<PAGE> 1
MUNICIPAL INCOME OPPORTUNITIES TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
Strong economic growth in the fourth quarter of 1993 and a shift in Federal
Reserve Board monetary policy in February of 1994 led to the sharpest increase
in interest rates in more than six years. At the beginning of the year, concerns
regarding inflation developed as the economy approached full employment and
commodity prices moved upward. In response, since early February, the Federal
Reserve Board has raised the federal-funds rate -- the interest rate banks
charge each other for overnight loans -- 250 basis points from 3.00 percent to
5.50 percent in six separate moves through November. Between May and November,
the discount rate -- the interest rate the Federal Reserve charges member banks
for loans -- increased 175 basis points to 4.75 percent.
In February and March yields, as measured by The Bond Buyer Revenue Bond
Index,* jumped 89 basis points from 5.50 percent to 6.39 percent in response to
the Federal Reserve Board's initial tightening and subsequent municipal bond
selling pressure. Despite 15 to 20 basis point yield swings in April and May, a
semblance of stability returned to the market between June and August. After
Labor Day, however, continued economic growth, aggressive tax-loss selling,
heavy mutual-fund redemptions and excessive dealer inventory led to further
municipal market deterioration.
Over the past 12 months, Revenue Bond Index yields rose from 5.71 percent
to 7.18 percent. This total yield increase of 147 basis points is equivalent to
a 17 percent price decline for a municipal bond with a 30-year maturity.
The municipal market was also influenced by supply and demand conditions.
New-issue underwriting totaled a record $290 billion in 1993. The pace of
new-issue activity through November 1994, however, slowed 43 percent. The
estimated issuance for 1994 is $160 billion. By way of comparison, bond
maturities and calls for redemption are expected to reach $190 billion this
year, resulting in a reduction in the amount of municipal debt outstanding. This
scarcity would normally be expected to improve the relative performance of
municipal bonds under a stable-to-improving market environment.
PERFORMANCE
Municipal Income Opportunities Trust's (NYSE: OIA) net asset value (NAV)
declined from $8.47 to $8.22 per share during the six-month period ended
November 30, 1994. Based on this change and reinvestment of tax-free dividends
totaling $0.32 per share, the Fund's total NAV return for the period was 0.98
percent. Concurrently, the Fund's market price on the New York Stock Exchange
declined from $8.125 to $7.875 per share. Based on this market change and
reinvestment of dividends, the Fund's total market return for the period was
0.85 percent. The Fund began the period trading at a 4.07 percent discount to
NAV and closed at a 4.20 percent discount to NAV. The trailing 12-month total
NAV return through November 30, 1994 was a comparatively strong +2.97 percent.
Undistributed net investment income of $0.056 per share was available on
November 30, 1994 to help sustain the Fund's current dividend.
- ---------------
* 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.
<PAGE> 2
PORTFOLIO STRUCTURE
The Fund held five non-performing loans representing 1.4 percent of net
assets at the end of the period. The loans were in the industrial
development/pollution control, housing, public facilities and retirement and
lifecare facilities revenue sectors. Three additional issues, representing
another 4.5 percent of net assets, are expected to be restructured or liquidated
in the future. While these problem loans are currently paying interest, project
revenues appear insufficient to sustain current debt-service levels.
As of November 30, 1994, the Fund had net assets in excess of $174 million.
The portfolio's long-term investments were diversified among 10 specific
municipal sectors and 50 separate issuers. Non-rated securities comprised
approximately 81 percent of the portfolio. The four largest municipal sectors
were nursing and health related, industrial development/pollution control,
housing and retirement and lifecare revenue bonds. At the end of the period,
these sectors represented approximately 72 percent of net assets. The average
maturity and call protection of the Fund's long-term holdings were 20 and 7
years, respectively.
LOOKING AHEAD
The overall direction of interest rates will primarily be determined by the
strength of the economy, the trend of inflation and the Federal Reserve Board's
responses. These conditions may continue to move interest rates higher through
mid-1995. Investor demand for municipal securities should be sustained by
significant bond maturities, calls for redemption and diminished new-issue
supply. Changing market conditions, the pace of accruing and nonaccruing problem
loan workouts and bond redemption activity are among the factors that will
determine the Fund's future level of income and influence the direction of the
common stock market price.
The Fund's procedure for reinvestment of all dividends and distributions on
common shares is by 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 first half of the 1995 fiscal year, the Fund
purchased 282,200 shares of common stock at a weighted average discount of 9.82
percent.
We appreciate your support of MUNICIPAL INCOME OPPORTUNITIES TRUST and look
forward to continuing to serve your investment needs.
Very truly yours,
CHARLES A. FIUMEFREDDO
Charles A. Fiumefreddo
Chairman of the Board
<PAGE> 3
MUNICIPAL INCOME OPPORTUNITIES TRUST
PORTFOLIO OF INVESTMENTS November 30, 1994 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
--------- ------- --------- -------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (88.5%)
GENERAL OBLIGATION (1.0%)
$ 2,000 New York City, New York, 1994 Ser D.................... 5.75 % 8/15/10 $ 1,687,980
--------- -------------
EDUCATIONAL FACILITIES REVENUE (1.9%)
3,000 New Jersey Educational Facilities Authority, Fairleigh
Dickinson University 1993 Ser C...................... 6.625 7/ 1/23 2,502,690
1,000 New York State Dormitory Authority, State University
Refg Ser 1993 A...................................... 5.25 5/15/15 780,370
--------- -------------
4,000 3,283,060
--------- -------------
HOSPITAL REVENUE (8.6%)
2,000 Corona, California, Vista Hospital System Inc Ser 1992
B COPs............................................... 9.50 7/ 1/20 2,073,380
3,500 Wilmington, Delaware, Osteopathic Hospital Association
of Delaware/Riverside Hospital Ser A 1988
(Prerefunded)........................................ 10.20 10/ 1/18 4,099,690
Illinois Health Facilities Authority,
1,600 Delnor Community Hospital Ser 1989 (Prerefunded)..... 8.00 5/15/19 1,770,592
1,065 Hinsdale Hospital Ser 1990 C......................... 9.50 11/15/19 1,184,387
1,915 Hinsdale Hospital Ser 1990 C (Prerefunded)........... 9.50 11/15/19 2,293,730
1,500 North Central Texas Health Facilities Development
Corporation, University Medical Center Inc Ser
1987................................................. 7.75 4/ 1/17 1,445,925
1,945 Buena Vista Industrial Development Authority, Virginia,
Stonewall Jackson Hospital Ser 1987.................. 8.375 11/ 1/14 2,076,929
--------- -------------
13,525 14,944,633
--------- -------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (20.2%)
2,000 Delaware Economic Development Authority, Syntek Inc Ser
1989 (AMT)(a)........................................ 11.25 5/ 1/09 20,000
485 Metropolitan Washington Airports Authority, District of
Columbia, Caterair Intl Corp Ser 1991 (AMT).......... 10.125 9/ 1/11 485,262
1,595 Illinois Development Finance Authority, Custom Tapes
Inc Refg Ser 1989.................................... 10.50 5/ 1/19 1,621,800
4,010 Detroit Economic Development Corporation, Michigan,
North Industrial Park LP Ser 1989.................... 11.375 2/15/14 4,236,204
1,660 Michigan Strategic Fund, Kasle Steel Corp Ser 1989
(AMT)................................................ 9.375 10/ 1/06 1,797,895
5,000 Cleveland, Ohio, Continental Airlines Inc Ser 1990
(AMT)................................................ 9.00 12/ 1/19 4,767,150
2,000 Dayton, Ohio, Emery Air Freight Corp Ser 1988 A........ 12.50 10/ 1/09 2,200,000
1,250 Zanesville-Muskingum County Port Authority, Ohio,
Anchor Glass Container Corp Ser 1989 B (AMT)......... 10.25 12/ 1/08 1,292,550
2,273 Butler County Industrial Development Authority,
Pennsylvania, Morgan Management Co Ser 1976.......... 8.75 11/15/03 2,359,762
4,045 East Hempfield Township Industrial Development
Authority, Pennsylvania, Herley Microwave System Inc
Ser 1989 A........................................... 10.40 6/ 1/04 4,501,114
Lexington County, South Carolina, Ellett Brothers Inc
2,850 Refg Ser 1988........................................ 10.625 9/ 1/02 3,019,660
4,250 Refg Ser 1988........................................ 10.625 9/ 1/08 4,503,003
4,500 Pittsylvania County Industrial Development Authority,
Virginia, Multi Trade Ser 1994 A (AMT)............... 7.45 1/ 1/09 4,325,535
--------- -------------
35,918 35,129,935
--------- -------------
</TABLE>
<PAGE> 4
MUNICIPAL INCOME OPPORTUNITIES TRUST
PORTFOLIO OF INVESTMENTS November 30, 1994 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
--------- ------- --------- -------------
<C> <S> <C> <C> <C>
MORTGAGE REVENUE - MULTI-FAMILY (4.4%)
$ 2,000 Dade County Housing Finance Authority, Florida, Arena
Square North & South 1989 Ser 2 (AMT)(a)............. 10.25 % 5/ 1/19 $ 300,000
Washington County Housing & Redevelopment Authority,
Minnesota, Courtly Park Townhomes
24,080 Ser 1989 B........................................... 0.00 6/15/19 662,199
8,678 Ser 1989 B (AMT)..................................... 0.00 6/15/19 238,641
3,885 Ser 1989 A........................................... 9.75 6/15/19 2,408,700
1,165 Ser 1989 A (AMT)..................................... 10.25 6/15/19 722,300
White Bear Lake, Minnesota, White Bear Woods Apts Phase
II
23,786 Refg 1989 Ser B...................................... 0.00 6/15/19 713,578
3,715 Refg 1989 Ser A...................................... 9.75 6/15/19 2,600,500
--------- -------------
67,309 7,645,918
--------- -------------
MORTGAGE REVENUE - SINGLE FAMILY (10.4%)
5,000 Alaska Housing Finance Corporation, Inc 1993 1st Ser... 5.90 12/ 1/33 4,009,200
49,561 San Francisco, California, Ser 1982.................... 0.00 10/ 1/14 5,703,949
640 Broward County Housing Finance Authority, Florida, Home
Ser 1989 A........................................... 10.00 10/ 1/03 651,744
59,260 New Hampshire Housing Finance Authority, Residential
1983 Ser B........................................... 0.00 1/ 1/15 6,875,345
770 Rhode Island Housing & Mortgage Finance Corporation,
Homeownership 1988 Ser 1-B (AMT)..................... 8.40 10/ 1/22 779,625
--------- -------------
115,231 18,019,863
--------- -------------
NURSING & HEALTH RELATED FACILITIES REVENUE (27.2%)
Vista, California, Long-Term Care Foundation of America
135 Ser A COPs(c)........................................ 0.00 1/ 1/20 1,345
991 Ser B COPs(c)........................................ 8.50 1/ 1/20 793,117
Escambia County, Florida, Pensacola Care Development
Centers
9,025 Ser 1989............................................. 10.25 7/ 1/11 9,457,839
2,060 Ser 1989 A........................................... 10.25 7/ 1/11 2,158,798
8,930 Flagler County Industrial Development Authority,
Florida, RHA/South Florida Properties Inc Ser 1988
A.................................................... 10.50 12/ 1/18 9,540,544
1,500 Winchester, Indiana, Hoosier Care II Inc Ser 1990...... 10.375 6/ 1/20 1,523,160
2,565 Jefferson County, Kentucky, AHF/Kentucky-Iowa Inc Ser
1990................................................. 10.25 1/ 1/20 2,659,751
1,600 Westside Habilitation Center, Louisiana, Intermediate
Care Facility for the Mentally Retarded Refg Ser
1993................................................. 8.375 10/ 1/13 1,516,624
3,600 Massachusetts Industrial Finance Agency, Vinfen Corp
Ser 1993............................................. 7.10 11/15/18 3,150,108
6,350 McCurtain County Development Authority, Oklahoma,
Heartway Corp Ser 1989 A-2........................... 10.25 3/ 1/19 6,223,000
1,000 Bucks County Industrial Development Authority,
Pennsylvania, RHA/Mill Run Ser 1989.................. 10.00 7/ 1/00 490,000
</TABLE>
<PAGE> 5
MUNICIPAL INCOME OPPORTUNITIES TRUST
PORTFOLIO OF INVESTMENTS November 30, 1994 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
--------- ------- --------- -------------
<C> <S> <C> <C> <C>
$ 1,475 Maury County Health & Educational Facilities Board,
Tennessee, Southern Healthcare/Heritage Manor of
Monteagle Ser 1990E.................................. 10.50 % 3/ 1/20 $ 1,515,725
4,760 Kirbyville Health Facilities Development Corporation,
Texas, Heartway III Corp Ser 1988 A.................. 11.25 3/20/21 4,141,200
3,935 North Central Texas Health Facilities Development
Corporation, C C Young Memorial Home Ser 1988........ 10.50 12/ 1/13 4,175,940
--------- -------------
47,926 47,347,151
--------- -------------
PUBLIC FACILITIES REVENUE (0.0%)
1,120 La Salle County Jail Facilities Finance Corporation,
Texas,
--------- Criminal Detention Center Ser 1989(a).................. 9.75 8/ 1/09 11
-------------
RETIREMENT & LIFECARE FACILITIES REVENUE (10.2%)
1,000 Colorado Health Facilities Authority, Liberty Heights
Ser A(a)............................................. 10.00 7/ 1/19 550,000
Connecticut Development Authority, Seabury Life Care
3,230 Ser 1991............................................... 10.00 9/ 1/04 3,315,853
1,000 Ser 1991............................................... 10.00 9/ 1/16 1,018,300
4,965 Volusia County Health Facilities Authority, Florida,
John Knox Village Center 1988 Ser A(b)............... 11.125 9/ 1/17 4,369,200
5,874 Ann Arbor Economic Development Corporation, Michigan,
Glacier Hills Inc Ser 1989........................... 10.375 1/15/19 5,521,560
3,000 Independence Industrial Development Authority,
Missouri, Greenbriar Meadows Ser 1989 A (AMT)(a)..... 10.25 8/ 1/19 1,560,000
1,500 Charlotte, Housing Authority, North Carolina, Merrywood
Senior Adult Community Ser 1989 A (AMT).............. 9.75 5/ 1/19 1,500,000
--------- -------------
20,569 17,834,913
--------- -------------
TAX ALLOCATION (4.6%)
2,000 Bridgeview, Illinois, Ser 1991......................... 9.50 1/ 1/11 2,091,240
Crestwood, Illinois,
3,000 Refg Ser 1994.......................................... 7.00 12/ 1/04 2,786,010
3,350 Refg Ser 1994.......................................... 7.25 12/ 1/08 3,100,626
--------- -------------
8,350 7,977,876
--------- -------------
315,948 TOTAL MUNICIPAL BONDS
--------- (IDENTIFIED COST $168,463,482)....................... 153,871,340
-------------
</TABLE>
<PAGE> 6
MUNICIPAL INCOME OPPORTUNITIES TRUST
PORTFOLIO OF INVESTMENTS November 30, 1994 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
--------- ------- --------- -------------
<C> <S> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATIONS (9.1%)
$ 3,800 Daly City Housing Development Authority, California,
Serramonte Del Ray Apts (Tender 12/1/94)............. 3.80 %* 12/ 1/07 $ 3,800,000
5,400 Louisiana Offshore Terminal Authority, LOOP Inc Ser
1992 A (Tender 12/1/94).............................. 3.50* 9/ 1/08 5,400,000
6,700 Harris County Health Facilities Development
Corporation, Texas, Methodist Hospital 1994 (Tender
12/1/94)............................................. 3.50* 12/ 1/25 6,700,000
--------- -------------
15,900 15,900,000
--------- -------------
TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS
(IDENTIFIED COST $15,900,000)................................... 15,900,000
-------------
$ 331,848 TOTAL INVESTMENTS
======== (IDENTIFIED COST $184,363,482)(D)............................... 97.6% 169,771,340
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.................... 2.4 4,272,698
----- -------------
NET ASSETS........................................................ 100.0% $ 174,044,038
----- -------------
----- -------------
</TABLE>
- ---------------
<TABLE>
<S> <C>
* Variable or floating rate securities. Coupon rate shown reflects current rate.
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
(a) Non-income producing, bond in default.
(b) Currently accrues interest. Past due interest recorded as received.
(c) Resale is restricted to qualified institutional investors.
(d) The aggregate cost for federal income tax purposes is $184,693,482; the aggregate gross unrealized appreciation
is $4,949,067 and the aggregate gross unrealized depreciation is $19,871,209, resulting in net unrealized
depreciation of $14,922,142.
</TABLE>
See Notes to Financial Statements
- --------------------------------------------------------------------------------
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
November 30, 1994 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Alaska............. 2.3%
California......... 4.9
Colorado........... 0.3
Connecticut........ 2.5
Delaware........... 4.6
District of
Columbia......... 0.3
Florida............ 14.2
Illinois........... 8.5%
Indiana............ 0.9
Louisiana.......... 4.0
Kentucky........... 2.0
Massachusetts...... 2.0
Michigan........... 6.6
Minnesota.......... 4.2
Missouri........... 0.9%
New Hampshire...... 4.0
New Jersey......... 1.4
New York........... 1.4
North Carolina..... 0.9
Ohio............... 4.7
Oklahoma........... 4.0
Pennsylvania....... 4.2%
Rhode Island....... 0.4
South Carolina..... 4.3
Tennessee.......... 0.9
Texas.............. 9.5
Virginia........... 3.7
----
Total.............. 97.6%
====
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 7
MUNICIPAL INCOME OPPORTUNITIES TRUST
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1994 (unaudited)
- -----------------------------------------
ASSETS:
Investments in securities, at value
(identified cost $184,363,482) (Note
1)..................................... $ 169,771,340
Cash..................................... 83,570
Receivable for:
Interest............................... 4,453,422
Investments sold....................... 295,733
Prepaid expenses and other assets........ 7,993
-------------
TOTAL ASSETS..................... 174,612,058
-------------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased.......................... 131,636
Investment advisory fee (Note 2)....... 79,113
Administration fee (Note 3)............ 47,468
Accrued expenses (Note 4)................ 309,803
-------------
TOTAL LIABILITIES................ 568,020
-------------
NET ASSETS:
Paid-in-capital.......................... 200,430,767
Net unrealized depreciation on
investments............................ (14,592,142)
Accumulated undistributed net investment
income................................. 1,201,101
Accumulated net realized loss on
investments............................ (12,995,688)
-------------
NET ASSETS....................... $ 174,044,038
=============
NET ASSET VALUE PER SHARE,
21,177,972 shares outstanding
(unlimited shares authorized of $.01
par value)............................. $8.22
-----
-----
STATEMENT OF OPERATIONS For the six months
ended November 30, 1994 (unaudited)
- -----------------------------------------
INVESTMENT INCOME:
INTEREST INCOME......................... $ 8,078,714
-------------
EXPENSES
Investment advisory fee (Note 2)....... 450,481
Administration fee (Note 3)............ 270,289
Professional fees...................... 259,864
Transfer agent fees and expenses (Note
4)................................... 44,050
Registration fees...................... 16,417
Trustees' fees and expenses (Note 4)... 13,715
Shareholder reports and notices........ 11,026
Other.................................. 8,298
-------------
TOTAL EXPENSES....................... 1,074,140
-------------
NET INVESTMENT INCOME.............. 7,004,574
-------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (NOTE 1):
Net realized loss on investments....... (733,005)
Net change in unrealized depreciation
on investments....................... (5,118,714)
-------------
NET LOSS ON INVESTMENTS.............. (5,851,719)
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........ $ 1,152,855
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six
months ended
November 30, For the
1994 year ended
(unaudited) May 31, 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................................... $ 7,004,574 $ 14,337,038
Net realized loss on investments.......................................... (733,005) (12,233,056)
Net change in unrealized appreciation (depreciation) on investments....... (5,118,714) 9,061,207
------------- -------------
Net increase in net assets resulting from operations.................. 1,152,855 11,165,189
------------- -------------
Dividends to shareholders from net investment income........................ (6,747,069) (13,519,844)
Net decrease from transactions in shares of beneficial interest (Note 6).... (2,106,742) --
------------- -------------
Total decrease........................................................ (7,700,956) (2,354,655)
NET ASSETS:
Beginning of period......................................................... 181,744,994 184,099,649
------------- -------------
END OF PERIOD (including undistributed net investment income of $1,201,101
and $943,596, respectively)................................................ $ 174,044,038 $ 181,744,994
============= =============
</TABLE>
See Notes to Financial Statements
<PAGE> 8
MUNICIPAL INCOME OPPORTUNITIES TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Municipal Income Opportunities 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 22, 1988 and commenced
operations on September 19, 1988.
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 on the identified cost
method. Discounts and premiums on securities are amortized 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.
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
<PAGE> 9
MUNICIPAL INCOME OPPORTUNITIES TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
fee, calculated weekly and payable monthly, by applying the annual rate of 0.50%
to the Fund's average weekly net assets.
Under the terms of the 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"), an affiliate of the
Investment Adviser, the Fund pays an administration fee, calculated weekly and
payable monthly, by applying the annual rate of 0.30% to the Fund's average
weekly net assets.
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 November 30, 1994 aggregated $1,545,000
and $2,645,480, respectively.
Dean Witter Trust Company, an affiliate of the Investment Adviser and
Administrator, is the Fund's transfer agent. At November 30, 1994, the Fund had
transfer agent fees and expenses payable of approximately $15,000.
On April 1, 1991, the Fund established an unfunded noncontributory defined
benefit pension plan covering all independent Trustees of the Fund who will have
served as independent 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 November 30, 1994, included in Trustees' fees and expenses
in the Statement of Operations, amounted to $4,082. At November 30, 1994, the
Fund had an accrued pension liability of $46,352 which is included in accrued
expenses in the Statement of Assets and Liabilities.
5. FEDERAL INCOME TAX STATUS -- At May 31, 1994, the Fund had a net capital
loss carryover of approximately $1,493,000 which will be available through May
31, 2002 to offset future capital gains to the extent provided by regulations.
Capital losses incurred after October 31 ("Post-October losses") within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and elected to defer a net capital loss of
approximately $10,448,000 during such period in fiscal 1994.
The Fund had temporary book/tax differences primarily attributable to
Post-October loss deferrals and capital loss deferrals on wash sales.
<PAGE> 10
MUNICIPAL INCOME OPPORTUNITIES TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
6. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Capital Paid
Par Value in Excess of
Shares of Shares Par Value
----------- --------- -------------
<S> <C> <C> <C>
Balance, May 31, 1992....................................... 21,729,572 $ 217,295 $ 204,481,371
Treasury shares purchased and retired
(weighted average discount 8.79%)*........................ (269,400) (2,694) (2,158,463)
----------- --------- -------------
Balance, May 31, 1993 and May 31, 1994...................... 21,460,172 214,601 202,322,908
Treasury shares purchased and retired
(weighted average discount 9.82%)*........................ (282,200) (2,822) (2,103,920)
----------- --------- -------------
Balance, November 30, 1994.................................. 21,177,972 $ 211,779 $ 200,218,988
========= ======== ===========
</TABLE>
- ---------------
* The Trustees have voted to retire the shares purchased.
7. DIVIDENDS -- The Fund has declared the following dividends from net
investment income:
<TABLE>
<CAPTION>
Declaration Amount Record Payable
Date per Share Date Date
- ------------------ --------- ----------------- ------------------
<S> <C> <C> <C>
November 29, 1994 $0.0525 December 9, 1994 December 23, 1994
January 3, 1995 $0.0525 January 13, 1995 January 27, 1995
</TABLE>
8. SELECTED QUARTERLY FINANCIAL DATA --
<TABLE>
<CAPTION>
Quarters Ended*
--------------------------------------------
11/30/94 8/31/94
-------------------- -------------------
Per Per
Total Share Total Share
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Total investment income...................................... $ 4,001 $ 0.19 $ 4,078 $ 0.19
Net investment income........................................ 3,482 0.16 3,523 0.17
Net realized and unrealized loss on investments.............. (5,434) (0.25) (418) (0.01)
</TABLE>
<TABLE>
<CAPTION>
Quarters Ended*
----------------------------------------------------------------------------------
5/31/94 2/28/94 11/30/93 8/31/93
------------------ ------------------ ---------------- ------------------
Per Per Per Per
Total Share Total Share Total Share Total Share
-------- ------- -------- ------- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income.......... $ 4,138 $ 0.19 $ 4,139 $ 0.19 $ 3,999 $ 0.19 $ 4,298 $ 0.20
Net investment income............ 3,364 0.16 3,675 0.17 3,506 0.16 3,792 0.18
Net realized and unrealized gain
(loss) on investments.......... (1,390) (0.07) (2,373) (0.11) (23) -- 614 0.03
</TABLE>
<TABLE>
<CAPTION>
Quarters Ended*
---------------------------------------------------------------------------------
5/31/93 2/28/93 11/30/92 8/31/92
------------------ ---------------- ----------------- ------------------
Per Per Per Per
Total Share Total Share Total Share Total Share
-------- ------- ------- ------ ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income......... $ 3,322 $ 0.15 $ 4,082 $ 0.19 $ 4,378 $ 0.20 $ 4,254 $ 0.20
Net investment income........... 2,708 0.12 3,575 0.17 3,852 0.18 3,713 0.17
Net realized and unrealized gain
(loss) on investments......... (5,037) (0.23) 660 0.03 (674) (0.03) (2,599) (0.11)
</TABLE>
- ---------------
* Totals expressed in thousands.
<PAGE> 11
MUNICIPAL INCOME OPPORTUNITIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
For the
six
months
ended
November
30, For the year ended May 31,
1994** --------------------------------------------------------------------------------
(unaudited) 1994** 1993** 1992** 1991** 1990**
-------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period...................... $ 8.47 $ 8.58 $ 8.97 $ 9.39 $ 9.44 $ 9.56
-------- ------------ ------------ ------------ ------------ ------------
Net investment income......... 0.33 0.67 0.64 0.74 0.79 0.81
Net realized and unrealized
loss on investments......... (0.26) (0.15) (0.34) (0.43) (0.02) (0.09)
-------- ------------ ------------ ------------ ------------ ------------
Total from investment
operations.................. 0.07 0.52 0.30 0.31 0.77 0.72
-------- ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions from:
Net investment income....... (0.32) (0.63) (0.66) (0.73) (0.82) (0.84)*
Net realized gain........... -- -- (0.03) -- -- --
-------- ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions............... (0.32) (0.63) (0.69) (0.73) (0.82) (0.84)
-------- ------------ ------------ ------------ ------------ ------------
Net asset value, end of
period...................... $ 8.22 $ 8.47 $ 8.58 $ 8.97 $ 9.39 $ 9.44
========== ======== ======== ======== ======== ========
Market value, end of period... $ 7.875 $ 8.125 $ 8.25 $ 9.325 $ 9.875 $ 10.25
========== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN+...... 0.85%(1) 6.17% (4.71)% 2.64% 4.99% 6.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).................. $174,044 $ 181,745 $ 184,100 $ 194,851 $ 202,418 $ 199,173
Ratios to average net assets:
Expenses.................... 1.19%(2) 1.22% 1.15% 1.08% 1.10% 1.10%
Net investment income....... 7.77%(2) 7.80% 7.27% 8.00% 8.37% 8.61%
Portfolio turnover rate....... 1%(1) 16% 2% 4% 7% 8%
</TABLE>
- ---------------
+ Total investment return is based upon the current market value on the last
day of each period reported. Dividends and distributions, if any, are
assumed to be reinvested at the prices obtained under the Fund's dividend
reinvestment plan. Total investment return does not reflect sales charges or
brokerage commissions.
* Includes distribution of $.0003 per share.
** The per share amounts were computed using an average number of shares
outstanding during the period.
(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.
<PAGE> 12
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
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
- -----------------------------
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
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
OPPORTUNITIES
TRUST
SEMIANNUAL REPORT
NOVEMBER 30, 1994
