-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, EbMMRuRGsOZ3iX6Jt2teggBu/mDHOA++jyUkJ0vhQ0HMmCb8qqL2vhQPBz3XY8mH kAe0iRDGkz8BdAOm08KL/g== 0000906341-94-000002.txt : 19940425 0000906341-94-000002.hdr.sgml : 19940425 ACCESSION NUMBER: 0000906341-94-000002 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940228 FILED AS OF DATE: 19940422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNICIPAL INCOME TRUST/MA CENTRAL INDEX KEY: 0000817130 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 133422754 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05214 FILM NUMBER: 94523931 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CNTR STREET 2: C/O DEAN WITTER INTERCAPITAL INC CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123922550 FORMER COMPANY: FORMER CONFORMED NAME: ALLSTATE MUNICIPAL INCOME TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WITTER DEAN TAX FREE INCOME TRUST DATE OF NAME CHANGE: 19870817 N-30D 1 MUNICIPAL INCOME TRUST Municipal Income Trust Two World Trade Center New York, New York 10048 DEAR SHAREHOLDER: - ------------------------------------------------------------------------------ Long-term revenue bond yields, as measured by The Bond Buyer, reached a record low of 5.41 percent in mid October. However, strong economic growth and fears of renewed inflationary pressures subsequently caused yields to rise. This reversed the trend toward lower yields that had been in place for more than three years. Municipal bond yields lagged the rise in U.S. Treasury bond yields through January. During February, municipal bond prices deteriorated substantially after the Federal Reserve Board increased the fed funds rate which banks charge each other for overnight borrowing. By the end of the period under review, The Bond Buyer Revenue Bond Index had climbed to 5.88 percent, its highest level in almost a year. New-issue underwriting totaled a record $290 billion in 1993, a 23 percent increase over the previous high of $235 billion set in 1992. Refunding issues, which are used by state and local governments to refinance higher- coupon debt, represented 66 percent of total volume last year. New issues backed by insurance had a 37 percent market share. This year's new-issue volume is expected to decline by approximately 30 percent to the $200 billion range. An estimated $260 billion in bonds will either mature or be called in 1994, resulting in a decrease in outstanding municipal debt. For the first two months of 1994, new-issue volume declined by 20 percent and totaled $30 billion. Refunding activity, the catalyst of last year's record underwriting dropped even more sharply. Performance Municipal Income Trust's (NYSE symbol: TFA) total return for the six months ended February 28, 1994 was--8.70 percent. This return was based on the change in New York Stock Exchange (NYSE) market price from $11.25 to $9.875 per share and reinvestment of dividends and distributions. The net asset value of TFA declined 2.86 percent from $10.83 to $10.52 per share. For the six-month period, the Fund paid shareholders income dividends totaling $0.35 per share and a capital gains distribution of $0.09 per share. Beginning with the February 25, 1994 distribution, the Fund's monthly dividend level was reduced from $0.06 per share to $0.05 per share. This decrease was prompted by the prospect of continued redemptions and sales of older, high- coupon bonds with reduced call protection. Portfolio Structure The Fund was fully invested throughout most of the six-month period in long-term tax-exempt bonds. Short-term municipals were temporarily held for cash flow purposes. Prerefunded bond holdings represented 23 percent of net assets. The average credit rating was "A1" by Moody's Investors Service, Inc. or "A+" by Standard & Poor's Corp. The Fund's average maturity and call protection were 20 years and 6 years, respectively. Hospital revenue, industrial development/pollution control revenue and general obligation bonds, the three largest portfolio sectors, comprised 45 percent of net assets. Bonds subject to the alternative minimum tax (AMT) accounted for 21 percent of net assets. We would like to remind you that the Trustees have approved a procedure whereby the Fund, when appropriate, may attempt to reduce or eliminate a market value discount from net asset value by repurchasing shares in the open market or in privately negotiated transactions at a price not above market value, if any, or net asset value, whichever is lower at the time of purchase. We appreciate your support of Municipal Income Trust and look forward to continuing to serve your investment needs and objectives. Sincerely yours, /S/ C. FIUMEFREDDO Charles A. Fiumefreddo Chairman of the Board Municipal Income Trust Portfolio of Investments February 28, 1994 (unaudited) - -------------------------------------------------------------------------------
Principal Amount (in Coupon Maturity thousands) Rate Date Value ---------- ------- -------- ------- MUNICIPAL BONDS (97.6%) GENERAL OBLIGATION (12.4%) $ 5,000 Chicago, Illinois, Refg 1987 Ser B (Prerefunded) ...................... 9.25% 1/ 1/13 $ 5,885,050 6,270 Washington Suburban Sanitary District, Maryland, Constr Refg 1994 ......... 5.00 6/ 1/10 5,961,202 10,000 Massachusetts, 1994 Ser A ............. 5.00 1/ 1/11 9,381,600 New York City, New York, 2,500 1988 Ser A ......................... 8.25 11/ 1/02 2,846,775 855 1988 Ser D ......................... 8.50 8/ 1/08 987,123 4,145 1988 Ser D (Prerefunded)............ 8.50 8/ 1/08 4,789,838 7,650 1988 Ser A (Prerefunded)............ 8.50 11/ 1/10 8,917,376 4,000 Washington, 1991 Ser B (Prerefunded)... 6.70 6/ 1/16 4,474,360 ------- ---------- 40,420 43,243,324 ------- ---------- EDUCATIONAL FACILITIES REVENUE (9.8%) 5,000 California Public Works Board, University of California 1993 Ser A .............................. 5.50 6/ 1/21 4,710,600 3,500 Georgetown University, District of Columbia, Ser 1989 A ............... 8.25 4/ 1/18 3,992,730 4,000 FSU Financial Assistance Inc, Florida, Impr & Refg Ser 1994 ...... 5.25 10/ 1/15 3,702,960 6,750 Hamilton, Indiana, Southeastern Building Corp Cons Ser 1988 (Prerefunded) ...................... 8.40 1/ 1/15 7,941,173 New York State Dormitory Authority, 2,700 St Rose College Ser 1987 (Prerefunded)....................... 8.00 7/ 1/07 3,082,779 2,000 State University Ser 1993 A ........ 5.25 5/15/15 1,864,240 8,000 Berks County Municipal Authority, Pennsylvania, University of Pennsylvania Ser 1985 .............. 7.00 9/ 1/15 8,671,920 ------- ---------- 31,950 33,966,402 - -------- ---------- ELECTRIC REVENUE (8.1%) North Carolina Eastern Municipal Power Agency, 5,000 Refg Ser 1986 A (Prerefunded) ...... 7.75 1/ 1/15 5,489,550 1,500 Refg Ser 1988 A .................... 7.00 1/ 1/24 1,621,500 1,500 North Carolina Municipal Power Agency #1, Catawba Refg Ser 1988 A ......................... 7.50 1/ 1/17 1,660,380 10,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 INFLOS ........... 6.37 + 2/ 1/06 8,937,500 Intermountain Power Agency, Utah, 1,000 First Crossover Ser ................ 7.875 7/ 1/14 1,100,980 3,000 Refg Ser 1987 D .................... 8.625 7/ 1/21 3,426,300 2,750 Chelan County Public Utility District #1, Washington, Ser 1987 B (AMT) ................... 9.30 7/ 1/62 3,126,778 2,500 Washington Public Power Supply System, Nuclear Proj #2 Refg Ser 1990 C (Prerefunded)....... 7.625 7/ 1/10 2,948,475 ------- ---------- 27,250 28,311,463 ------- ---------- HOSPITAL REVENUE (18.6%) 3,800 Maricopa County Industrial Development Authority, Arizona, Samaritan Health Ser 1985 A (Crossover Refunded)................ 9.25 12/ 1/15 4,192,882 St Petersburg, Florida, Allegheny Health/St Anthony 245 Ser 1988 C ......................... 7.75 1/ 1/14 272,219 5 Ser 1988 C (Prerefunded)............ 7.75 1/ 1/14 5,649
Municipal Income Trust Portfolio of Investments February 28, 1994 (unaudited) (continued) - --------------------------------------------------------------------------------
Principal Amount (in Coupon Maturity thousands) Rate Date Value ---------- ------- -------- ------- Illinois Health Facilities Authority, $ 1,410 Glen Oaks Medical Center Inc Refg 1990 Ser D ................. 9.50% 11/15/15 $ 1,711,303 1,000 Mercy Center for Health Care Services Ser 1992 ............... 6.65 10/ 1/22 1,056,750 10,600 Indiana Health Facilities Financing Authority, St Anthony Medical Center & Home Inc Ser 1987 (Prerefunded) ..................... 9.25 10/ 1/17 12,452,668 2,500 Kentucky Development Finance Authority, Ashland Hospital/King's Daughters Refg & Impr Ser 1987 .... 9.75 8/ 1/11 3,010,425 1,500 Winchester, Kentucky, Clark County Hospital Refg Ser 1987 ............ 7.75 4/ 1/13 1,653,345 7,700 Breckenridge, Minnesota, Franciscan Sisters Health Care Inc Ser 1987 B--1 (Prerefunded) ....... 9.375 9/ 1/17 9,150,988 4,000 Minneapolis, Minnesota, Lifespan Inc Refg Ser 1987 B (Prerefunded).. 9.125 12/ 1/14 4,763,280 7,500 North Carolina Medical Care Commission, Presbyterian Health Services Corp Refg Ser 1993 ....... 5.50 10/ 1/20 7,275,375 4,735 Cass County, North Dakota, Franciscan Sisters Health Care Ser 1987 C ........................ 9.375 9/ 1/17 5,525,366 6,000 Lehigh County General Purpose Authority, Pennsylvania, HealthEast Inc Ser 1987 A&B ....... 9.00 7/ 1/15 6,901,750 1,000 Montgomery County Higher Education & Health Authority, Pennsylvania, Frankford Hospital Ser 1986 ....... 7.875 1/ 1/19 1,077,610 3,275 Washington Health Care Facility Authority, Sisters of Providence Ser 1988 ............... 8.625 10/ 1/07 3,722,430 1,850 Fayette County, West Virginia, MPC Inc Refg Ser 1990 ............. 9.75 2/ 1/11 2,052,076 ------- ---------- 57,120 64,824,116 ------- ---------- INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (13.6%) 5,000 California Pollution Control Finance Authority, Pacific Gas & Electric Co 1987 Ser B (AMT) ....... 8.875 1/ 1/10 5,785,400 5,000 Oxnard Industrial Development Finance Authority, California, Green Foods Corp Ser 1987 (AMT)..... 9.50 10/ 1/97 5,291,000 Illinois Development Finance Authority, America Tire Corp 840 Ser 1987 (AMT) .................... 10.00 10/ 1/97 814,800 3,000 Ser 1987 (AMT) .................... 10.50 10/ 1/07 2,880,000 2,890 Lapeer Economic Development Corporation, Michigan, Dott Manufacturing Co Ser 1989 A (AMT).. 10.65 11/15/17 3,229,170 5,465 Missouri Environmental Improvement & Energy Resource Authority, Associated Electric Coop Inc/ NRU-CFC Gtd Ser 84G-5 & 84G-6 ..... 7.90 11/15/14 6,032,267 10,000 New York State Energy Research & Development Authority, Consolidated Edison Co of New York Inc Refg Ser 1993 B....... 5.25 8/15/20 9,285,600 6,000 Ohio Air Quality Development Authority, Dayton Power & Light Co Ser 1985 ................. 9.50 12/ 1/15 6,685,380 5,000 Tulsa Municipal Airport Trust, Oklahoma, American Airlines Inc Ser 1988 (AMT) ................ 7.375 12/ 1/20 5,301,650 1,965 Matagorda County Navigation District #1, Texas, Houston Lighting & Power Co Collateralized Ser 1989 A (AMT) ... 7.875 2/ 1/19 2,191,112 ------- ---------- 45,160 47,496,379 ------- ----------
Municipal Income Trust Portfolio of Investments February 28, 1994 (unaudited) (continued) - --------------------------------------------------------------------------------
Principal Amount (in Coupon Maturity thousands) Rate Date Value ---------- ------- -------- ------- MORTGAGE REVENUE--MULTI-FAMILY (4.5%) $57,797 Eden Prairie, Minnesota, Fountain Place Apts--Phase II Refg Ser 1989 B ................... 0.00% 7/15/19 $ 2,167,378 5,000 New York City Housing Development Corporation, New York, Ser 1987 A ........................ 9.625 1/ 1/19 5,771,350 940 Rhode Island Housing & Mortgage Finance Corporation, Rental 1989 Ser B (AMT)................... 7.95 10/ 1/20 979,489 30,935 Oak Ridge Industrial Development Board, Tennessee, Gardens Southern Hill Woodlands Apts GNMA--Backed Refg Ser 1988 ........ 0.00 10/20/19 3,437,497 3,000 Virginia Housing Development Authority Ser 1987 B .............. 9.45 11/ 1/12 3,240,420 - ---------- ---------- 97,672 15,596,134 - ---------- ---------- MORTGAGE REVENUE--SINGLE FAMILY (5.4%) 5,000 Alaska Housing Finance Corporation, 1993 1st Ser ...................... 5.90 12/ 1/33 4,901,750 6,970 San Francisco Redevelopment Agency, California, Residential Ser 1984 Issue A ........................... 0.00 4/ 1/17 588,129 Maine Housing Authority, Purchase 4,265 1988 Ser D-2 (AMT) ................ 8.10 11/15/19 4,484,903 1,000 1988 Ser D-2 (AMT) ................ 8.10 11/15/22 1,067,570 4,410 North Dakota Housing Finance Agency, 1990 Ser B (AMT) .................. 7.75 7/ 1/24 4,746,968 1,975 Ohio Housing Finance Agency, GNMA- Backed 1990 Ser C (AMT) ........... 7.85 9/ 1/21 2,054,356 1,000 Pennsylvania Housing Finance Agency, 1987 Ser R (AMT) .................. 8.125 10/ 1/19 1,078,260 - ---------- ---------- 24,620 18,921,936 - ---------- ---------- NURSING & HEALTH RELATED FACILITIES REVENUE (3.1%) 2,000 Vista, California, Long-Term Care Foundation of America Ser 1989 COPs (a) (b) .............. 9.875 1/ 1/20 1,200,000 2,820 Newton County Industrial Development Authority, Missouri, Skilled Health Care--Joplin Refg Ser 1987... 10.50 10/ 1/11 3,036,802 7,000 New York State Medical Care Facilities Finance Agency, Mental Health Ser F ................. 5.25 2/15/19 6,392,190 - ---------- ---------- 11,820 10,628,992 - ---------- ---------- PUBLIC FACILITIES REVENUE (1.0%) 3,245 Illinois, Civic Center Dedicated Tax Ser 1991 (AMBAC Insured) ........ 6.25 12/15/20 3,511,804 - -------- ---------- RESOURCE RECOVERY REVENUE (4.3%) 9,110 Greater Detroit Resource Recovery Authority, Michigan, 1984 Ser B & G ........................... 9.25 12/13/08 9,868,134 4,500 Charleston County, South Carolina, Foster-Wheeler Charleston Inc Ser 1987 A (AMT) ........................ 9.25 1/ 1/10 5,228,955 - ---------- ---------- 13,610 15,097,089 - ---------- ---------- RETIREMENT & LIFE CARE FACILITIES REVENUE (1.0%) 3,000 Atlanta Urban Residential Financial Authority, Georgia, Renaissance on Peachtree Apts Ser 1988 (a) ........ 10.50 12/ 1/10 1,920,000 2,065 Charleston County, South Carolina, Sandpiper Village Inc Refg Ser 1988 ........................... 7.00 11/ 1/13 1,528,100 - ---------- ---------- 5,065 3,448,100 - ---------- ----------
Municipal Income Trust Portfolio of Investments February 28, 1994 (unaudited) (continued) - --------------------------------------------------------------------------------
Principal Amount (in Coupon Maturity thousands) Rate Date Value ---------- ------- -------- ------- TRANSPORTATION REVENUE (9.1%) Denver, Colorado, Airport $ 408,722 Ser 1991 D (AMT) ................... 7.75% 11/15/21 $11,121,000 2,500 Ser 1991 A (AMT) ................... 8.75 11/15/23 2,950,875 910 Southwestern Development Authority, Illinois, Tri-City Regional Port District Ser 1989 A (AMT) (b) .......................... 7.90 7/ 1/14 1,034,761 5,000 Albuquerque, New Mexico, Airport Ser 1987 B (AMT) ................... 8.75 7/ 1/19 5,698,400 4,500 Charlotte, North Carolina, Airport Ser 1987 (AMT) ..................... 8.50 7/ 1/17 5,087,745 2,000 Puerto Rico Highway & Transportation Authority, Refg Ser X .............. 5.25 7/ 1/21 1,855,060 3,380 Dallas-Fort Worth Regional Airport Board, Texas, Dallas-Fort Worth Intl Airport Ser 1985 .............. 9.125 11/ 1/15 3,736,658 - ---------- ---------- 28,290 31,484,499 - ---------- ---------- WATER & SEWER REVENUE (6.7%) 5,000 Birmingham Water Works & Sewer Board, Alabama, Ser 1994 (c) .............. 5.50 1/ 1/20 4,793,450 5,000 Phoenix Civic Improvement Corporation, Arizona, Jr Lien Water Ser 1994 (c).. 5.45 7/ 1/19 4,813,600 3,000 Massachusetts Water Resources Authority, 1993 Ser C ............... 5.25 12/ 1/20 2,776,830 New York City Municipal Water Finance Authority, New York, 1,000 1991 Ser A (Secondary FGIC Insured).. 6.75 6/15/16 1,097,980 8,500 1987 Ser A (Prerefunded)............. 9.00 6/15/17 9,952,990 - -------- ---------- 22,500 23,434,850 - -------- ---------- $408,722 TOTAL INVESTMENTS (Identified Cost ======== $313,240,349) (d) .......................... 97.6% 339,965,088 OTHER ASSETS IN EXCESS OF LIABILITIES ........ 2.4 8,511,075 ------ ----------- NET ASSETS ................................... 100.0% $348,476,163 ====== ============ - ------------------ + Current coupon rate for residual interest bonds. This rate resets periodically as the auction rate on the related short-term securities fluctuates. (a)Non-income producing, bond in default. (b)Resale is restricted to qualified investors. (c)Security purchased on a "when issued" basis. (d)The aggregate cost for federal income tax purposes is $313,240,349; the aggregate gross unrealized appreciation is $35,013,354 and the aggregate gross unrealized depreciation is $8,288,615, resulting in net unrealized appreciation of $26,724,739. See Notes to Financial Statements
MUNICIPAL INCOME TRUST FINANCIAL STATEMENTS - --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES February 28, 1994 (unaudited) - -------------------------------------------------------------------------------- ASSETS: Investments in securities, at value (identified cost $313,240,349) (Note 1) ........................................ $ 339,965,088 Receivable for: Investments sold ................................ 8,227,251 Interest ........................................ 6,027,685 Prepaid expenses and other assets .................. 43,236 ----------- Total Assets .................................. 354,263,260 ----------- LIABILITIES: Payable for: Investments purchased ............................ 4,963,750 Shares of beneficial interest repurchased (Note 5) ......................................... 206,787 Payable to bank ..................................... 339,074 Investment advisory fee payable (Note 2) ............ 96,674 Administration fee payable (Note 3) ................. 55,875 Accrued expenses (Note 4)............................ 124,937 ----------- Total Liabilities ............................. 5,787,097 ----------- NET ASSETS: Paid-in-capital ..................................... 311,738,611 Accumulated undistributed net realized gain on investments ................................... 9,096,300 Net unrealized appreciation on investments .......... 26,724,739 Accumulated undistributed net investment income ........................................... 916,513 ------------ Net Assets .......................................... $348,476,163 ============ Net Asset Value Per Share, 33,132,650 shares outstanding (unlimited shares authorized of $.01 par value) ................... $10.52 ======
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STATEMENT OF OPERATIONS For the six months ended February 28, 1994 (unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME: Interest Income ................................. $12,672,591 ----------- Expenses Investment advisory fee (Note 2) .............. 567,844 Administration fee (Note 3) ................... 328,275 Transfer agent fees and expenses (Note 4) ................................... 110,410 Professional fees ............................. 33,503 Shareholder reports and notices ............... 22,263 Registration fees ............................. 15,816 Trustees' fees and expenses (Note 4) .......... 15,803 Custodian fees ................................ 6,335 Other ......................................... 10,857 ---------- Total Expenses ............................. 1,111,106 ---------- Net Investment Income .................... 11,561,485 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1): Net realized gain on investments .............. 11,862,328 Net change in unrealized appreciation on investments ............................. (19,186,889) ------------ Net Loss on Investments .................... (7,324,561) ------------ Net Increase in Net Assets Resulting from Operations ............. $ 4,236,924 ============
STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
For the six months ended For the year February 28, 1994 ended (unaudited) August 31, 1993 ----------- --------------- INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income ...................... $ 11,561,485 $ 23,825,661 Net realized gain on investments ........... 11,862,328 554,522 Net change in unrealized appreciation on investments ........................... (19,186,889) 4,188,802 ------------- ------------ Net increase in net assets resulting from operations ......................... 4,236,924 28,568,985 ---------- ---------- Dividends and distributions to shareholders from: Net investment income ...................... (11,603,568) (23,869,997) Net realized gain on investments ........... (3,116,386) -0- ------------ ------------ Total dividends and distributions ........ (14,719,954) (23,869,997) ------------ ------------ Net decrease from transactions in shares of beneficial interest (Note 5)............... (206,787) -0- ------------ ---------- Total increase (decrease) ................ (10,689,817) 4,698,988 NET ASSETS Beginning of period .......................... 359,165,980 354,466,992 ----------- ----------- End of period (including undistributed net investment income of $916,513 and $958,596, respectively) ................ $348,476,163 $359,165,980 ============ ============ See Notes to Financial Statements
MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS (unaudited) - -------------------------------------------------------------------------------- 1. Organization and Accounting Policies--Municipal Income Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, closed-end management investment company. It was organized on June 16, 1987 as a Massachusetts business trust and commenced operations on September 29, 1987. The following is a summary of significant accounting policies: A. Valuation of Investments--Portfolio securities are valued for the Fund by an outside independent pricing service approved by the Fund's Trustees. The pricing service has informed the Fund that in valuing the Fund's portfolio securities, it uses both a computerized grid matrix of tax-exempt securities and evaluations by its staff, in each case based on information concerning market transactions and quotations from dealers which reflect the bid side of the market each day. The Fund's portfolio securities are thus valued by reference to a combination of transactions and quotations for the same or other securities believed to be comparable in quality, coupon, maturity, type of issue, call provisions, trading characteristics and other features deemed to be relevant. B. Accounting for Investments--Security transactions are accounted for on the trade date (date the order to buy or sell is executed). In computing net investment income, the Fund amortizes premiums and original issue discounts on fixed income securities. Additionally, with respect to market discount on bonds purchased after April 30, 1993, a portion of any capital gain realized upon disposition is recharacterized as taxable investment income. Realized gains and losses on security transactions are determined on the identified cost method. Interest income is accrued daily except where collection is not expected. C. Federal Income Tax Status--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable and nontaxable income to its shareholders. Accordingly, no federal income tax provision is required. D. Dividends and Distributions to Shareholders--The Fund records dividends and distributions to its shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax- basis treatment; temporary differences do not require reclassifications. Dividends and distributions which exceed net investment income and net realized capital gains for financial reporting purposes but not for tax purposes are reported as dividends in excess of net investment income or distributions in excess of net realized capital gains. To the extent that they exceed net investment income and net realized capital gains for tax purposes, they are reported as distributions of paid-in-capital. 2. Investment Advisory Agreement--Pursuant to an Investment Advisory Agreement (the "Advisory Agreement") with Dean Witter InterCapital Inc. (the "Investment Adviser"), the Fund pays its Investment Adviser an advisory fee, calculated weekly and payable monthly, by applying the following annual rates to the Fund's average weekly net assets: 0.35% of the portion of the Fund's average weekly net assets not exceeding $250 million and 0.25% of the portion of average weekly net assets exceeding $250 million. Under the terms of the Advisory Agreement, the Investment Adviser manages the Fund's assets. Also, the Investment Adviser pays the salaries of all personnel, including officers of the Fund, who are employees of the Investment Adviser. MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) - -------------------------------------------------------------------------------- 3. Administration Agreement--Through December 31, 1993, pursuant to an Administration Agreement with Dean Witter InterCapital Inc. (the "Former Administrator"), the Fund paid an administration fee, calculated weekly and payable monthly, by applying the following annual rates to the Fund's average weekly net assets: 0.20% of the portion of the Fund's average weekly net assets not exceeding $250 million; 0.15% of the portion of average weekly net assets exceeding $250 million but not exceeding $500 million; 0.12% of the portion of the average weekly net assets exceeding $500 million but not exceeding $750 million; and 0.10% of the portion of the average weekly net assets exceeding $750 million. On January 1, 1994, the Administration Agreement between the Former Administrator and the Fund had been terminated and a new Administration Agreement had been entered into between Dean Witter Services Company Inc. (the "Administrator"), a wholly- owned subsidiary of the Former Administrator, and the Fund. The nature and scope of the services being provided to the Fund or any fees being paid by the Fund under the new Agreement are identical to those of the previous Agreement. Under the terms of the Administration Agreement, the Administrator maintains certain of the Funds books and records and furnishes, at its own expense, such office space, facilities, equipment, clerical help, bookkeeping and certain legal services as the Fund may reasonably require in the conduct of its business. In addition, the Administrator pays the salaries of all personnel, including officers of the Fund who are employees of the Administrator. 4. Security Transactions and Transactions with Affiliates--The cost of purchases and the proceeds from sales of portfolio securities for the six months ended February 28, 1994, excluding short-term investments, aggregated $70,923,636 and $75,938,102, respectively. On April 1, 1991, the Fund established an unfunded noncontributory defined benefit pension plan covering all independent Trustees of the Fund who will have served as Independent Trustee for at least five years at the time of retirement. Benefits under this plan are based on years of service and compensation during the last five years of service. Aggregate pension costs for the six months ended February 28, 1994, included in Trustees' fees and expenses in the Statement of Operations, amounted to $4,720. At February 28, 1994, the Fund had an accrued pension liability of $39,943 which is included in accrued expenses in the Statement of Assets and Liabilities. Dean Witter Trust Company, an affiliate of the Investment Adviser and Administrator, is the Fund's transfer agent. At February 28, 1994, the Fund had transfer agent fees and expenses payable of $52,390. 5. Shares of Beneficial Interest--Transactions in shares of beneficial interest were as follows:
Capital Par Value Paid in of Excess of Shares Shares Par Value ------- -------- ---------- Balance, August 31, 1992 and August 31, 1993 ...................... 33,153,050 $331,531 $311,613,867 Treasury shares purchased and retired (weighted average discount 4.027%)*... (20,400) (204) (206,583) --------- -------- ------------ Balance, February 28, 1994 ............. 33,132,650 $331,327 $311,407,284 ========== ======== ============ - -------- *The Trustees have voted to retire the shares repurchased.
MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) - -------------------------------------------------------------------------------- 6. Dividends--The Fund has declared the following dividends from net investment income--
Declaration Amount Record Payable Date Per Share Date Date ----------- ---------- ------- ------- March 1, 1994 $0.05 March 11, 1994 March 25, 1994 March 29, 1994 $0.05 April 8, 1994 April 22, 1994
7. Selected Quarterly Financial Data--
Quarters Ended* ------------------------------ 2/28/94 11/30/93 --------------- ------------ Per Per Total Share Total Share ------ ------ ----- ------ Total investment income .................. $ 6,176 $0.19 $ 6,497 $0.20 Net investment income .................... 5,626 0.17 5,935 0.18 Net realized and unrealized loss on investments ........................ (5,024) (0.15) (2,301) (0.07)
Quarters Ended* ---------------------------------------------------- 8/31/93 5/31/93 2/28/93 11/30/92 ----------- ----------- ----------- ----------- Per Per Per Per Total Share Total Share Total Share Total Share ----- ----- ----- ----- ----- ----- ------ ----- Total investment income........... $6,832 $0.21 $6,391 $0.19 $6,476 $0.19 $6,517 $0.20 Net investment income........... 6,267 0.19 5,844 0.18 5,840 0.17 5,875 0.18 Net realized and unrealized gain (loss) on investments..... 4,204 0.12 (6,319) (0.19) 8,393 0.26 (1,535) (0.05) - -------- *Totals expressed in thousands of dollars.
MUNICIPAL INCOME TRUST FINANCIAL HIGHLIGHTS (unaudited) - -------------------------------------------------------------------------------- Selected data and ratios for a share of beneficial interest outstanding throughout each period:
For the six For the year ended August 31, months ended ------------------------------- February 28, 1994 1993 1992 1991 1990 1989 ---------- ---- ----- ----- ----- ----- Per Share Operating Performance: Net asset value, beginning of period.... $10.83 $10.69 $10.37 $10.01 $10.36 $10.20 ------ ------ ------ ------ ------ ------ Net investment income... 0.35 0.72 0.73 0.74 0.76 0.76 Net realized and unrealized gain (loss) on investments.........(0.22) 0.14 0.31 0.30 (0.20) 0.41 ------ ------ ------ ------ ------ ------ Total from investment operations .............. 0.13 0.86 1.04 1.04 0.56 1.17 ------ ------ ------ ------ ------ ------ Less dividends and distributions: Dividends from net investment income.....(0.35) (0.72) (0.72) (0.68) (0.85) (0.78) Distributions from net realized gain on investments....(0.09) -0- -0-* -0-* (0.06) (0.23) ------ ------ ------ ------ ------ ------ Total dividends and distributions........... (0.44) (0.72) (0.72) (0.68) (0.91) (1.01) ------ ------ ------ ------ ------ ------ Net asset value, end of period ......... $10.52 $10.83 $10.69 $10.37 $10.01 $10.36 ====== ====== ====== ====== ====== ====== Market value, end of period ......... $9.875 $11.25 $10.75 $10.25 $10.125 $10.50 ====== ====== ====== ====== ====== ====== TOTAL INVESTMENT RETURN+................(8.70%)(1) 11.82% 12.28% 8.23% 5.27% 17.24% RATIOS/SUPPLEMENTAL DATA: NET ASSETS, END OF PERIOD (IN THOUSANDS).. $348,476 $359,166 $354,467 $343,724 $329,674 $328,429 Ratio of expenses to average net assets ......... 0.63%(2) 0.67% 0.73% 0.75% 0.79% 0.76% Ratio of net investment income to average net assets ......... 6.52%(2) 6.70% 6.87% 7.31% 7.38% 7.29% Portfolio turnover rate .............. 21% 1% 11% 5% 10% 18% - ------- * Distribution of $.0041 and $.0012 for the years ended August 31, 1992 and August 31, 1991, respectively. + Total investment return is based upon the current market value on the first and last day of each period reported. Dividends and distributions are assumed to be reinvested at the prices obtained under the Fund's dividend reinvestment plan. Total investment return does not reflect sales charges or brokerage commissions. (1) Not annualized. (2) Annualized. See Notes to Financial Statements
- -------------------------------------------------------------------------------- The financial statements included herein have been taken from the records of the Fund without examination by the independent accountants and accordingly they do not express an opinion thereon. TRUSTEES - ----------------------------------------------- Jack F. Bennett Michael Bozic Charles A. Fiumefreddo Edwin J. Garn John R. Haire Dr. John E. Jeuck Dr. Manuel H. Johnson Paul Kolton Michael E. Nugent Philip J. Purcell John L. Schroeder Edward R. Telling OFFICERS - ----------------------------------------------- Charles A. Fiumefreddo Chairman and Chief Executive Officer Sheldon Curtis Vice President, Secretary and General Counsel James F. Willison Vice President Thomas F. Caloia Treasurer TRANSFER AGENT - ----------------------------------------------- Dean Witter Trust Company Harborside Financial Center--Plaza Two Jersey City, New Jersey 07311 LEGAL COUNSEL - ----------------------------------------------- Sheldon Curtis Two World Trade Center New York, New York 10048 INDEPENDENT ACCOUNTANTS - ----------------------------------------------- Price Waterhouse 1177 Avenue of the Americas New York, New York 10036 INVESTMENT MANAGER - ----------------------------------------------- Dean Witter InterCapital Inc. Two World Trade Center New York, New York 10048 MUNICIPAL INCOME TRUST Semiannual Report February 28, 1994 -----END PRIVACY-ENHANCED MESSAGE-----