-----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, hpnBhmpHpJkBlRAI7X5D0EShn5Gj+wRP4SlNg91HbDK7Ecxgpoi8RutHILkIMc+q LyHHpOwZxtaa0iEd7Ow/jg== 0000950136-95-000145.txt : 19950503 0000950136-95-000145.hdr.sgml : 19950503 ACCESSION NUMBER: 0000950136-95-000145 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950502 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNICIPAL INCOME TRUST/MA CENTRAL INDEX KEY: 0000817130 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [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: 95533738 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 SEMI ANNUAL REPORT MUNICIPAL INCOME TRUST Two World Trade Center New York, New York 10048 DEAR SHAREHOLDER: - ----------------------------------------------------------------------------- Interest rates moved higher throughout most of 1994 as the fixed-income markets focused on the strong pace of economic growth and the risk of higher inflation. Convinced that growth would be sustained, the Federal Reserve Board progressively tightened its monetary policy. This led to one of the most severe bear markets for bonds in recent history. Subsequently, the bond market began to rally in November based on signs of slower economic growth and investor anticipation that the Fed's tighter monetary policy was taking effect. MUNICIPAL MARKET CONDITIONS Municipal bond yields, as tracked by The Bond Buyer Revenue Bond Index,* moved 187 basis points higher over a ten month period, from a low of 5.50 percent prior to the central bank's first rate increase in February 1994 to a high of 7.37 percent in November. The municipal market rallied over the next three months and the Revenue Bond Index yield declined 106 basis points to 6.31 percent at the end of February 1995. These yield changes were equivalent to a 22 point drop in price through November 1994 and a subsequent 9 point recovery by February 1995. The period ended February 28, 1995 was marked by shifts in the balance of supply and demand in the municipal market. Between February and May 1994, dealer inventories reached near-record levels as long-term bonds were sold to pay taxes and increase cash. A semblance of stability returned to the market between June and August. However, after Labor Day the market was subjected to another round of bond sales caused by tax-loss selling. Conditions improved in December as the market anticipated the reinvestment of coupons, bond calls and maturities in January at a time of scarce supply. This seasonal pattern more than offset the uncertainty caused by the Orange County, California bankruptcy filing. On December 6, 1994 Orange County, one of the nation's most affluent areas, was forced to seek court protection when its pooled-investment fund faced unprecedented losses. Long-term municipal bonds have out-performed U.S. Treasury bonds since November. The ratio of Revenue Bond Index yields to 30-year Treasury yields over the past twelve months began at 87 percent, ranged as high as 92 percent in November and ended the period at 84 percent. A declining ratio means that municipal prices have been relatively stronger than U.S. Treasury prices. The rise in interest rates in 1994 also took its toll on the level of state and local government debt issuance. For the year, new-issue volume declined 44 percent to $163 billion. The driving force behind this sharp decline was the virtual halt in refunding issues, which plummeted 74 percent. Last year, municipal maturities and bond calls reached $191 billion and exceeded the supply of new issues coming to market. This marked the first decline in the outstanding supply of municipal securities. A continuation of this pattern is expected in 1995 and should strengthen municipal market conditions. In the first two months of 1995 municipal volume was down approximately 60 percent compared to the same period last year. FUND PERFORMANCE Municipal Income Trust's net asset value (NAV) declined from $10.16 to $9.80 per share during the six-month period ended February 28, 1995. The Fund's total NAV return for the period was 3.40 percent. This was based on the NAV price change of $0.36 and the reinvestment of tax-free dividends and capital gains distributions which totaled $0.30 and $0.34 per share, respectively. Concurrently, the Fund's market price on the New York Stock Exchange declined from $9.25 to $9.125 per share. Based on this - ------------ * The Bond Buyer Revenue Bond Index is an arithmetic average of the yields of 25 selected municipal revenue bonds with 30-year maturities. Credit ratings of these bonds range from Aa1 to Baa1 by Moody's and AA+ to A-by Standard & Poor's. price change and reinvestment of dividends and capital gains, the Fund's total market return for the fiscal period was 5.75 percent. The Fund began the period trading at a 9.0 percent discount to NAV and closed at a 6.9 percent discount to NAV. On February 28, 1995 undistributed net investment income totaled $0.10 per share, an increase from $0.07 at the beginning of the fiscal year, and is an indication that the Fund had earned more than it paid in dividends during the period. INVESTMENT STRATEGY Under volatile interest rate conditions, the Fund benefited from its established mix of older, high coupon bonds. The portfolio held more than 20 percent of its net assets in refunded issues backed by U.S. government securities held in escrow or by another refinancing method to redeem the municipal issues on their first call dates. The portfolio's long-term investments were diversified among 14 specific municipal sectors and 69 credits. The Fund held one issuer, insured by MBIA, which participated in the Orange County investment pool. The three largest sectors represented in the portfolio were refunded, industrial development/pollution control and hospital revenue bonds. These sectors accounted for 42 percent of net assets. The average maturity and call protection of the Fund's long-term holdings were 18 and 5 years, respectively. Bonds subject to the alternative minimum tax (AMT) comprised approximately 17 percent of net assets. The credit-quality ratings of long-term portfolio are summarized below:
MOODY'S OR STANDARD & POOR'S RATING PERCENT Aaa or AAA ......................... 17 Aa or AA ........................... 31 A or A ............................. 36 Baa or BBB ......................... 8 Not rated .......................... 8
LOOKING AHEAD While economic growth is expected to continue in 1995, the effect of last year's rise in interest rates is likely to take its toll. By mid-year, we anticipate that the economy will slow vis-a-vis the rapid pace experienced in 1994 and that inflation will stabilize. Investor demand for municipal securities should be sustained by significant bond maturities, calls for redemption and diminished new-issue supply. The Fund plans to reduce defensive positions, including refunded bonds to improve call protection. New investments will continue to stress credit quality and essential service sectors. Even with the move to higher yields that occurred last year, the Fund still cannot replace the yield attributable to many older investments that may be called or sold in the next few years. The Fund's procedure for reinvestment of all dividends and distributions on common shares is through purchase in the open market. This method helps to support the market value of the Fund's shares. In addition, we would like to remind you that the Trustees have approved a procedure whereby the Fund, when appropriate, may repurchase shares in the open market or in privately negotiated transactions at a price not above market value or net asset value, whichever is lower at the time of purchase. During the six-month period ended February 28, 1995, the Fund purchased 728,300 shares of common stock at a weighted average discount of 9.3 percent. We appreciate your ongoing support of Municipal Income Trust and look forward to continuing to serve your investment needs. Very truly yours, Charles A. Fiumefreddo Chairman of the Board MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS February 28, 1995 (unaudited)
PRINCIPAL AMOUNT (IN COUPON MATURITY THOUSANDS) RATE DATE VALUE - ----------- --------- ---------- -------------- MUNICIPAL BONDS (95.5%) GENERAL OBLIGATION (8.8%) $ 6,000 Moulton-Niguel Water District, California, Refg 1993 (MBIA Insured) .......................................................5.00 % 09/01/19 $ 5,118,780 10,000 Massachusetts, 1994 Ser A .......................................5.00 01/01/11 8,938,700 6,270 Washington Suburban Sanitary District, Maryland, Gen Constr Refg 1994 ...........................................................5.00 06/01/10 5,706,829 New York City, New York, 2,500 1988 Ser A .....................................................8.25 11/01/02 2,731,650 4,000 1995 Ser D .....................................................6.20 02/01/07 4,167,600 850 1988 Ser D .....................................................8.50 08/01/08 908,769 - ----------- -------------- 29,620 27,572,328 - ----------- -------------- EDUCATIONAL FACILITIES REVENUE (6.4%) 5,000 California Public Works Board, University of California 1993 Ser A ..............................................................5.50 06/01/21 4,390,650 3,500 Georgetown University, District of Columbia, Ser 1989 A ........8.25 04/01/18 3,840,655 4,000 FSU Financial Assistance Inc, Florida, Impr & Refg Ser 1994 ....5.25 10/01/15 3,586,840 8,000 Berks County Municipal Authority, Pennsylvania, University of Pennsylvania Ser 1985 ..........................................7.00 09/01/15 8,249,200 - ----------- -------------- 20,500 20,067,345 - ----------- -------------- ELECTRIC REVENUE (8.7%) 1,500 North Carolina Municipal Power Agency #1, Catawba Refg Ser 1988 A ..............................................................7.50 01/01/17 1,585,185 20,000 San Antonio, Texas, Electric & Gas Refg Ser 1994 C ..............4.70 02/01/06 18,089,400 Intermountain Power Agency, Utah, 1,000 First Crossover Ser ............................................7.875 07/01/14 1,049,450 3,000 Refg Ser 1987 D ................................................8.625 07/01/21 3,263,430 2,750 Chelan County Public Utility District #1, Washington, Ser 1987 B (AMT) ..........................................................9.30 07/01/62 3,110,195 - ----------- -------------- 28,250 27,097,660 - ----------- -------------- HOSPITAL REVENUE (8.9%) Illinois Health Facilities Authority, 1,375 Glen Oaks Medical Center Inc Refg 1990 Ser D ...................9.50 11/15/15 1,585,966 1,000 Mercy Center for Health Care Services Ser 1992 .................6.65 10/01/22 982,550 950 Kentucky Development Finance Authority, Ashland Hospital/ King's Daughters Refg & Impr Ser 1987 .................................9.75 08/01/11 1,083,000 1,500 Winchester, Kentucky, Clark County Hospital Refg Ser 1987 ......7.75 04/01/13 1,557,750 7,500 North Carolina Medical Care Commission, Presbyterian Health Services Corp Refg Ser 1993 ....................................5.50 10/01/20 6,897,600 4,735 Cass County, North Dakota, Franciscan Sisters Health Care Ser 1987 C .........................................................9.375 09/01/17 5,279,856 3,500 Lehigh County General Purpose Authority, Pennsylvania, HealthEast Inc Ser 1987 A & B ..................................9.00 07/01/15 3,837,050 1,000 Montgomery County Higher Education & Health Authority, Pennsylvania, Frankford Hospital Ser 1986 ......................7.875 01/01/19 1,018,130 3,275 Washington Health Care Facilities Authority, Sisters of Providence Ser 1988 ............................................8.625 10/01/07 3,573,156 1,850 Fayette County, West Virginia, MPC Inc Refg Ser 1990 ...........9.750 02/01/11 2,047,525 - ----------- -------------- 26,685 27,862,583 - ----------- --------------
MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS February 28, 1995 (unaudited) (continued)
PRINCIPAL AMOUNT (IN COUPON MATURITY THOUSANDS) RATE DATE VALUE - ----------- --------- ---------- -------------- INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (10.5%) $ 5,000 California Pollution Control Finance Authority, Pacific Gas & Electric Co 1987 Ser B (AMT) ................................... 8.875% 01/01/10 $ 5,494,200 5,000 Oxnard Industrial Development Finance Authority, California, Green Foods Corp Ser 1987 (AMT) ................................ 9.50 10/01/97 5,119,450 2,860 Lapeer Economic Development Corporation, Michigan, Dott Manufacturing Co Ser 1989 A (AMT) ..............................10.65 11/15/17 3,149,032 5,390 Missouri Environment Improvement & Energy Resource Authority, Associated Electric Coop Inc/NRU-CFC Gtd Ser 84G-5 & 6 ........ 7.90 11/15/14 5,690,546 6,000 Ohio Air Quality Development Authority, Dayton Power & Light Co Ser 1985 ....................................................... 9.50 12/01/15 6,379,440 5,000 Tulsa Municipal Airport Trust, Oklahoma, American Airlines Inc Ser 1988 (AMT) ................................................. 7.375 12/01/20 5,006,400 1,965 Matagorda County Navigation District #1, Texas, Houston Lighting & Power Co Collateralized Ser 1989 A (AMT) ..................... 7.875 02/01/19 2,058,731 - ----------- -------------- 31,215 32,897,799 - ----------- -------------- MORTGAGE REVENUE -MULTI-FAMILY (4.7%) 57,797 Eden Prairie, Minnesota, Fountain Place Apts -Phase II Refg Ser 1989 B ......................................................... 0.00 07/15/19 1,155,935 5,000 New York City Housing Development Corporation, New York, Ser 1987 A ......................................................... 9.625 01/01/19 5,410,500 940 Rhode Island Housing & Mortgage Finance Corporation, Rental 1989 Ser B (AMT) .................................................... 7.95 10/01/20 990,450 30,935 Oak Ridge Industrial Development Board, Tennessee, Gardens Southern Hill Woodlands Apts GNMA-Backed Refg Ser 1988 ........ 0.00 10/20/19 3,818,616 3,000 Virginia Housing Development Authority, Ser 1987 B .............. 9.45 11/01/12 3,280,740 - ----------- -------------- 97,672 14,656,241 - ----------- -------------- MORTGAGE REVENUE -SINGLE FAMILY (5.5%) 5,000 Alaska Housing Finance Corporation, 1993 1st Ser ................ 5.90 12/01/33 4,531,050 Maine Housing Authority, Purchase 4,265 1988 Ser D-2 (AMT) ............................................. 8.10 11/15/19 4,523,971 1,000 1988 Ser D-2 (AMT) ............................................. 8.10 11/15/22 1,062,610 3,920 North Dakota Housing Finance Agency, 1990 Ser B (AMT) .......... 7.75 07/01/24 4,137,991 1,915 Ohio Housing Finance Agency, GNMA-Backed 1990 Ser C (AMT) ...... 7.85 09/01/21 2,040,758 1,000 Pennsylvania Housing Finance Agency, 1987 Ser R (AMT) .......... 8.125 10/01/19 1,051,600 - ----------- -------------- 17,100 17,347,980 - ----------- -------------- NURSING & HEALTH RELATED FACILITIES REVENUE (3.2%) Vista, California, Long-Term Care Foundation of America 1,601 Ser 1994 A COPs (a) ............................................ 8.50 01/01/20 1,280,700 210 Ser 1994 B COPs (a) ............................................ 0.00 01/01/20 2,106 2,755 Newton County Industrial Development Authority, Missouri, Skilled Health Care -Joplin Refg Ser 1987 ......................10.50 10/01/11 2,917,710 7,000 New York State Medical Care Facilities Finance Agency, Mental Health Refg Ser F .............................................. 5.25 02/15/19 5,936,770 - ----------- -------------- 11,566 10,137,286 - ----------- -------------- PUBLIC FACILITIES REVENUE (1.1%) 3,245 Illinois, Civic Center Dedicated Tax Ser 1991(AMBAC Insured) ... 6.25 12/15/20 3,333,134 - ----------- -------------- RESOURCE RECOVERY REVENUE (4.7%) 9,110 Greater Detroit Resource Recovery Authority, Michigan, 1984 Ser B & G ................................................. 9.25 12/13/08 9,596,929 4,500 Charleston County, South Carolina, Foster-Wheeler Charleston Inc Ser 1987 A (AMT) ............................................... 9.25 01/01/10 5,030,640 - ----------- -------------- 13,610 14,627,569 - ----------- --------------
MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS February 28, 1995 (unaudited) (continued)
PRINCIPAL AMOUNT (IN COUPON MATURITY THOUSANDS) RATE DATE VALUE - ----------- --------- ---------- -------------- RETIREMENT & LIFECARE FACILITIES REVENUE (1.1%) $ 3,000 Atlanta Urban Residential Finance Authority, Georgia, Renaissance on Peachtree Apts Ser 1988 (b) .....................10.50 % 12/01/10 $ 2,100,000 2,065 Charleston County, South Carolina, Sandpiper Village Inc Refg Ser 1988 ....................................................... 7.00 11/01/13 1,528,100 - ----------- -------------- 5,065 3,628,100 - ----------- -------------- TRANSPORTATION FACILITIES REVENUE (4.8%) 885 Southwestern Development Authority, Illinois, Tri-City Regional Port District Ser 1989 A (AMT) (a) ............................. 7.90 07/01/14 952,853 5,000 Albuquerque, New Mexico, Gross Receipts Airport Ser 1987 B (AMT) 8.75 07/01/19 5,473,200 4,500 Charlotte, North Carolina, Airport Ser 1987 (AMT) ............... 8.50 07/01/17 4,868,370 3,380 Dallas-Fort Worth Regional Airport Board, Texas, Dallas-Fort Worth Intl Airport Ser 1985 .................................... 9.125 11/01/15 3,557,382 - ----------- -------------- 13,765 14,851,805 - ----------- -------------- WATER & SEWER REVENUE (4.8%) 5,000 Birmingham Water Works & Sewer Board, Alabama, Ser 1994 ........ 5.50 01/01/20 4,642,350 5,000 Phoenix Civic Improvement Corporation, Arizona, Jr Lien Water Ser 1994 ....................................................... 5.45 07/01/19 4,596,050 2,000 Chicago, Illinois, Wastewater Ser 1994 (MBIA Insured) .......... 6.375 01/01/24 2,032,200 3,000 Massachusetts Water Resources Authority, 1993 Ser C ............ 5.25 12/01/20 2,645,850 1,000 New York City Municipal Water Finance Authority, New York, 1991 Ser A (Secondary FGIC Insured) ................................. 6.75 06/15/16 1,053,930 - ----------- -------------- 16,000 14,970,380 - ----------- -------------- REFUNDED (22.3%) 3,800 Maricopa County Industrial Development Authority, Arizona, Samaritan Health Ser 1985 A (Crossover Refunded) ............... 9.25 12/01/15 3,997,220 5,000 Chicago, Illinois, Refg 1987 Ser B (Prerefunded) ................ 9.25 01/01/13 5,580,850 6,750 Hamilton, Indiana, Southeastern Building Corp Cons Ser 1988 (Prerefunded) .................................................. 8.40 01/01/15 7,581,870 10,600 Indiana Health Facilities Financing Authority, St Anthony Medical Center & Home Inc Ser 1987 (Prerefunded) ............... 9.25 10/01/17 11,909,418 1,550 Kentucky Development Finance Authority, Ashland Hospital/King's Daughters Refg & Impr Ser 1987 (Prerefunded) ................... 9.75 08/01/11 1,776,130 7,700 Breckenridge, Minnesota, Franciscan Sisters Health Care Inc Ser 1987 B-1 (Prerefunded) ......................................... 9.375 09/01/17 8,667,659 4,000 Minneapolis, Minnesota, Lifespan Inc Refg Ser 1987 B (Prerefunded) .................................................. 9.125 12/01/14 4,511,640 New York City, New York, 4,150 1988 Ser D (Prerefunded) ....................................... 8.50 08/01/08 4,571,267 5,000 1988 Ser A (Prerefunded) ....................................... 8.50 11/01/10 5,534,050 5,000 New York City Municipal Water Finance Authority, New York, 1987 Ser A (Prerefunded) ............................................ 9.00 06/15/17 5,552,250 2,500 Lehigh County General Purpose Authority, Pennsylvania, HealthEast Inc Ser 1987 A & B (Prerefunded) .................... 9.00 07/01/15 2,773,225 4,000 Washington, 1991 Ser B (Prerefunded) ............................ 6.70 06/01/16 4,316,600 2,500 Washington Public Power Supply System, Nuclear Proj #2 Refg Ser 1990 C (Prerefunded) ........................................... 7.625 07/01/10 2,836,125 - ----------- -------------- 62,550 69,608,304 - ----------- -------------- 376,843 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $288,858,813) ................................. 298,658,514 - ----------- --------------
MUNICIPAL INCOME TRUST PORTFOLIO OF INVESTMENTS February 28, 1995 (unaudited) (continued)
PRINCIPAL AMOUNT (IN COUPON MATURITY THOUSANDS) RATE DATE VALUE - ----------- --------- ---------- -------------- SHORT-TERM MUNICIPAL OBLIGATIONS (2.7%) $ 7,000 Harris County Health Facilities Development Corporation, Texas, Methodist Hospital Ser 1994 (Tender 03/01/95) ..................3.75*% 12/01/25 $ 7,000,000 1,500 Washington Health Care Facilities Authority, Sisters of Providence Ser 1985 B (Tender 03/01/95) ........................3.95* 10/01/05 1,500,000 - ----------- -------------- 8,500 TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $8,500,000) ................. 8,500,000 - ----------- -------------- $385,343 TOTAL INVESTMENTS (IDENTIFIED COST $297,358,813) (C) ...................... 98.2% 307,158,514 =========== OTHER ASSETS IN EXCESS OF LIABILITIES ..................................... 1.8 5,479,785 -------------- NET ASSETS ................................................................ 100.0% $312,638,299 ===== ============== - --------------- AMT Alternative Minimum Tax. COPs Certificates of Participation. * Variable or floating rate securities. Coupon rate shown reflects current rate. (a) Resale is restricted to qualified institutional investors. (b) Non-income producing, bond in default. (c) The aggregate cost for federal income tax purposes is $297,358,813; the aggregate gross unrealized appreciation is $21,299,155 and the aggregate gross unrealized depreciation is $11,499,454, resulting in net unrealized appreciation of $9,799,701.
GEOGRAPHIC SUMMARY OF INVESTMENTS Based on Market Value as a Percent of Net Assets February 28, 1995 (unaudited) - -----------------------------------------------------------------------------
Alabama ............ 1.5% Alaska ............. 1.5 Arizona ............ 2.7 California ......... 6.8 District of Columbia 1.2 Florida ............ 1.1 Georgia ............ 0.7 Illinois ........... 4.6 Indiana ............ 6.2% Kentucky ........... 1.4 Maine .............. 1.8 Maryland ........... 1.8 Massachusetts ...... 3.7 Michigan ........... 4.1 Minnesota .......... 4.6 Missouri ........... 2.8 New Mexico ......... 1.8% New York ........... 11.5 North Carolina ..... 4.3 North Dakota ....... 3.0 Ohio ............... 2.7 Oklahoma ........... 1.6 Pennsylvania ....... 5.4 Rhode Island ....... 0.3 South Carolina ..... 2.1% Tennessee .......... 1.2 Texas .............. 9.8 Utah ............... 1.4 Virginia ........... 1.0 Washington ......... 4.9 West Virginia ...... 0.7 ------ Total .............. 98.2% ======
See Notes to Financial Statements MUNICIPAL INCOME TRUST FINANCIAL STATEMENTS - ----------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES February 28, 1995 (unaudited) - -----------------------------------------------------------------------------
ASSETS: Investments in securities, at value (identified cost $297,358,813) ........ $307,158,514 Receivable for: Interest ............................... 5,641,158 Investments sold ....................... 60,000 Prepaid expenses and other assets ...... 36,137 -------------- TOTAL ASSETS .......................... 312,895,809 -------------- LIABILITIES: Payable for: Investment advisory fee ................ 90,054 Administration fee ..................... 51,835 Payable to bank ......................... 13,019 Accrued expenses and other payables .... 102,602 -------------- TOTAL LIABILITIES ..................... 257,510 -------------- NET ASSETS: Paid-in-capital ......................... 300,666,125 Net unrealized appreciation ............. 9,799,701 Accumulated undistributed net investment income ................................. 3,239,267 Accumulated net realized loss ........... (1,066,794) -------------- NET ASSETS ............................ $312,638,299 ============== NET ASSET VALUE PER SHARE, 31,912,650 shares outstanding (unlimited shares authorized of $.01 par value) .......... $9.80 ==============
STATEMENT OF OPERATIONS For the six months ended February 28, 1995 (unaudited) - -----------------------------------------------------------------------------
NET INVESTMENT INCOME: INTEREST INCOME ....................... $11,666,929 ------------- EXPENSES Investment advisory fee .............. 515,625 Administration fee ................... 296,944 Transfer agent fees and expenses .... 87,279 Professional fees .................... 47,323 Shareholder reports and notices ..... 31,966 Registration fees .................... 15,971 Trustees' fees and expenses .......... 14,153 Other ................................ 9,152 ------------- TOTAL EXPENSES ...................... 1,018,413 ------------- NET INVESTMENT INCOME ............... 10,648,516 ------------- NET REALIZED AND UNREALIZED LOSS: Net realized loss .................... (1,066,804) Net change in unrealized appreciation (1,522,856) ------------- TOTAL LOSS .......................... (2,589,660) ------------- NET INCREASE ........................ $ 8,058,856 =============
STATEMENT OF CHANGES IN NET ASSETS - -----------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR FEBRUARY 28, 1995 ENDED AUGUST (UNAUDITED) 31, 1994 ----------------- --------------- INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income ........................................ $ 10,648,516 $ 22,771,576 Net realized gain (loss) ..................................... (1,066,804) 13,818,414 Net change in unrealized appreciation ........................ (1,522,856) (34,589,071) ----------------- --------------- Net increase ................................................ 8,058,856 2,000,919 ----------------- --------------- Dividends and distributions to shareholders from: Net investment income ........................................ (9,680,543) (21,458,878) Net realized gain ............................................ (11,045,137) (3,123,625) ----------------- --------------- Total ....................................................... (20,725,680) (24,582,503) Net decrease from transactions in shares of beneficial interest ...................................................... (6,440,118) (4,839,155) ----------------- --------------- Net decrease ................................................ (19,106,942) (27,420,739) NET ASSETS: Beginning of period ........................................... 331,745,241 359,165,980 ----------------- --------------- END OF PERIOD (including undistributed net investment income of $3,232,030 and $2,271,294, respectively) .................. $312,638,299 $331,745,241 ================= ===============
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, as a diversified, closed-end management investment company. The Fund was organized as a Massachusetts business trust on June 16, 1987 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 Trustees. The pricing service has informed the Fund that in valuing the Fund's portfolio securities, it uses both a computerized 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. Short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost. B. Accounting for Investments --Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. The Fund amortizes premiums and discounts on securities purchased over the life of the respective securities. 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 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 reclassification. 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 they exceed net investment income and net realized capital gains for tax purposes, they are reported as distributions of paid-in-capital. MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) - ----------------------------------------------------------------------------- 2. INVESTMENT ADVISORY AGREEMENT --Pursuant to an Investment 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% to the portion of the Fund's average weekly net assets not exceeding $250 million and 0.25% to the portion of the Fund's average weekly net assets exceeding $250 million. Under the terms of the Advisory Agreement, in addition to managing the Fund's investments, the Investment Adviser pays the salaries of all personnel, including officers of the Fund, who are employees of the Investment Adviser. 3. ADMINISTRATION AGREEMENT --Pursuant to an Administration Agreement with Dean Witter Services Company Inc. (the "Administrator"), the Fund pays an administration fee, calculated weekly and payable monthly, by applying the following annual rates to the Fund's average weekly net assets: 0.20% to the portion of the Fund's average weekly net assets not exceeding $250 million; 0.15% to the portion of the Fund's average weekly net assets exceeding $250 million but not exceeding $500 million; 0.12% to the portion of the Fund's average weekly net assets exceeding $500 million but not exceeding $750 million; and 0.10% to the portion of the Fund's average weekly net assets exceeding $750 million. Under the terms of the Administration Agreement, the Administrator maintains certain of the Fund's books and records and furnishes, at its own expense, office space, facilities, equipment, clerical, bookkeeping and certain legal services and pays the salaries of all personnel, including officers of the Fund who are employees of the Administrator. The Administrator also bears the cost of telephone services, heat, light, power and other utilities provided to the Fund. 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES --The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended February 28, 1995 aggregated $3,983,280 and $25,914,754, respectively. Dean Witter Trust Company, an affiliate of the Investment Adviser and Administrator, is the Fund's transfer agent. At February 28, 1995, the Fund had transfer agent fees and expenses payable of approximately $12,300. The Fund established an unfunded noncontributory defined benefit pension plan covering all independent Trustees of the Fund who will have served as independent Trustees 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, 1995, included in Trustees' fees and expenses in the Statement of Operations amounted to $3,889. At February 28, 1995, the Fund had an accrued pension liability of $47,803 which is included in accrued expenses in the Statement of Assets and Liabilities. MUNICIPAL INCOME TRUST NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) - ----------------------------------------------------------------------------- 5. SHARES OF BENEFICIAL INTEREST --Transactions in shares of beneficial interest were as follows:
Capital Paid Par value of in Excess of Shares Shares Par Value ------------ -------------- -------------- Balance, August 31, 1993 ....................... 33,153,050 $331,531 $311,613,867 Treasury shares purchased and retired (weighted average discount 7.22%)* ...................... (512,100) (5,121) (4,834,034) ------------ -------------- -------------- Balance, August 31, 1994 ....................... 32,640,950 326,410 306,779,833 Treasury shares purchased and retired (weighted average discount 9.27%)* ...................... (728,300) (7,283) (6,432,835) ------------ -------------- -------------- Balance, February 28, 1995 ..................... 31,912,650 $319,127 $300,346,998 ============ ============== ============== - --------------- * The Trustees have voted to retire the shares purchased.
6. DIVIDENDS --The Fund has declared the following dividends from net investment income:
Amount Per Declaration Date Share Record Date Payable Date - -------------------- ----------- -------------- -------------- February 28, 1995 $0.05 March 10, 1995 March 24, 1995 March 28, 1995 $0.05 April 7, 1995 April 21, 1995
7. SELECTED QUARTERLY FINANCIAL DATA --(unaudited)
Quarter Ended 2/28/95 11/30/94 ----------------------- ------------------- Per Per Total* Share Total* Share -------------- ------- ---------- ------- Total investment income ................ $ 5,738 $0.18 $ 5,929 $ 0.18 Net investment income .................. 5,222 0.16 5,427 0.17 Net realized and unrealized gain (loss) 11,705 0.37 (14,295) (0.42)
Quarters Ended 8/31/94 5/31/94 2/28/94 11/30/93 ------------------------ -------------------- ------------------- ------------------ Per Per PER PER Total* Share Total* Share Total* SHARE TOTAL* SHARE -------------- -------- ---------- -------- --------- -------- --------- ------- Total investment income ... $ 6,169 $ 0.19 $ 6,098 $ 0.18 $ 6,176 $ 0.19 $ 6,497 $ 0.20 Net investment income ..... 5,657 0.17 5,554 0.17 5,626 0.17 5,935 0.18 Net realized and unrealized loss ...................... (1,001) (0.03) (12,445) (0.37) (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) ............... 4,204 0.12 (6,319) (0.19) 8,393 0.26 (1,535) (0.05) - --------------- * Totals expressed in thousands.
MUNICIPAL INCOME TRUST FINANCIAL HIGHLIGHTS - ----------------------------------------------------------------------------- Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
For the year ended August 31, For the six months ended February 28, -------------------------------------------------- 1995* (unaudited) 1994* 1993* 1992* 1991* 1990* ----------------- ------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period .. $ 10.16 $ 10.83 $ 10.69 $ 10.37 $ 10.01 $ 10.36 -------- -------- -------- -------- -------- -------- Net investment income .................. 0.33 0.69 0.72 0.73 0.74 0.76 Net realized and unrealized gain (loss) (0.05) (0.62) 0.14 0.31 0.30 (0.20) -------- -------- -------- -------- -------- -------- Total from investment operations ...... 0.28 0.07 0.86 1.04 1.04 0.56 -------- -------- -------- -------- -------- -------- Less dividends and distributions from: Net investment income ................. (0.30) (0.65) (0.72) (0.72) (0.68) (0.85) Net realized gain ..................... (0.34) (0.09) -- --** --** (0.06) -------- -------- -------- -------- -------- -------- Total dividends and distributions ..... (0.64) (0.74) (0.72) (0.72) (0.68) (0.91) -------- -------- -------- -------- -------- -------- Net asset value, end of period ......... $ 9.80 $ 10.16 $ 10.83 $ 10.69 $ 10.37 $ 10.01 ======== ======== ======== ======== ======== ======== Market value, end of period ............ $ 9.125 $ 9.25 $ 11.25 $ 10.75 $ 10.25 $ 10.125 ======== ======== ======== ======== ======== ======== TOTAL INVESTMENT RETURN+ ............... 5.75 %(1) (11.73)% 11.82% 12.28% 8.23% 5.27 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands) ............................ $312,638 $331,745 $359,166 $354,467 $343,724 $329,674 Ratios to average net assets: Expenses .............................. 0.65 %(2) 0.63% 0.67% 0.73% 0.75% 0.79 % Net investment income ................. 6.80 %(2) 6.59% 6.70% 6.87% 7.31% 7.38 % Portfolio turnover rate ................ 1 %(1) 27 % 1 % 11 % 5 % 10 % - --------------- * The per share amounts were computed using an average number of shares outstanding during the period. ** Distribution of $.0041 and $.0012 for the years ended August 31, 1992 and 1991, respectively. + Total investment return is based upon the current market value on the last day of each period reported. Dividends and distributions are assumed to be reinvested at 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. Manuel H. Johnson Paul Kolton Michael E. Nugent Philip J. Purcell John L. Schroeder OFFICERS Charles A. Fiumefreddo Chirman 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 INDEPENDENT ACCOUNTANTS Price Waterhouse LLP 1177 Avenue of the Americas New York, New York 10036 INVESTMENT ADVISER Dean Witter InterCapital Inc. Two World Trade Center New York, New York 10048 MUNICIPAL INCOME TRUST SEMIANNUAL REPORT FEBRUARY 28, 1995 -----END PRIVACY-ENHANCED MESSAGE-----