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COLONIAL
MUNICIPAL
INCOME
TRUST
ANNUAL REPORT
NOVEMBER 30, 1996
<PAGE>
COLONIAL MUNICIPAL INCOME TRUST HIGHLIGHTS
DECEMBER 1, 1995 - NOVEMBER 30, 1996
INVESTMENT OBJECTIVE: Colonial Municipal Income Trust seeks to provide high
current income, generally exempt from federal income taxes, by investing
primarily in medium and lower quality municipal securities.
THE FUND IS DESIGNED TO OFFER:
|X| Potential for high tax-free income
|X| Experienced professional management
|X| Expert credit analysis
PORTFOLIO MANAGER COMMENTARY: "We continue to try to increase value for
investors by focusing on industrial revenue bonds and by broadly diversifying
the Trust across sectors. We believe the supply of high yield bonds will
diminish over the near term and we will be working harder to identify
unconventional total return opportunities, such as candidates for credit rating
upgrades or acquisition. Additionally, with the election year behind us and a
balance of Democrats and Republicans in Congress, we believe that political
conditions will promote stability in the municipal bond market."
-- Peter Andersen
COLONIAL MUNICIPAL INCOME TRUST PERFORMANCE
Distributions declared per share(1) $0.510
12-month total return, assuming
reinvestment of all distributions
|X| NAV 6.38%
|X| Market Price 15.36%
Price per share
|X| NAV $7.41
|X| Market Price $7.25
(1) A portion of the Fund's income may be subject to the alternative minimum
tax.
The fund may at times purchase tax-exempt securities at a discount, and some or
all of this discount may be included in the fund's ordinary income which will be
taxable when distributed.
TOP FIVE SECTORS QUALITY BREAKDOWN
(as of 11/30/96) (as of 11/30/96)
Nursing Home.................. 20.0% NET CASH: 1.0%
Housing....................... 13.3% AAA: 11.6%
Hospital....................... 9.4% AA: 2.6%
Manufacturing.................. 5.0% NON-RATED: 59.4%
Air Transportation............. 4.9% A: 5.3%
BBB: 18.7%
BB: 1.4%
Sector and quality breakdowns are calculated as a percent of total net assets.
Because the Trust is actively managed, there can be no guarantee the Trust will
continue to maintain these quality weightings or invest in theses sectors in the
future. Industry sectors in the following financial statements are based upon
the standard industrial classifications (SIC) published by the U.S. Office of
Management and Budget. The sector classifications used on this page are based
upon Colonial's defined criteria as used in the investment process.
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of Howard W. Cogger]
I am pleased to present your Fund's annual report for the fiscal year ended
November 30, 1996. This report provides us with the opportunity to reflect on
the investment environment of the past 12 months.
The economy grew at a comfortable pace through the end of 1995 and into 1996.
The Federal Reserve Board lowered short-term interest rates in December 1995 and
again in January 1996, but stronger-than-expected economic indicators in
February 1996 brought the Fed easing trend to a halt. However, recently released
economic data confirm that economic growth has slowed to a pace well within the
"comfort zone" of the Federal Reserve Board, lessening the market's fears of a
Fed tightening. We are hopeful that the volatility that has characterized the
fixed income market during the past year will be somewhat reduced in the months
ahead.
While market conditions put pressure on municipal bond prices, technical
dynamics, such as low supply and strong retail market support, enabled
tax-exempt bonds to outperform Treasury bonds for much of the year. The
post-election conditions should promote a period of stability for the municipal
market as the flat tax initiative is now a receding memory. In this market, your
management team has maintained a long-term outlook and has focused on industrial
revenue bonds backed by publicly held companies that have good liquidity
characteristics as a result of their "household name" status.
Our economic expectations include growth continuing at a slower, but more
sustainable, rate and our outlook for 1997 is relatively bright. Lower mortgage
rates, increased consumer spending power and accelerating exports lead us to
believe that the current economic expansion could continue through the year
ahead.
As always, we thank you for the opportunity to help you meet your investment
goals through the Colonial family of funds.
Respectfully,
/s/ Howard W. Cogger
Howard W. Cogger
President
January 10, 1997
Because market conditions change frequently, there can be no assurance that the
trends described here will continue, come to pass or affect Fund performance.
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1996 (IN THOUSANDS)
MUNICIPAL BONDS - 96.0% PAR VALUE
- -------------------------------------------------------------------------------
EDUCATION - 3.9%
EDUCATION - 1.8%
CT HEFA University of New Haven,
6.625% 07/01/16 $ 1,000 $ 1,024
NY State Dormitory Authority,
State University,
Series 1995-A,
5.300% 07/01/24 2,700 2,643
--------
3,667
--------
SCHOOL DISTRICT GENERAL OBLIGATION - 1.1%
AZ Apache County School District
Number 010 Round Valley
Project of 1987, Series 1990-C,
9.875% 07/01/05 2,000 2,220
--------
STUDENT LOAN - 1.0%
SD State Student Loan Finance Corp.,
Series 1996-E,
6.550% 08/01/20 2,000 2,028
--------
- -------------------------------------------------------------------------------
HEALTH - 30.4%
HOSPITAL - 9.5%
AL Special Care Facilities Authority,
Montgomery Healthcare,
Series 1989,
11.000% 10/01/19 2,280 2,326
DE State Economic Development Authority,
Riverside Hospital,
Series 1992-A,
9.500% 01/01/22 895 1,183
GA Clayton Hospital Authority,
The Woodlands Foundation Inc.,
Series 1991-A,
9.750% 05/01/21 1,500 1,275
ID State Health Facilities Authority,
IHC Hospitals, Inc.,
8.420% 02/15/21 2,750 3,083
IL Health Facilities Authority,
Edgewater Medical Center,
Series A,
9.250% 07/01/24 2,250 2,481
MO Hannibal Industrial Development,
Medical Systems of Northeast Missouri,
Series 1992,
9.500% 03/01/22 2,000 2,518
NJ Health Care Facilities Financing
Authority, Raritan Bay Medical Center
7.250% 07/01/27 1,000 1,052
VA Dickenson County Industrial
Development Authority, Volunteer
Healthcare Systems, Inc., Series 1988 A
10.750% 06/01/18 (a) 5,500 1,650
VT Educational & Health Buildings
Financing Agency, Springfield Hospital,
Series A,
7.750% 01/01/13 1,050 1,148
WA State Health Care Facility,
Grays Harbor Community
Hospital, Series 1993,
7.200% 07/01/03 (b) 375 417
8.025% 07/01/20 (b) 1,770 2,024
--------
19,157
--------
INTERMEDIATE CARE FACILITIES - 0.9%
MA State Health & Educational
Facilities Authority,
Corp. for Independent Living,
8.100% 07/01/18 690 697
TN Shelby County, Health, Education,
& Housing Facilities Board, Open Arms
Development Center:
Series 1992-A,
9.750% 08/01/19 520 602
Series 1992-C,
9.750% 08/01/19 530 613
--------
1,912
--------
NURSING HOME - 20.0%
CO Health Facility,
American Housing Foundation I,
Series 1990,
10.250% 12/01/20 1,500 1,500
DE State Economic Development Authority,
12.000% 04/01/25
2,270 2,500
DE Sussex County, Healthcare Facility,
Delaware Health Corp.,
Series 1994-A,
7.600% 01/01/24 1,000 996
FL Flagler County Industrial
Development Authority,
South Florida Properties, Series 1988,
10.500% 12/01/18 1,470 1,487
IA State Finance Authority,
Care Initiatives Project,
Series 1996,
9.250% 07/01/25 1,000 1,220
IN Gary Industrial Economic Development,
West Side Health Care Center,
Series 1987-A,
11.500% 10/01/17 2,500 2,500
IN Michigan City Health Facilities,
Metropolitan Health Foundation
Inc. Project,
5.000% 11/01/22 4,500 4,050
KS Halstead Industrial
Health Care Project,
10.250% 08/01/13 (a) 1,330 532
KY Jefferson County
First Mortgage
Kentucky Iowa, Inc. Project, Series 1990,
10.250% 01/01/20 990 1,025
KY Lexington-Fayette Urban County
Government, First Mortgage, AHF
Kentucky-Iowa, Inc. Project, Series 1990,
10.250% 01/01/20 990 1,025
MA Boston,
St. Joseph Nursing Care Center, Inc.
Series 1990,
10.000% 01/01/20 (c) 1,960 2,151
MA State Industrial Finance Agency,
GF/Massachusetts Inc.,
Series 1994,
8.300% 07/01/23 990 990
MI Cheboygan County Economic
Development Corp.,
Metro Health Foundation Project, Series 1993,
11.000% 11/01/22 (b) 2,440 2,196
MO Grove Industrial Development Authority,
First Mortgage Health Care Facility,
Heritage Manor GR, Series 1988,
10.250% 11/01/13 520 468
MO Saint Louis County Industrial
Development Authority,
10.250% 12/01/16 1,860 1,916
MO Springfield Industrial Development
Authority,
10.250% 12/01/10 1,215 1,242
NJ Economic Development Authority
Geriatric and Medical Service,
Inc., Series A,
10.500% 05/01/04 790 847
NM City of Clovis,
Retirement Ranches Project:
10.750% 04/01/19 2,155 2,354
OH Lucas County,
Gericare, Inc.,
Series 1988-B,
10.500% 06/01/18 2,500 2,519
OH Montgomery County,
Grafton Oaks Limited Partners,
Series 1986,
9.750% 12/01/16 1,480 1,406
OK Muskogee County Economic Development
Authority Health Facilities,
Heartway Corp., Series 1989 A-3,
10.250% 03/01/19 (a) 1,970 1,379
PA Philadelphia Authority for
Industrial Development:
First Mortgage, The Care Pavilion,
Series 1988,
10.250% 02/01/18 975 995
RHA/Philadelphia Project,
10.250% 11/01/18 1,450 1,499
TN New Tazewell Health Education and
Housing Facilities Board,
New Tazewell Series 1987,
10.000% 06/01/17 1,640 1,673
VA Beach Development Authority,
Beverly Enterprises, Series 1985,
10.000% 04/01/10 1,860 2,062
--------
40,532
--------
- -------------------------------------------------------------------------------
HOUSING - 13.3%
ASSISTED LIVING/SENIOR - 2.7%
IL State Development Finance Authority,
Care Institute, Inc.,
8.250% 06/01/25 1,500 1,562
MN Roseville,
Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 1,630 1,536
PA Montgomery County Industrial
Development Authority, Assisted
Living Facility, Series 1993-A,
8.250% 05/01/23 820 847
TX Bell County Health Facilities
Development Corp., Care Institutions, Inc.
9.000% 11/01/24 1,500 1,629
--------
5,574
--------
MULTI-FAMILY - 9.7%
FL Clearwater Housing Authority,
Hampton Apartments,
Series 1994,
8.250% 05/01/24 2,500 2,641
FL Hialeah Housing Authority,
Series 1991,
9.500% 11/01/21 1,000 950
FL State Housing Finance Agency,
Windsong Apartments,
Series 1993-C,
9.250% 01/01/19 830 838
IL Chicago,
Michigan Boulevard Garden Apartment
Rehabilitaion Project, Series 1985,
12.000% 01/01/00 390 395
MN Washington County Housing &
Redevelopment Authority,
Cottages of Aspen, Series 1992,
9.250% 06/01/22 1,095 1,185
MN White Bear Lake,
Birch Lake Townhomes Project:
Series 1989-A,
10.250% 07/15/19 1,770 1,781
Series 1989-B,
07/15/19 (d) 687 1,187
NC Eastern Carolina Regional Housing
Authority, New River Apartments,
Jacksonville, Series 1994,
8.250% 09/01/14 1,960 1,984
Resolution Trust Corp.,
Pass Through Certificates,
Series 1993-A,
8.500% 12/01/16 (b) 4,248 4,360
SC State Housing Finance and Development
Multi-family Housing Finance Revenue,
Westbridge Apartments, Series A,
9.500% 09/01/20 2,200 2,241
TX Galveston Health Facilities Center,
Pass Through Certificates,
8.000% 08/01/23 1,000 1,038
VA Alexandria Redevelopment
& Housing Authority, Courthouse
Commons Apartments, Series 1990-A,
10.000% 01/01/21 1,000 1,010
--------
19,610
--------
SINGLE-FAMILY - 0.9%
AK State Housing Finance Corp.,
Series 1996-A,
6.050% 12/01/17 1,000 1,006
KY 1986 County Single Family Mortgage
Revenue, Class A,
9.000% 09/01/16 30 31
PA Allegheny County,
Residential Financial Authority,
Single-family Mortgage, Series 1987-G,
9.500% 12/01/18 710 732
--------
1,769
--------
- -------------------------------------------------------------------------------
OTHER - 4.2%
PUBLIC FACILITIES IMPROVEMENT - 0.9%
CA Statewide Communities
Development Corp.,
J. Paul Getty Trust Center,
5.000% 10/01/23 2,000 1,858
--------
REFUNDED/ESCROW/SPECIAL OBLIGATION - 3.3%
IL Chicago Public Building Commission,
Series 1990-A,
7.000% 01/01/20 2,000 2,400
MA State Industrial Finance Agency:
Mary Ann Morse Nursing Home, Inc.,
Series 1991-I,
10.000% 01/01/21 1,200 1,476
Series 1990,
9.000% 10/01/20 950 1,120
MI State Hospital Finance Authority,
Detroit Osteopathic Hospital,
Series 1987-A,
7.500% 11/01/10 950 1,003
NC Lincoln County,
Lincoln County Hospital,
9.000% 05/01/07 530 635
--------
6,634
--------
- -------------------------------------------------------------------------------
OTHER REVENUE - 19.2%
AMUSEMENTS & RECREATION - 0.6%
MN Mille Lacs Capital
Improvement Infrastructure, Band of Chippewa,
Series 1992-A,
9.250% 11/01/12 1,085 1,215
--------
CHEMICALS - 3.5%
LA St. Charles Parish Pollution
Control Revenue,
Union Carbide Project,
7.350% 11/01/22 2,000 2,170
SC York County Industrial Revenue,
Hoechst Celanese Corp.,
5.700% 01/01/24 5,000 4,975
--------
7,145
--------
HOTELS/CAMPS/LODGING - 2.0%
MN Burnsville Commercial Development,
Holiday Inn Project,
10.600% 06/01/06 2,500 2,546
MN Minneapolis Commercial Development,
Hometel Associates, Ltd.,
Series 1988,
10.500% 06/01/03 1,500 1,517
--------
4,063
--------
JUSTICE & PUBLIC ORDER - 0.4%
TN Franklin Industrial Board,
Landings Apartment Project,
Series 1996-B,
8.750% 04/01/27 800 802
--------
MANUFACTURING - 5.0%
CO Mesa County Industrial Development,
Joy Technologies Inc.,
Series 1992,
8.500% 09/15/06 1,000 1,091
MA State Industrial Finance Agency,
House of Bianchi Inc.,
8.750% 06/01/18 330 347
MN Brooklyn Park,
TL Systems Corp.,
Series 1991,
10.000% 09/01/16 795 988
OH Cuyahoga County,
Joy Technologies, Inc.,
Series 1992,
8.750% 09/15/07 550 606
VA Halifax County Industrial Development
Craddock-Terry Inc., Series 1989,
10.000% 12/01/19 1,010 1,087
VA Pittsylvania County Industrial
Development, Craddock-Terry Inc.,
Series 1989,
10.000% 12/01/19 1,085 1,161
VA Prince Edward County Industrial
Development, Craddock-Terry, Inc.,
Series 1989,
10.000% 12/01/19 1,860 1,990
WA Pilchuck Public Development Corp.,
Goodrich (B.F.) Co. Tramco Project,
Series 1993,
6.000% 08/01/23 3,000 2,966
--------
10,236
--------
MISCELLANEOUS RETAIL - 0.4%
OH Lake County,
North Madison Properties,
Series 1993,
8.819% 09/01/11 710 749
--------
OTHER REVENUE - 2.1%
IN Hammond,
American Maize Products Co.,
Series 1994,
8.000% 12/01/24 2,000 2,255
LA Port New Orleans Industrial Development,
Continental Grain Co., Series 1993,
7.500% 07/01/13 1,000 1,075
MD Baltimore,
Park Charles Project,
Series 1986,
8.000% 01/01/10 855 904
--------
4,234
--------
PAPER PRODUCTS - 4.5%
MI State Strategic Fund,
Blue Water Fiber Project,
Series 1994,
8.000% 01/01/12 2,000 1,498
MI State Strategic Fund,
Great Lakes Pulp & Fibre Project,
Series 1994,
10.250% 12/01/16 (e) 4,000 2,040
NY New York City Industrial
Development Agency,
Visy Paper, Inc., Series 1995,
7.950% 01/01/28 2,200 2,362
SC Darlington County,
Industrial Development Authority,
SONOCO Products Co. Project,
6.125% 06/01/25 2,000 2,080
WA Walla Walla Public Corp.,
Ponderosa Fibres Project,
9.125% 01/01/26 1,230 1,147
--------
9,127
--------
PETROLEUM REFINING - 0.7%
WA Pierce County Economic
Development Corp.,
Occidental Petroleum Co.,
5.800% 09/01/29 1,500 1,436
--------
- -------------------------------------------------------------------------------
RESOURCE RECOVERY - 4.4%
CO-GENERATION - 2.5%
FL Martin County Industrial
Development Authority,
Indiantown Co-generation Project,
7.875% 12/15/25 1,000 1,147
MD State Energy Financing Administration,
AES Warrior Co-generation Project,
7.400% 09/01/19 1,750 1,855
NY Port Authority of New York & New Jersey,
KIAC Partners,
Series 1996 IV,
6.750% 10/01/11 2,000 2,083
--------
5,085
--------
LAND FILL - 0.6%
MA State Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 1,110 1,181
--------
MISCELLANEOUS DISPOSAL - 0.6%
MA Boston Industrial Development
Finance Authority,
Jet-A-Way, Inc.,
10.500% 01/01/11 1,000 1,116
--------
RECYCLING - 0.7%
GA Fulton County Development
Authority,
Very, Inc.,
10.500% 12/01/07 1,445 1,517
--------
- -------------------------------------------------------------------------------
TAX-BACKED - 5.3%
GENERAL OBLIGATION - 1.2%
LA New Orleans,
Series 1991,
(f) 09/01/15 4,000 1,400
NY New York City,
Series 1997-A,
7.000% 08/01/07 1,000 1,106
--------
2,506
--------
SALES & EXCISE TAX - 4.1%
IL Development Finance Authority,
City of Marion Project,
Series 1991,
9.625% 09/15/21 1,475 1,525
IL Metropolitan Pier & Exposition
Authority, Series 1996-A,
(f) 12/15/13 5,000 1,931
(f) 12/15/21 8,000 1,930
IL Metropolitan Pier & Exposition Authority,
McCormick Project:
(f) 06/15/14 5,000 1,875
(f) 06/15/15 3,000 1,054
--------
8,315
--------
- -------------------------------------------------------------------------------
TRANSPORTATION - 7.5%
AIR TRANSPORTATION - 4.9%
IN Indianapolis Airport Authority:
United Airlines Project,
Series A,
6.500% 11/15/31 2,000 2,033
Federal Express Project,
7.100% 01/15/17 2,000 2,170
KY Kenton County Airport Board,
Delta Airlines, Inc.,
Series 1992-A,
7.500% 02/01/20 2,500 2,697
OH Dayton,
Emery Air Freight Facilities,
Series 1993-E,
6.050% 10/01/09 1,000 1,022
TX Alliance Airport Authority:
American Airlines Project,
7.500% 12/01/29 1,000 1,075
Federal Express Corp.,
Series 1996,
6.375% 04/01/21 1,000 1,010
--------
10,007
--------
TURNPIKE/TOLLROAD/BRIDGE - 2.6%
CA San Joaquin Hills Transncorridor
Agency Senior Toll Road,
Series 1993:
(f) 01/01/25 10,000 1,788
5.000% 01/01/33 2,480 2,182
PR Commonwealth of Puerto Rico
Highway & Transportation Authority,
Series 1996-Y,
5.500% 07/01/36 1,300 1,277
--------
5,247
--------
- -------------------------------------------------------------------------------
UTILITY - 7.8%
INDIVIDUAL POWER PRODUCER - 2.2%
PA Economic Development Finance
Authority, Colver Project, Series D:
7.125% 12/01/15 500 525
7.150% 12/01/18 3,750 3,933
--------
4,458
--------
INVESTOR OWNED - 1.0%
IL Bryant Pollution Control Revenue,
Central Illinois Light Co. Project,
5.900% 08/01/23 2,000 2,025
--------
MUNICIPAL ELECTRIC - 1.8%
TX Austin:
Series 1994,
(f) 05/15/17 6,600 2,104
(f) 05/15/18 5,000 1,506
--------
3,610
--------
WATER & SEWER - 2.8%
CT State Development Authority,
Sewer Sludge Disposal Facilities,
Series 1996,
8.250% 12/01/06 1,250 1,277
LA Public Facility Belmont Water
Authority,
9.000% 03/15/24 (b) 790 826
MA State Industrial Finance Agency,
Massachusetts Environmental Services,
Series 1994 A,
8.750% 11/01/21 990 970
MS V Lakes Utility District,
8.250% 07/15/24 500 516
NJ State Economic Development
Authority,
Hills Development Co.,
10.500% 09/01/08 2,100 2,110
--------
5,699
--------
TOTAL MUNICIPAL BONDS (cost of $193,918) (g) 194,734
--------
- -------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 0.9% PAR VALUE
- -------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (h)
CA Irvine Ranch Water District,
3.900% 01/01/21 900 900
MI Farmington Hills Hospital
Finance Authority,
Botsford General Hospital, Series 1991 B,
4.100% 02/15/16 1,000 1,000
--------
TOTAL SHORT-TERM OBLIGATIONS 1,900
--------
OTHER ASSETS & LIABILITIES, NET - 3.1% 6,159
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $202,793
========
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) This issuer is in default of certain debt covenants. Income is not being
accrued.
(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
1996 the value of these securities amounted to $9,823 or 4.8% of net assets.
(c) This is a restricted security which was acquired at a cost of $1,940. This
security represents 1.1% of the Fund's net assets at November 30, 1996.
(d) Accrued interest accumulates in the value of the security and is payable at
redemption.
(e) Subsequent to November 30, 1996, this issuer is in default of certain debt
covenants. Income is not being accrued.
(f) Zero coupon bond.
(g) Cost for federal income tax purposes is $194,004.
(h) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of November 30, 1996.
See notes to financial statements.
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1996
(in thousands except for per share amount)
ASSETS
Investments at value (cost $193,918) $ 194,734
Short-term obligations 1,900
----------
196,634
Receivable for:
Interest $ 5,281
Investments sold 2,095
Other 34 7,410
---------- ----------
Total Assets 204,044
LIABILITIES
Payable for:
Distributions 1,163
Accrued:
Deferred Trustees fees 3
Other 85
----------
Total Liabilities 1,251
----------
NET ASSETS at value for 27,367
shares of beneficial interest outstanding $ 202,793
==========
Net asset value per share $ 7.41
==========
COMPOSITION OF NET ASSETS
Capital paid in $ 246,821
Undistributed net investment income 467
Accumulated net realized loss (45,311)
Net unrealized appreciation 816
----------
$ 202,793
==========
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1996
(in thousands)
INVESTMENT INCOME
Interest $ 15,697
EXPENSES
Management fee $ 1,311
Transfer agent 105
Bookkeeping fee 53
Trustees fee 19
Custodian fee 5
Audit fee 44
Legal fee 198
Reports to shareholders 12
Other 97 1,844
---------- ----------
Net Investment Income 13,853
----------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain 70
Net unrealized depreciation during
the period (1,839)
----------
Net Loss (1,769)
----------
Net Increase in Net Assets from Operations $ 12,084
==========
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands) Year ended November 30
----------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995
Operations:
Net investment income $ 13,853 $ 14,955
Net realized gain (loss) 70 (7,350)
Net unrealized appreciation (depreciation) (1,839) 16,568
----------- -----------
Net Increase from Operations 12,084 24,173
Distributions:
From net investment income (13,957) (15,104)
----------- -----------
(1,873) 9,069
Fund Share Transactions:
Value of distributions reinvested -- 153
----------- -----------
Total Increase (Decrease) (1,873) 9,222
NET ASSETS
Beginning of period 204,666 195,444
----------- -----------
End of period (including undistributed
net investment income
of $467 and $511, respectively) $ 202,793 $ 204,666
=========== ===========
NUMBER OF FUND SHARES
Issued for distributions reinvested -- 21
Outstanding at
Beginning of period 27,367 27,346
----------- -----------
End of period 27,367 27,367
----------- -----------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1996
NOTE 1. ACCOUNTING POLICIES
...............................................................................
ORGANIZATION: Colonial Municipal Income Trust (the Fund) is a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end management investment company. The Fund's
investment objective is to provide high current income, generally exempt from
federal income taxes. The Fund may issue an unlimited number of shares.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies that are consistently followed by the Fund in
the preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Debt securities are valued by a pricing
service based upon market transactions for normal, institutional-size trading
units of similar securities. When management deems it appropriate, an
over-the-counter or exchange bid quotation is used.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions which cannot be valued as set forth above are valued at fair
value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
The Fund may trade securities on other than normal settlement terms. This may
increase the risk if the other party to the transaction fails to deliver and
causes the Fund to subsequently invest at less advantageous prices.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable and tax-exempt
income, no federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; market
discount is not accreted. Premium is amortized against interest income with a
corresponding decrease in the cost basis.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
...............................................................................
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.65% annually of the Fund's
average weekly net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$18,000 per year plus 0.0233% of the Fund's average net assets over $50 million.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
...............................................................................
INVESTMENT ACTIVITY: During the year ended November 30, 1996, purchases and
sales of investments, other than short-term obligations, were $43,444,372 and
$44,714,481, respectively.
Unrealized appreciation (depreciation) at November 30, 1996, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $ 10,402,432
Gross unrealized depreciation (9,672,930)
--------------
Net unrealized appreciation $ 729,502
==============
CAPITAL LOSS CARRYFORWARDS: At November 30, 1996, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
------------ -----------------
1997 $ 2,498,000
1998 6,551,000
1999 6,352,000
2000 9,103,000
2001 7,979,000
2002 5,301,000
2003 7,499,000
2004 4,000
--------------
$ 45,287,000
==============
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
OTHER: There are certain risks arising from geographic concentration in any
state. Certain revenue or tax related events in a state may impair the ability
of certain issuers of municipal securities to pay principal and interest on
their obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows:
Year ended November 30
----------------------------------------
1996 1995 1994
Net asset value -
Beginning of period $ 7.480 $ 7.150 $ 7.830
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.508 0.547 0.609
Net realized and
unrealized gain (loss) (0.068) 0.335 (0.707)
-------- -------- --------
Total from Investment
Operations 0.440 0.882 (0.098)
-------- -------- --------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.510) (0.552) (0.582)
-------- -------- --------
Net asset value -
End of period $ 7.410 $ 7.480 $ 7.150
======== ======== ========
Market price per share -
End of period $ 7.250 $ 6.750 $ 6.750
======== ======== ========
Total return - based on market
value (a) 15.36% 8.04% (10.06)%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.91%(b) 0.98%(b) 0.90%
Net investment income 6.87%(b) 7.47%(b) 8.12%
Portfolio turnover 22% 24% 24%
Net assets at end
of period (000) $202,793 $204,666 $195,444
(a) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(b) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
- --------------------------------------------------------------------------------
Federal income tax information (unaudited)
All of the distributions will be treated as exempt income for federal income tax
purposes.
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
Year ended November 30
----------------------------
1993 1992
Net asset value -
Beginning of period $ 7.890 $ 8.060
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.639 0.636
Net realized and
unrealized loss (0.063) (0.170)
--------- ---------
Total from Investment
Operations 0.576 0.466
--------- ---------
LESS DISTRIBUTIONS DECLARED TO
SHAREHOLDERS:
From net investment income (0.632) (0.636)
In excess of net
investment income (0.004) --
--------- ---------
Total Distributions
Declared to Shareholders (0.636) (0.636)
--------- ---------
Net asset value -
End of period $ 7.830 $ 7.890
========= =========
Market price per share -
End of period $ 8.000 $ 7.875
========= =========
Total return - based on market
value (a) 11.56% 1.82%
========= =========
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.87% 0.87%
Net investment income 8.03% 7.99%
Portfolio turnover 21% 10%
Net assets at end
of period (000) $ 213,292 $ 213,420
(a) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
<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, 1996, the results of its operations, the changes in its net assets
and the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of portfolio positions at November 30, 1996
by correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 10, 1997
<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. For shares issued at a discount from market value, the difference between
market value and issue price may represent taxable income at the time of
issuance. Any portion of the discount includable in income will increase the
basis of the shares issued. If net asset value exceeds the market price, or the
distribution is payable only in cash, shares will be bought in the open market
for the accounts of Plan participants. If the market price surpasses the net
asset value before such purchasing is completed, the average per share price
paid may exceed the net asset value of the shares, resulting in the acquisition
of fewer shares than if the distribution had been in newly-issued shares.
Participants in the Plan have the option of making additional cash payments to
the Plan administrator semiannually, for investment in the Trust's shares. Such
payments may be made in any amount from $100 to $500. The administrator will use
all funds received from participants (as well as any dividends and distributions
received in cash) to purchase Trust shares in the open market semiannually.
Interest will not be paid on any uninvested cash payments.
All Plan accounts receive monthly written confirmations of all transactions.
Shares purchased under the Plan are ordinarily held in uncertified form,
although participants have the right to receive certificates for whole shares
issued to them.
Each shareholder's proxy includes shares purchased pursuant to the Plan. The
automatic reinvestment of distributions does not relieve participants of any
income tax payable on the distributions. Participants may recognize capital gain
or ordinary income for federal income tax purposes in an amount equal to the
market value of shares received under the Plan.
Fees and expenses of the Plan other than brokerage charges will be paid by the
Trust. No brokerage charges are incurred on shares issued directly by the Trust.
Participants will bear a pro-rata share of brokerage charges incurred on open
market purchases.
A Plan participant may terminate his or her participation by written notice to
the Plan agent. The Plan may be amended or terminated on 90 days written notice
to the Plan participants. Upon withdrawal by any participant or any termination
of the Plan, certificates for whole shares will be issued and cash payments will
be made for any fractional shares. All correspondence concerning the Plan should
be directed to State Street Bank and Trust Company, the Trust's dividend
disbursing agent and administrator of the Plan, at P.O. Box 8200, Boston,
Massachusetts 02266-8200.
<PAGE>
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<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 Colonial at
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial Municipal Income
Trust.
<PAGE>
[logo] COLONIAL
MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
TRUSTEES
ROBERT J. BIRNBAUM
Retired (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief
Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Retired (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, C.S. First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and Consultant,
The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC., Distributor (C) 1997
One of the Liberty Financial Companies (NYSE:L)
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
IT-02/139D-1196 M (1/97)
[recycle symbol] Printed on recycled paper
