<PAGE>
COLONIAL
MUNICIPAL
INCOME
TRUST
ANNUAL REPORT
NOVEMBER 30, 1995
<PAGE>
COLONIAL MUNICIPAL INCOME TRUST HIGHLIGHTS
DECEMBER 1, 1994 - NOVEMBER 30, 1995
INVESTMENT OBJECTIVE: Colonial Municipal Income Trust seeks to provide high
current income, generally exempt from federal income taxes, by investing
primarily in medium and lower quality municipal securities.
POLICY CHANGE: At a meeting held on February 17, 1995, the Trustees approved a
policy change to allow the segregation of high-quality debt securities, in
addition to cash and cash equivalents, for futures trading.
THE FUND IS DESIGNED TO OFFER:
- Potential for high tax-free income
- Experienced professional management
- Expert credit analysis
PORTFOLIO MANAGER COMMENTARY: "We remain confident about the long-term prospects
for this market, despite recent developments that may have a negative impact on
the municipal bond market, including discussions about tax-reform. If demand
remains strong and supply continues to decline, the municipal bond market should
continue to be a source of attractive returns for investors."
COLONIAL MUNICIPAL INCOME TRUST PERFORMANCE
<TABLE>
<S> <C>
Distributions declared per share $0.552
- ----------------------------------------------------------------
12-month total return, assuming
reinvestment of all distributions
- - NAV 12.96%
- - Market Price 8.04%
- ----------------------------------------------------------------
Price per share
- - NAV $7.48
- - Market Price $6.75
</TABLE>
<TABLE>
<CAPTION>
QUALITY BREAKDOWN
(as of 11/30/95)
..................................
<S> <C>
AAA .................... 5.0%
AA ..................... 2.6%
A ...................... 4.5%
BBB .................... 19.3%
BB ..................... 2.9%
B ...................... 0.7%
Non-rated .............. 62.9%
Other .................. 2.1%
</TABLE>
[CHART]
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
In general, conditions in the municipal bond market were favorable during the 12
months ended November 30, 1995. Although there were some tax reform related
concerns, for the most part these questions were overlooked by the market.
The downward move in interest rates had the biggest impact on municipal bond
prices during the fiscal year. From the beginning to the end of the period,
long-term interest rates, as measured by the 30-year Treasury bond, declined
from 8.00% to 6.14%. We took advantage of declining interest rates by upgrading
the credit quality of the portfolio. As interest rates moved lower, the
difference in yields available from higher and lower quality bonds narrowed,
allowing us to improve quality without sacrificing income or returns.
Another factor that influenced the market's performance was the favorable
supply/demand dynamic. The supply of municipal bonds has been declining for
several years, and this trend is expected to continue. From January through
November 1995, approximately $136 billion in new issue bonds were issued, a
decline of 11.8% from calendar 1994. At the same time, demand remained strong,
despite ongoing tax reform discussions in Washington. The combination of
declining supply and continued interest in municipal bonds has enhanced the
value of these securities.
Although we avoid large bets in individual issues, some investments made notable
contributions to performance. Among the Fund's non-rated holdings, T.L. Systems,
a manufacturer of medical instruments and measuring devices, produced a total
return of 34% when that company was acquired by Bosch Company. Rated investments
included bonds issued by the San Joaquin Hills Transportation Corridor Agency,
which realized a price gain after the successful resolution of concerns raised
about the highway project's environmental impact.
In the months ahead, tax reform will remain a source of concern. However,
barring a radical change in the tax code, the combination of low supply and
strong demand for these securities should continue to provide support for
municipal bond prices.
Respectfully,
/s/ JOHN A. MCNEICE, JR.
- ------------------------
John A. McNeice, Jr.
President
January 12, 1996
3
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
MUNICIPAL BONDS - 96.3% PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 0.5%
Agriculture - Crops
LA Port New Orleans Industrial Development,
Continental Grain Co., Series 1993,
7.500% 07/01/13 $ 1,000 $ 1,035
----------
- -------------------------------------------------------------------------------
CERTIFICATES OF PARTICIPATION - 1.3%
CA Statewide Communities
Development Corp.,
5.000% 10/01/23 2,000 1,873
MA State Health and Educational Facilities,
Independent Living Bonds,
Series 1993-A,
8.100% 07/01/18 695 705
----------
2,578
----------
- -------------------------------------------------------------------------------
CONSTRUCTION - 1.1%
Building Construction
IN Hammond Sewer & Solid Waste Disposal,
American Maize Products Co., Series A,
8.000% 12/01/24 2,000 2,230
----------
- -------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 0.5%
Real Estate
MD Baltimore,
Economic Development,
Park Charles Project, Series 1986,
8.000% 01/01/10 895 961
----------
- -------------------------------------------------------------------------------
GENERAL OBLIGATION - 2.1%
AZ Apache County School District,
Number 010, Round Valley
Project of 1987, Series 1990-C,
9.875% 07/01/05 2,000 2,235
CA State of California,
5.750% 03/01/19 2,000 2,008
----------
4,243
----------
- -------------------------------------------------------------------------------
HEALTH - 31.7%
Hospitals - 10.0%
AL Alabama Special Care Facilities Authority,
Montgomery Healthcare,
Series 1989,
11.000% 10/01/19 2,280 2,246
</TABLE>
4
<PAGE>
Investment Portfolio/November 30, 1995
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
DE State Economic Development,
Riverside Hospital, Series 1992 A,
9.500% 01/01/22 $ 905 $ 1,042
GA Clayton Hospital Authority,
The Woodlands Foundation Inc.,
Series 1991 A,
9.750% 05/01/21(a) 1,500 1,275
ID State Health Facilities Authority,
IHC Hospitals, Inc.,
8.190% 02/15/21 2,750 3,169
IL Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 07/01/24 2,250 2,374
MI State Hospital Finance Authority:
Detroit Osteopathic Hospital,
Series 1987-A,
7.500% 11/01/10 950 970
Sarotoga Community Hospital,
Series 1992,
8.750% 06/01/10 535 576
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 2,000 2,338
NC Lincoln County, Lincoln County Hospital,
9.000% 05/01/07 560 702
NJ State Health Care Facilities Financing
Authority, Raritan Bay Medical Center,
7.250% 07/01/27 1,000 1,006
VA Dickenson County Industrial
Development, Volunteer Healthcare
Systems Inc., Series 1988 A,
10.750% 06/01/18(a) 5,500 1,210
VT State Educational & Health Buildings
Financing Agency, Springfield Hospital,
7.750% 01/01/13 1,090 1,136
WA State Health Care
Facility, Grays Harbor Community
Hospital, Series 1993:
7.200% 07/01/03 385 414
8.025% 07/01/20 1,770 1,923
----------
20,381
----------
</TABLE>
5
<PAGE>
Investment Portfolio/November 30, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
Human Services Providers - 0.6%
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 $ 530 $ 620
Series 1992-C,
9.750% 08/01/19 540 632
----------
1,252
----------
Nursing Homes - 21.1%
AZ Tucson Industrial Development
Authority, Villa Maria Care Center,
10.125% 11/01/21 500 469
CO State Health Facility,
American Housing Foundation I,
Series 1990,
10.250% 12/01/20 1,500 1,682
DE State Economic Development Authority,
12.000% 04/01/25 2,320 2,587
DE Sussex County, Healthcare Facility,
Delaware Health Corp., Series
1994-A,
7.600% 01/01/24 1,000 978
FL Flagler County Industrial
Redevelopment Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 1,470 1,479
IA State Finance Authority Healthcare Facility,
Mercy Health Initiatives,
Series 1989,
9.950% 07/01/19 2,000 2,040
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987 A,
11.500% 10/01/17 2,500 2,375
IN Michigan City Health Facilities,
Metropolitan Health Foundation,
Inc. Project,
10.000% 11/01/22(a) 4,500 3,150
KS Halstead Industrial Health Care
Project,
10.250% 08/01/13 1,330 931
KY Jefferson County
First Mortgage,
Kentucky-Iowa, Inc. Project, Series 1990,
10.250% 01/01/20 1,000 1,050
</TABLE>
6
<PAGE>
Investment Portfolio/November 30, 1995
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
KY Lexington-Fayette Urban County
Government, First Mortgage, AHF
Kentucky-Iowa, Inc. Project, Series 1990,
10.250% 01/01/20 $ 1,000 $ 1,050
MA Boston,
St. Joseph Nursing Care Center, Inc.,
10.000% 01/01/20(b) 1,980 2,195
MA State Industrial Finance Agency:
Mary Ann Morse Nursing Home,
Series 1991- I,
10.000% 01/01/21 1,200 1,528
GF/Massachusetts Inc.,
Series 1994,
8.300% 07/01/23 1,000 986
MI Cheboygan County Economic
Development Corp.,
Metro Health Foundation Project,
10.000% 11/01/22(a) 2,440 1,708
MO Grove Industrial Development Authority,
First Mortgage Health Care Facility,
Heritage Manor GR, Series 1988,
10.250% 11/01/13 545 491
MO Saint Louis County Industrial
Development Authority,
10.250% 12/01/16 1,890 1,944
MO Springfield Industrial Development
Authority,
10.250% 12/01/10 1,255 1,296
NJ State Economic Development Authority
Geriatric and Medical Service,
Inc., Series A,
10.500% 05/01/04 850 923
NM Clovis Industrial Development,
Retirement Ranches Project,
10.750% 04/01/19 2,175 2,417
OH Lucas County,
Villa North Nursing Home,
Series 1988-B,
10.500% 06/01/18 2,500 2,450
OH Montgomery County,
Grafton Oaks Project,
Series 1986,
9.750% 12/01/16 1,480 1,406
OK Muskogee County Economic Development
Authority Health Facilities,
Heartway Corp., Series 1989 A-3,
10.250% 03/01/19 1,970 1,773
</TABLE>
7
<PAGE>
Investment Portfolio/November 30, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
HEALTH - CONT.
Nursing Homes - Cont.
PA Philadelphia Authority for Industrial
Development, First Mortgage:
The Care Pavilion, Series 1988,
10.250% 02/01/18 $ 975 $ 1,006
RHA/PA Nursing Home, Series 1988,
10.250% 11/01/18 1,470 1,528
TN New Tazewell Health Education and
Housing Facilities Board,
New Tazewell, Series 1987,
10.000% 06/01/17 1,660 1,708
VA Virginia Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 1,915 2,154
---------
43,304
---------
- -------------------------------------------------------------------------------
HOUSING - 14.3%
Assisted Living/Senior - 2.7%
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 1,500 1,545
MN Roseville,
Care Institute, Inc., Series 1993
7.750% 11/01/23 1,630 1,516
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 820 829
TX Bell County Health Facilities
Development Corp., Care Institution, Inc.,
9.000% 11/01/24 1,500 1,607
---------
5,497
---------
Multi-family - 11.2%
FL Clearwater, Hampton Apartments,
8.250% 05/01/24 2,500 2,656
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 1,000 1,050
FL State Housing Finance Agency,
Windsong Apartments, Series 1993-C,
9.250% 01/01/19 830 843
FL West Palm Beach Housing, Inc.,
Multi-family Housing, Cypress Run,
10.500% 03/15/19(a) 2,040 979
</TABLE>
8
<PAGE>
Investment Portfolio/November 30, 1995
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
IL Chicago Multi-family Housing,
Michigan Boulevard Garden Apartments,
Rehabilitation Section 8, Series 1985,
12.000% 01/01/00 $ 480 $ 490
MN Washington County Housing &
Redevelopment Authority, Cottages of
Aspen Project,
9.250% 06/01/22 1,100 1,132
MN White Bear Lake,
Birch Lake Townhomes Project:
Series 1989-A,
10.250% 07/15/19 1,770 1,790
Series 1989-B,
(c) 07/15/19 730 1,151
NC Durham Urban Development Authority,
Durham Hosiery Mill Project,
7.500% 08/01/29 1,000 1,094
NC Eastern Carolina Regional Housing
Authority, Jacksonville New River
Apartments,
8.250% 09/01/14 2,000 2,038
Resolution Trust Corp., Pass Through
Certificates, Series 1993-A,
8.500% 12/01/16(d) 4,248 4,391
SC State Housing Finance and Development,
Multi-family Housing Finance Revenue,
Westbridge Apartments, Series A,
9.500% 09/01/20 2,200 2,255
TX Galveston Health Facilities Center,
Pass Through Certificates,
8.000% 08/01/23 1,000 1,042
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990-A,
10.000% 01/01/21 1,000 1,016
VA Roanoke Redevelopment & Housing
Authority, First Mortgage, Mountain
Ridge,
9.250% 11/01/22 1,000 1,030
--------
22,957
--------
Single-family - 0.4%
KY 1986 County Single-family Mortgage
Revenue, Class A,
9.000% 09/01/16 30 31
</TABLE>
9
<PAGE>
Investment Portfolio/November 30, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BONDS - CONT. PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - CONT.
Single-family - Cont.
PA Allegheny County,
Residential Financial Authority,
Single-family Mortgage, Series 1987-G,
9.500% 12/01/18 $ 710 $ 740
--------
771
--------
- -----------------------------------------------------------------------------
MANUFACTURING - 9.7%
Apparel - 2.1%
VA Halifax County Industrial Development,
Craddock-Terry Inc., Series 1989,
10.000% 12/01/19 1,020 1,108
VA Pittsylvania County Industrial
Development, Craddock-Terry Inc.,
Series 1989,
10.000% 12/01/19 1,095 1,182
VA Prince Edward County Industrial
Development, Craddock-Terry, Inc.,
Series 1989,
10.000% 12/01/19 1,880 2,029
--------
4,319
--------
Electronic & Electric Equipment - 0.6%
SD Rapid City Economic Development
Corporate Headquarters, Series 1985,
11.875% 11/01/10 1,245 1,291
--------
Measuring & Analyzing Instruments - 0.5%
MN Brooklyn Park,
TL Systems Corp., Series 1991,
10.000% 09/01/16 810 964
--------
Paper Products - 6.5%
GA Rockdale County Development,
Solid Waste Disposal Bonds,
Visy Paper Inc., Series 1993,
7.400% 01/01/08 5,000 5,188
MI State Strategic Fund,
Blue Water Fiber Project, Series 1994,
8.000% 01/01/12 2,000 1,928
MI Strategic Fund Limited,
Great Lakes Pulp & Fibre Project,
10.250% 12/01/16 4,000 4,215
SC Darlington County,
Industrial Development Authority,
SONOCO Products Co. Project,
6.125% 06/01/25 2,000 2,070
--------
13,401
--------
</TABLE>
10
<PAGE>
Investment Portfolio/November 30, 1995
- -----------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
MINING - 0.8%
Metal Mining
CO Mesa County Industrial Development,
Joy Technologies Inc., Series 1992,
8.500% 09/15/06 $ 1,000 $ 1,075
OH Cuyahoga County,
Joy Technologies, Inc.,
8.750% 09/15/07 550 598
--------
1,673
--------
- -----------------------------------------------------------------------------
POLLUTION CONTROL REVENUE - 5.2%
IL Bryant Pollution Control Revenue,
Central Illinois Light Co. Project,
5.900% 08/01/23 2,000 2,048
LA St. Charles Parish Pollution
Control Revenue,
Union Carbide Project,
7.350% 11/01/22 2,000 2,165
SC York County Industrial Revenue,
Hoechst Celanese Corp.,
5.700% 01/01/24 5,000 4,975
WV Weirton Pollution Control, Weirton
Steel Corp., Series 1989,
8.625% 11/01/14 1,400 1,491
--------
10,679
--------
- -----------------------------------------------------------------------------
PUBLIC FACILITIES IMPROVEMENT - 2.0%
IL Metropolitan Pier & Exposition Authority,
McCormick Place Expansion Project:
(e) 06/15/15 3,000 983
(e) 06/15/14 5,000 1,731
MN Mille Lacs Capital Improvement
Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 1,115 1,267
--------
3,981
--------
- -----------------------------------------------------------------------------
PUBLIC INFRASTRUCTURE - 11.7%
Airports - 4.7%
CO Denver City & County Airport,
Denver International Airport,
Series 1991-D,
7.750% 11/15/21 3,000 3,349
IN Indianapolis Airport Authority,
United Airlines Project,
Series A,
6.500% 11/15/31 2,000 2,015
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1995
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------
<S> <C> <C>
PUBLIC INFRASTRUCTURE - CONT.
Airports - Cont.
IN State Airport Authority,
7.100% 01/15/17 $ 2,000 $ 2,175
TX Dallas-Fort Worth International Airport
American Airlines, Inc., Series 1990,
7.500% 11/01/25 2,000 2,140
--------
9,679
--------
Turnpikes/Toll Roads/Bridges - 7.0%
CA Foothill Eastern Transportation
Corridor Agency, State Toll Road,
Senior Lien, Series A:
(e) 01/01/29 18,000 2,115
6.000% 01/01/34 2,000 1,955
CA San Joaquin Hills Transcorridor
Agency Senior Toll Road,
Series 1993:
(e) 01/01/25 45,000 7,031
5.000% 01/01/33 2,480 2,089
MA State Industrial Finance Agency,
Series 1990,
9.000% 10/01/20 960 1,104
--------
14,294
--------
- -----------------------------------------------------------------------------
REFUNDED/ESCROW/SPECIAL OBLIGATION - 1.4%
AL Marshall County Hospital Board,
Boaz-Albertville Medical Center,
8.875% 01/01/05 2,645 2,832
--------
- -----------------------------------------------------------------------------
RETAIL TRADE - 0.5%
Apparel & Accessory Stores - 0.2%
MA State Industrial Finance Agency,
House of Bianchi Inc.,
8.750% 06/01/18 330 349
--------
Miscellaneous Retail - 0.3%
OH Lake County Economic Development,
North Madison Properties, Series 1993,
8.819% 09/01/11 710 754
--------
- -----------------------------------------------------------------------------
SERVICES - 2.0%
Hotels, Camps & Lodging
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 2,500 2,570
</TABLE>
12
<PAGE>
Investment Portfolio/November 30, 1995
- -----------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
MN Minneapolis Commercial Development,
Hometel Associates, Ltd.,
Series 1988,
10.500% 06/01/03 $ 1,500 $ 1,518
--------
4,088
--------
- -----------------------------------------------------------------------------
SOLID WASTE - 3.0%
Land Fills - 1.6%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc. Project,
9.000% 09/01/05 1,140 1,221
WA Walla Walla Public Corp.,
Ponderosa Fibers Project,
9.125% 01/01/26 2,000 2,088
--------
3,309
--------
Miscellaneous Disposal - 0.6%
MA Boston,
Industrial Development Financing,
Solid Waste Disposal,
10.500% 01/01/11 1,000 1,136
--------
Recycling - 0.8%
GA Fulton County Development
Authority Industrial,
10.500% 12/01/07 1,515 1,600
--------
- -----------------------------------------------------------------------------
TAX ALLOCATION - 0.7%
IL State Development Finance Authority,
City of Marion Project, Series 1991,
9.625% 09/15/21 1,485 1,543
--------
- -----------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.5%
Air Transportation
NY New York City Industrial
Development Agency, American
Airlines,
6.900% 08/01/24 1,000 1,064
--------
- -----------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio/November 30, 1995
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - CONT. PAR VALUE
- -----------------------------------------------------------------------------
<S> <C> <C>
UTILITY - 4.0%
Co-Generation - 1.4%
FL Martin County Industrial
Development Authority, Indiantown
Co-generation Project,
7.875% 12/15/25 $ 1,000 $ 1,143
MD State Energy Financing Administration,
AES Warrior Co-generation Project,
7.400% 09/01/19 1,750 1,831
--------
2,974
--------
Individual Power Producer - 0.8%
PA State Economic Development Finance
Authority, Colver Project, Series D,
7.150% 12/01/18 1,500 1,584
--------
Municipal Electric - 1.8%
MN Southern Minnesota Municipal
Power Agency, Series 1994A,
(e) 01/01/25 18,000 3,622
--------
- -----------------------------------------------------------------------------
WATER & SEWER - 3.3%
LA Public Facility Belmont Water
Authority,
9.000% 03/15/24 790 832
MA State Industrial Finance Agency,
Environmental Service Project,
Series 1994 A,
8.750% 11/01/21 1,000 1,036
MS Five Lakes Utility District,
8.250% 07/15/24 500 519
NJ State Economic Development Authority,
Hills Development Co.,
Series 1988,
10.500% 09/01/08 2,100 2,194
OH State Water Development Pollution
Collateralized Control, The Cleveland
Electric Illumination Co., Series 1987-A-1,
9.750% 11/01/22 2,000 2,125
--------
6,706
--------
TOTAL MUNICIPAL BONDS (cost of $194,396)(f) 197,051
--------
</TABLE>
14
<PAGE>
Investment Portfolio/November 30, 1995
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM OBLIGATIONS - 1.9% PAR VALUE
- -----------------------------------------------------------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES(g)
AL Columbia Industrial Development Board,
Alabama Power Co. Project,
Series C,
4.000% 10/01/22 $ 400 $ 400
CA State Pollution Control Finance
Authority, Series B,
3.450% 10/01/11 400 400
CA State Pollution Control Finance
Authority, Honey Lake Power,
3.750% 09/01/18 200 200
IL State Development Finance Authority,
Ulhich Children's Home Project,
3.900% 04/01/07 1,700 1,700
IL State Health Facilities Authority,
Franciscan Sisters Health Center,
4.100% 01/01/18 700 700
NY New York City Water and Sewer,
Series G,
3.700% 06/15/24 100 100
WY Green River,
3.900% 06/01/07 400 400
--------
TOTAL SHORT-TERM OBLIGATIONS 3,900
--------
OTHER ASSETS & LIABILITIES, NET - 1.8% 3,715
- -----------------------------------------------------------------------------
NET ASSETS - 100% $204,666
--------
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- -----------------------------------------------------------------------------
(a) This issuer is in default of certain debt covenants. Income is not
being accrued.
(b) This is a restricted security which was acquired at a cost of $1,980. This
security respresents 1.1% of the Fund's net assets at November 30, 1995.
(c) Accrued interest accumulates in the value of the security and is payable
at redemption.
(d) Security is exempt from registration under rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At year end,
the value of this security amounted to $4,391 or 2.1% of net assets.
(e) Zero coupon bond.
(f) Cost for federal income tax purposes is the same.
(g) 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,
1995.
See notes to financial statements.
15
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
(in thousands except for per share amount)
ASSETS
Investments at value (cost $194,396) $ 197,051
Short-term obligations 3,900
---------
200,951
Receivable for:
Interest $ 4,702
Investments sold 180
Other 85 4,967
--------- ---------
Total Assets 205,918
LIABILITIES
Payable for:
Distributions 1,163
Accrued:
Deferred Trustees Fees 2
Other 87
---------
Total Liabilities 1,252
---------
NET ASSETS at value for 27,367
shares of beneficial interest outstanding $ 204,666
---------
Net asset value per share $ 7.48
---------
COMPOSITION OF NET ASSETS
Capital paid in $ 249,674
Undistributed net investment income 511
Accumulated net realized loss (48,174)
Net unrealized appreciation 2,655
---------
$ 204,666
---------
</TABLE>
See notes to financial statements.
16
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 16,915
EXPENSES
Management fee $ 1,301
Transfer agent 123
Bookkeeping fee 53
Trustees fee 18
Custodian fee 18
Audit fee 47
Legal fee 268
Reports to shareholders 11
Other 121 1,960
-------- --------
Net Investment Income 14,955
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (7,350)
Net unrealized appreciation during
the period 16,568
--------
Net Gain 9,218
--------
Net Increase in Net Assets from Operations $ 24,173
--------
</TABLE>
See notes to financial statements.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands) Year ended November 30
------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS 1995 1994
Operations:
Net investment income $ 14,955 $ 16,650
Net realized loss (7,350) (5,234)
Net unrealized appreciation (depreciation) 16,568 (14,182)
--------- ---------
Net Increase (Decrease) from Operations 24,173 (2,766)
Distributions:
From net investment income (15,104) (15,888)
--------- ---------
9,069 (18,654)
Fund Share Transactions:
Value of distributions reinvested 153 806
--------- ---------
Total Increase (Decrease) 9,222 (17,848)
NET ASSETS
Beginning of period 195,444 213,292
--------- ---------
End of period (including undistributed
net investment income
of $511 and $638, respectively) $ 204,666 $ 195,444
--------- ---------
NUMBER OF FUND SHARES
Issued for distributions reinvested 21 105
Outstanding at
Beginning of period 27,346 27,241
--------- ---------
End of period 27,367 27,346
--------- ---------
</TABLE>
See notes to financial statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Municipal Income Trust (the Fund), is a
Massachusetts business trust registered under the Investment Company Act
of 1940, as amended, as a diversified, closed-end, management investment
company. The Fund may issue an unlimited number of shares. The following
significant accounting policies are consistently followed by the Fund in
the preparation of its financial statements and conform to generally
accepted accounting principles.
SECURITY VALUATION AND TRANSACTIONS: Debt securities are valued by a
pricing service based upon market transactions for normal,
institutional-size trading units of similar securities. When management
deems it appropriate, an over-the-counter or exchange bid quotation is
used.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued
at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific
identification method for both financial statement and federal income tax
purposes.
The Fund may trade securities on other than normal settlement terms. This
may increase the risk if the other party to the transaction fails to
deliver and causes the Fund to subsequently invest at less advantageous
prices.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable and
tax-exempt income, no federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on
the accrual basis. Original issue discount is accreted to interest income
over the life of a security with a corresponding increase in the cost
basis; market discount is not accreted. Premium is amortized against
interest income with a corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on
the ex-date.
The character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Reclassifications are made to the Fund's
capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the in-
vestment Adviser of the Fund and furnishes accounting and other services and
office
19
<PAGE>
Notes to Financial Statements/November 30, 1995
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
facilities for a monthly fee equal to 0.65% annually of the Fund's average
weekly net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$18,000 per year plus 0.0233% of the Fund's average net assets over $50
million.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which
may be terminated at any time. Obligations of the plan will be paid solely
out of the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended November 30, 1995, purchases
and sales of investments, other than short-term obligations, were
$47,321,402 and $51,365,902, respectively.
Unrealized appreciation (depreciation) at November 30, 1995, based on cost
of investments for both financial statement and federal income tax
purposes was approximately:
<TABLE>
<S> <C>
Gross unrealized appreciation $12,069,000
Gross unrealized depreciation (9,414,000)
-----------
Net unrealized appreciation $ 2,655,000
-----------
</TABLE>
CAPITAL LOSS CARRYFORWARDS: At November 30, 1995, capital loss
carryforwards available (to the extent provided in regulations) to offset
future realized gains were approximately as follows:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
---------- ----------------
<S> <C>
1996 $ 2,850,000
1997 2,498,000
1998 6,551,000
1999 6,352,000
2000 9,103,000
2001 7,977,000
2002 5,301,000
2003 7,499,000
-------------
$48,131,000
-------------
</TABLE>
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized
gains, it is unlikely that such gains would be distributed since they may
be taxable to shareholders as ordinary income.
OTHER: There are certain risks arising from geographic concentration in
any state. Certain revenue or tax related events in a state may impair the
ability of certain issuers of municipal securities to pay principal and
interest on their obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
20
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
Year ended November 30
---------------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 7.150 $ 7.830 $ 7.890 $ 8.060 $ 8.370
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.547 0.609 0.639 0.636 0.682
Net realized and
unrealized gain (loss) 0.335 (0.707) (0.063) (0.170) (0.279)
-------- ------- -------- -------- --------
Total from Investment
Operations 0.882 (0.098) 0.576 0.466 0.403
-------- ------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.552) (0.582) (0.632) (0.636) (0.713)
In excess of net
investment income -- -- (0.004) -- --
-------- ------- -------- -------- --------
Total Distributions
Declared to Shareholders (0.552) (0.582) (0.636) (0.636) (0.713)
-------- ------- -------- -------- --------
Net asset value -
End of period $ 7.480 $ 7.150 $ 7.830 $ 7.890 $ 8.060
======== ======== ======== ======== ========
Market price per share $ 6.750 $ 6.750 $ 8.000 $ 7.875 $ 8.375
======== ========= ======== ======== ========
Total return - based on market
value (a) 8.04% (10.06)% 11.56% 1.82% 17.77%
======== ========= ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses 0.98%(b) 0.90% 0.87% 0.87% 0.87%
Net investment income 7.47%(b) 8.12% 8.03% 7.99% 8.29%
Portfolio turnover 24% 24% 21% 10% 12%
Net assets at end
of period (000) $204,666 $195,444 $213,292 $213,420 $216,394
</TABLE>
(a) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior year ratios are net of benefits received,
if any.
- --------------------------------------------------------------------------------
Federal income tax information (unaudited)
All of the distributions will be treated as exempt income for federal income tax
purposes.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES OF COLONIAL MUNICIPAL INCOME TRUST
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Municipal Income Trust at
November 30, 1995, the results of its operations, the changes in its net assets
and the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of portfolio positions at November 30, 1995
by correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 12, 1996
22
<PAGE>
<TABLE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------
NOVEMBER 30, 1995 AUGUST 31, 1995 MAY 31, 1995 FEBRUARY 28, 1995
(000) Per Share (000) Per Share (000) Per Share (000) Per Share
----- --------- ----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income $4,471 $0.163 $3,840 $0.140 $4,310 $0.157 $4,294 $0.157
Net investment income $3,856 $0.141 $3,390 $0.125 $3,848 $0.140 $3,861 $0.141
Net realized and
unrealized gain (loss) $4,516 $0.168 $(771) $(0.026) $(468) $(0.017) $5,941 $0.210
Market value per share:
High $7.125 $6.875 $7.375 $7.375
Low $6.750 $6.375 $7.000 $6.375
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------
NOVEMBER 30, 1994 AUGUST 31, 1994 MAY 31, 1994 FEBRUARY 28, 1994
(000) Per Share (000) Per Share (000) Per Share (000) Per Share
----- --------- ----- --------- ----- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income $4,901 $0.180 $4,369 $0.160 $4,483 $0.164 $4,736 $0.173
Net investment income $4,363 $0.160 $3,932 $0.143 $4,049 $0.148 $4,306 $0.158
Net realized and
unrealized gain (loss) $(7,998) $(0.291) $(427) $(0.013) $(6,691) $(0.245) $(4,300) $(0.158)
Market value per share:
High $7.125 $7.500 $8.375 $8.500
Low $6.000 $7.000 $7.250 $7.875
<FN>
At November 30, 1995 there were 5,172 shareholder accounts.
</TABLE>
23
<PAGE>
DIVIDEND REINVESTMENT PLAN
The Trust generally distributes net investment income monthly and capital gains
annually. Under the Trust's Dividend Reinvestment and Cash Purchase Plan (the
"Plan") shareholders may elect to have all distributions reinvested
automatically in additional shares of the Trust. Shareholders not making such
election will receive all distributions in cash paid by check mailed directly to
the record holder by the dividend paying agent.
Shareholders participating in the Plan will receive distributions in the form of
shares of the Trust. If the market price of the shares on the distribution
payment date is equal to or greater than the net asset value, Plan participants
will be issued shares at the higher of net asset value or 95% of the market
price. The aggregate market value of the shares may constitute income to
shareholders for federal income tax purposes. If net asset value exceeds the
market price, or the distribution is payable only in cash, shares will be bought
in the open market for the accounts of Plan participants. If the market price
surpasses the net asset value before such purchasing is completed, the average
per share price paid may exceed the net asset value of the shares, resulting in
the acquisition of fewer shares than if the distribution had been in
newly-issued shares.
Participants in the Plan have the option of making additional cash payments to
the Plan administrator semiannually, for investment in the Trust's shares. Such
payments may be made in any amount from $100 to $500. The administrator will use
all funds received from participants (as well as any dividends and distributions
received in cash) to purchase Trust shares in the open market semiannually.
Interest will not be paid on any uninvested cash payments.
All Plan accounts receive monthly written confirmations of all transactions.
Shares purchased under the Plan are ordinarily held in uncertified form,
although participants have the right to receive certificates for whole shares
issued to them.
Each shareholder's proxy includes shares purchased pursuant to the Plan. The
automatic reinvestment of distributions does not relieve participants of any
income tax payable on the distributions. Participants may recognize capital gain
or ordinary income for federal income tax purposes in an amount equal to the
market value of shares received under the Plan.
Fees and expenses of the Plan other than brokerage charges will be paid by the
Trust. No brokerage charges are incurred on shares issued directly by the Trust.
Participants will bear a pro-rata share of brokerage charges incurred on open
market purchases.
A Plan participant may terminate his or her participation by written notice to
the Plan agent. The Plan may be amended or terminated on 90 days written notice
to the Plan participants. Upon withdrawal by any participant or any termination
of the Plan, certificates for whole shares will be issued and cash payments will
be made for any fractional shares. All correspondence concerning the Plan should
be directed to State Street Bank and Trust Company, the Trust's dividend
disbursing agent and administrator of the Plan, at P.O. Box 8200, Boston,
Massachusetts 02266-8200.
24
<PAGE>
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25
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
26
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Municipal Income Trust is:
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
1-800-426-5523
Colonial Municipal Income Trust mails one shareholder report to each shareholder
address. If you would like more than one report, please call our Literature
Department at 1-800-248-2828 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Municipal Income
Trust.
27
<PAGE>
[COLONIAL MUTUAL FUNDS LOGO]
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland (formerly Dean,
Simon Graduate School of Business, University of Rochester; Chairman and Chief
Executive Officer, C.S. First Boston Merchant Bank; and President and Chief
Executive Officer, The First Boston Corporation)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
Colonial Investment Services, Inc. (C)1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
IT-02/604B-1195 (1/96)
[Printed on recycled paper LOGO]
