UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-4992
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Colonial Municipal Income Trust
--------------------------------------------------
(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Vincent Pietropaolo, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
--------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3698
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Date of fiscal year end: 11/30/2004
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Date of reporting period: 11/30/2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
COLONIAL MUNICIPAL INCOME TRUST ANNUAL REPORT
NOVEMBER 30, 2004
[photo of colonial-style building]
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
PRESIDENT'S MESSAGE
Dear Shareholder:
In 2004, Colonial Funds became part of the Bank of America family, one of the
largest, most respected financial institutions in the United States. As a direct
result of this merger, a number of changes are in the works that we believe
offer significant potential benefits for our shareholders. First, some funds may
be merged in order to eliminate redundancies, others may be liquidated and fund
management teams will be aligned to maximize performance potential. You will
receive more detailed information about these changes if your fund is affected
and you may be asked to vote on certain fund changes. In this matter, your
timely response will enable us to implement the changes in 2005.
As a result of these changes, we believe we will offer shareholders an even
stronger lineup of investment options. What will not change as we enter this
next phase of consolidation is our commitment to the highest standards of
performance and our dedication to superior service. Change for the good has
another name: it's called improvement. It helps move us forward, and we believe
that it represents progress for all our shareholders in their quest for
long-term financial success.
In the pages that follow, you'll find a detailed report from the fund's manager
or managers on key factors that influenced your fund's performance. We hope that
you will read the manager reports carefully and discuss any questions you might
have with your financial advisor.
As always, we thank you for choosing Colonial Funds. We appreciate your
continued confidence. And, we look forward to helping you keep your long-term
financial goals on target in the years to come.
Sincerely,
/s/ Christopher L. Wilson
Christopher L. Wilson
Head of Mutual Funds, Columbia Management
Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible
for the day-to-day delivery of mutual fund services to the firm's investors.
With the exception of distribution, Chris oversees all aspects of the mutual
fund services operation, including treasury, investment accounting and
shareholder and broker services. Chris serves as Columbia Management's liaison
to the mutual fund boards of trustees.
Chris joined Bank of America in August 2004.
Economic and market conditions change frequently. There is no assurance that
trends described in this report will continue or commence.
PORTFOLIO MANAGER'S REPORT
PRICE PER SHARE AS OF 11/30/04 ($)
Net asset value 5.69
-----------------------------
Market price 5.66
-----------------------------
1-YEAR TOTAL RETURN
AS OF 11/30/04 (%)
Net asset value 4.69
-----------------------------
Market price 7.86
-----------------------------
Lipper High Yield
Municipal Debt Funds
Category average 7.64
-----------------------------
All returns shown assume reinvestment of distributions.
DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/01/03 - 11/30/04 ($)
0.42
-----------------------------
A portion of the trust's income may be subject to the alternative minimum tax.
The trust may at times purchase tax-exempt securities at a discount from their
original issue price. Some or all of this discount may be included in the
trust's ordinary income, and any market discount is taxable when distributed.
TOP 5 SECTORS AS OF 11/30/04 (%)
Hospitals 10.7
--------------------------------
Continuing care retirement 7.2
--------------------------------
Local general obligations 6.6
--------------------------------
Multi-family 5.2
--------------------------------
Investor owned utility 5.1
--------------------------------
QUALITY BREAKDOWN
AS OF 11/30/04 (%)
AAA 32.2
-----------------------------
AA 0.6
-----------------------------
A 6.8
-----------------------------
BBB 21.0
-----------------------------
BB 5.5
-----------------------------
B 1.9
-----------------------------
CCC 0.2
-----------------------------
CC 0.2
-----------------------------
Non-rated 30.1
-----------------------------
Cash equivalents 1.5
-----------------------------
Sector and quality breakdowns are calculated as a percentage of total
investments. Ratings shown in the quality breakdown represent the lowest rating
assigned to a particular bond by one of the following nationally recognized
rating agencies: Standard & Poor's, a division of The McGraw Hill Companies,
Inc., Moody's Investors Service, Inc. or Fitch Ratings, Ltd. The majority of the
bonds that are non-rated are considered by the advisor to be of non-investment
grade quality.
Because the trust is actively managed, there is no guarantee that the trust will
continue to invest in these sectors or maintain this quality breakdown in the
future.
For the 12-month period ended November 30, 2004, Colonial Municipal Income Trust
generated a total return of 7.86%, based on its market price. Changes in the
market price of the trust's shares reflect investor demand and are not
necessarily linked directly to changes in the trust's net asset value. The trust
returned 4.69%, based on investment at net asset value. The trust trailed the
7.64% average return of its peer group, the Lipper High Yield Municipal Debt
Funds Category.1 It also lagged a customized peer group consisting of nine
leveraged closed-end high-yield municipal funds, which averaged a 6.81% return
over the period. High-yield municipals were top performers as investors searched
for yield in a low interest rate environment.
We sold Treasury futures early in the period to help keep the trust's
sensitivity to interest rate changes in line with its Lipper peer group. When
yields on 10- and 30-year Treasuries fell--and prices rose--this strategy hurt
the trust because the Treasury futures fell in value more than the increase in
the value of the hedged municipal bonds. Most of this underperformance occurred
early in the year. As the year progressed, the trust made up some of its first
quarter underperformance.
Leverage increases the duration (sensitivity to interest rates) of the common
shares because the trust borrows at a short term rate and invests in long term
assets - the duration of those assets is borne by the common shares. Because
many of the trusts in the Lipper High Yield Municipal Debt Funds Category are
not leveraged, we used futures contracts to reduce the duration of the trust to
bring its overall sensitivity to interest rates more in line with the average of
the Lipper Category. The customized peer group that only includes leveraged
closed-end high yield funds has a longer average duration than the Lipper High
Yield Municipal Debt Funds Category. Therefore, the trust will have a longer
duration but will be less reliant on hedging to bring its duration in line with
its peer group and thus will be less subject to volatility related to relative
performance of the Treasury market versus the municipal market.
USING LEVERAGE TO ADD INCOME
The trust's use of leverage gave it an income advantage over its non-leveraged
peers. The leverage comes from the trust's preferred shares, which were issued
in 1999, allowing the trust to borrow against its underlying investments. We
invest the proceeds from the preferred shares in longer maturity,
higher-yielding bonds, and then pay out to preferred shareholders a short-term
rate influenced by the federal funds rate--the overnight rate at which banks
lend each other money. Although the federal funds rate rose from 1.00% to 2.00%
during the period,2 the trust benefited because short-term interest rates
remained at low levels. We were able to keep the trust's dividend yield stable
even as short-term interest rates rose. However, this could change in 2005. In
addition, the use of leverage increases the likelihood of share price volatility
and market risk.
GAINS FROM HIGHER-YIELDING SECTORS
The trust benefited as we trimmed its stake in higher-quality AAA-rated bonds
and boosted our investment in higher-yielding BBB-rated issues. Purchases
------------
1 Lipper Inc., a widely respected data provider in the industry, calculates
an average total return based on net asset value for mutual funds with
similar investment objectives as those of the trust.
2 On December 14, 2004, the federal funds rate was increased to 2.25%.
1
PORTFOLIO MANAGER'S REPORT (CONTINUED)
included tobacco bonds, as well as multi-family housing and retirement community
bonds. Investor owned utilities, including Nevada Power (1.2 % of total
investments), also did particularly well, as investor concerns finally eased
following the Enron Corporation scandal.3 In addition, Nevada Power benefited
from a positive ruling on the rates it charges customers. Pooled multi-family
housing bonds and health-care issues also continued to contribute positively to
performance. In the continuing care retirement sector, bonds such as Kahala Nui
project (0.3% of total investments), a project in Hawaii, rallied nicely as new
construction neared completion and residents prepared to occupy the units.
However, our holdings of the Woodlawn Nursing Home bonds (0.1% of total
investments) underperformed due to reduced cash flow from the project.
ENVIRONMENT CONTINUES TO FAVOR HIGH-YIELD BONDS
If the economy continues to grow at a reasonable rate and interest rates rise
slightly, we believe that the environment for high-income municipal bonds should
remain positive. Bonds with high coupons (or stated interest rates) tend to
perform well even when interest rates rise because so much of their total return
comes from income. In general, high coupon bonds tend to be less sensitive to
interest rate changes. Also, high-yield bonds tend to perform well during
periods of economic recovery because many issuers experience improved credit
quality. We plan to continue trimming AAA-rated bonds, while adding BBB-rated
issues in an effort to boost income. Going forward, we also expect to continue
to reduce the trust's reliance on Treasury futures.
/s/ Maureen G. Newman
Maureen G. Newman has been the portfolio manager of Colonial Municipal Income
Trust since August 1998. Ms. Newman has managed various other municipal funds
for Columbia Management Advisors, Inc. or its predecessors or affiliate
organizations since May 1996.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND CURRENT PERFORMANCE MAY
BE LOWER OR HIGHER. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
The values of fixed-income securities generally move inversely with changes in
interest rates such that when interest rates rise, bond values fall and vice
versa. Tax-exempt investing offers current tax-free income, but it also involves
certain risks. The value of the trust shares will be affected by interest rate
changes and the creditworthiness of issues held in the trust. Investing in
high-yield securities offers the potential for high current income and
attractive total return, but involves certain risks. Lower-rated bond risks
include default of the issuer and rising interest rates. Interest income from
certain tax-exempt bonds may be subject to the federal alternative minimum tax
for individuals and corporations. Please see Federal Income Tax Information.
-----------
3 Holdings are disclosed as of November 30, 2004.
2
INVESTMENT PORTFOLIO
November 30, 2004
MUNICIPAL BONDS - 151.2% PAR ($) VALUE ($)
-----------------------------------------------------------
EDUCATION - 7.8%
EDUCATION - 7.0%
CA Educational Facilities Authority,
Loyola Marymount University,
Series 2001,
Insured: MBIA
(a) 10/01/14 1,250,000 818,463
CA Public Works Board Lease
Revenue, UCLA, Series 2002 A,
Insured: FSA
5.375% 10/01/15 1,000,000 1,099,420
MA Development Finance Agency,
Western New England College,
Series 2002,
6.125% 12/01/32 200,000 209,070
MI Southfield Economic Development
Corp., Lawrence University,
Series 1998 A,
5.400% 02/01/18 750,000 762,578
NC Capital Facilities Finance Authority,
Meredith College, Series 2001,
Insured: AMBAC
5.125% 06/01/15 1,000,000 1,074,730
PA Higher Educational Facilities
Authority Revenue, Philadelphia
University, Series 2004 A,
5.125% 06/01/25 570,000 554,838
VT Educational & Health Buildings
Finance Agency, Norwich University,
Series 1998,
5.500% 07/01/21 1,000,000 1,031,200
WA Higher Education Facilities
Authority, University of Puget
Sound, Series 1998,
Insured: MBIA
5.375% 10/01/30 5,000,000 5,210,550
WV University, Series 2000 A,
Insured: AMBAC
(a) 04/01/25 750,000 260,820
-----------
Education Total 11,021,669
-----------
PREP SCHOOL - 0.8%
CA Statewide Community
Development Authority,
Crossroads School for Arts
& Sciences, Series 1998,
6.000% 08/01/28 (b) 1,080,000 1,118,653
MA Industrial Finance Agency,
St. John's High School,
Series 1998,
5.350% 06/01/28 200,000 201,068
-----------
Prep School Total 1,319,721
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EDUCATION TOTAL 12,341,390
-----------
PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE - 39.5%
CONTINUING CARE RETIREMENT - 11.2%
CA La Verne Certificates of
Participation, Brethren Hillcrest
Homes, Series 2003 B,
6.625% 02/15/25 525,000 531,925
CA Statewide Community
Development Authority,
Eskaton Village - Grass Valley,
Series 2000,
8.250% 11/15/31 (b) 745,000 815,991
CT Development Authority, First
Mortgage, The Elim Park Baptist,
Inc. Project, Series 2003,
5.850% 12/01/33 430,000 439,593
FL Capital Projects Finance Authority,
Continuing Care Retirement,
Glenridge on Palmer Ranch,
Series 2002 A,
8.000% 06/01/32 500,000 517,570
FL Lee County Industrial Development
Authority, Shell Point Village Project,
Series 1999 A,
5.500% 11/15/29 400,000 387,336
GA Fulton County Residential Care
Facilities, Canterbury Court
Project, Series 2004 A,
6.125% 02/15/26 500,000 503,790
GA Savannah Economic Development
Authority, 1st Mortgage, Marshes
of Skidaway, Series 2003 A,
7.400% 01/01/34 350,000 352,517
HI Department of Budget & Finance,
Kahala Nui Project, Series 2003 A,
8.000% 11/15/33 750,000 800,220
IL Health Facilities Authority Revenue:
Lutheran Senior Ministries,
Series 2001,
7.375% 08/15/31 250,000 251,648
Washington and Jane Smith
Community,
Series 2003 A,
7.000% 11/15/32 525,000 528,197
KS Manhattan, Meadowlark Hills
Retirement Home,
Series 1999 A,
6.375% 05/15/20 250,000 256,870
MA Boston Industrial Development
Finance Authority, Springhouse, Inc.,
Series 1988,
5.875% 07/01/20 235,000 235,785
See Accompanying Notes to Financial Statements.
3
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
CONTINUING CARE RETIREMENT (CONTINUED)
MA Development Finance Agency,
Loomis Communities:
Series 1999 A,
5.625% 07/01/15 250,000 247,300
Series 2002 A,
6.900% 03/01/32 125,000 132,292
MD Westminster Economic
Development, Carroll Lutheran
Village, Series 2004 A,
6.250% 05/01/34 500,000 510,130
MO Cole County Industrial
Development Authority, Senior
Living Revenue, Heisinger
Project, Series 2004,
5.500% 02/01/35 750,000 766,185
NH Higher Educational & Health
Facilities Authority, Rivermead at
Peterborough, Series 1998,
5.750% 07/01/28 1,100,000 1,046,738
NJ Economic Development Authority,
Seabrook Village, Inc.,
Series 2000 A,
8.250% 11/15/30 500,000 545,265
Winchester Gardens,
Series 2004 A,
5.750% 11/01/24 500,000 513,355
PA Chartiers Valley Industrial &
Commercial Development Authority,
Asbury Health Center, Series 1999,
6.375% 12/01/24 1,000,000 1,000,010
Friendship Village, Series 2003 A,
5.750% 08/15/20 1,000,000 998,670
PA Delaware County Authority,
Dunwoody Village, Series 2003 A,
5.375% 04/01/17 400,000 422,656
PA Lancaster Industrial Development
Authority, Garden Spot Village,
Series 2000 A,
7.625% 05/01/31 325,000 344,133
TN Johnson City Health & Educational
Facilities Board, Retirement Facility
Revenue, Appalachian Christian
Village Project,
Series 2004,
6.250% 02/15/32 250,000 247,505
TN Metropolitan Government,
Nashville & Davidson Counties,
Blakeford at Green Hills,
Series 1998,
5.650% 07/01/24 575,000 542,311
PAR ($) VALUE ($)
-----------------------------------------------------------
TN Shelby County Health, Education
& Housing Facilities Board,
Germantown Village,
Series 2003 A,
7.250% 12/01/34 300,000 309,444
TX Abilene Health Facilities
Development Corp., Sears Methodist
Retirement Obligated Group:
Series 1998 A,
5.900% 11/15/25 750,000 726,180
Series 2003 A,
7.000% 11/15/33 200,000 207,924
TX Houston Health Facilities
Development Corp., Retirement
Facilities Revenue, Buckingham
Senior Living Community, Inc.,
Series 2004 A,
7.000% 02/15/26 500,000 518,355
WI Health & Educational Facilities Authority:
Attic Angel Obligated Group,
Series 1998,
5.750% 11/15/27 875,000 806,820
Clement Manor, Series 1998,
5.750% 08/15/24 1,000,000 970,980
Three Pillars Senior Living
Communities, Series 2003,
5.750% 08/15/26 500,000 503,150
United Lutheran Program for
Aging, Inc., Series 1998,
5.700% 03/01/28 750,000 696,960
-----------
Continuing Care Retirement Total 17,677,805
-----------
HEALTH SERVICES - 2.7%
CO Health Care Facilities Authority,
National Jewish Medical &
Research Center, Series 1998:
5.375% 01/01/16 1,500,000 1,514,520
5.375% 01/01/23 340,000 330,412
MA Development Finance Agency,
Boston Biomedical Research
Institute, Series 1999,
5.650% 02/01/19 620,000 599,428
MA Health & Educational Facilities
Authority, Civic Investments, Inc.,
Series 2002 A,
9.000% 12/15/15 750,000 855,188
MN Minneapolis & St. Paul Housing
& Redevelopment Authority,
Healthpartners Project, Series 2003,
5.625% 12/01/22 200,000 205,470
WI Health & Educational Facilities
Authority, Blood Center
Southeastern Project, Series 2004,
5.75 06/01/34 750,000 777,210
-----------
Health Services Total 4,282,228
-----------
See Accompanying Notes to Financial Statements.
4
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS - 16.6%
AR Conway Health Facilities Board,
Conway Regional Medical Center:
Series 1999 A,
6.400% 08/01/29 350,000 369,593
Series 1999 B,
6.400% 08/01/29 850,000 896,606
CA Health Facilities Financing
Authority, Cedars-Sinai Medical
Center, Series 1999 A,
6.125% 12/01/30 650,000 693,329
CA Rancho Mirage Joint Powers
Finance Authority, Eisenhower
Medical Center,
Series 2004,
5.625% 07/01/29 750,000 776,078
CO Health Care Facilities Authority,
Parkview Medical Center,
Series 2004,
5.000% 09/01/25 550,000 540,408
Vail Valley Medical Center Project,
Series 2004,
5.000% 01/15/20 (c) 500,000 504,285
FL Orange County Health Facilities
Authority, Orlando Regional
Healthcare, Series 2002,
5.750% 12/01/33 150,000 157,760
FL South Lake County Hospital
District, South Lake Hospital, Inc.,
Series 2003,
6.375% 10/01/34 250,000 255,645
FL West Orange Healthcare District,
Series 2001 A,
5.650% 02/01/22 400,000 416,060
GA Coffee County Hospital Authority
Revenue, Coffee Regional Medical
Center, Inc. Project,
Series 2004,
5.000% 12/01/26 350,000 340,931
IL Health Facilities Authority:
Swedish American Hospital,
Series 2000,
6.875% 11/15/30 500,000 549,990
Thorek Hospital & Medical
Center, Series 1998,
5.375% 08/15/28 500,000 485,865
IL Southwestern Development
Authority, Anderson Hospital,
Series 1999:
5.375% 08/15/15 500,000 510,905
5.500% 08/15/20 550,000 553,256
IN Health Facility Authority,
Community Foundation, Northwest
Indiana, Inc., Series 2004 A,
6.000% 03/01/34 425,000 419,756
PAR ($) VALUE ($)
-----------------------------------------------------------
LA Public Facilities Authority, Touro
Infirmary, Series 1999:
5.625% 08/15/29 525,000 529,919
5.500% 08/15/19 250,000 257,748
MA Health & Educational
Facilities Authority:
Jordan Hospital, Series 2003 E,
6.750% 10/01/33 250,000 262,165
Milford-Whitinsville
Regional Hospital:
Series 1998 C,
5.250% 07/15/18 500,000 487,155
Series 2002 D,
6.350% 07/15/32 250,000 259,260
MD Health & Higher Educational
Facilities Authority, Adventist
Healthcare, Series 2003 A:
5.000% 01/01/16 365,000 371,654
5.750% 01/01/25 400,000 414,576
MI Dickinson County Healthcare
System, Series 1999,
5.700% 11/01/18 770,000 765,288
MI Flint Hospital Building Authority,
Hurley Medical Center,
Series 1998 A,
5.375% 07/01/20 460,000 449,075
MN St. Paul Housing & Redevelopment
Authority, HealthEast Project,
Series 2001 A,
5.700% 11/01/15 2,000,000 1,975,700
NH Higher Educational & Health
Facilities Authority:
Catholic Medical Center,
Series 2002,
6.125% 07/01/32 200,000 205,234
Littleton Hospital Association, Inc.,
Series 1998 A:
5.900% 05/01/18 500,000 481,225
6.000% 05/01/28 625,000 591,094
Series 1998 B,
5.900% 05/01/28 675,000 630,275
NJ Health Care Facilities Financing
Authority Revenue, Capital Health
Systems Obligated Group, Inc.,
Series 2003 A,
5.750% 07/01/23 500,000 528,215
NV Henderson Healthcare Facility
Revenue, Catholic Healthcare West,
Series 1998,
5.375% 07/01/26 500,000 502,725
NY State Dormitory Authority Revenue,
North Shore - Long Island Jewish
Medical Center, Series 2003,
5.500% 05/01/33 200,000 205,688
See Accompanying Notes to Financial Statements.
5
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
HOSPITALS (CONTINUED)
OH Belmont County, East Ohio
Regional Hospital, Series 1998,
5.700% 01/01/13 700,000 651,357
OH Highland County Joint Township
Hospital District, Series 1999,
6.750% 12/01/29 715,000 688,166
OH Lakewood Hospital Improvement
Revenue, Lakewood Hospital
Association, Series 2003,
5.500% 02/15/14 400,000 429,016
OH Miami County, Upper Valley
Medical Center, Inc., Series 1996 A,
6.250% 05/15/16 665,000 694,233
OH Sandusky County, County
Memorial Hospital, Series 1998,
5.150% 01/01/08 270,000 277,106
PA Allegheny County Hospital
Development, Ohio Valley General
Hospital, Series 1998 A,
5.450% 01/01/28 1,050,000 991,788
SC Jobs Economic Development
Authority, Bon Secours Health
Care Systems, Inc.,
Series 2002 A,
5.250% 11/15/23 1,250,000 1,277,500
SC Lexington County Health Services
District Inc. Hospital Improvement,
Series 2003,
5.500% 11/01/23 750,000 780,083
SD Health & Educational Facilities
Authority, Sioux Valley Hospitals
& Health Systems,
Series 2004 A,
5.250% 11/01/34 525,000 523,168
TX Richardson Hospital Authority,
Baylor Richardson Medical Center,
Series 1998,
5.625% 12/01/28 300,000 305,589
TX Tyler Health Facilities
Development Corp., Mother Frances
Hospital, Series 2001,
6.000% 07/01/31 750,000 778,613
VA Prince William County Industrial
Development Authority Revenue,
Potomac Hospital Corp.,
Series 2003,
5.200% 10/01/30 350,000 356,951
VT Educational & Health Buildings
Finance Agency, Brattleboro
Memorial Hospital, Series 1998,
5.375% 03/01/28 500,000 476,255
PAR ($) VALUE ($)
-----------------------------------------------------------
WI Health & Educational
Facilities Authority:
Aurora Health Care, Inc.,
Series 2003,
6.400% 04/15/33 350,000 371,175
Fort Health Care, Inc. Project,
Series 2004,
6.100% 05/01/34 750,000 782,025
Wheaton Franciscan
Services, Series 2002,
5.750% 08/15/30 450,000 469,382
-----------
Hospitals Total 26,239,870
-----------
INTERMEDIATE CARE FACILITIES - 1.2%
IN Health Facilities Financing
Authority, Hoosier Care, Inc.,
Series 1999 A,
7.125% 06/01/34 1,055,000 896,339
PA Economic Development Financing
Authority, Northwestern Human
Services, Inc., Series 1998 A,
5.250% 06/01/14 1,000,000 912,610
-----------
Intermediate Care Facilities Total 1,808,949
-----------
NURSING HOMES - 7.8%
AK Juneau, St. Ann's Care Center,
Series 1999,
6.875% 12/01/25 1,000,000 1,003,270
CO Health Facilities Authority:
American Housing Foundation I,
Inc. Project, Series 1990 A,
8.500% 12/01/31 545,000 533,473
Volunteers of America:
Series 1998 A:
5.450% 07/01/08 250,000 247,513
5.750% 07/01/20 700,000 641,480
Series 1999 A,
6.000% 07/01/29 350,000 318,990
IA Finance Authority, Care
Initiatives Project:
Series 1996,
9.250% 07/01/25 965,000 1,166,048
Series 1998 B:
5.750% 07/01/18 550,000 513,167
5.750% 07/01/28 1,475,000 1,287,410
IN Gary Industrial Economic
Development, West Side Health
Care Center, Series 1987 A,
11.500% 10/01/17 (d) 2,230,000 1,115,000
IN Michigan City Health Facilities,
Metro Health Foundation, Inc.
Project, Series 1993,
11.000% 11/01/22 (e) 3,717,555 144,985
KY Economic Development Finance
Authority, Health Facilities Revenue,
Series 2003,
6.500% 01/01/29 925,000 844,266
See Accompanying Notes to Financial Statements.
6
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HEALTH CARE (CONTINUED)
NURSING HOMES (CONTINUED)
MA Development Finance Agency:
Alliance Health Care Facilities,
Series 1999,
7.100% 07/01/32 1,135,000 1,114,536
American Health Woodlawn
Manor, Inc.:
Series 2000 A,
7.750% 12/01/27 370,000 199,896
Series 2000 B,
10.250% 06/01/27 (d)(l) 113,186 16,978
GF/Massachusetts, Inc.,
Series 1994,
8.300% 07/01/23 875,000 881,746
MI Cheboygan County Economic
Development Corp., Metro Health
Foundation Project, Series 1993,
11.000% 11/01/22 (e) 2,015,833 78,617
MN Carlton Inter-Faith Social
Services, Inc., Series 2000,
7.500% 04/01/19 250,000 261,363
MN Sartell, Foundation for
Healthcare, Series 1999 A,
6.625% 09/01/29 1,025,000 1,042,077
TX Kirbyville Health Facilities
Development Corp.,
Heartway III Project,
Series 1997 A,
10.000% 03/20/18 (d) 539,215 172,549
WA Kitsap County Housing
Authority, Martha & Mary
Nursing Home, Series 1996,
Insured: GNMA
7.100% 02/20/36 643,000 750,169
-----------
Nursing Homes Total 12,333,533
-----------
HEALTH CARE TOTAL 62,342,385
-----------
-----------------------------------------------------------
HOUSING - 10.7%
ASSISTED LIVING/SENIOR - 4.6%
DE Kent County, Heritage at Dover,
Series 1999, AMT
7.625% 01/01/30 1,210,000 1,073,887
GA Columbus Housing Authority,
The Gardens at Calvary,
Series 1999,
7.000% 11/15/19 490,000 440,157
IL Development Finance Authority,
Care Institute, Inc., Series 1995
8.250% 06/01/25 1,410,000 1,367,474
MN Roseville, Care Institute, Inc.,
Series 1993,
7.750% 11/01/23 (d) 1,630,000 1,059,500
PAR ($) VALUE ($)
-----------------------------------------------------------
NC Medical Care Commission,
DePaul Community Facilities
Project, Series 1999,
7.625% 11/01/29 975,000 1,005,410
NY Huntington Housing Authority,
Gurwin Jewish Senior Center,
Series 1999:
5.875% 05/01/19 420,000 399,504
6.000% 05/01/29 650,000 609,577
TX Bell County Health Facilities
Development Corp., Care
Institutes, Inc., Series 1994,
9.000% 11/01/24 1,390,000 1,276,368
-----------
Assisted Living/Senior Total 7,231,877
-----------
MULTI-FAMILY - 6.1%
DE Wilmington, Electra Arms
Senior Association Project,
Series 1998, AMT,
6.250% 06/01/28 930,000 739,889
FL Broward County Housing Finance
Authority, Chaves Lake Apartment
Project, Series 2000, AMT,
7.500% 07/01/40 500,000 494,630
FL Clay County Housing Finance
Authority, Madison Commons
Apartments, Series 2000 A, AMT,
7.450% 07/01/40 500,000 497,690
MN Washington County Housing &
Redevelopment Authority, Cottages
of Aspen, Series 1992, AMT,
9.250% 06/01/22 980,000 1,002,275
MN White Bear Lake, Birch Lake
Townhome Project:
Series 1989 A, AMT,
(a) 07/15/19 624,000 280,120
Series 1989 B, AMT,
10.250% 07/15/19 1,770,000 1,771,451
NC Medical Care Community Revenue,
Healthcare Housing, ARC Projects,
Series 2004 A,
5.800% 10/01/34 400,000 395,376
Resolution Trust Corp., Pass-Through
Certificates, Series 1993 A,
8.750% 12/01/16 (f) 455,481 442,309
SC Housing Finance & Development,
Multi-Family Housing Finance
Revenue, Westbridge Apartments,
Series 1990 A, AMT,
9.500% 09/01/20 1,865,000 1,828,800
TN Franklin Industrial Development
Board, Landings Apartment Project,
Series 1996 B,
8.750% 04/01/27 690,000 706,415
See Accompanying Notes to Financial Statements.
7
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
HOUSING (CONTINUED)
MULTI-FAMILY (CONTINUED)
TX Affordable Housing Corp.,
NHT/GTEX Project,
Series 2001 C,
10.000% 10/01/31 (d) 685,000 23,975
TX El Paso County Housing
Finance Corp., American
Village Communities:
Series 2000 C,
8.000% 12/01/32 300,000 307,818
Series 2000 D,
10.000% 12/01/32 300,000 307,932
VA Alexandria Redevelopment &
Housing Authority, Courthouse
Commons Apartments,
Series 1990 A, AMT,
10.000% 01/01/21 1,000,000 829,410
-----------
Multi-Family Total 9,628,090
-----------
SINGLE FAMILY - 0.0%
KY Kentucky County Single Family
Mortgage Revenue,
Series 1987 A, AMT,
Insured: MBIA
9.000% 09/01/16 15,000 15,042
-----------
Single Family Total 15,042
-----------
HOUSING TOTAL 16,875,009
-----------
-----------------------------------------------------------
INDUSTRIAL - 9.1%
FOOD PRODUCTS - 2.5%
GA Cartersville Development Authority,
Anheuser Busch Project, Inc.,
Series 2002, AMT,
5.950% 02/01/32 1,000,000 1,043,350
IN Hammond, American Maize
Products Co., Series 1994, AMT,
8.000% 12/01/24 260,000 272,693
LA Port of New Orleans Industrial
Development, Continental Grain
Co., Series 1993,
7.500% 07/01/13 1,000,000 1,012,490
LA Southern Louisiana Port
Commission, Cargill, Inc. Project,
Series 1997,
5.850% 04/01/17 500,000 525,455
MI Strategic Fund, Michigan Sugar Co.,
Sebewaing Project, Series 1998 A,
6.250% 11/01/15 1,000,000 989,640
-----------
Food Products Total 3,843,628
-----------
FOREST PRODUCTS - 3.3%
AL Camden Industrial Development
Board, Weyerhaeuser Co.,
Series 2003 B, AMT,
6.375% 12/01/24 400,000 429,436
PAR ($) VALUE ($)
-----------------------------------------------------------
AL Courtland Industrial Development
Board, Champion International Corp.,
Series 1999, AMT,
6.000% 08/01/29 1,000,000 1,022,470
AL Phenix City Industrial
Development Board Environmental
Improvement Revenue,
Meadwestvaco Corp.,
Series 2001 A, AMT,
6.350% 05/15/35 400,000 417,948
GA Rockdale County Development
Authority, Solid Waste Disposal
Visy Paper, Inc., Series 1993, AMT,
7.500% 01/01/26 800,000 823,624
LA Beauregard Parish, Boise Cascade
Corp. Project, Series 2002,
6.800% 02/01/27 1,000,000 1,040,490
MI Delta County Economic
Development Corp., Mead
Westvaco-Escanaba,
Series 2002 B, AMT,
6.450% 04/15/23 300,000 316,044
MS Lowndes County Solid Waste
Disposal & Waste Control Revenue,
Weyerhaeuser Co., Project,
Series 1992 B,
6.700% 04/01/22 595,000 699,476
VA Bedford County Industrial
Development Authority, Nekoosa
Packaging Corp.,
Series 1998, AMT,
5.600% 12/01/25 400,000 389,596
-----------
Forest Products Total 5,139,084
-----------
MANUFACTURING - 1.0%
IL Will-Kankakee Regional
Development Authority, Flanders
Corp., Precisionaire Project,
Series 1997, AMT,
6.500% 12/15/17 825,000 829,447
TX Trinity River Authority,
Texas Instruments Project,
Series 1996, AMT,
6.200% 03/01/20 750,000 778,290
-----------
Manufacturing Total 1,607,737
-----------
METALS & MINING - 0.3%
NV Department of Business &
Industry, Wheeling-Pittsburgh
Steel Corp., Series 1999 A, AMT,
8.000% 09/01/14 (f) 222,097 198,557
VA Greensville County Industrial
Development Authority,
Wheeling-Pittsburgh Steel Corp.,
Series 1999 A, AMT,
7.000% 04/01/14 375,000 335,246
-----------
Metals & Mining Total 533,803
-----------
See Accompanying Notes to Financial Statements.
8
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
INDUSTRIAL (CONTINUED)
OIL & GAS - 2.0%
NJ Middlesex County Pollution
Control Authority Revenue,
Financing Pollution Control,
Amerada, Series 2004,
6.050% 09/15/34 115,000 119,969
TX Gulf Coast Industrial
Development Authority, Solid
Waste Disposal, Citgo Petroleum,
Series 1998, AMT,
8.000% 04/01/28 375,000 414,446
VI Government Refinery
Facilities, Hovensa Coker
Project, Series 2002, AMT,
6.500% 07/01/21 250,000 271,305
VI Public Finance Authority, Refinery
Facilities Revenue, Hovensa Refinery:
Series 2003, AMT,
6.125% 07/01/22 425,000 452,969
Series 2004, AMT,
5.875% 07/01/22 400,000 420,068
WA Pierce County Economic
Development Corp., Occidental
Petroleum Co., Series 1993, AMT,
5.800% 09/01/29 1,500,000 1,501,830
-----------
Oil & Gas Total 3,180,587
-----------
INDUSTRIAL TOTAL 14,304,839
-----------
-----------------------------------------------------------
OTHER - 11.2%
OTHER - 0.5%
NY Convention Center Operating Corp.,
Yale Building Project, Series 2003,
(a) 06/01/08 1,000,000 857,150
-----------
Other Total 857,150
-----------
POOL/BOND BANK - 0.4%
MI Municipal Bond Authority,
Local Government Loan Project,
Series 2001 A,
Insured: AMBAC
5.375% 11/01/17 550,000 604,676
-----------
Pool/Bond Bank Total 604,676
-----------
REFUNDED/ESCROWED (g) - 8.0%
CT Development Authority, Sewer
Sludge Disposal Facilities,
Series 1996, AMT,
8.250% 12/01/06 570,000 607,694
GA Forsyth County Hospital
Authority, Georgia Baptist
Healthcare System, Series 1998,
6.000% 10/01/08 620,000 664,851
ID Health Facilities Authority, IHC
Hospitals, Inc., Series 1992,
6.650% 02/15/21 2,750,000 3,503,748
PAR ($) VALUE ($)
-----------------------------------------------------------
IL Metropolitan Pier & Exposition
Authority, McCormick Project,
Series 1993 A,
Insured: FGIC
(a) 06/15/14 3,990,000 2,650,038
IL University of Illinois,
Series 2001 A,
Insured: AMBAC
5.500% 08/15/17 600,000 678,246
NC Lincoln County, Lincoln County
Hospital, Series 1991,
9.000% 05/01/07 200,000 217,444
PA Delaware County Authority,
Mercy Health Corp., Southeastern
Pennsylvania Obligated,
Series 1996:
6.000% 12/15/16 1,400,000 1,514,156
6.000% 12/15/26 500,000 538,165
PR Commonwealth of Puerto Rico,
Public Finance Corp.,
Series 2002 E,
6.000% 08/01/26 80,000 93,914
TN Shelby County, Health, Education
& Housing Facilities Board, Open
Arms Development Center:
Series 1992 A,
9.750% 08/01/19 450,000 543,632
Series 1992 C,
9.750% 08/01/19 455,000 549,672
TX Board of Regents, University of
Texas, Series 2001 B,
5.375% 08/15/18 350,000 392,585
WV Hospital Finance Authority,
Charleston Area Medical Center,
Series 2000 A,
6.750% 09/01/30 605,000 720,628
-----------
Refunded/Escrowed Total 12,674,773
-----------
TOBACCO - 2.3%
CA Golden State Tobacco Securitization
Authority, Asset Backed:
Series 2002 A-1:
6.250% 06/01/33 1,600,000 1,557,488
Series 2003 B,
5.500% 06/01/43 500,000 517,845
NJ Tobacco Settlement Financing
Corp., Series 2003,
6.750% 06/01/39 1,000,000 997,340
WA Tobacco Settlement Authority,
Series 2002,
6.625% 06/01/32 500,000 490,700
-----------
Tobacco Total 3,563,373
-----------
OTHER TOTAL 17,699,972
-----------
See Accompanying Notes to Financial Statements.
9
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
OTHER REVENUE - 4.9%
HOTELS - 1.3%
PA Philadelphia Authority for
Industrial Development, Doubletree
Project, Series 1997 A,
6.500% 10/01/27 2,000,000 2,028,940
-----------
Hotels Total 2,028,940
-----------
RECREATION - 2.6%
CA Agua Caliente, Band of Cahuilla
Indians Revenue, Series 2003,
5.600% 07/01/13 775,000 785,230
CA Cabazon Band Mission Indian,
Series 2004:
8.375% 10/01/15 (f) 220,000 219,562
8.750% 07/01/19 (f) 780,000 778,424
CT Gaming Authority, Mohegan
Tribe, Series 2001,
6.250% 01/01/31 (f) 200,000 211,528
CT Mashantucket Western Pequot
Revenue, Series B,
(a) 09/01/18 (f) 1,100,000 516,307
FL Capital Trust Agency, Seminole
Tribe Convention Center,
Series 2002 A,
10.000% 10/01/33 (f) 900,000 1,102,833
NM Red River Sports Facility, Red
River Ski Area Project,
Series 1998,
6.450% 06/01/07 515,000 521,834
-----------
Recreation Total 4,135,718
-----------
RETAIL - 1.0%
NJ Economic Development Authority,
Glimcher Properties LP Project,
Series 1998, AMT,
6.000% 11/01/28 1,000,000 978,770
OH Lake County, North Madison
Properties, Series 1993,
8.819% 09/01/11 610,000 609,335
-----------
Retail Total 1,588,105
-----------
OTHER REVENUE TOTAL 7,752,763
-----------
-----------------------------------------------------------
RESOURCE RECOVERY - 2.4%
DISPOSAL - 1.1%
CA Pollution Control Financing
Authority, Solid Waste Disposal
Revenue, Republic Services, Inc.
Project, Series 2002 C, AMT,
5.250% 06/01/23 500,000 515,710
MA Industrial Finance Agency,
Peabody Monofill Associates, Inc.,
Series 1995,
9.000% 09/01/05 395,000 402,078
PAR ($) VALUE ($)
-----------------------------------------------------------
UT Carbon County, Laidlaw
Environmental,
Series 1997 A, AMT:
7.500% 02/01/10 250,000 255,398
7.450% 07/01/17 500,000 513,165
-----------
Disposal Total 1,686,351
-----------
RESOURCE RECOVERY - 1.3%
MA Industrial Finance Agency,
Ogden Haverhill Project,
Series 1998 A, AMT,
5.500% 12/01/13 1,000,000 1,009,190
PA Delaware County Industrial
Development Authority, BFI
Project, Series 1988 A,
6.200% 07/01/19 1,000,000 1,060,320
-----------
Resource Recovery Total 2,069,510
-----------
RESOURCE RECOVERY TOTAL 3,755,861
-----------
-----------------------------------------------------------
TAX-BACKED - 25.6%
LOCAL APPROPRIATED - 1.0%
CA Compton Certificates of
Participation, Civic Center &
Capital Improvements,
Series 1997 A,
5.500% 09/01/15 1,000,000 1,046,690
SC Dorchester County School District
No. 2 Installment Purchase Revenue,
Series 2004,
5.250% 12/01/29 500,000 503,480
-----------
Local Appropriated Total 1,550,170
-----------
LOCAL GENERAL OBLIGATIONS - 10.3%
CA East Side Union High School
District, Series 2003 B,
Insured: MBIA
5.100% 02/01/20 750,000 825,120
CA Fresno Unified School District,
Series 2002 A,
Insured: MBIA
6.000% 02/01/18 1,245,000 1,485,198
CA Los Angeles Unified School
District, Series 2002,
Insured: MBIA
5.750% 07/01/16 600,000 699,000
CA Vallejo Unified School District,
Series 2002 A,
Insured: MBIA
5.900% 08/01/25 1,000,000 1,162,700
LA New Orleans, Series 1991,
Insured: AMBAC
(a) 09/01/15 4,000,000 2,489,280
NY New York City, Series 1998 H,
Insured: MBIA
5.125% 08/01/25 5,000,000 5,191,150
See Accompanying Notes to Financial Statements.
10
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
LOCAL GENERAL OBLIGATIONS (CONTINUED)
TX Dallas County Flood Control,
District No. 1, Series 2002,
7.250% 04/01/32 750,000 777,420
TX Irving Independent School
District, Series 1997:
Insured: PSFG
(a) 02/15/15 1,500,000 951,975
(a) 02/15/16 1,000,000 597,370
WA Clark County School District
No. 37, Series 2001 C,
Insured: FGIC
(a) 12/01/18 4,000,000 2,055,920
-----------
Local General Obligations Total 16,235,133
-----------
SPECIAL NON-PROPERTY TAX - 5.1%
CA San Diego Redevelopment
Agency, Series 2001,
Insured: FSA
(a) 09/01/18 1,015,000 523,689
FL Northern Palm Beach County
Improvement District, Series 1999,
Insured: MBIA
5.900% 08/01/19 500,000 550,955
IL Metropolitan Pier & Exposition
Authority, McCormick Place
Expansion Project:
Series 1993 A,
Insured: FGIC
(a) 06/15/14 1,010,000 669,499
Series 1994 A,
Insured: MBIA
(a) 06/15/15 3,000,000 1,885,590
Series 1996 A,
Insured: MBIA
(a) 12/15/13 5,000,000 3,427,550
NJ Economic Development Authority
Revenue, Cigarette Tax,
Series 2004,
5.750% 06/15/29 500,000 510,660
5.750% 06/15/31 120,000 120,367
PR Commonwealth Highway
& Transportation Authority,
Series 2003 AA
Insured: MBIA
5.500% 07/01/18 375,000 431,801
-----------
Special Non-Property Tax Total 8,120,111
-----------
SPECIAL PROPERTY TAX - 7.6%
CA Huntington Beach Community
Facilities District, Grand Coast Resort,
Series 2001,
6.450% 09/01/31 500,000 516,105
CA Lincoln Community Facilities
District, No. 2003-1,
Series 2004,
5.550% 09/01/18 500,000 494,745
PAR ($) VALUE ($)
-----------------------------------------------------------
CA Oakdale Public Finance Authority,
Tax Allocation Revenue, Central
City Redevelopment Project,
Series 2004,
5.375% 06/01/33 1,125,000 1,119,308
CA Orange County Community
Facilities District, Ladera Ranch,
Series 1999 A,
6.500% 08/15/21 1,000,000 1,088,450
CA Orange County Improvement Bond
Act 1915, Phase IV, No. 01-1-B,
Series 2003,
5.750% 09/02/33 500,000 506,460
CA Redwood City Community
Facilities District, No. 1 Redwood,
Series 2003 B,
6.000% 09/01/33 300,000 307,761
CA Temecula Valley Unified School
District, No. 02-1,
Series 2003,
6.125% 09/01/33 355,000 359,995
CA Yorba Linda Redevelopment
Agency, Series 1998 A,
Insured: MBIA
(a) 09/01/24 1,325,000 468,772
FL Celebration Community
Development District,
Special Assessment,
Series 2003 A,
6.400% 05/01/34 750,000 775,358
FL Colonial Country Club Community
Development District, Capital
Improvement,
Series 2003,
6.400% 05/01/33 495,000 515,404
FL Double Branch Community
Development District, Special
Assessment, Series 2002 A,
6.700% 05/01/34 500,000 533,620
FL Heritage Palms Community
Development District,
Series 1999 A,
6.250% 11/01/07 250,000 251,610
FL Islands at Doral Southwest
Community Development District,
Series 2003,
6.375% 05/01/35 250,000 260,410
FL Lexington Oaks Community
Development District,
Series 1998 A,
6.125% 05/01/19 685,000 695,275
FL Orlando, Conroy Road
Interchange Project,
Series 1998 A:
5.500% 05/01/10 125,000 128,869
5.800% 05/01/26 300,000 303,675
See Accompanying Notes to Financial Statements.
11
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TAX-BACKED (CONTINUED)
SPECIAL PROPERTY TAX (CONTINUED)
FL Seven Oaks Community
Development District II,
Special Assessment Revenue,
Series 2004 B,
5.000% 05/01/09 1,000,000 1,000,990
FL Stoneybrook Community
Development District:
Series 1998 A,
6.100% 05/01/19 245,000 248,758
Series 1998 B,
5.700% 05/01/08 25,000 25,401
FL Westchester Community
Development District No. 1,
Special Assessment,
Series 2003,
6.125% 05/01/35 275,000 277,527
IL Chicago Tax Increment,
Pilsen Redevelopment,
Series 2004 B,
6.750% 06/01/22 310,000 315,298
IL Lincolnshire Special Service No. 1,
Sedgebrook Project, Series 2004,
Insured: AMBAC
6.250% 03/01/34 250,000 247,650
MI Pontiac Finance Authority,
Development Area, No. 3,
Series 2002,
6.375% 06/01/31 450,000 455,792
MI Taylor Tax Increment Finance
Authority, Series 2001,
Insured: FSA
5.375% 05/01/17 1,000,000 1,095,500
-----------
Special Property Tax Total 11,992,733
-----------
STATE APPROPRIATED - 1.3%
MI Building Authority,
Series 2001 I,
5.000% 10/15/24 1,000,000 1,028,040
PR Commonwealth of Puerto Rico,
Public Finance Corp., Series 2002 E,
6.000% 08/01/26 820,000 943,131
-----------
State Appropriated Total 1,971,171
-----------
STATE GENERAL OBLIGATIONS - 0.3%
CA State, Series 2003
5.250% 02/01/23 380,000 409,682
-----------
State General Obligations Total 409,682
-----------
TAX-BACKED TOTAL 40,279,000
-----------
PAR ($) VALUE ($)
-----------------------------------------------------------
TRANSPORTATION - 14.0%
AIR TRANSPORTATION - 3.8%
CA Los Angeles Regional Airport
Improvement, American Airlines,
Series 2002 C, AMT,
7.500% 12/01/24 400,000 387,336
Laxfuel Corp., Series 2001, AMT,
Insured: AMBAC
5.250% 01/01/23 500,000 508,255
FL Capital Trust Agency Revenue,
Air Cargo - Orlando Project,
Series 2003, AMT,
6.750% 01/01/32 350,000 336,077
IN Indianapolis Airport Authority:
FedEx Corp., Series 1994, AMT,
7.100% 01/15/17 500,000 517,970
United Airlines Project,
Series 1995 A, AMT,
6.500% 11/15/31 (e) 435,000 38,237
KY Kenton County Airport Board,
Delta Airlines, Inc.,
Series 1992 A, AMT,
7.500% 02/01/20 500,000 402,120
MN Minneapolis & St. Paul
Metropolitan Airport Commission,
Northwest Airlines, Inc.:
Series 2001 A, AMT,
7.000% 04/01/25 800,000 685,424
Series 2001 B, AMT,
6.500% 04/01/25 250,000 250,905
NC Charlotte Special Facilities Revenue,
Douglas International Airport,
US Airways, Inc.:
Series 1998, AMT,
5.600% 07/01/27 (j) 250,000 115,465
Series 2000, AMT,
7.750% 02/01/28 (j) 500,000 244,470
NJ Economic Development
Authority, Continental Airlines, Inc.
Project, Series 2003, AMT,
9.000% 06/01/33 1,250,000 1,275,775
NY New York City Industrial
Development, JFK International
Airport Project, American Airlines,
Inc., Series 2002 B, AMT,
8.500% 08/01/28 500,000 373,170
PA Philadelphia Authority for Industrial
Development, Aero Philadelphia LLC,
Series 1999, AMT,
5.250% 01/01/09 350,000 342,951
TX Houston Industrial Development,
Air Cargo, Perot Development,
Series 2002, AMT,
6.000% 03/01/23 541,150 553,082
-----------
Air Transportation Total 6,031,237
-----------
See Accompanying Notes to Financial Statements.
12
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
TRANSPORTATION (CONTINUED)
AIRPORTS - 1.9%
TX Dallas Fort Worth International
Airport, Series 2004 B, AMT,
Insured: FSA
5.000% 11/01/25 3,000,000 3,018,540
-----------
Airports Total 3,018,540
-----------
TOLL FACILITIES - 3.4%
CA San Joaquin Hills Transportation
Corridor Agency, Series 1993 A,
Insured: MBIA
(a) 01/15/15 3,000,000 1,908,000
CO Northwest Parkway Public
Highway Authority, Series 2001 D,
7.125% 06/15/41 1,000,000 1,052,630
CO Public Highway Authority,
Arapahoe County, E-470,
Series 2000 B:
Insured: MBIA
(a) 09/01/18 3,000,000 1,566,900
Series 2000 B:
(a) 09/01/35 8,750,000 909,038
-----------
Toll Facilities Total 5,436,568
-----------
TRANSPORTATION - 4.9%
NV Department of Business &
Industry, Las Vegas Monorail
Project, Series 2000,
7.375% 01/01/40 750,000 760,673
NY Port Authority of New York &
New Jersey Thirty-Seventh,
Series 2004, AMT,
Insured: FSA
5.125% 07/15/30 6,790,000 6,893,683
-----------
Transportation Total 7,654,356
-----------
TRANSPORTATION TOTAL 22,140,701
-----------
-----------------------------------------------------------
UTILITY - 26.0%
INDEPENDENT POWER PRODUCERS - 4.2%
MI Midland County Economic
Development Corp.,
Series 2000, AMT,
6.875% 07/23/09 1,000,000 1,039,200
NY Port Authority of New York &
New Jersey, KIAC Partners,
Series 1996 IV, AMT,
6.750% 10/01/11 2,000,000 2,098,580
NY Suffolk County Industrial
Development Revenue,
Nissequoque Cogeneration
Partner Facilities, Series 1998,
5.500% 01/01/23 550,000 523,754
PA Carbon City Industrial
Development, Panther Creek
Partners Project,
Series 2000, AMT,
6.650% 05/01/10 140,000 150,896
PAR ($) VALUE ($)
-----------------------------------------------------------
PA Economic Development Finance
Authority, Colver Project,
Series 1994 D, AMT,
7.150% 12/01/18 1,500,000 1,535,490
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical &
Environmental Cogeneration
Facilities, AES Project,
Series 2000, AMT,
6.625% 06/01/26 320,000 344,857
VA Pittsylvania County Industrial
Development Authority,
Multi-trade of Pittsylvania,
Series 1994 A, AMT,
7.450% 01/01/09 1,000,000 1,023,380
-----------
Independent Power Producers Total 6,716,157
-----------
INVESTOR OWNED - 8.0%
AZ Maricopa County Pollution
Control, El Paso Electric Co.,
Series 2002 A,
6.250% 05/01/37 500,000 511,830
AZ Pima Industrial Development
Authority, Tucson Electric
Power Co., Series 1997 A, AMT,
6.100% 09/01/25 750,000 749,850
CA Chula Vista Industrial
Development Revenue,
San Diego Gas & Electric Co.,
Series 1996 B, AMT,
5.500% 12/01/21 475,000 495,587
FL Polk County Industrial
Development Authority, Tampa
Electric Co. Project,
Series 1996, AMT,
5.850% 12/01/30 800,000 815,712
IL Bryant Pollution Control Revenue,
Central Illinois Light Co.,
Series 1993,
5.900% 08/01/23 1,000,000 1,018,950
IN Petersburg in Pollution Control
Revenue, Indianapolis Power &
Light Project, Series 1995,
6.625% 12/01/24 750,000 769,425
LA Calcasieu Parish Industrial
Development Board, Entergy Gulf
States, Inc., Series 1999,
5.450% 07/01/10 500,000 506,015
LA West Feliciana Parish, Entergy
Gulf States, Inc., Series 1999 B,
6.600% 09/01/28 500,000 510,100
MS Business Finance Corp., Systems
Energy Resources Project, Series 1998,
5.875% 04/01/22 1,500,000 1,507,725
MT Forsyth Pollution Control,
Portland General, Series 1998,
5.200% 05/01/33 225,000 237,303
See Accompanying Notes to Financial Statements.
13
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
MUNICIPAL BONDS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
UTILITY (CONTINUED)
INVESTOR OWNED (CONTINUED)
NV Clark County, Industrial
Development Revenue, Nevada
Power Co., Series 1997 A, AMT,
5.900% 11/01/32 3,000,000 2,920,170
OH Air Quality Development
Authority, Pollution Control Revenue,
Cleveland Electric, Series 2002 A,
6.000% 12/01/13 650,000 688,903
TX Brazos River Authority Pollution
Control Revenue, TXU Electric Co.:
Series 2001 C, AMT,
5.750% 05/01/36 220,000 237,461
Series 2003 C, AMT,
6.750% 10/01/38 555,000 600,549
WY Campbell County Pollution
Control Revenue, Black Hills
Power, Inc. Project,
Series 2004,
5.350% 10/01/24 1,000,000 994,600
-----------
Investor Owned Total 12,564,180
-----------
JOINT POWER AUTHORITY - 0.3%
NC Eastern Municipal Power Agency,
Series 2003 F,
5.500% 01/01/16 430,000 459,158
-----------
Joint Power Authority Total 459,158
-----------
MUNICIPAL ELECTRIC - 7.0%
CA Department of Water Resources,
Power Supply Revenue Bonds,
Series 2002 A,
Insured: AMBAC
5.500% 05/01/14 2,000,000 2,259,420
TX Austin Utilities System,
Series 1994:
Insured: FGIC
(a) 05/15/17 6,600,000 3,690,918
(a) 05/15/18 5,000,000 2,640,750
WA Seattle Light & Power,
Series 2001,
Insured: FSA
5.500% 03/01/17 2,250,000 2,464,425
-----------
Municipal Electric Total 11,055,513
-----------
WATER & SEWER - 6.5%
CA Castaic Lake Water Agency,
Series 1999 A,
Insured: AMBAC
(a) 08/01/25 10,445,000 3,472,127
MA Water Resources Authority,
Series 1997 D,
Insured: MBIA
5.000% 08/01/24 (h) 4,000,000 4,100,840
MS V Lakes Utility District,
Series 1994,
8.250% 07/15/24 500,000 490,110
PAR ($) VALUE ($)
-----------------------------------------------------------
TX Houston Water & Sewer System,
Series 1991 C,
Insured: AMBAC
(a) 12/01/12 3,000,000 2,173,140
-----------
Water & Sewer Total 10,236,217
-----------
UTILITY TOTAL 41,031,225
-----------
TOTAL MUNICIPAL BONDS
(cost of $239,671,378) 238,523,145
-----------
MUNICIPAL PREFERRED STOCKS - 2.0%
-----------------------------------------------------------
HOUSING - 2.0%
MULTI-FAMILY - 2.0%
Charter Mac Equity Issuer Trust:
Series A-4, AMT,
6.000% 04/30/19 (f) 1,000,000 1,068,130
AMT,
7.600% 11/30/10 (f) 500,000 577,690
GMAC Municipal Mortgage,
5.600% 10/31/39 (f) 500,000 497,980
Munimae Trust
5.800% 06/30/49 (f) 1,000,000 996,030
-----------
TOTAL MUNICIPAL PREFERRED STOCKS
(cost of $3,000,000) 3,139,830
-----------
INVESTMENT COMPANY - 0.0% SHARES
-----------------------------------------------------------
Federated Tax-Free Obligations Fund 253 253
-----------
INVESTMENT COMPANY TOTAL
(cost of $253)
Investment Company Total 253
-----------
SHORT-TERM OBLIGATIONS - 2.4% PAR ($)
-----------------------------------------------------------
VARIABLE RATE DEMAND NOTES (i) - 2.4%
FL Alachua County Health Facilities
Continuing Care, Oak Hammock
University Project,
Series 2002 A,
1.490% 10/01/32 400,000 400,000
IL Healthcare Facilities Authority
Revenue, OSF Healthcare System,
Series 2002,
1.700% 11/15/27 100,000 100,000
IN Development Financing Authority
Revenue, Cathedral High Trustees,
Inc., Series 2001,
1.720% 09/01/26 200,000 200,000
IN Health Facility Financing Authority,
Golden Years Homestead, Inc.,
Series 2002 A,
1.690% 06/01/25 600,000 600,000
See Accompanying Notes to Financial Statements.
14
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2004
SHORT-TERM OBLIGATIONS (CONTINUED) PAR ($) VALUE ($)
-----------------------------------------------------------
VARIABLE RATE DEMAND NOTES (i) (CONTINUED)
MO State Development Finance
Board, Lease Revenue,
Series 2003,
1.720% 06/01/33 395,000 395,000
MN Makato Revenue,
Bethany Lutheran College,
Series 2000 B,
1.720% 11/01/15 400,000 400,000
MN State Higher Education
Facility Authority, Olaf College,
Series 5-M1,
1.670% 10/01/32 300,000 300,000
NY New York City Municipal Water
Financing Authority, Water &
Sewer System Revenue,
Series 1994 G,
1.640% 06/15/24 400,000 400,000
WY Uinta County Pollution
Control Revenue, Chevron
U.S.A. Inc., Project,
Series 1993,
1.680% 08/15/20 400,000 400,000
1.680% 12/01/22 600,000 600,000
-----------
Variable Rate Demand Notes Total 3,795,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(cost of $3,795,000) 3,795,000
-----------
TOTAL INVESTMENTS - 155.6%
(cost of $246,466,631) (k) 245,458,228
AUCTION PREFERRED SHARES PLUS
CUMULATIVE UNPAID DISTRIBUTIONS - (57.1)% (90,015,873)
OTHER ASSETS & LIABILITIES, NET - 1.5% 2,314,334
-----------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS - 100.0% 157,756,689
===========
NOTES TO INVESTMENT PORTFOLIO:
--------------------------------------------------------------------------------
(a) Zero coupon bond.
(b) Denotes a restricted security, which is subject to restrictions on resale
under federal securities laws. At November 30, 2004, the value of these
securities amounted to $1,934,644, which represents 1.2% of net assets.
Additional information on these securities is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
--------------------------------------------------------------------------------
CA Statewide Community Development
Authority:
Crossroads School for
Arts & Sciences, Series 1998:
6.000% 08/01/28 08/21/98 $ 410,000
6.000% 08/01/28 08/31/98 700,000
Eskaton Village - Grass Valley,
Series 2000,
11/15/31 09/08/00 750,000
----------
$1,860,000
==========
(c) Security purchased on a delayed delivery basis.
(d) The issuer is in default of certain debt covenants. Income is not being
accrued. As of November 30, 2004, the value of these securities amounted to
$2,388,002, which represents 1.5% of net assets.
(e) The issuer has filed for bankruptcy protection under Chapter 11. Income is
not being accrued. As of November 30, 2004, the value of these securities
amounted to $261,839, which represents 0.2% of net assets.
(f) Security exempt from registration under Rule 144A of the Securities Act of
1933 and may be resold in transactions exempt from registration, normally to
qualified institutional buyers. At November 30, 2004 the value of these
securities amounted to $6,609,350, which represents 4.2% of net assets.
(g) The Trust has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
principal and interest.
(h) A portion of this security with a market value of $2,217,529 is pledged as
collateral for open futures contracts.
(i) Variable rate demand notes. These securities are payable upon demand and are
secured by letters of credit or other credit support agreements from banks.
The interest rates change periodically and the interest rates shown reflect
the rates as of November 30, 2004.
(j) The issuer has filed for bankruptcy protection under Chapter 11. Income is
being accrued. As of November 30, 2004, the value of these securities
amounted to $359,935, which represents 0.2% of net assets.
(k) Cost for federal income tax purposes is $246,333,869.
(l) Represents fair value as determined in good faith under procedures approved
by the Board of Trustees.
At November 30, 2004, the Fund held the following open short futures contracts:
UNREALIZED
AGGREGATE EXPIRATION APPRECIATION/
TYPE CONTRACTS VALUE FACE VALUE DATE (DEPRECIATION)
------------------------------------------------------------------------------
U.S. Treasury
Bonds 239 $26,319,875 $26,333,498 Mar-2005 $ 13,623
U.S. Treasury
Note
10-Year 245 27,133,750 27,086,261 Mar-2005 (47,489)
--------
$(33,866)
--------
Acronym Name
----------------------------------------------------------------
AMBAC Ambac Assurance Corp.
AMT Alternative Minimum Tax
FGIC Financial Guaranty Insurance Co.
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Association
MBIA MBIA Insurance Corp.
PSFG Permanent School Fund Guaranteed
At November 30, 2004, the Trust held investments in the following sectors:
% OF
HOLDINGS BY REVENUE SOURCE (UNAUDITED) NET ASSETS
---------------------------------------------------------------
Health Care 39.5
Utility 26.0
Tax-Backed 25.6
Transportation 14.0
Housing 12.7
Other 11.2
Industrial 9.1
Education 7.8
Other Revenue 4.9
Resource Recovery 2.4
Short-Term Obligations 2.4
Auction Preferred Shares (57.1)
Other Assets & Liabilities 1.5
-----
100.0%
-----
See Accompanying Notes to Financial Statements.
15
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2004
ASSETS:
Investments, at cost $246,466,631
------------
Investments, at value $245,458,228
Cash 65,576
Receivable for:
Interest 3,843,138
Futures variation margin 80,269
Deferred Trustees' compensation plan 12,727
------------
Total Assets 249,459,938
------------
LIABILITIES:
Payable for:
Investments purchased on
a delayed delivery basis 503,920
Distributions -- common shares 970,190
Distributions -- preferred shares 15,873
Investment advisory fee 131,239
Pricing and bookkeeping fees 12,927
Trustees' fees 144
Custody fee 1,446
Preferred shares remarketing commissions 2,477
Deferred Trustees' fees 12,727
Other liabilities 52,306
------------
Total Liabilities 1,703,249
------------
AUCTION PREFERRED SHARES (3,600 shares issued
and outstanding at $25,000 per share) $ 90,000,000
------------
COMPOSITION OF NET ASSETS
APPLICABLE TO COMMON SHARES:
Paid-in capital -- common shares $207,837,794
Undistributed net investment income 428,592
Accumulated net realized loss (49,467,428)
Net unrealized depreciation on:
Investments (1,008,403)
Futures contracts (33,866)
------------
Net assets at value applicable to 27,719,719
common shares of beneficial
interest outstanding $157,756,689
============
Net asset value per common share $ 5.69
============
STATEMENT OF OPERATIONS
For the Year Ended November 30, 2004
INVESTMENT INCOME:
Interest $ 14,567,097
Dividends 2,755
------------
Total Investment Income 14,569,852
------------
EXPENSES:
Investment Advisory fee 1,614,523
Transfer agent fee 55,733
Pricing and bookkeeping fees 127,467
Trustees' fees 12,311
Preferred shares remarketing commissions 225,874
Custody fee 17,250
Other expenses 191,039
------------
Total Expenses 2,244,197
Custody earnings credit (716)
------------
Net Expenses 2,243,481
------------
Net Investment Income 12,326,371
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES CONTRACTS:
Net realized gain (loss) on:
Investments 1,149,397
Futures contracts (3,935,002)
------------
Net realized loss (2,785,605)
------------
Net change in unrealized appreciation/
depreciation on:
Investments (1,176,727)
Futures contracts (126,474)
------------
Net change in unrealized
appreciation/depreciation (1,303,201)
------------
Net Loss (4,088,806)
------------
Net Increase in Net Assets from Operations 8,237,565
------------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (1,014,983)
------------
Net Increase in Net Assets from Operations
Applicable to Common Shares $ 7,222,582
------------
See Accompanying Notes to Financial Statements.
16
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED
NOVEMBER 30,
---------------------------------
INCREASE (DECREASE) IN NET ASSETS: 2004 2003
-------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 12,326,371 $ 13,061,245
Net realized loss on investments and futures contracts (2,785,605) (6,018,896)
Net change in unrealized appreciation (depreciation) on investments and futures contract (1,303,201) 6,503,690
------------ ------------
Net Increase from Operations 8,237,565 13,546,039
------------ ------------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (1,014,983) (886,846)
------------ ------------
Increase in Net Assets from Operations Applicable to Common Shares 7,222,582 12,659,193
------------ ------------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income: (11,640,812) (11,897,663)
------------ ------------
SHARE TRANSACTIONS:
Distributions reinvested 181,019 188,292
------------ ------------
Total Increase (Decrease) in Net Assets (4,237,211) 949,822
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of period 161,993,900 161,044,078
------------ ------------
End of period (including overdistributed net investment income
of $428,592 and $764,260, respectively) $157,756,689 $161,993,900
------------ ------------
NUMBER OF TRUST SHARES:
Common Shares:
Issued for distributions reinvested 31,152 32,387
Outstanding at:
Beginning of period 27,688,567 27,656,180
------------ ------------
End of period 27,719,719 27,688,567
------------ ------------
Preferred Shares:
Outstanding at end of period 3,600 3,600
------------ ------------
See Accompanying Notes to Financial Statements.
17
NOTES TO FINANCIAL STATEMENTS
November 30, 2004
NOTE 1. ORGANIZATION
Colonial Municipal Income Trust (the "Trust") is a Massachusetts business trust
registered under the Investment Company Act of 1940 (the "Act"), as amended, as
a non-diversified, closed-end management investment company.
INVESTMENT GOAL
The Trust seeks to provide high current income, generally exempt from federal
income taxes, by investing primarily in medium and lower quality bonds and
notes issued by or on behalf of state and local government units whose interest
is exempt from ordinary federal income tax, other than the possible incidence
of any alternative minimum tax. The Trust's secondary goal is to seek total
return.
TRUST SHARES
The Trust may issue an unlimited number of common shares. On July 20, 1999, the
Trust issued 3,600 Auction Preferred Shares ("APS").
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Trust in the preparation of its financial statements.
SECURITY VALUATION
Debt securities generally are valued by pricing services approved by the Trust's
Board of Trustees, based upon market transactions for normal, institutional-size
trading units of similar securities. The services may use various pricing
techniques which take into account appropriate factors such as yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other data, as
well as broker quotes. Debt securities for which quotations are readily
available are valued at an over-the-counter or exchange bid quotation. Certain
debt securities, which tend to be more thinly traded and of lesser quality, are
priced based on fundamental analysis of the financial condition of the issuer
and the estimated value of any collateral. Valuations developed through pricing
techniques may vary from the actual amounts realized upon sale of the
securities, and the potential variation may be greater for those securities
valued using fundamental analysis.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Investments in other investment companies are valued at net asset value.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
FUTURES CONTRACTS
The Trust may invest in municipal and U.S. Treasury futures contracts. The Trust
will invest in these instruments to hedge against the effects of changes in the
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, for duration management, or when the transactions are
economically appropriate to the reduction of risk inherent in the management of
the Trust and not for trading purposes. The use of futures contracts involves
certain risks, which include: (1) imperfect correlation between the price
movement of the instruments and the underlying securities, (2) inability to
close out positions due to differing trading hours, or the temporary absence of
a liquid market, for either the instrument or the underlying securities, or (3)
an inaccurate prediction by Columbia Management Advisors, Inc. of the future
direction of interest rates. Any of these risks may involve amounts exceeding
the variation margin recorded in the Trust's Statement of Assets and Liabilities
at any given time.
Upon entering into a futures contract, the Trust deposits cash or securities
with the broker in an amount sufficient to meet the initial margin requirement.
Subsequent payments are made or received by the Trust equal to the daily change
in the contract value and are recorded as variation margin receivable or payable
and offset in unrealized gains or losses. The Trust also identifies portfolio
securities as segregated with the custodian in a separate account in an amount
equal to the futures contract. The Trust recognizes a realized gain or loss when
the contract is closed or expires.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from registration. In
some cases, the issuer of restricted securities has agreed to register such
securities for resale at the issuer's expense either upon demand by the Trust or
in connection with another registered offering of the securities.
18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Board of Trustees. The Trust will not
incur any registration costs upon such resale.
DELAYED DELIVERY SECURITIES
The Trust may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. This may increase the
risk if the other party to the transaction fails to deliver and causes the Trust
to subsequently invest at less advantageous prices. The Trust identifies cash or
liquid portfolio securities as segregated with the custodian in an amount equal
to the delayed delivery commitment.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Premium and discount are
amortized and accreted, respectively, on all debt securities. Corporate actions
and dividend income are recorded on the ex date.
FEDERAL INCOME TAX STATUS
The Trust intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its tax exempt or taxable income, if any, for its tax year,
and as such will not be subject to federal income taxes. In addition, the Trust
intends to distribute in each calendar year substantially all of its net
investment income, capital gains and certain other amounts, if any, such that
the Trust should not be subject to federal excise tax. Therefore, no federal
income or excise tax provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to common shareholders are recorded on the ex-date. Distributions
to Auction Preferred shareholders are recorded daily and payable at the end of
each dividend period. Each dividend payment period for the APS is generally
seven days. The applicable dividend rate for the APS on November 30, 2004, was
1.61%. For the year ended November 30, 2004, the Trust declared dividends to
Auction Preferred shareholders amounting to $1,014,983, representing an average
dividend rate of 1.13% per APS.
NOTE 3. FEDERAL TAX INFORMATION
The timing and character of income and capital gain distributions are determined
in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Trust's capital accounts for permanent tax
differences to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
For the year ended November 30, 2004, permanent book and tax basis differences
resulting primarily from differing treatments for expired capital loss
carryforwards, discount accretion/premium amortization on debt securities and
market discount reclassification were identified and reclassified among the
components of the Trust's net assets as follows:
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN
INCOME LOSS CAPITAL
------------ ------------ -----------
$(6,244) $10,318 $(4,074)
Net investment income and net realized gains (losses), as disclosed on the
Statement of Operations, and net assets were not affected by this
reclassification.
The tax character of distributions paid during the years ended November 30, 2004
and November 30, 2003 was as follows:
NOVEMBER 30, NOVEMBER 30,
2004 2003
---------- ----------
Distributions paid from:
Tax-Exempt Income $12,603,622 $12,778,538
Ordinary Income 52,173 5,971
Long-Term Capital Gains -- --
As of November 30, 2004, the components of distributable earnings on a tax basis
were as follows:
UNDISTRIBUTED UNDISTRIBUTED UNDISTRIBUTED
TAX-EXEMPT ORDINARY LONG-TERM NET UNREALIZED
INCOME INCOME CAPITAL GAINS (DEPRECIATION)*
------------ ------------ ------------ -------------
$2,232,941 $-- $-- $(875,641)
* The differences between book-basis and tax-basis net unrealized
appreciation/depreciation are primarily due to discount accretion/premium
amortization on debt securities.
Unrealized appreciation and depreciation at November 30, 2004, based on cost of
investments for federal income tax purposes, was:
Unrealized appreciation $ 12,947,542
Unrealized depreciation (13,823,183)
------------
Net unrealized depreciation $ (875,641)
============
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
The following capital loss carryforwards, determined as of November 30, 2004,
may be available to reduce taxable income arising from future net realized gains
on investments, if any, to the extent permitted by the Internal Revenue Code:
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
----------------- -----------------------
2005 $ 7,196,783
2007 3,490,821
2008 13,036,764
2009 3,114,307
2010 7,684,792
2011 4,393,912
2012 4,060,511
-----------
$42,977,890
===========
Capital loss carryforwards of $4,074 expired during the year ended November 30,
2004 for the Trust.
Expired capital loss carryforwards are recorded as a reduction of paid-in
capital.
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the
Trust. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary
of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004,
FleetBoston, including the Trust's investment advisor, was acquired by Bank of
America Corporation ("BOA"). The acquisition did not change the way the Trust is
managed, the investment personnel assigned to manage the Trust or the fees paid
by the Trust.
INVESTMENT ADVISORY FEE
Columbia provides administrative and other services to the Trust in addition to
investment advisory services. Columbia receives a monthly investment advisory
fee at the annual rate of 0.65% of the Trust's average weekly net assets,
including assets applicable to the APS.
PRICING AND BOOKKEEPING FEES
Columbia is responsible for providing pricing and bookkeeping services to the
Trust under a pricing and bookkeeping agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Corporation ("State Street"). As a result, Columbia pays the total fees received
to State Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Trust, Columbia receives
from the Trust an annual flat fee of $10,000 paid monthly, and in any month that
the Trust's average weekly net assets, including assets applicable to APS,
exceed $50 million, an additional monthly fee. The additional fee rate is
calculated by taking into account the fees payable to State Street under the
Outsourcing Agreement. This rate is applied to the average weekly net assets,
including assets applicable to APS, of the Trust for that month. The Trust also
pays additional fees for pricing services based on the number of securities held
by the Trust. For the year ended November 30, 2004, the Trust's effective
pricing and bookkeeping fee rate, inclusive of out-of-pocket expenses, was
0.051% of the Trust's average weekly net assets including assets applicable to
APS.
CUSTODY CREDITS
The Trust has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. These credits are recorded as a reduction of
total expenses on the Statement of Operations. The Trust could have invested a
portion of the assets utilized in connection with the expense offset arrangement
in an income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
With the exception of one officer, all officers of the Trusts are employees of
Columbia or its affiliates and receive no compensation from the Trust. Effective
August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to
the Trust in accordance with federal securities regulations. The Trust, along
with other affiliated Trusts, will pay its pro-rata share of the expenses
associated with the Office of the Chief Compliance Officer. The Trust's fee will
not exceed $15,000 per year.
The Trust'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 Trust's assets.
OTHER
Columbia provides certain services to the Trust related to Sarbanes-Oxley
compliance. For the year ended November 30, 2004, the Trust paid $1,538 to
Columbia for such services. This amount is included in "Other expenses" on the
Statement of Operations.
NOTE 5. PORTFOLIO INFORMATION
For the year ended November 30, 2004, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $39,792,164 and
$45,936,859, respectively.
NOTE 6. PREFERRED SHARES
The Trust currently has outstanding 3,600 APS. The APS are redeemable at the
option of the Trust on any dividend payment date at the redemption price of
$25,000 per share, plus an amount equal to any dividends accumulated on a daily
basis unpaid through the redemption date (whether or not such dividends have
been declared).
Under the Act, the Trust is required to maintain asset coverage of at least 200%
with respect to the APS as of the last business day of each month in which any
APS are outstanding. Additionally, the Trust is required to meet more stringent
asset coverage requirements in accordance with the guidelines prescribed by the
APS' rating agencies. Should these requirements not be met, or should dividends
accrued on the APS not be paid, the Trust may be restricted in its ability to
declare dividends to common shareholders or may be required to redeem certain
APS. At November 30, 2004, there were no such restrictions on the Trust.
20
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2004
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
CONCENTRATION OF CREDIT RISK
The Trust holds investments that are insured by private insurers who guarantee
the payment of principal and interest in the event of default or that are
supported by a letter of credit. Each of the Trust's insurers is rated AAA by
Moody's Investor Services, Inc. At November 30, 2004, investments supported by
private insurers that represent greater than 5% of the total investments of the
Trust were as follows:
INSURER INVESTMENTS
-----------------------------------------------------------
MBIA Insurance Corp. 12.1%
Financial Security Assurance, Inc. 6.1
Ambac Assurance Corp. 5.6
GEOGRAPHIC CONCENTRATION
The Trust has greater than 5% of its total investments at November 30, 2004
invested in debt obligations issued by the states of California, Colorado,
Florida, Illinois, Minnesota, Pennsylvania and Texas and their respective
political subdivisions, agencies and public authorities. The Trust is more
susceptible to economic and political factors adversely affecting issuers of
these state's municipal securities than are municipal bond funds that are not
concentrated to the same extent in these issuers.
HIGH-YIELD SECURITIES
Investing in high-yield securities may involve greater credit risk and
considerations not typically associated with investing in U.S. government bonds
and other higher quality fixed income securities. These securities are
non-investment grade securities, often referred to as "junk bonds." Economic
downturns and industry events may disrupt the high yield market and impair the
ability of issuers to repay principal and interest. Also, an increase in
interest rates would likely have an adverse impact on the value of such
obligations. Moreover, high-yield securities may be less liquid to the extent
there is no established secondary market.
LEGAL PROCEEDINGS
Columbia, Columbia Funds Distributor, Inc. ("CFDI"), and certain of their
affiliates (collectively, "the Columbia Group") have received information
requests and subpoenas from various regulatory and law enforcement authorities
in connection with their investigations of late trading and market timing in
mutual funds as well as other industry wide issues. The Columbia Group has not
uncovered any instances where Columbia or CFDI were knowingly involved in late
trading of mutual fund shares.
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and CFDI, alleging that they had violated certain
provisions of the federal securities laws in connection with trading activity in
mutual fund shares. Also on February 24, 2004, the New York Attorney General
("NYAG") filed a civil complaint in New York Supreme Court, County of New York
against Columbia and CFDI alleging that Columbia and CFDI had violated certain
New York anti-fraud statutes. If either Columbia or CFDI is unsuccessful in its
defense of these proceedings, it could be barred from serving as an investment
advisor or distributor for any investment company registered under the
Investment Company Act of 1940, as amended (a "registered investment company").
Such results could prevent Columbia, CFDI or any company that is an affiliated
person of Columbia and CFDI from serving as an investment advisor or distributor
for any registered investment company, including your fund. Your fund has been
informed by Columbia and CFDI that, if these results occur, they will seek
exemptive relief from the SEC to permit them to continue to serve as your fund's
investment advisor and distributor. There is no assurance that such exemptive
relief will be granted. On March 15, 2004, Columbia and CFDI entered into
agreements in principle with the SEC Division of Enforcement and NYAG in
settlement of the charges. Under the agreements, Columbia and CFDI agreed, among
other things, to the following conditions: payment of $70 million in
disgorgement; payment of $70 million in civil penalties; an order requiring
Columbia and CFDI to cease and desist from violations of the antifraud
provisions and other provisions of the federal securities laws; governance
changes designed to maintain the independence of the mutual fund boards of
trustees and ensure compliance with securities laws and their fiduciary duties;
and retention of an independent consultant to review Columbia's and CFDI's
compliance policies and procedures. The agreement requires the final approval of
the SEC. In a separate agreement with the NYAG, the Columbia Group and its
affiliate Banc of America Capital Management, LLC have agreed to collectively
reduce mutual fund fees by $160 million over a five-year period.
In connection with the events described in detail above, various parties have
filed suit against certain funds, their Boards and/or FleetBoston (and
affiliated entities). More than 300 cases (including those filed against
entities unaffiliated with the funds, their Boards and/or FleetBoston and its
affiliated entities) have been consolidated in a multi-district proceeding and
transferred to the Federal District Court in Maryland. Recently, certain
Columbia funds and affiliated entities have been named as defendants in several
derivative actions under various sections of the Investment Company Act of 1940,
as amended, alleging, among other things, that the fees and expenses paid by
those funds are excessive. The funds and the other defendants to these actions,
including Columbia and various of its affiliates, certain other mutual funds
advised by Columbia and its affiliates, and various directors of such funds,
have denied these allegations and are contesting the plaintiffs' claims. These
suits and certain regulatory investigations are ongoing, however, based on
currently available information, Columbia believes that these lawsuits are
without merit, that the likelihood they will have a material adverse impact on
any fund is remote, and that the lawsuits are not likely to materially affect
its ability to provide investment management services to its clients, including
the funds.
21
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
YEAR ENDED NOVEMBER 30,
-----------------------------------------------------------------------------
2004 2003 2002 2001 2000 1999
-------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 5.85 $ 5.82 $ 6.12 $ 6.05 $ 6.51 $ 7.57
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.45(a) 0.47(a) 0.50(a)(b) 0.53(a) 0.55(c) 0.46
Net realized and unrealized gain (loss)
on investments and futures contracts (0.15) 0.02 (0.33)(b) 0.03 (0.44) (0.97)
----------- ----------- ----------- ----------- ----------- -----------
Total from Investment Operations 0.30 0.49 0.17 0.56 0.11 (0.51)
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (0.04) (0.03) (0.05) (0.10) (0.14) (0.04)
----------- ----------- ----------- ----------- ----------- -----------
Total from Investment Operations
Applicable to Common Shareholders 0.26 0.46 0.12 0.46 (0.03) (0.55)
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO
COMMON SHAREHOLDERS:
From net investment income (0.42) (0.43) (0.42) (0.39) (0.43) (0.42)
In excess of net investment income -- -- -- -- -- (0.04)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions Declared to
Common Shareholders (0.42) (0.43) (0.42) (0.39) (0.43) (0.46)
----------- ----------- ----------- ----------- ----------- -----------
LESS SHARE TRANSACTIONS:
Commission and offering costs --
preferred shares -- -- -- -- --(d) (0.05)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 5.69 $ 5.85 $ 5.82 $ 6.12 $ 6.05 $ 6.51
----------- ----------- ----------- ----------- ----------- -----------
Market price per share --
common shares $ 5.66 $ 5.65 $ 5.67 $ 5.65 $ 5.38 $ 5.75
----------- ----------- ----------- ----------- ----------- -----------
Total return -- based on market value
-- common shares (e) 7.86% 7.35% 7.87% 12.05% 0.84% (24.33)%
----------- ----------- ----------- ----------- ----------- -----------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Expenses (f)(g) 1.42% 1.39% 1.37% 1.45% 1.33% 1.08%
Net investment income before
preferred stock dividend (f)(g) 7.79% 8.17% 8.28%(b) 8.55% 8.88% 7.00%
Net investment income after preferred
stock dividend (f)(g) 7.15% 7.61% 7.47% (b) 6.94% 6.68% 6.36%
Portfolio turnover rate 16% 15% 27% 12% 12% 20%
Net assets, end of period (000's)--
common shares $ 157,757 $ 161,994 $ 161,044 $ 169,080 $ 167,265 $ 180,082
(a) Per share data was calculated using average shares outstanding during the
period.
(b) Effective December 1, 2001, the Trust adopted the provision of the AICPA
Audit and Accounting Guide for Investment Companies and began accreting
market discount on all debt securities. The effect of this change, for the
year ended November 30, 2002, was to increase the ratio of net investment
income to average net assets from 8.24% to 8.28% and increase the ratio of
net investment income (adjusted for dividend payments to preferred
shareholders) from 7.43% to 7.47%. The impact to net investment income and
net realized and unrealized loss per share was less than $0.01. Per share
data and ratios for periods prior to November 30, 2002, have not been
restated to reflect this change in presentation.
(c) The per share net investment income amount does not reflect the period's
reclassification of differences between book and tax basis net investment
income.
(d) Rounds to less than $0.01 per share.
(e) Total return at market value assuming all distributions reinvested at
prices calculated in accordance with the Dividend Reinvestment Plan.
(f) The benefits derived from custody credits and directed brokerage
arrangement, if applicable, had an impact of less than 0.01%.
(g) Ratios reflect average net assets available to common shares only.
22
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
YEAR ENDED NOVEMBER 30,
--------------------------------------------------
1998 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.41 $ 7.41 $ 7.48 $ 7.15
----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.47 0.51 0.51 0.55
Net realized and unrealized gain (loss) on investments
and futures contracts 0.18 --(a) (0.07) 0.33
----------- ------------ ---------- -----------
Total Income from Investment Operations 0.65 0.51 0.44 0.88
----------- ------------ ---------- -----------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (0.48) (0.51) (0.51) (0.55)
In excess of net investment income (0.01) -- -- --
----------- ----------- ----------- -----------
Total Distributions Declared to Common Shareholders (0.49) (0.51) (0.51) (0.55)
----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 7.57 $ 7.41 $ 7.41 $ 7.48
----------- ----------- ----------- -----------
Market price per share -- common shares $ 8.13 $ 7.56 $ 7.25 $ 6.75
----------- ----------- ----------- -----------
Total return -- based on market value -- common shares (b) 14.57% 11.67% 15.36% 8.04%
----------- ------------ ---------- -----------
RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA:
Expenses (c) 0.82% 0.86% 0.91% 0.98%
Net investment income (c) 6.20% 6.83% 6.87% 7.47%
Portfolio turnover rate 34% 15% 22% 24%
Net assets, end of period (000's)-- common shares $ 208,931 $ 203,533 $ 202,793 $ 204,666
(a) Rounds to less than $0.01 per share.
(b) Total return at market value assuming all distributions reinvested at
prices calculated in accordance with the Dividend Reinvestment Plan.
(c) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY AVERAGE
ASSET LIQUIDATING MARKET
TOTAL AMOUNT COVERAGE PREFERENCE VALUE
OUTSTANDING PER SHARE* PER SHARE PER SHARE
----------------------------------------------------------------------------------------------------------------
11/30/04 $90,000,000 $68,821 $25,004 $25,000
11/30/03 90,000,000 69,998 25,006 25,000
11/30/02 90,000,000 69,734 25,001 25,000
11/30/01 90,000,000 71,967 25,007 25,000
11/30/00 90,000,000 71,462 25,011 25,000
11/30/99 ** 90,000,000 50,023 25,006 25,000
* Calculated by subtracting the Fund's total liabilities from the Fund's total
assets and dividing the amount by the number of APS outstanding.
** On July 20, 1999, the Trust began offering Auction Preferred Shares.
23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE TRUSTEES AND THE SHAREHOLDERS 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
(the "Trust") at November 30, 2004, and the results of its operations, the
changes in its net assets, and its financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust'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 the standards of the Public Company
Accounting Oversight Board (United States), 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 securities at
November 30, 2004 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 19, 2005
24
UNAUDITED INFORMATION
FEDERAL INCOME TAX INFORMATION
99.59% of distributions from net investment income will be treated as exempt
income for federal income tax purposes.
--------------------------------------------------------------------------------
As of December 31, 2004, 24.35% of distributions from net investment income is
subject to the alternative minimum tax.
25
DIVIDEND REINVESTMENT PLAN
COLONIAL MUNICIPAL INCOME TRUST
Shareholders may elect to have all distributions of dividends and capital gains
automatically reinvested by EquiServe Trust Company, N.A. (the "Plan Agent"), as
agent under the Trust's Dividend Reinvestment and Cash Purchase Plan (the
"Plan"). Pursuant to the Plan, the provisions of which are described below,
shareholders not making such an election will receive all such amounts in cash
paid by check mailed directly to the shareholder by the Plan Agent, as the
dividend paying agent.
If the Trustees of the Trust declare a dividend or determine to make a capital
gain distribution payable either in shares of the Trust or in cash, as
shareholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive the equivalent in shares of the Trust.
If the market price of the shares on the payment date for the dividend or
distribution is equal to or exceeds their net asset value, participants will be
issued shares of the Trust at the higher of net asset value or 95% of the market
price. If the net asset value exceeds the market price of Trust shares at such
time, or if the Trust declares a dividend or other distribution payable only in
cash, the Plan Agent will, as agent for Plan participants, buy Trust shares in
the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts. If, before the Plan Agent has completed its purchases,
the market price exceeds the net asset value of the Trust's shares, the average
per share purchase price paid by the Plan Agent may exceed the net asset value
of the Trust's shares, resulting in the acquisition of fewer shares than if the
dividend or distribution had been paid in shares issued by the Trust.
Participants in the Plan may withdraw from the Plan upon written notice to the
Plan Agent. When a participant withdraws from the Plan or upon termination of
the Plan as provided below, certificates for whole shares credited to the
participant's account under the Plan will be issued and a cash payment will be
made for any fraction of a share credited to such account.
Participants in the Plan have the option of making additional cash payments to
the Plan Agent semi-annually, for investment in the Trust's shares. Such
payments may be made in any amount from $100 to $500. State Street 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.
In the case of shareholders such as banks, brokers or nominees holding shares
for others who are the beneficial owners of those shares, the Plan Agent will
administer the Plan on the basis of the number of shares certified from time to
time by the shareholder of record as representing the total amount registered in
such shareholder's name and held for the account of beneficial owners who are to
participate in the Plan.
There is no charge to Plan participants for reinvesting dividends or
distributions. The Plan Agent's fees for the handling of the reinvestment of
dividends and distributions will be paid by the Trust. There will be no
brokerage charges with respect to shares issued directly by the Trust as a
result of dividends or distributions payable either in stock or in cash.
However, each participant will pay a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open market purchases in connection
with the reinvestment of dividends or distributions as well as from voluntary
cash payments. Brokerage charges for purchasing small amounts of stock for
individual accounts under the voluntary cash purchase provisions of the Plan are
expected to be less than the usual brokerage charges for individual transactions
of comparable size, because the Plan Agent will be purchasing shares for all
participants in blocks and charging to cash purchase Plan participants a pro
rated portion of the lower commissions usually obtainable on such block
purchases.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax that may be payable on such dividends or
distributions.
The Plan may be amended or terminated on 30 days' written notice to the Plan
participants. All correspondence concerning the Plan should be directed to
EquiServe by mail at P.O. Box 403011, Providence, RI 02940-3011, or by phone at
1-800-426-5523.
26
TRUSTEES AND OFFICERS
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Trust in the Columbia
Funds Complex, the year each was first elected or appointed to office, their
principal business occupations during at least the last five years, the number
of portfolios overseen by each Trustee/Director and other directorships they
hold are shown below. Each officer listed below serves as an officer of each
Trust in the Columbia Funds Complex.
NAME, ADDRESS AND AGE,
POSITION WITH FUNDS,
YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS
APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
DOUGLAS A. HACKER (age 49) Executive Vice President-Strategy of United Airlines (airline) since December 2002 (formerly
P.O. Box 66100 President of UAL Loyalty Services (airline) from September 2001 to December 2002; Executive Vice
Chicago, IL 60666 President and Chief Financial Officer of United Airlines from March 1999 to September 2001; Senior
Trustee (since 1996) Vice President-Finance from March 1993 to July 1999). Oversees 118, None
JANET LANGFORD KELLY (age 47) Adjunct Professor of Law, Northwestern University, since September 2004; Private Investor since
9534 W. Gull Lake Drive March 2004 (formerly Chief Administrative Officer and Senior Vice President, Kmart Holding
Richland, MI 49083-8530 Corporation (consumer goods), from September 2003 to March 2004; Executive Vice President-Corporate
Trustee (since 1996) Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer),
from September 1999 to August 2003; Senior Vice President, Secretary and General Counsel, Sara Lee
Corporation (branded, packaged, consumer-products manufacturer) from January 1995 to September
1999). Oversees 118, None
RICHARD W. LOWRY (age 68) Private Investor since August 1987 (formerly Chairman and Chief Executive Officer, U. S. Plywood
10701 Charleston Drive Corporation (building products manufacturer)). Oversees 120(3), None
Vero Beach, FL 32963
Trustee (since 1995)
CHARLES R. NELSON (age 62) Professor of Economics, University of Washington, since January 1976; Ford and Louisa Van Voorhis
Department of Economics Professor of Political Economy, University of Washington, since September 1993 (formerly Director,
University of Washington Institute for Economic Research, University of Washington from September 2001 to June 2003) Adjunct
Seattle, WA 98195 Professor of Statistics, University of Washington, since September 1980; Associate Editor, Journal
Trustee (since 1981) of Money Credit and Banking, since September 1993; consultant on econometric and statistical
matters. Oversees 118, None
JOHN J. NEUHAUSER (age 61) Academic Vice President and Dean of Faculties since August 1999, Boston College (formerly Dean,
84 College Road Boston College School of Management from September 1977 to September 1999). Oversees 121(3), (4),
Chestnut Hill, MA 02467-3838 Saucony, Inc. (athletic footwear)
Trustee (since 1985)
PATRICK J. SIMPSON (age 60) Partner, Perkins Coie LLP (law firm). Oversees 118, None
1120 N.W. Couch Street
Tenth Floor
Portland, OR 97209-4128
Trustee (since 2000)
27
TRUSTEES AND OFFICERS (CONTINUED)
NAME, ADDRESS AND AGE,
POSITION WITH FUNDS,
YEAR FIRST ELECTED OR PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA FUNDS
APPOINTED TO OFFICE(1) COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD
--------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES (continued)
THOMAS E. STITZEL (age 68) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, College of
2208 Tawny Woods Place Business, Boise State University); Chartered Financial Analyst. Oversees 118, None.
Boise, ID 83706
Trustee (since 1998)
THOMAS C. THEOBALD (age 67) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) since September 2004
303 W. Madison (formerly Managing Director, William Blair Capital Partners (private equity investing) from
Suite 2500 September 1994 to September 2004). Oversees 118, Anixter International (network support equipment
Chicago, IL 60606 distributor); Ventas, Inc. (real estate investment trust); Jones Lang LaSalle (real estate
Trustee and Chairman management services) and Ambac Financial Group (financial guaranty insurance)
of the Board(5)
(since 1996)
ANNE-LEE VERVILLE (age 59) Retired since 1997 (formerly General Manager, Global Education Industry, IBM Corporation (computer
359 Stickney Hill Road and technology) from 1994 to 1997). Oversees 119(4), Chairman of the Board of Directors, Enesco
Hopkinton, NH 03229 Group, Inc. (designer, importer and distributor of giftware and collectibles)
Trustee (since 1998)
RICHARD L. WOOLWORTH (age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, The Regence Group
100 S.W. Market Street #1500 (regional health insurer); Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon;
Portland, OR 97207 Certified Public Accountant, Arthur Young & Company). Oversees 118, Northwest Natural Gas Co.
Trustee (since 1991) (natural gas service provider)
INTERESTED TRUSTEE
WILLIAM E. MAYER(2) (age 64) Partner, Park Avenue Equity Partners (private equity) since February 1999 (formerly Partner,
399 Park Avenue Development Capital LLC from November 1996 to February 1999). Oversees 120(3), Lee Enterprises
Suite 3204 (print media), WR Hambrecht + Co. (financial service provider); First Health (healthcare); Reader's
New York, NY 10022 Digest (publishing); OPENFIELD Solutions (retail industry technology provider)
Trustee (since 1994)
(1) In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds Complex.
(2) Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co.
(3) Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the
Liberty All-Star Funds, currently consisting of 2 funds, which are advised
by an affiliate of the Advisor.
(4) Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
(5) Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003.
28
TRUSTEES AND OFFICERS (CONTINUED)
NAME, ADDRESS AND AGE,
POSITION WITH COLUMBIA FUNDS,
YEAR FIRST ELECTED OR
APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
-------------------------------------------------------------------------------------------------------------------
OFFICERS
CHRISTOPHER L. WILSON (age 47) Head of Mutual Funds for the Advisor since August 2004; President of the Columbia Funds since
One Financial Center October 2004 (formerly President and Chief Executive Officer, CDC IXIS Asset Management Services,
Boston, MA 02111 Inc. from September 1998 to August 2004).
President (since 2004)
J. KEVIN CONNAUGHTON (age 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December 2000; Vice
One Financial Center President of the Advisor since April 2003 (formerly President of the Columbia Funds from February
Boston, MA 02111 2004 to October 2004; Chief Accounting Officer and Controller of the Liberty Funds and of the
Treasurer (since 2000) Liberty All-Star Funds from February 1998 to October 2000); Treasurer of the Galaxy Funds since
September 2002; (formerly Treasurer from December 2002 to December 2004 and President from February
2004 to December 2004 of the Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of
Colonial Management Associates, Inc. from February 1998 to October 2000).
MARY JOAN HOENE (age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds and of the Liberty All-Star
40 West 57th Street Funds since August 2004 (formerly Partner, Carter, Ledyard & Milburn LLP from January 2001 to August
New York, NY 10019 2004; Counsel, Carter, Ledyard & Milburn LLP from November 1999 to December 2000; Vice President and
Chief Compliance Officer Counsel, Equitable Life Assurance Society of the United States Senior Vice President and from April
(since 2004) 1998 to November 1999).
MICHAEL G. CLARKE (age 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star Funds since October 2004
One Financial Center (formerly Controller of the Columbia Funds and of the Liberty All-Star Funds from May 2004 to
Boston, MA 02111 October 2004; Assistant Treasurer from June, 2002 to May 2004; Vice President, Product Strategy &
Chief Accounting Officer Development of the Liberty Funds Group from February 2001 to June 2002; Assistant Treasurer of the
(since 2004) Liberty Funds and of the Liberty All-Star Funds from August 1999 to February 2001; Audit Manager,
Deloitte & Touche LLP from May 1997 to August 1999).
JEFFREY R. COLEMAN (age 35) Controller of the Columbia Funds and of the Liberty All-Star Funds since October 2004 (formerly Vice
One Financial Center President of CDC IXIS Asset Management Services, Inc. and Deputy Treasurer of the CDC Nvest Funds
Boston, MA 02111 and Loomis Sayles Funds from February 2003 to September 2004; Assistant Vice President of CDC IXIS
Controller (since 2004) Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to
February 2003; Tax Manager of PFPC Inc. from November 1996 to August 2000).
R. SCOTT HENDERSON (age 45) Secretary of the Columbia Funds since December 2004 (formerly Of Counsel, Bingham McCutchen from
One Financial Center April 2001 to September 2004; Executive Director and General Counsel, Massachusetts Pension Reserves
Boston, MA 02111 Investment Management Board from September 1997 to March 2001).
Secretary (since 2004)
29
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TRANSFER AGENT
--------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Municipal Income Trust is:
EquiServe Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
The trust mails one shareholder report to each shareholder address. Shareholders
can order additional reports by calling 800-730-6001. In addition,
representatives at that number can provide shareholders information about the
trust.
Financial advisors who want additional information about the trust may speak to
a representative at 800-426-3750.
A description of the trust's proxy voting policies and procedures is available
(i) at www.columbiamanagement.com; (ii) on the Securities and Exchange
Commission's website at www.sec.gov, and (iii) without charge, upon request, by
calling 800-730-6001. Information regarding how the trust voted proxies relating
to portfolio securities during the 12-month period ended June 30, 2004 is
available from the SEC's website. Information regarding how the trust voted
proxies relating to portfolio securities is also available at
www.columbiamanagement.com.
The trust files a complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The trust's Form N-Q
is available on the SEC's website at www.sec.gov and may be reviewed and copied
at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
This report has been prepared for shareholders of Colonial Municipal Income
Trust.
COLONIAL MUNICIPAL INCOME TRUST ANNUAL REPORT
101-02/738T-1104 (01/05) 05/3936
ITEM 2. CODE OF ETHICS.
(a) The registrant has, as of the end of the period covered by this
report, adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers
or implicit waivers to a provision of the code of ethics adopted in
2(a) above.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas
E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members
of the registrant's Board of Trustees and Audit Committee, each qualify as an
audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr.
Woolworth are each independent trustees, as defined in paragraph (a)(2) of this
Item's instructions and collectively constitute the entire Audit Committee.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Aggregate Audit Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are approximately as follows:
2004 2003
$26,670 $28,460
Audit Fees include amounts related to the audit of the registrant's annual
financial statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Aggregate Audit-Related Fees billed by the principal accountant for
professional services rendered during the fiscal years ended November 30, 2004
and November 30, 2003 are approximately as follows:
2004 2003
$7,100 $7,400
Audit-Related Fees include amounts for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported in Audit Fees
above. In both fiscal years 2004 and 2003, Audit-Related Fees include certain
agreed-upon procedures performed for semi-annual shareholder reports.
(c) Aggregate Tax Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are approximately as follows:
2004 2003
$3,110 $3,071
Tax Fees in both fiscal years 2004 and 2003 consist primarily of the review of
annual tax returns and include amounts for professional services by the
principal accountant for tax compliance, tax advice and tax planning.
(d) Aggregate All Other Fees billed by the principal accountant for professional
services rendered during the fiscal years ended November 30, 2004 and November
30, 2003 are as follows:
2004 2003
$0 $0
All Other Fees include amounts for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) above.
None of the amounts described in paragraphs (a) through (d) above were approved
pursuant to the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X.
(e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
I. GENERAL OVERVIEW
The Audit Committee of the registrant has adopted a formal policy (the "Policy")
which sets forth the procedures and the conditions pursuant to which the Audit
Committee will pre-approve (i) all audit and non-audit (including audit related,
tax and all other) services provided by the registrant's independent auditor to
the registrant and individual funds
(collectively "Fund Services"), and (ii) all non-audit services provided by the
registrant's independent auditor to the funds' adviser or a control affiliate of
the adviser, that relate directly to the funds' operations and financial
reporting (collectively "Fund-related Adviser Services"). A "control affiliate"
is an entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the funds, and the term "adviser" is
deemed to exclude any unaffiliated sub-adviser whose role is primarily portfolio
management and is sub-contracted or overseen by another investment adviser. The
adviser and control affiliates are collectively referred to as "Adviser
Entities."
The Audit Committee uses a combination of specific (on a case-by-case basis as
potential services are contemplated) and general (pre-determined list of
permitted services) pre-approvals. Unless a type of service has received general
pre-approval, it will require specific pre-approval by the Audit Committee if it
is to be provided by the independent auditor.
The Policy does not delegate the Audit Committee's responsibilities to
pre-approve services performed by the independent auditor to management.
II. GENERAL PROCEDURES
On an annual basis, the Fund Treasurer and/or Director of Trustee Administration
shall submit to the Audit Committee a schedule of the types of Fund Services and
Fund-related Adviser Services that are subject to general pre-approval.
These schedules will provide a description of each type of service that is
subject to general pre-approval and, where possible, will provide estimated fees
for each instance of providing each service. This general pre-approval and
related fees (where provided) will generally cover a one-year period (for
example, from June 1 through May 31 of the following year). The Audit
Committee will review and approve the types of services and review the projected
fees for the next one-year period and may add to, or subtract from, the list of
general pre-approved services from time to time, based on subsequent
determinations. This approval acknowledges that the Audit Committee is in
agreement with the specific types of services that the independent auditor will
be permitted to perform. The fee amounts will be updated to the extent necessary
at other regularly scheduled meetings of the Audit Committee.
In addition to the fees for each individual service, the Audit Committee has the
authority to implement a fee cap on the aggregate amount of non-audit services
provided to an individual fund.
If, subsequent to general pre-approval, a fund, its investment adviser or a
control affiliate determines that it would like to engage the independent
auditor to perform a service that requires pre-approval and that is not included
in the general pre-approval list, the specific pre-approval procedure shall be
as follows:
o A brief written request shall be prepared by management detailing the
proposed engagement with explanation as to why the work is proposed to
be performed by the independent auditor;
o The request should be addressed to the Audit Committee with copies to
the Fund Treasurer and/or Director of Trustee Administration;
o The Fund Treasurer and/or Director of Trustee Administration will
arrange for a discussion of the service to be included on the agenda
for the next regularly scheduled Audit Committee meeting, when the
Committee will discuss the proposed engagement and approve or deny the
request.
o If the timing of the project is critical and the project needs to
commence before the next regularly scheduled meeting, the Chairperson
of the Audit Committee may approve or deny the request on behalf of
the Audit Committee, or, in the Chairperson's discretion, determine to
call a special meeting of the Audit Committee for the purpose of
considering the proposal. Should the Chairperson of the Audit
Committee be unavailable, any other member of the Audit Committee may
serve as an alternate for the purpose of approving or denying the
request. Discussion with the Chairperson (or alternate, if necessary)
will be arranged by the Fund Treasurer and/or Director of Trustee
Administration. The independent auditor will not commence any such
project unless and until specific approval has been given.
III. CERTAIN OTHER SERVICES PROVIDED TO ADVISER ENTITIES
The Audit Committee recognizes that there are cases where services proposed to
be provided by the independent auditor to the adviser or control affiliates are
not Fund-related Adviser Services within the meaning of the Policy, but
nonetheless may be relevant to the Audit Committee's ongoing evaluation of the
auditor's independence and objectivity with respect to its audit services to the
funds. As a result, in all cases where an Adviser Entity engages the independent
auditor to provide audit or non-audit services that are not Fund Services or
Fund-related Adviser Services, were not subject to pre-approval by the Audit
Committee, and the projected fees for any such engagement (or the aggregate of
all such engagements during the period covered by the Policy) exceeds a
pre-determined threshold established by the Audit Committee; the independent
auditor, Fund Treasurer and/or Director of Trustee Administration will notify
the Audit Committee not later than its next meeting. Such notification shall
include a general description of the services provided, the entity that is to be
the recipient of such services, the timing of the engagement, the entity's
reasons for selecting the independent auditor, and the projected fees. Such
information will allow the Audit Committee to consider whether non-audit
services provided to the adviser and Adviser Entities, which were not subject to
Audit Committee pre-approval, are compatible with maintaining the auditor's
independence with respect to the Funds.
IV. REPORTING TO THE AUDIT COMMITTEE
The Fund Treasurer or Director of Trustee Administration shall report to the
Audit Committee at each of its regular meetings regarding all Fund Services or
Fund-related Adviser Services initiated since the last such report was rendered,
including:
o A general description of the services, and
o Actual billed and projected fees, and
o The means by which such Fund Services or Fund-related Adviser Services
were pre-approved by the Audit Committee.
In addition, the independent auditor shall report to the Audit Committee
annually, and no more than 90 days prior to the filing of audit reports with the
SEC, all non-audit services provided to entities in the funds' "investment
company complex," as defined by SEC rules, that did not require pre-approval
under the Policy.
V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE
The Policy may be amended from time to time by the Audit Committee. Prompt
notice of any amendments will be provided to the independent auditor, Fund
Treasurer and Director of Trustee Administration. The Policy shall be reviewed
and approved at least annually by the Audit Committee.
*****
(e)(2) The percentage of services described in paragraphs (b) through (d) of
this Item approved pursuant to the "de minimis" exception under paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X during both fiscal years ended
November 30, 2004 and November 30, 2003 was zero.
(f) Not applicable.
(g) All non-audit fees billed by the registrant's accountant for services
rendered to the registrant for the fiscal years ended November 30, 2004 and
November 30, 2003 are disclosed in (b) through (d) of this Item.
During the fiscal years ended November 30, 2004 and November 30, 2003, there
were no Audit-Related Fees, Tax Fees or All Other Fees that were approved for
services to the investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser) and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant under
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of Audit-Related Fees, Tax Fees and All Other Fees required to be
approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were
approved under the "de minimis" exception during both fiscal years ended
November 30, 2004 and November 30, 2003 was zero.
(h) The registrant's Audit Committee of the Board of Directors has considered
whether the provision of non-audit services that were rendered to the
registrant's adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X, is compatible with maintaining the principal accountant's
independence. The Audit Committee determined that the provision of such services
is compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C.
78c(a)(58)(A)). Douglas A. Hacker, Thomas E. Stitzel, Anne-Lee Verville and
Richard L. Woolworth are each independent trustees and collectively constitute
the entire Audit Committee.
ITEM 6. SCHEDULE OF INVESTMENTS
The registrant's "Schedule I - Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form
N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Fund has delegated to Columbia Management Advisors, Inc. (the "Advisor") the
responsibility to vote proxies relating to portfolio securities held by the
Fund. In deciding to delegate this responsibility to the Advisor, the Board of
Trustees of the Trust reviewed and approved the policies and procedures adopted
by the Advisor. These included the procedures that the Advisor follows when a
vote presents a conflict between the interests of the Fund and its shareholders
and the Advisor, its affiliates, its other clients or other persons.
The Advisor's policy is to vote all proxies for Fund securities in a manner
considered by the Advisor to be in the best interest of the Fund and its
shareholders without regard to any benefit to the Advisor, its affiliates, its
other clients or other persons. The Advisor examines each proposal and votes
against the proposal, if, in its judgment, approval or adoption of the proposal
would be expected to impact adversely the current or potential market value of
the issuer's securities. The Advisor also examines each proposal and votes the
proxies against the proposal, if, in its judgment, the proposal would be
expected to affect adversely the best interest of the Fund. The Advisor
determines the best interest of the Fund in light of the potential economic
return on the Fund's investment.
The Advisor addresses potential material conflicts of interest by having
predetermined voting guidelines. For those proposals that require special
consideration or in instances where special circumstances may require varying
from the predetermined guideline, the Advisor's Proxy Committee determines the
vote in the best interest of the Fund, without consideration of any
benefit to the Advisor, its affiliates, its other clients or other persons. The
Advisor's Proxy Committee is composed of representatives of the Advisor's equity
investments, equity research, compliance, legal and fund administration
functions. In addition to the responsibilities described above, the Proxy
Committee has the responsibility to review, on a semi-annual basis, the
Advisor's proxy voting policies to ensure consistency with internal policies and
regulatory agency policies and to develop additional voting guidelines to assist
in the review of proxy proposals.
The Proxy Committee may vary from the predetermined guideline if it determines
that voting on the proposal according to the predetermined guideline would be
expected to impact adversely the current or potential market value of the
issuer's securities or to affect adversely the best interest of the client.
References to the best interest of a client refer to the interest of the client
in terms of the potential economic return on the client's investment. In
determining the vote on any proposal, the Proxy Committee does not consider any
benefit other than benefits to the owner of the securities to be voted. A member
of the Proxy Committee is prohibited from voting on any proposal for which he or
she has a conflict of interest by reason of a direct relationship with the
issuer or other party affected by a given proposal. Persons making
recommendations to the Proxy Committee or its members are required to disclose
to the Committee any relationship with a party making a proposal or other matter
known to the person that would create a potential conflict of interest.
The Advisor has retained Institutional Shareholder Services ("ISS"), a third
party vendor, to implement its proxy voting process. ISS provides proxy
analysis, record keeping services and vote disclosure services.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not yet applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Registrant Purchases of Equity Securities*
(a) (b) (c) (d)
Total Number of Maximum Number of
Shares Purchased as Shares that May Yet
Period Total Number Average Price Part of Publically Be Purchased Under
of Shares Paid Per Share Announced Plans the Plans or Programs
------------------------------------------------------------------------------------------------------------------------------------
06/01/04 through 06/30/04 11,584 $5.39 11,584 N/A
07/01/04 through 07/31/04 10,745 $5.60 10,745 N/A
08/01/04 through 08/31/04 10,883 $5.63 10,883 N/A
09/01/04 through 09/30/04 10,626 $5.82 10,626 N/A
10/01/04 through 10/31/04 10,347 $5.80 10,347 N/A
11/01/04 through 11/30/04 10,322 $5.76 10,322 N/A
------------------------------------------------------------------------------------------------------------------------------------
Total 64,507 $5.66 64,507 N/A
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* Includes shares purchased by the Dividend Reinvestment Agent pursuant to
the Registrant's Dividend Reinvestment Plan.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have not been any material changes to the procedures by which shareholders
may recommend nominees to the registrant's board of directors, since those
procedures were last disclosed in response to the requirements of Item
7(d)(2)(ii)(G) of Schedule 14A or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officers, based on their evaluation of the registrant's disclosure
controls and procedures as of a
date within 90 days of the filing of this report, have concluded that
such controls and procedures are adequately designed to ensure that
information required to be disclosed by the registrant in Form N-CSR
is accumulated and communicated to the registrant's management,
including the principal executive officer and principal financial
officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR
attached hereto as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Colonial Municipal Income Trust
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By (Signature and Title) /S/ Christopher L. Wilson
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Christopher L. Wilson, President
Date January 26, 2005
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /S/ Christopher L. Wilson
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Christopher L. Wilson, President
Date January 26, 2005
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By (Signature and Title) /S/ J. Kevin Connaughton
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J. Kevin Connaughton, Treasurer
Date January 26, 2005
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