - -------------------------------------------------------------------------------- (a) Zero coupon bond. (b) Denotes a restricted security, which is subject to restrictions on resale under Federal Securities laws. At November 30, 2001, these securities amounted to $2,157,507, which represents 0.8% of net assets. Additional information on the restricted securities held at November 30, 2001, is as follows: ACQUISITION ACQUISITION SECURITY DATE COST ---------------------------------------------------------------------- CA Crossroads School for Arts 08/21/98 $460,000 CA Crossroads School for Arts 08/31/98 700,000 MA House of Bianchi, Inc. 06/30/92 180,000 CA Statewide Community Development Authority 09/08/00 750,000 (c) The issuer is in default of certain debt covenants. Income is not being accrued. (d) The Trust 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 interest and principle. (e) This security, or a portion thereof, with a market value of $3,363,107, is being used to collateralize open future contracts. (f) 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, 2001. (g) Cost for federal income tax purposes is $263,245,672. (h) These securities are exempt from registration under Rule 144A of the Securities Act of 1933 and may be sold in transactions exempt from registration normally to qualified institutional buyers. Short futures contracts open at November 30, 2001: PAR VALUE UNREALIZED COVERED BY EXPIRATION APPRECIATION TYPE CONTRACTS MONTH AT 11/30/01 - ------------------------------------------------------------------------------ Municipal Bond Index $35,000,000 March $ 763,489 U.S. Treasury Bond 32,500,000 March 1,580,049 U.S. Treasury Note 21,600,000 March 644,096 ---------- $2,987,634 ---------- ACRONYM NAME - ----------------------------------------------------------------------------- AHF American Housing Foundation See notes to financial statements. - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------- November 30, 2001 ASSETS Investments at cost $263,245,283 ------------ Investments, at value $256,713,347 Cash 68,387 Receivable for: Interest 4,511,260 Investments sold 270,076 Deferred Trustees' compensation plan 7,148 Futures variation margin 12,094 ------------ Total assets 261,582,312 ------------ LIABILITIES Payable for: Investments purchased 1,408,426 Distributions -- common shares 843,176 Distributions -- preferred shares 24,660 Management fee 139,142 Bookkeeping fee 8,515 Deferred Trustees' fee 7,148 Other liabilities 71,447 ------------ Total liabilities 2,502,514 ------------ NET ASSETS $259,079,798 ------------ COMPOSITION OF NET ASSETS Auction Preferred Shares (3,600 shares issued and outstanding at $25,000 per share) $ 90,000,000 Paid-in capital -- common shares 220,206,191 Overdistributed net investment income (339,824) Accumulated net realized loss (47,242,267) Net unrealized appreciation/depreciation on: Investments (6,531,936) Futures contracts 2,987,634 ------------ NET ASSETS $259,079,798 ------------ Net Assets Net Assets at value including undeclared dividends applicable to 3,600 preferred shares outstanding $ 90,000,000 ------------ Net Assets at value applicable to 27,645,113 common shares of beneficial interest outstanding $169,079,798 ------------ Net Asset value per common share $ 6.12 ------------ See notes to financial statements. - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------- For the Year Ended November 30, 2001 INVESTMENT INCOME Interest $ 17,097,739 ------------ EXPENSES Management fee 1,694,757 Transfer agent fee 143,206 Bookkeeping fee 81,282 Trustee fee 11,411 Legal fee 157,920 Preferred shares remarketing commissions 227,726 Other expenses 173,935 ------------ Total Expenses 2,490,237 ------------ Custodian earnings credit (204) ------------ Net Expenses 2,490,033 ------------ Net Investment Income 14,607,706 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS: Net realized loss on: Investments (705,900) Futures contracts (10,055,064) ------------ Net realized loss (10,760,964) ------------ Net change in unrealized appreciation/depreciation on: Investments 6,859,477 Futures contracts 4,500,833 ------------ Net change in unrealized appreciation/depreciation 11,360,310 ------------ Net Gain 599,346 ------------ Increase in Net Assets from Operations $ 15,207,052 ------------ See notes to financial statements. - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30, ------------------------------- INCREASE (DECREASE) IN NET ASSETS: 2001 2000 - ----------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 14,607,706 $ 15,235,387 Net realized loss on investments and futures contracts (10,760,964) (12,850,420) Net change in unrealized appreciation/depreciation on investments and futures contracts 11,360,310 634,363 ------------- ------------- Net Increase from Operations 15,207,052 3,019,330 ------------- ------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income to common shareholders (10,670,628) (11,970,087) From net investment income to preferred shareholders (2,721,317) (3,778,348) ------------- ------------- (13,391,945) (15,748,435) ------------- ------------- SHARE TRANSACTIONS: Preferred share offering costs -- (108,000) ------------- ------------- Total Increase (Decrease) in Net Assets 1,815,107 (12,837,105) NET ASSETS: Beginning of period 257,264,691 270,101,796 ------------- ------------- End of period (including overdistributed net investment income of ($339,824) and ($1,570,087), respectively) $ 259,079,798 $ 257,264,691 ------------- ------------- NUMBER OF FUND SHARES: Common Shares: Outstanding at End of period 27,645,113 27,645,113 ------------- ------------- Preferred Shares: Outstanding at End of period 3,600 3,600 ------------- -------------
See notes to financial statements. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- November 30, 2001 NOTE 1. ACCOUNTING POLICIES ORGANIZATION: Colonial Municipal Income Trust (the "Trust") is a Massachusetts business trust, registered under the Investment Company Act of 1940 (the "Act") as amended, as a non-diversified, closed-end management investment company. The Trust's primary investment objective is to provide high current income, generally exempt from federal income taxes. The Trust's secondary objective is to seek total return. The Trust authorized an unlimited number of common shares of beneficial interest and 3,600 Auction Preferred Shares ("APS"). 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 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. Investments 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 (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. At November 30, 2001, capital loss carryforwards available (to the extent provided in regulations) to offset future realized gains were approximately as follows: YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD ------------------ ------------------------- 2002 $ 5,301,224 2003 7,498,926 2004 4,074 2005 7,196,783 2007 3,490,821 2008 13,036,764 2009 3,114,307 ----------- $39,642,899 ----------- Expired capital loss carryforwards, if any, are recorded as a reduction of paid-in capital. 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 the 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. Effective December 1, 2001, the Trust will adopt the provisions of the AICPA Audit and Accounting Guide for Investment Companies and will be required to amortize premium and discount on all debt securities. Upon the effective date, this accounting principle change will not have an impact on total net assets, but will result in a reclassification between cost of securities held and net unrealized appreciation/depreciation. Management of the Trust believes that the impact of adopting this principle will not be material to the financial statements. DISTRIBUTIONS TO SHAREHOLDERS: Distributions to common and preferred 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. The following reclassifications have been made to the financial statements. INCREASE (DECREASE) - ------------------------------------------------------------------------------ OVERDISTRIBUTED ACCUMULATED NET PAID-IN CAPITAL NET INVESTMENT INCOME REALIZED LOSS --------------- --------------------- ------------- ($7,979,388) $14,502 $7,964,886 These differences are primarily due to market discount reclassification and expiring capital loss carryforwards. Net investment income, net realized gains (losses) and net assets were not affected by this reclassification. Distributions to preferred shareholders are recorded daily and are payable at the end of each dividend period. Each dividend payment period for APS is generally seven days. The applicable dividend rate for the APS on November 30, 2001 was 1.75%. For the year ended November 30, 2001, the Trust declared dividends to Auction Preferred shareholders amounting to $2,721,317, representing an average APS dividend rate of 3.02%. 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 0.65% annually of the Trust's average weekly net assets. On November 1, 2001, Liberty Financial Companies, Inc., the former parent of the Advisor, completed the sale of its asset management business, including the Advisor, to Fleet National Bank ("Fleet"). This transaction resulted in a change of control of the Advisor and, therefore, an assignment of the Advisor's investment advisory contract with the Trust to Fleet. The Trust had obtained approval of a new investment advisory contract by the Trust's Board of Trustees and shareholders, which became effective upon completion of the sale. The new contract is identical to the prior contract in all material respects except for its effective and termination dates. BOOKKEEPING FEE: The Advisor is responsible for providing pricing and bookkeeping services to the Trust under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), the Advisor has delegated those functions to State Street Bank and Trust Company ("State Street"). The Advisor pays fees to State Street under the Outsourcing Agreement. During the period December 1, 2000 to June 30, 2001, the Advisor provided bookkeeping and pricing services to the Trust for a monthly fee equal to $18,000 annually plus 0.0233% annually of the Trust's average net assets over $50 million. Effective July 1, 2001, under its pricing and bookkeeping agreement with the Trust, the Advisor receives from the Trust an annual flat fee of $10,000, paid monthly, and in any month that the Trust's average net assets are more than $50 million, a monthly fee equal to the average net assets of the Trust for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. 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. The Trust has an agreement with its custodian bank under which $204 of custodian fees were reduced by balance credits for the year ended November 30, 2001. 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 3. PORTFOLIO INFORMATION INVESTMENT ACTIVITY: For the year ended November 30, 2001, purchases and sales of investments, other than short-term obligations, were $30,957,697 and $43,560,851, respectively. Unrealized appreciation (depreciation) at November 30, 2001, based on cost of investments for federal income tax purposes, was: Gross unrealized appreciation $10,710,222 Gross unrealized depreciation (17,242,547) ----------- Net unrealized depreciation $(6,532,325) =========== 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 trust 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 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 Advisor of the future direction of interest rates. Any of these risks may involve amounts exceeding the variation margin recorded in the Trust's Statement of Assets and Liabilities at any given time. NOTE 4. PREFERRED SHARE OFFERING On July 20, 1999, the Trust offered and currently has outstanding 3,600 APS. The APS are redeemable at the option of the Trust on any dividend payment date at the redemption price of $25,000 per share, plus an amount equal to any dividends accumulated on a daily basis unpaid through the redemption date (whether or not such dividends have been declared). Total proceeds, net of commissions, of $88,875,000, were received upon completion of the offering. APS commissions of $1,125,000 from the offering and costs incurred by the Trust in connection with the offering of the APS totaling $108,000 and $139,690 for fiscal years 2000 and 1999, respectively, were recorded as a reduction of capital paid in excess of par applicable to common shares. Under the Act, the Trust is required to maintain asset coverage of at least 200% with respect to the APS as of the last business day of each month in which any APS are outstanding. Additionally, the Trust is required to meet more stringent asset coverage requirements under the terms of the APS and in accordance with the guidelines prescribed by the rating agencies. Should these requirements not be met, or should dividends accrued on the APS not be paid, the Trust may be restricted in its ability to declare dividends to common shareholders or may be required to redeem certain of the APS. At November 30, 2001 there were no such restrictions on the Trust. - -------------------- FINANCIAL HIGHLIGHTS - -------------------- Selected data throughout each period is as follows (common shares unless otherwise noted):
YEAR ENDED NOVEMBER 30, ------------------------------------------------------------------------------------------ 2001 2000 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 6.05 $ 6.51 $ 7.57 $ 7.41 $ 7.41 ------- ------- ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.53(f) 0.55(a) 0.46 0.47 0.51 Net realized and unrealized gain (loss) on investments and futures contracts 0.03 (0.44) (0.97) 0.18 0.00(b) ------- ------- ------- ------- ------- Total from Investment Operations 0.56 0.11 (0.51) 0.65 0.51 ------- ------- ------- ------- ------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income to common shareholders (0.39) (0.43) (0.42) (0.48) (0.51) From net investment income to preferred shareholders (0.10) (0.14) (0.04) -- -- In excess of net investment income -- common shares -- -- (0.04) (0.01) -- ------- ------- ------- ------- ------- Total Distributions Declared to Shareholders (0.49) (0.57) (0.50) (0.49) (0.51) ------- ------- ------- ------- ------- LESS CAPITAL TRANSACTIONS Commission and offering costs -- preferred shares -- (0.00)(b) (0.05) -- -- ------- ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 6.12 $ 6.05 $ 6.51 $ 7.57 $ 7.41 ------- ------- ------- ------- ------- Market price per share -- common shares $ 5.65 $ 5.38 $ 5.75 $ 8.13 $ 7.56 ------- ------- ------- ------- ------- Total return -- based on market value(c) 12.05% 0.84% (24.33)% 14.57% 11.67% ------- ------- ------- ------- ------- RATIOS TO AVERAGE NET ASSETS Expenses (d) (e) 1.45% 1.33% 1.08% 0.82% 0.86% Net investment income (d) (e) 8.55% 8.88% 7.00% 6.20% 6.83% Net investment income (d) (e) 6.94%(g) 6.68%(g) 6.36%(g) 6.20% 6.83% Portfolio turnover rate 12% 12% 20% 34% 15% Net assets, end of period (000's) -- common shares $169,080 $167,265 $180,082 $ 208,931 $ 203,533 (a) The per share net investment income amount does not reflect the period's reclassification of differences between book and tax basis net investment income. (b) Represents less than $0.01 per share. (c) Total return at market value assuming all distributions reinvested at prices obtained by the Dividend Reinvestment Plan. (d) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had no impact. (e) Ratios reflect average net assets available to common shares only. (f) Per share data was calculated using average shares outstanding during the period. (g) Ratios reflect reduction for dividend payments to preferred shareholders. - ----------------------------------------------------------------------------------------------------------------------------------- ASSET COVERAGE REQUIREMENTS TOTAL AMOUNT ASSET COVERAGE INVOLUNTARY LIQUIDATING AVERAGE MARKET NOVEMBER 30, OUTSTANDING PER SHARE PREFERENCE PER SHARE VALUE PER SHARE - ----------------------------------------------------------------------------------------------------------------------------------- 2001 $90,000,000 $71,967 $25,007 $25,000 2000 90,000,000 71,462 25,011 25,000 1999* 90,000,000 50,023 25,006 25,000 * On July 20, 1999, the Trust began offering Auction Preferred Shares.
- -------------------- FINANCIAL HIGHLIGHTS - -------------------- Selected data throughout each period is as follows (common shares unless otherwise noted):
YEAR ENDED NOVEMBER 30, ------------------------------------------------------------------------------------ 1996 1995 1994 1993 1992 - ----------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 7.48 $ 7.15 $ 7.83 $ 7.89 $ 8.06 ------- ------- ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.51 0.55 0.61 0.64 0.64 Net realized and unrealized gain (loss) on investments and futures contracts (0.07) 0.33 (0.71) (0.06) (0.17) ------- ------- ------- ------- ------- Total from Investment Operations 0.44 0.88 (0.10) 0.58 0.47 ------- ------- ------- ------- ------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income to common shareholders (0.51) (0.55) (0.58) (0.64) (0.64) ------- ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 7.41 $ 7.48 $ 7.15 $ 7.83 $ 7.89 ------- ------- ------- ------- ------- Market price per share -- common shares $ 7.25 $ 6.75 $ 6.75 $ 8.00 $ 7.88 ------- ------- ------- ------- ------- Total return -- based on market value(a) 15.36% 8.04% (10.06)% 11.56% 1.82% ------- ------- ------- ------- ------- RATIOS TO AVERAGE NET ASSETS Expenses (b) 0.91% 0.98% 0.90% 0.87% 0.87% Net investment income (b) 6.87% 7.47% 8.12% 8.03% 7.99% Portfolio turnover rate 22% 24% 24% 21% 10% Net assets, end of period (000's) -- common shares $202,793 $204,666 $195,444 $ 213,292 $ 213,420 (a) Total return at market value assuming all distributions reinvested at prices obtained by the Dividend Reinvestment Plan. (b) The benefits derived from custody credits and directed brokerage arrangement, if applicable, had no impact.
- --------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS - --------------------------------- TO THE SHAREHOLDERS AND THE 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 (the "Trust") at November 30, 2001, the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust'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 auditing standards generally accepted in the United States of America 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, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts January 10, 2002 - --------------------- UNAUDITED INFORMATION - --------------------- RESULTS OF ANNUAL MEETING OF SHAREHOLDERS On September 26, 2001, the Annual Meeting of Shareholders of the Colonial Municipal Income Trust was held to conduct the vote for or against the approval of the items listed on the Trust's Proxy Statement for said Meeting. On July 16, 2001, the record date for the Meeting, the Trust had 27,645,113 common shares outstanding. The votes cast were as follows: PROPOSAL 1: TO APPROVE A NEW % OF SHARES TO % OF SHARES TO INVESTMENT ADVISORY TOTAL OUTSTANDING TOTAL SHARES AGREEMENT: SHARES SHARES VOTED - -------------------------------------------------------------------------------- For 21,730,196.1898 78.60% 95.21% Against 648,231.5360 2.34% 2.84% Abstain 445,451.4961 1.61% 1.95% PROPOSAL 2: ELECTION OF TRUSTEES: FOR WITHHELD - -------------------------------------------------------------------------------- Douglas A. Hacker 22,294,799.7420 529,079.4799 Janet Langford Kelly 22,309,716.4159 514,162.8060 Richard W. Lowry 22,325,578.0047 498,301.2172 William E. Mayer 22,322,773.3914 501,105.8305 Charles R. Nelson 22,311,543.6607 512,335.5612 John J. Neuhauser 22,313,207.6281 510,671.5938 Joseph R. Palombo 22,301,944.8111 521,934.4108 Thomas C. Theobald 22,318,567.8691 505,311.3528 Anne-Lee Verville 22,297,995.4159 525,883.8060 On July 16, 2001, the record date for the Meeting, the Trust had 3,600 preferred shares outstanding. The votes cast were as follows: PROPOSAL 1: TO APPROVE A NEW % OF SHARES TO % OF SHARES TO INVESTMENT ADVISORY TOTAL OUTSTANDING TOTAL SHARES AGREEMENT: SHARES SHARES VOTED - -------------------------------------------------------------------------------- For 3,497 97.14% 97.14% Against 2 0.06% 0.06% Abstain 101 2.81% 2.81% PROPOSAL 2: ELECTION OF TRUSTEES: FOR WITHHELD - -------------------------------------------------------------------------------- Douglas A. Hacker 3,497 103 Janet Langford Kelly 3,497 103 Richard W. Lowry 3,497 103 Salvatore Macera 3,497 103 William E. Mayer 3,497 103 Charles R. Nelson 3,497 103 John J. Neuhauser 3,497 103 Joseph R. Palombo 3,497 103 Thomas E. Stitzel 3,497 103 Thomas C. Theobald 3,497 103 Anne-Lee Verville 3,497 103 - -------------------------------------------------------------------------------- FEDERAL INCOME TAX INFORMATION 99.92% of the distributions from net investment income will be treated as exempt income for federal income tax purposes. - -------------------------------------------------------------------------------- - -------------------------- 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") all distributions will be reinvested automatically in additional shares of the Trust, unless the shareholder elects to receive cash or the shares are held in broker or nominee name and a reinvestment service is not provided by the broker or nominee. All cash distributions will be mailed by check directly to the record holder by the dividend paying agent. 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. The aggregate market value of the shares may constitute income to shareholders for federal income tax purposes. However, if the market price of the shares is less than the net asset value, shares will be bought as soon as practicable (but no more than 30 days after the distribution, except as may be required to comply with federal securities laws) in the open market for the accounts of plan participants. If, during this purchase period, the market price surpasses the net asset value, 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. All plan accounts receive written confirmations of all transactions. Shares purchased under the plan are held in uncertificated form. 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. Fees and expenses of the plan other than 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. All correspondence concerning the plan should be directed to State Street Bank and Trust Company, the plan agent, by mail at P.O. Box 8200, Boston, MA 02266-8200 or by phone at 1-800-426-5523. TRANSFER AGENT IMPORTANT INFORMATION ABOUT THIS REPORT The Transfer Agent for Colonial Municipal Income Trust is: EquiServe Trust Company, N.A. 150 Royall Street Canton, MA 02021 1-800-730-6001 The 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 DOUGLAS A. HACKER President of UAL Loyalty Services and Executive Vice President of United Airlines (formerly Executive Vice President, Senior Vice President and Chief Financial Officer of UAL, Inc.) JANET LANGFORD KELLY Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (formerly Senior Vice President, Secretary and General Counsel, Sara Lee Corporation) RICHARD W. LOWRY Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood Corporation) SALVATORE MACERA Private Investor (formerly Executive Vice President and Director of Itek Corp.) WILLIAM E. MAYER Managing Partner, Park Avenue Equity Partners (formerly Founding Partner, Development Capital LLC; Dean and Professor, College of Business and Management, University of Maryland) CHARLES R. NELSON Van Voorhis Professor, Department of Economics, University of Washington; consultant on econometric and statistical matters (formerly Department Chairman and Director of the Institute for Economic Research) JOHN J. NEUHAUSER Academic Vice President and Dean of Faculties, Boston College (formerly Dean, Boston College School of Management) JOSEPH R. PALOMBO Chief Operating Officer, Fleet Asset Management; Executive Vice President and Director of Colonial Management Associates, Inc. and Stein Roe & Farnham Incorporated; Executive Vice President and Chief Administrative Officer of Liberty Funds Group LLC (formerly Chief Operations Officer, Mutual Funds, Liberty Financial Companies, Inc.; Vice President of Liberty Mutual Funds, Stein Roe Mutual Funds and All-Star Funds, and Chief Operating Officer, Putnam Mutual Funds) THOMAS E. STITZEL Business Consultant and Chartered Financial Analyst (formerly Professor of Finance, College of Business, Boise State University) THOMAS C. THEOBALD Managing Director, William Blair Capital Partners (formerly Chief Executive Officer and Chairman of the Board of Directors, Continental Bank Corporation) ANNE-LEE VERVILLE Chairman of the Board of Directors, Enesco Group, Inc. and author and speaker on educational systems needs (formerly General Manager, Global Education Industry, and President, Applications Solutions Division, IBM Corporation) - ---------------------------------------------- COLONIAL MUNICIPAL INCOME TRUST ANNUAL REPORT - ---------------------------------------------- 101-02/451H-0901 (1/02) 01/2474 -----END PRIVACY-ENHANCED MESSAGE-----