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 811-4841
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MFS MUNICIPAL INCOME TRUST
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(Exact name of registrant as specified in charter)
500 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agents for service)
Registrant's telephone number, including area code: (617) 954-5000
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Date of fiscal year end: October 31
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Date of reporting period: April 30, 2006
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ITEM 1. REPORTS TO STOCKHOLDERS.
MFS(R) MUTUAL FUNDS 4/30/06
SEMIANNUAL REPORT
MFS(R) MUNICIPAL INCOME TRUST
A path for pursuing opportunity
M F S(SM)
INVESTMENT MANAGEMENT(R)
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NOT FDIC INSURED MAY LOSE VALUE NO BANK OR CREDIT UNION GUARANTEE NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY OR NCUA/NCUSIF
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MFS(R) MUNICIPAL INCOME TRUST 4/30/06
The trust seeks to provide high current income exempt
from federal income taxes.
New York Stock Exchange Symbol: MFM
TABLE OF CONTENTS
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LETTER FROM THE CEO 1
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PORTFOLIO COMPOSITION 2
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PORTFOLIO MANAGERS' PROFILES 3
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PERFORMANCE SUMMARY 4
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DIVIDEND REINVESTMENT AND CASH
PURCHASE PLAN 6
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PORTFOLIO OF INVESTMENTS 7
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FINANCIAL STATEMENTS 29
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NOTES TO FINANCIAL STATEMENTS 34
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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM 40
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BOARD REVIEW OF INVESTMENT
ADVISORY AGREEMENT 41
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PROXY VOTING POLICIES AND
INFORMATION 41
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QUARTERLY PORTFOLIO DISCLOSURE 41
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CONTACT INFORMATION BACK COVER
LETTER FROM THE CEO
[Photo of Robert J. Manning]
Dear Shareholders,
It has been said that change is the only constant in life. As investors have
seen, that theme is still accurate today as we recently have experienced
shifting economic cycles because of natural disasters and political
instability around the globe.
Markets worldwide have fluctuated in the past year as devastating hurricanes
had a dramatic effect on the international economy, particularly on oil
prices. We witnessed political unrest in the Middle East, highlighted by
instability in Iraq, and in Africa, the usually stable Nigeria also
experienced violence. As a result, energy prices have bounced up and down,
with crude oil prices at one point topping a record $70 per barrel.
Such cycles are not uncommon and in fact have almost become the norm
in our everyday lives. What does all of this mean to you as an investor?
In times like these, it helps to know that you're working with a seasoned
investment professional who has experience to guide you through difficult
times. At MFS(R), we believe our investment management team has the knowledge
and confidence to navigate through difficult cycles and at the
same time see through adversity to find investment opportunities for our
clients and shareholders.
Our investment management process, honed over 80 years, combines a unique
concept of teamwork with our unwavering focus on the long term. We firmly
believe that the best way to realize long-term financial goals - be it a
college education, a comfortable retirement, or a secure family legacy - is to
follow a three-pronged approach that focuses on longer time horizons. Allocate
holdings across the major asset classes - including stocks, bonds, and cash.
Diversify within each class to take advantage of different market segments and
investing styles. Rebalance assets regularly to maintain a desired asset
allocation. Of course, these strategies cannot guarantee a profit or protect
against a loss. This long-term approach requires diligence and patience, two
traits that in our experience are essential to capitalizing on the many
opportunities the financial markets can offer - through both up and down
economic cycles.
Respectfully,
/s/ Robert J. Manning
Robert J. Manning
Chief Executive Officer and Chief Investment Officer
MFS Investment Management(R)
June 15, 2006
The opinions expressed in this letter are those of MFS, and no forecasts can
be guaranteed.
PORTFOLIO COMPOSITION
PORTFOLIO STRUCTURE(i)
Bonds 99.7%
Cash & Other Net Assets 0.3%
TOP FIVE BOND INDUSTRIES (i)
Healthcare Revenue - Hospitals 27.7%
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Healthcare Revenue - Long-Term Care 8.9%
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Utilities - Investor Owned 7.0%
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Industrial Revenue - Paper 4.5%
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Tobacco 4.5%
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CREDIT QUALITY OF BONDS (r)
AAA 16.9%
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AA 2.8%
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A 10.3%
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BBB 31.9%
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BB 7.7%
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B 4.9%
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CCC 5.0%
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Not Rated 20.5%
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PORTFOLIO FACTS
Average Duration (d) 6.9
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Average Life (m) 16.4 yrs.
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Average Maturity (m) 18.4 yrs.
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Average Credit Quality of Rated
Securities (a) BBB+
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Average Short Term Credit Quality A-1
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(a) The average credit quality of rated securities is based upon a market
weighted average of portfolio holdings that are rated by public rating
agencies.
(d) Duration is a measure of how much a bond price is likely to fluctuate with
general changes in interest rates, e.g., if rates rise 1.00%, a fund with a
5-year duration is likely to lose about 5.00% of its value.
(i) For purposes of this graphical presentation, the bond component includes
both accrued interest amounts and the equivalent exposure from any
derivative holdings, if applicable.
(m) The average maturity shown is calculated using the final stated maturity on
the portfolio's holdings without taking into account any holdings which have
been pre-refunded to an earlier date or which have a mandatory put date
prior to the stated maturity. The average life shown takes into account
these earlier dates.
(r) Each security is assigned a rating from Moody's Investors Service. If not
rated by Moody's, the rating will be that assigned by Standard & Poor's.
Likewise, if not assigned a rating by Standard & Poor's, it will be based on
the rating assigned by Fitch, Inc. For those portfolios that hold a security
which is not rated by any of the three agencies, the security is considered
Not Rated. Holdings in U.S. Treasuries and government agency mortgage-backed
securities, if any, are included in a "AAA"-rating category. Percentages are
based on the total market value of investments as of 4/30/06.
Percentages are based on net assets, including preferred shares, as of
4/30/06, unless otherwise noted.
The portfolio is actively managed, and current holdings may be different.
PORTFOLIO MANAGERS' PROFILES
Geoffrey L. Schechter, CFA, CPA, is a Senior Vice President of MFS Investment
Management (MFS) and a Municipal Fixed Income Portfolio Manager. He also
manages several other government bond portfolios for MFS. He joined MFS as a
portfolio manager, and named Senior Vice President in 2002. Geoffrey is a
graduate of the University of Texas and has an M.B.A. degree from Boston
University. He holds the Chartered Financial Analyst (CFA) and Certified
Public Accountant (CPA) designations.
Gary A. Lasman, CFA, is Vice President of MFS Investment Management(R)
(MFS(R)) and is a Municipal Fixed Income Portfolio Manager. Prior to joining
the firm in 2002, Gary served as an Assistant Portfolio Manager and Senior
Municipal Analyst for Liberty Funds Group. He served as a Vice President for
Thomson Financial Services and a Senior Account Manager for The Industrial
Indemnity Financial Corporation. He also served as an Associate for Laventhol
& Horwath. Gary has a bachelor's degree from Trinity College and holds the
Chartered Financial Analyst (CFA) designation. He is a member of the Boston
Security Analysts Society, Inc.
Note to Shareholders: Effective April 2006, Gary Lasman became co-manager of
the fund.
PERFORMANCE SUMMARY THROUGH 4/30/06
All results are historical. Investment return and principal value will
fluctuate, and shares, when sold, may be worth more or less than their
original cost. More recent returns may be more or less than those shown.
Past performance is no guarantee of future results.
PRICE SUMMARY
Six months ended 4/30/06
Date Price
Net asset value per share 4/30/06 $7.95
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10/31/05 $7.92
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New York Stock Exchange Price 4/30/06 $8.23
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3/09/06(high) (t) $8.39
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11/14/05(low) (t) $7.54
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10/31/05 $8.27
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TOTAL RETURNS VS BENCHMARK
Six months ended 4/30/06
New York Stock Exchange Price (r) 2.73%
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Net asset value (r) 3.67%
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Lehman Brothers Municipal Bond Index (f) 1.56%
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(f) Source: FactSet Research Systems, Inc.
(r) Includes reinvestment of dividends and capital gain distributions.
(t) For the period November 1, 2005 through April 30, 2006.
INDEX DEFINITION
Lehman Brothers Municipal Bond Index - a market-value-weighted index
representative of the tax-exempt bond market.
It is not possible to invest directly in an index.
NOTES TO PERFORMANCE SUMMARY
The trust's shares may trade at a discount to net asset value. Shareholders do
not have the right to cause the trust to repurchase their shares at net asset
value. When trust shares trade at a premium, buyers pay more than the asset
value underlying trust shares, and shares purchased at a premium would receive
less than the amount paid for them in the event of the trust's liquidation. As
a result, the total returns that are calculated based on the net asset value
and New York Stock Exchange prices can be different.
The trust's monthly distributions may include a return of capital to
shareholders. Distributions that are treated for federal income tax purposes
as a return of capital will reduce each shareholder's basis in his or her
shares and, to the extent the return of capital exceeds such basis, will be
treated as gain to the shareholder from a sale of shares. Returns of
shareholder capital have the effect of reducing the trust's assets and may
increase the trust's expense ratio.
From time to time the trust may receive proceeds from litigation settlements,
without which performance would be lower.
KEY RISK CONSIDERATIONS
The portfolio's yield and share prices change daily based on the credit
quality of its investments and changes in interest rates. In general, the
value of debt securities will decline when interest rates rise and will
increase when interest rates fall. Debt securities with longer maturity dates
will be subject to greater price fluctuations than those with shorter
maturities. Municipal instruments can be volatile and significantly affected
by adverse tax, legislative or political changes and the financial condition
of the issuers and/or insurers of municipal instruments. These conditions may
include, for example, constitutional or statutory limits on an issuers ability
to raise revenues or increase taxes, anticipated or actual budget deficits or
other financial difficulties, or changes in the credit quality of municipal
issuers in the state. If the Internal Revenue Service determines an issuer of
a municipal security has not complied with applicable tax requirements,
interest from the security could become taxable and the security could decline
significantly in value. Derivatives may involve risks different from, and
greater than, those of the underlying indicator's in whose value the
derivative is based. The value of the derivative may move in unexpected ways
and result in unanticipated losses and increased volatility if the value of
the underlying indicator(s) does not move in the direction or the extent
anticipated. Lower quality debt securities involve substantially greater risk
of default and their value can decline significantly over time. When you sell
your shares, they may be worth more or less than the amount you paid for them.
These risks may increase share price volatility.
In accordance with Section 23(c) of the Investment Company Act of 1940, the
trust hereby gives notice that it may from time to time repurchase shares of
the trust in the open market at the option of the Board of Trustees and on
such terms as the Trustees shall determine.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The trust offers a Dividend Reinvestment and Cash Purchase Plan that allows
you to reinvest either all of the distributions paid by the trust or only the
long-term capital gains. Purchases are made at the market price unless that
price exceeds the net asset value (the shares are trading at a premium). If
the shares are trading at a premium, purchases will be made at a discounted
price of either the net asset value or 95% of the market price, whichever is
greater. Twice each year you can also buy shares. Investments may be made in
any amount over $100 in January and July on the 15th of the month or shortly
thereafter.
If your shares are in the name of a brokerage firm, bank, or other nominee,
you can ask the firm or nominee to participate in the plan on your behalf. If
the nominee does not offer the plan, you may wish to request that your shares
be re-registered in your own name so that you can participate.
There is no service charge to reinvest distributions, nor are there brokerage
charges for shares issued directly by the trust. However, when shares are
bought on the New York Stock Exchange or otherwise on the open market, each
participant pays a pro rata share of the commissions. The automatic
reinvestment of distributions does not relieve you of any income tax that may
be payable (or required to be withheld) on the distributions.
To enroll in or withdraw from the plan, or if you have any questions, call
1-800-637-2304 any business day from 8 a.m. to 8 p.m. Eastern time. Please
have available the name of the trust and your account and Social Security
numbers. For certain types of registrations, such as corporate accounts,
instructions must be submitted in writing. Please call for additional details.
When you withdraw from the plan, you can receive the value of the reinvested
shares in one of two ways: a check for the value of the full and fractional
shares, or a certificate for the full shares and a check for the fractional
shares.
PORTFOLIO OF INVESTMENTS (unaudited) - 4/30/06
The Portfolio of Investments is a complete list of all
securities owned by your trust. It is categorized by broad-based
asset classes.
Municipal Bonds - 140.6%
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ISSUER SHARES/PAR VALUE ($)
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Airport & Port Revenue - 5.0%
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Chicago, IL, O'Hare International Airport Rev. RITES, XLCA,
7.417%, 2022 (v)(z) $ 1,500,000 $ 1,740,528
Chicago, IL, O'Hare International Airport Rev., Third Lien,
"A", FGIC, 5%, 2033 345,000 353,211
Chicago, IL, O'Hare International Airport Rev., Third Lien,
"A", MBIA, 5%, 2029 1,385,000 1,421,204
New York City, NY, City Industrial Development Agency,
Special Facilities Rev. (Terminal One Group), 5.5%, 2024 275,000 287,128
Oklahoma City, OK, Airport Trust Rev., FSA, 5.75%, 2016 3,125,000 3,292,125
Port Authority, NY, Special Obligations Rev. (JFK
International), MBIA, 5.75%, 2022 7,000,000 7,321,160
Seattle, WA, Airport Trust Rev., FGIC, 5.625%, 2018 1,500,000 1,583,865
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$ 15,999,221
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Chemicals - 0.7%
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Red River Authority, TX, Pollution Control Rev. (Celanese
Project), 6.7%, 2030 $ 1,920,000 $ 2,062,349
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General Obligations - General Purpose - 2.0%
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Kane Kendall County, IL, Capital Appreciation, "E",
FGIC, 0%, 2023 $ 1,945,000 $ 807,895
Kane Kendall County, IL, Capital Appreciation, "E",
FGIC, 0%, 2025 1,915,000 713,050
Lake County, IL, Land Acquisition & Development,
5.75%, 2017 1,000,000 1,078,740
New York City, NY, "M", 5%, 2035 3,800,000 3,870,984
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$ 6,470,669
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General Obligations - Schools - 1.1%
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Aledo, TX, Independent School District, School Building,
"A", PSF, 5.125%, 2033 $ 955,000 $ 989,428
De Soto, TX, Independent School District, School Building,
PSF, 0%, 2031 555,000 148,612
De Soto, TX, Independent School District, School Building,
PSF, 0%, 2034 415,000 94,259
De Soto, TX, Independent School District, School Building,
PSF, 0%, 2036 555,000 113,176
Ennis, TX, Independent School District, Capital
Appreciation, "N", PSF, 0%, 2028 290,000 91,785
Ennis, TX, Independent School District, Capital
Appreciation, "N", PSF, 0%, 2029 560,000 174,462
Ennis, TX, Independent School District, Capital
Appreciation, "N", PSF, 0%, 2031 555,000 148,612
Leander, TX, Independent School District, Capital
Appreciation, Refunding, School Building, FGIC, 0%, 2026 1,285,000 450,213
Leander, TX, Independent School District, Capital
Appreciation, Refunding, School Building, FGIC, 0%, 2031 1,295,000 336,532
Royse City, TX, Independent School District, School
Building, PSF, 0%, 2027 955,000 320,259
Royse City, TX, Independent School District, School
Building, PSF, 0%, 2028 960,000 303,840
Royse City, TX, Independent School District, School
Building, PSF, 0%, 2029 965,000 289,394
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$ 3,460,572
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Healthcare Revenue - Hospitals - 39.3%
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Alexander City, AL, Special Care Facilities Financing
Authority Medical Facilities Rev. (Russell Hospital Corp.), "A",
5.75%, 2036 $ 600,000 $ 607,062
Allegheny County, PA, Hospital Development Authority Rev.
(South Hills Health Systems), "B", 6.75%, 2025 500,000 537,120
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), 9.25%, 2030 2,000,000 2,382,680
Allegheny County, PA, Hospital Development Authority Rev.
(West Penn Allegheny Health), "B", 9.25%, 2022 1,000,000 1,191,340
Arkansas Development Finance Authority Rev. (Washington
Regional Medical Center), 7.25%, 2010 (c) 500,000 559,640
Athens County, OH, Hospital Facilities Rev. (O'Bleness
Memorial Hospital), "A", 7.125%, 2033 1,500,000 1,610,445
Baldwin County, AL, Eastern Shore Health Care Authority Rev.
(Thomas Hospital), 5.75%, 2008 (c) 700,000 738,605
Birmingham, AL, Baptist Medical Center, Special Care Facilities
Rev. (Baptist Health Systems, Inc.), "A", 5%, 2030 490,000 473,203
Brookhaven, NY, Civic Facilities Rev. (Memorial Hospital
Medical Center, Inc.), 7.75%, 2010 695,000 735,616
California Valley Health Systems, COP, 6.875%, 2023 720,000 724,586
Chautauqua County, NY, Industrial Development Agency, Civic
Facilities Rev. (Women's Christian Assn.), "A", 6.35%, 2017 235,000 238,010
Chautauqua County, NY, Industrial Development Agency, Civic
Facilities Rev. (Women's Christian Assn.), "A", 6.4%, 2029 980,000 975,159
Chemung County, NY, Civic Facilities Rev. (St. Joseph's
Hospital-Elmira), "A", 6%, 2013 490,000 495,003
Chemung County, NY, Civic Facilities Rev. (St. Joseph's
Hospital-Elmira), "B", 6.35%, 2013 120,000 123,606
Chester County, PA, Health & Educational Facilities Rev.
(Chester County Hospital), 6.75%, 2021 1,625,000 1,760,785
Citrus County, FL, Hospital Development Authority Rev.
(Citrus Memorial Hospital), 6.25%, 2023 955,000 1,020,016
Coffee County, GA, Hospital Authority Rev. (Coffee Regional
Medical Center, Inc.), 5%, 2026 40,000 39,193
Colorado Health Facilities Authority Rev. (Parkview Medical
Center), 6.5%, 2020 1,230,000 1,338,609
Colorado Health Facilities Authority Rev. (Parkview Medical
Center), 6.6%, 2025 1,000,000 1,086,100
Colorado Health Facilities Authority Rev. (Portercare
Adventist Health Systems), 6.625%, 2011 (c) 675,000 773,732
Crittenden County, AR, Hospital Rev., 7%, 2020 1,030,000 1,033,121
Cuyahoga County, OH, Hospital Facilities Rev. (Canton,
Inc.), 7.5%, 2030 1,330,000 1,463,173
Delaware Health Facilities Authority Rev. (Nanticoke
Memorial Hospital), 5.625%, 2032 1,250,000 1,308,463
Denver, CO, Health & Hospital Authority Rev., 5.25%, 2013 635,000 642,188
Denver, CO, Health & Hospital Authority Rev., 5.375%, 2018 1,500,000 1,522,080
Denver, CO, Health & Hospital Authority Rev., 5.375%, 2028 860,000 857,171
Denver, CO, Health & Hospital Authority Rev., "A", 6%, 2023 250,000 263,643
District of Columbia, Health & Hospital Authority Rev.
(Medstar University Hospital), "D", 6.875%, 2007 (c) 1,200,000 1,230,108
Gaylord, MI, Hospital Finance Authority Rev. (Otsego
Memorial Hospital), 6.2%, 2025 250,000 254,380
Gaylord, MI, Hospital Finance Authority Rev. (Otsego
Memorial Hospital), 6.5%, 2031 295,000 304,003
Grand Forks, ND, Health Care Authority Rev. (Altru Health
Systems Obligated Group), 7.125%, 2024 755,000 833,256
Gulfport, MS, Hospital Facilities Rev. (Memorial Hospital),
5.75%, 2031 1,000,000 1,020,010
Highlands County, FL, Health Facilities Authority Rev.
(Adventist/Sunbelt Hospital), 6%, 2011 (c) 900,000 1,003,833
Houston County, AL, Health Care Authority Rev., AMBAC,
6.25%, 2030 2,000,000 2,161,540
Huntsville, AL, Health Care Authority Rev., 5.625%, 2026 875,000 906,561
Illinois Development Finance Authority, Hospital Authority
Rev. (Adventist/Sunbelt Hospital), 5.65%, 2009 (c) 1,750,000 1,869,000
Illinois Health Facilities Authority Rev. (Centegra Heath
Systems), 5.25%, 2018 1,000,000 1,009,550
Indiana Health Facilities Financing Authority, Hospital Rev.
(Clarian Health), "A", 5%, 2039 1,110,000 1,112,475
Indiana Health Facilities Financing Authority, Hospital Rev.
(Community Hospital), "A", AMBAC, 5%, 2035 1,780,000 1,822,738
Indiana Health Facilities Financing Authority, Hospital Rev.
(Munster Medical Research Foundation, Inc.), 6.375%, 2031 3,990,000 4,219,146
Indiana Health Facilities Financing Authority, Hospital Rev.
(Riverview Hospital), 6.125%, 2031 1,000,000 1,039,250
Johnson City, TN, Health & Educational Facilities, Hospital
Rev. (Mountain States Health), "A", 5.5%, 2036 355,000 367,837
Joplin, MO, Industrial Development Authority Health
Facilities Rev. (Freeman Health Systems), 5.5%, 2029 440,000 451,119
Joplin, MO, Industrial Development Authority Health
Facilities Rev. (Freeman Health Systems), 5.75%, 2035 475,000 501,135
Kentucky Economic Development Finance Authority, Health
Systems Rev. (Norton Healthcare, Inc.), 6.5%, 2020 5,000,000 5,405,650
Knox County, TN, Health Educational Housing Facilities
Board, Hospital Facilities Rev. (Baptist Health Systems),
6.5%, 2031 1,725,000 1,827,845
Lauderdale County & Florence, AL, Health Care Authority Rev.
(Coffee Health Group), MBIA, 5.625%, 2021 3,000,000 3,225,090
Lufkin, TX, Health Facilities Rev. (Memorial Health System
of East Texas), 5.7%, 2008 (c) 995,000 1,046,730
Macomb County, MI, Hospital Finance Authority Rev. (Mount
Clemens General Hospital), 5.75%, 2025 1,000,000 1,047,920
Macomb County, MI, Hospital Finance Authority Rev. (Mount
Clemens General Hospital), 5.875%, 2034 905,000 949,481
Madison County, ID, Hospital Rev., COP, 5.25%, 2030 240,000 241,478
Madison County, ID, Hospital Rev., COP, 5.25%, 2037 310,000 311,910
Maryland Health & Higher Educational Facilities Authority
Rev. (Medstar Health), 5.5%, 2033 380,000 392,726
Maryland Health & Higher Educational Facilities Authority
Rev. (North Arundel Hospital), 6.5%, 2010 (c) 1,500,000 1,670,310
Massachusetts Health & Educational Facilities Authority Rev.
(Berkshire Health Systems), 6.25%, 2031 1,900,000 2,006,419
Massachusetts Health & Educational Facilities Authority Rev.
(Caritas Christi), 6.5%, 2012 600,000 648,030
Massachusetts Health & Educational Facilities Authority Rev.
(Caritas Christi), 5.7%, 2015 500,000 518,915
Massachusetts Health & Educational Facilities Authority Rev.
(Jordan Hospital), 5.25%, 2018 1,400,000 1,399,972
Massachusetts Health & Educational Facilities Authority Rev.
(Northern Berkshire Health), "B", 6.375%, 2034 640,000 661,907
Massachusetts Health & Educational Facilities Authority Rev.
(Saints Memorial Medical Center), 6%, 2023 465,000 467,674
Massachusetts Health & Educational Facilities Authority Rev.
(University of Massachusetts), "D", 5%, 2033 605,000 596,990
Miami Beach, FL, Health Facilities Rev. (Mount Sinai Medical
Center), 6.75%, 2029 810,000 895,949
Miami Beach, FL, Health Facilities Rev. (Mount Sinai Medical
Center), "A", 6.7%, 2019 995,000 1,091,565
Mississippi Business Finance Corp., Health Facilities Rev.
(Rush Medical Foundation, Inc.), 5.625%, 2023 845,000 832,933
Mississippi Hospital Equipment, Health Facilities Rev. (Rush
Medical Foundation, Inc.), 5.4%, 2007 105,000 105,554
Monongalia County, WV, Building Commission Hospital Rev.
(Monongalia General Hospital), "A", 5%, 2030 425,000 415,642
Monroe County, NY, Industrial Development Agency, Civic
Facilities Rev. (Highland Hospital of Rochester), 5%, 2025 65,000 65,138
Montgomery, AL, Special Care Facilities, Financing Authority
Rev. (Baptist Health), "A-2", MBIA, 0% to 2007,
5% to 2014 (c) 1,725,000 1,683,824
Montgomery, AL, Special Care Facilities, Financing Authority
Rev. (Baptist Health), "C", 5.25%, 2014 (c) 760,000 822,958
Mount Lebanon, PA, Hospital Authority Rev. (St. Clair
Memorial Hospital), 5.625%, 2032 435,000 450,864
Nassau County, NY, Industrial Development Agency, Civic
Facilities Rev. (North Shore Health System), 5.625%, 2010 620,000 640,032
Nassau County, NY, Industrial Development Agency, Civic
Facilities Rev. (North Shore Health System), 5.875%, 2011 485,000 508,469
New Hampshire Health & Educational Facilities Authority Rev.
(Covenant Health), 6.5%, 2017 870,000 965,561
New Hampshire Higher Educational & Health Facilities
Authority Rev. (Catholic Medical Center), 6.125%, 2032 1,000,000 1,033,260
New Jersey Health Care Facilities, Financing Authority Rev.
(Children's Specialized Hospital), "A", 5.5%, 2030 245,000 252,014
New Jersey Health Care Facilities, Financing Authority Rev.
(St. Peter's University Hospital), 6.875%, 2030 3,000,000 3,254,370
New York City, NY, Health & Hospital Corp. Rev., "A",
5.25%, 2017 700,000 725,123
New York City, NY, Industrial Development Agency, Civic
Facilities Rev. (Staten Island University Hospital), "A",
6.375%, 2031 500,000 507,210
New York State Dormitory Authority Rev., Non State Supported
Debt (Mt. Sinai NYU Health), 5.5%, 2026 635,000 644,239
New York State Dormitory Authority Rev., Non State Supported
Debt (Mt. Sinai NYU Health), "C", 5.5%, 2026 500,000 507,275
Norman, OK, Regional Hospital Authority Rev., 5.375%, 2036 490,000 494,430
North Texas Health Facilities Development Corp. Rev. (United
Regional Health Care System, Inc.), 6%, 2023 1,000,000 1,066,330
Ohio County, WV, County Commission Health System Rev. (Ohio
Valley Medical Center), 5.75%, 2013 850,000 809,353
Oklahoma Development Finance Authority Rev. (Comanche County
Hospital), 6.6%, 2031 1,665,000 1,808,340
Rhode Island Health & Education Building Rev., Hospital
Financing (Lifespan Obligated Group), 6.5%, 2012 (c) 505,000 576,902
Rhode Island State Health & Educational Building Unrefunded
(Hospital Lifespan), 6.375%, 2021 245,000 270,019
Rhode Island State Health & Educational Building, (Hospital
Financing Lifespan), 6.375%, 2012 (c) 1,560,000 1,771,349
Royston, GA, Hospital Authority Rev. (Ty Cobb Healthcare
Systems, Inc.), 6.375%, 2014 955,000 979,276
Salt Lake City, UT, Hospital Authority Rev. INFLOS, AMBAC,
ETM (Intermountain Health Care), 9.616%, 2020 (c)(v) 600,000 602,088
Shelby County, TN, Educational & Hospital Facilities Board
Hospital Rev. (Methodist Healthcare), 6.375%, 2012 (c) 625,000 710,213
Shelby County, TN, Educational & Housing Facilities Board
Hospital Rev. (Methodist Healthcare), 6.25%, 2012 (c) 315,000 355,758
Shelby County, TN, Educational & Housing Facilities Board
Hospital Rev. (Methodist Healthcare), 6.25%, 2018 (c) 185,000 208,937
Shelby County, TN, Educational & Housing Facilities Board
Hospital Rev. (Methodist Healthcare), 6.375%, 2019 (c) 375,000 426,128
South Carolina Jobs & Economic Development Authority Rev.
(Bon Secours Health Systems, Inc.), "A", 5.625%, 2030 710,000 738,471
South Carolina Jobs & Economic Development Authority,
Hospital Facilities Rev. (Palmetto Health Alliance),
6.25%, 2031 835,000 895,087
South Carolina Medical University, Hospital Facilities Rev.,
"A", MBIA, 5%, 2031 685,000 700,330
South Dakota Health & Education Facilities Authority Rev.
(Prairie Lakes Health Care System), 5.625%, 2032 670,000 685,537
Southwestern Illinois Development Authority Rev. (Anderson
Hospital), 5.5%, 2020 60,000 62,066
Southwestern Illinois Development Authority Rev. (Anderson
Hospital), 5.625%, 2029 870,000 888,427
Springfield, TN, Health & Educational Facilities Rev.
(Northcrest Medical Center), 5.25%, 2018 1,400,000 1,373,876
Steubenville, OH, Hospital Authority Rev. (Trinity Health
Center), 6.5%, 2030 1,300,000 1,411,020
Stillwater, OK, Medical Center Authority, 5.625%, 2023 1,000,000 1,042,410
Tallahassee, FL, Health Facilities Rev. (Tallahassee
Memorial Healthcare), 6.25%, 2020 3,085,000 3,248,628
Texas Metro Health Facilities Development Corp., Metro
Health Facilities Development Rev. (Wilson N. Jones Memorial
Hospital), 7.2%, 2021 700,000 726,705
Texas Metro Health Facilities Development Corp., Metro
Health Facilities Development Rev. (Wilson N. Jones Memorial
Hospital), 7.25%, 2031 1,000,000 1,036,090
Tom Green County, TX, Health Facilities Rev. (Shannon Health
System), 6.75%, 2021 1,250,000 1,343,350
Upper Illinois River Valley Development, Health Facilities
Rev. (Morris Hospital), 6.625%, 2031 600,000 648,132
Valley, AL, Special Care Facilities, Financing Authority
Rev. (Lanier Memorial Hospital), 5.6%, 2016 600,000 599,100
Wapello County, IA, Hospital Authority Rev. (Ottumwa
Regional Health Center), 6.375%, 2031 1,500,000 1,569,195
Washington County, AR, Hospital Rev., Regional Medical
Center, "A", 5%, 2035 250,000 243,655
Washington County, AR, Hospital Rev., Regional Medical
Center, "B", 5%, 2025 1,000,000 1,004,850
Weirton, WV, Municipal Hospital Building, Commission Rev.
(Weirton Hospital Medical Center), 6.375%, 2031 1,115,000 1,144,046
Weslaco, TX, Health Facilities Rev. (Knapp Medical Center),
6.25%, 2032 1,000,000 1,051,940
West Plains, MO, Industrial Development Authority Rev.
(Ozarks Medical Center), 6.75%, 2024 170,000 174,830
West Shore Pennsylvania, Hospital Authority Rev. (Holy
Spirit Hospital), 6.2%, 2026 1,250,000 1,321,800
Wichita, KS, Hospital Authority Rev. (Via Christi Health
System), 6.25%, 2020 1,500,000 1,648,290
Wisconsin Health & Educational Facilities Authority Rev.
(Aurora Health Care, Inc.), 6.875%, 2030 1,000,000 1,133,360
Wisconsin Health & Educational Facilities Authority Rev.
(Aurora Health Care, Inc.), MBIA, 5.25%, 2017 5,000,000 5,183,700
Wisconsin Health & Educational Facilities Authority Rev.
(Marshfield Clinic), "A", 5.375%, 2034 490,000 498,727
Yonkers, NY, Industrial Development Agency, Civic Facilities
Rev. (St. John's Riverside Hospital), 6.8%, 2016 710,000 740,757
Yonkers, NY, Industrial Development Agency, Civic Facilities
Rev. (St. John's Riverside Hospital), "A", 7.125%, 2031 490,000 509,046
Yonkers, NY, Industrial Development Agency, Civic Facilities
Rev. (St. Joseph's Hospital), "C", 6.2%, 2020 750,000 742,005
-------------
$ 124,871,870
--------------------------------------------------------------------------------------------------
Healthcare Revenue - Long Term Care - 12.5%
--------------------------------------------------------------------------------------------------
Abilene, TX, Health Facilities Development Co., Retirement
Facilities Rev. (Sears Methodist Retirement), "A", 7%, 2033 $ 345,000 $ 369,909
Arizona Health Facilities Authority Rev. (The Terraces
Project), 7.75%, 2033 750,000 843,173
Bell County, TX, Health Facilities Development Rev.
(Advanced Living Technology), 7.75%, 2006 65,000 64,865
Bell County, TX, Health Facilities Development Rev.
(Advanced Living Technology), 8.125%, 2016 1,085,000 1,033,397
Bell County, TX, Health Facilities Development Rev.
(Advanced Living Technology), 8.5%, 2026 2,405,000 2,250,118
Bridgeport, CT, Senior Living Facility Rev. (3030 Park
Retirement Community), 7.25%, 2035 1,020,000 861,268
Bucks County, PA, Industrial Development Authority Rev.
(Ann's Choice, Inc.), 6.125%, 2025 430,000 439,030
Cambria County, PA, Industrial Development Authority Rev.
(Beverly Enterprises, Inc.), 10%, 2012 400,000 477,396
Chester County, PA, Industrial Development Authority Rev.
(RHA Nursing Home), 8.5%, 2032 585,000 600,368
Clarion, PA, Industrial Development Authority Rev. (Beverly
Enterprises, Inc.), 7.5%, 2012 1,000,000 1,013,160
Colorado Health Facilities Authority Rev. (Covenant
Retirement Communities, Inc.), "B", 6.125%, 2033 1,000,000 1,065,340
Colorado Health Facilities Authority Rev. (Evangelical
Lutheran), 6.9%, 2025 3,000,000 3,366,240
Cumberland County, PA, Municipal Authority Rev. (Wesley),
"A", 7.25%, 2013 (c) 720,000 859,262
Cumberland County, PA, Municipal Authority Rev. (Wesley),
"A", 7.25%, 2035 280,000 298,872
Franklin County, OH, Healthcare Facilities Rev. (Ohio
Presbyterian), 7.125%, 2029 1,000,000 1,084,770
Fulton County, GA, Residential Care Facilities (Canterbury
Court), "A", 6.125%, 2034 330,000 341,263
Greenville County, SC, Hospital Rev. (Chestnut Hill),
"A", 8%, 2015 2,125,000 2,126,488
Hawaii Department of Budget & Finance, Special Purpose Rev.
(Kahala Nui Senior Living Community), 8%, 2033 500,000 573,260
Illinois Finance Authority Rev. (Clare at Water Tower),
"A", 6%, 2025 490,000 502,216
Illinois Finance Authority Rev. (Landing at Plymouth Place),
"A", 6%, 2037 490,000 502,515
Iowa Finance Authority, Health Care Facilities Rev. (Care
Initiatives Project), 5.75%, 2018 895,000 878,863
Iowa Finance Authority, Health Care Facilities Rev. (Care
Initiatives Project), 9.25%, 2025 1,645,000 1,947,877
Lenexa, KS, Health Care Facilities Rev. (Lakeview Village,
Inc.), 6.875%, 2032 500,000 534,975
Lenexa, KS, Health Care Facilities Rev. (Lakeview Village,
Inc.), "B", 6.25%, 2026 500,000 507,965
Maine Health & Higher Educational Facilities Rev. (Piper
Shores), 7.5%, 2009 (c) 800,000 863,480
Millbrae, CA, Residential Facilities Rev. (Magnolia of
Millbrae), "A", 7.375%, 2027 1,880,000 1,958,283
Montgomery County, PA, Higher Education & Health Authority
Rev. (AHF/Montgomery), 10.5%, 2020 2,175,000 2,178,632
Montgomery County, PA, Higher Education & Health Authority
Rev. (AHF/Montgomery), 6.875%, 2036 1,195,000 1,196,924
Montgomery County, PA, Industrial Development Authority Rev.
(Whitemarsh Continuing Care), 6.125%, 2028 250,000 262,385
Montgomery County, PA, Industrial Development Authority Rev.
(Whitemarsh Continuing Care), 6.25%, 2035 510,000 535,668
New Jersey Economic Development Authority Rev. (Courthouse
Convalescent Center), "A", 8.7%, 2014 650,000 650,761
New Jersey Economic Development Authority Rev. (Lions Gate),
"A", 5.875%, 2037 310,000 315,775
New Jersey Health Care Facilities Financing Authority Rev.
(Cherry Hill), 8%, 2027 1,000,000 1,030,980
Norfolk, VA, Redevelopment & Housing Authority Rev. (Fort
Norfolk Retirement Community), "A", 6%, 2025 125,000 126,853
Norfolk, VA, Redevelopment & Housing Authority Rev. (Fort
Norfolk Retirement Community), "A", 6.125%, 2035 90,000 91,356
Reedley, CA, COP (Mennonite Home), 7.5%, 2006 (c) 2,705,000 2,799,080
Shelby County, TN, Health Educational Rev. (Germantown
Village), 7.25%, 2034 820,000 870,856
Sterling, IL (Hoosier Care), 7.125%, 2034 710,000 673,187
Suffolk County, NY, Industrial Development Agency (Medford
Hamlet Assisted Living), 6.375%, 2039 500,000 492,270
Travis County, TX, Health Facilities Development Corp.,
Retirement Facilities Rev. (Querencia Barton Creek),
5.5%, 2025 460,000 449,461
Travis County, TX, Health Facilities Development Corp.,
Retirement Facilities Rev. (Querencia Barton Creek),
5.65%, 2035 695,000 677,632
Washington County, FL, Industrial Development Authority Rev.
(Washington County), 10%, 2016 860,000 861,720
Wilkinsburg, PA, Municipal Authority Health Rev.
(Monroeville Christian/Judea), 8.25%, 2007 (c) 980,000 1,043,622
-------------
$ 39,621,515
--------------------------------------------------------------------------------------------------
Human Services - 2.7%
--------------------------------------------------------------------------------------------------
Cheneyville, LA, Westside Habilitation Center Rev.,
8.375%, 2013 $ 1,310,000 $ 1,324,502
Iowa Finance Authority, Community Provider (Boys & Girls
Home), 6.25%, 2028 500,000 473,275
Lehigh County, PA, General Purpose Authority (Kidspeace
Corp.), 6%, 2023 3,000,000 2,819,190
New York City, NY, Industrial Development Agency, Civic
Facility Rev. (Special Needs Facilities), 6.5%, 2017 1,030,000 1,057,995
New York City, NY, Industrial Development Agency, Civic
Facility Rev. (A Very Special Place), "A", 5.75%, 2029 1,000,000 934,940
Orange County, FL, Health Facilities Authority Rev.
(GF/Orlando Healthcare Facilities), 8.75%, 2011 510,000 540,080
Orange County, FL, Health Facilities Authority Rev.
(GF/Orlando Healthcare Facilities), 9%, 2031 1,000,000 1,101,560
Osceola County, FL, Industrial Development Authority Rev.
(Community Provider), 7.75%, 2017 454,000 454,917
-------------
$ 8,706,459
--------------------------------------------------------------------------------------------------
Industrial Revenue - Airlines - 5.9%
--------------------------------------------------------------------------------------------------
Alliance Airport Authority, Inc., TX, Special Facilities
Rev. (AMR Corp.), 7.5%, 2029 $ 965,000 $ 931,495
Dallas Fort Worth, TX, International Airport Facility
Improvement Corp. (American Airlines, Inc.), 7.25%, 2030 2,515,000 2,362,214
Dallas Fort Worth, TX, International Airport Facility
Improvement Corp. (American Airlines, Inc.), 6.375%, 2035 4,040,000 3,368,067
Houston, TX, Airport Systems Rev., Special Facilities
(Continental, Inc.), "E", 6.75%, 2029 1,700,000 1,722,865
Los Angeles, CA, Regional Airport Lease Rev. (AMR Corp.),
7.5%, 2024 850,000 908,608
New Jersey Economic Development Authority (Continental
Airlines, Inc.), 7.2%, 2030 1,595,000 1,606,835
New Jersey Economic Development Authority, Special
Facilities Rev. (Continental Airlines, Inc.), 6.25%, 2029 505,000 492,774
New York City, NY, Industrial Development Agencies Rev.
(Continental Airlines, Inc.), 7.25%, 2008 160,000 161,776
New York City, NY, Industrial Development Agencies Rev.
(Continental Airlines, Inc.), 8%, 2012 300,000 308,013
New York City, NY, Industrial Development Agency Rev.
(American Airlines, Inc.), 7.625%, 2025 4,025,000 4,410,394
Tulsa, OK, Municipal Airport Trust Rev. (American Airlines,
Inc.), "B", 5.65%, 2035 40,000 39,837
Tulsa, OK, Municipal Airport Trust Rev. (AMR Corp.),
"B", 6%, 2035 2,500,000 2,508,550
-------------
$ 18,821,428
--------------------------------------------------------------------------------------------------
Industrial Revenue - Chemicals - 0.3%
--------------------------------------------------------------------------------------------------
Sweetwater County, WY, Solid Waste Disposal Rev. (FMC
Corp.), 5.6%, 2035 $ 985,000 $ 1,028,567
--------------------------------------------------------------------------------------------------
Industrial Revenue - Environmental Services - 3.7%
--------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, Solid
Waste Disposal Rev. (Browning Ferris, Inc.), "A", 5.8%, 2016 $ 1,000,000 $ 974,310
California Statewide Community Development Authority, Solid
Waste Facilities Rev. (Republic Services, Inc.), "A",
4.95%, 2012 1,000,000 1,025,910
Gloucester County, NJ, Solid Waste Resource Recovery Rev.
(Waste Management, Inc.), 6.85%, 2029 850,000 926,424
Gulf Coast Waste Disposal Authority, TX, (Waste Mangement of
Texas), "A", 5.2%, 2028 445,000 444,422
Henrico County, VA, Industrial Development Authority Rev.
(Browning Ferris, Inc.), 5.45%, 2014 1,750,000 1,688,085
Illinois Development Finance Authority, Solid Waste Disposal
Rev. (Waste Management, Inc.), 5.85%, 2007 4,500,000 4,556,835
Nevada Department of Business Rev. (Republic Services,
Inc.), 5.625%, 2026 750,000 801,780
New Morgan, PA, Industrial Development Authority, Solid
Waste Disposal Rev. (New Morgan Landfill Co., Inc./Browning
Ferris, Inc.), 6.5%, 2019 1,000,000 1,004,220
State of New Hampshire Business Finance Authority Solid Wast
Disposal, Rev., 5.2%, 2027 445,000 445,000
-------------
$ 11,866,986
--------------------------------------------------------------------------------------------------
Industrial Revenue - Metals - 0.2%
--------------------------------------------------------------------------------------------------
Mobile County, AL, Industrial Development Authority Rev.
(Ipsco, Inc.), 6.875%, 2030 $ 650,000 $ 689,774
--------------------------------------------------------------------------------------------------
Industrial Revenue - Other - 5.1%
--------------------------------------------------------------------------------------------------
Gulf Coast, TX, Industrial Development Authority (Valero
Energy Corp.), 5.6%, 2031 $ 1,750,000 $ 1,796,848
Gulf Coast, TX, Waste Disposal Rev. (Valero Energy Corp.),
6.65%, 2032 1,000,000 1,083,170
Hardeman County, TN, Correctional Facilities Rev.,
7.75%, 2017 2,220,000 2,291,440
Madison County, FL, Rev. (Twin Oaks Project), "A", 6%, 2025 565,000 576,554
New Jersey Economic Development Authority, Economic
Development Rev. (Holt Hauling & Warehousing),
8.4%, 2015 (q) 1,000,000 910,000
New Jersey Economic Development Authority, Economic
Development Rev. (Holt Hauling & Warehousing),
8.6%, 2017 (q) 1,000,000 910,000
Park Creek Metropolitan District, CO, Rev., Custodial
Receipts, CR-1, 7.875%, 2032 (a) 1,270,000 1,400,886
Park Creek Metropolitan District, CO, Rev., Custodial
Receipts, CR-2, 7.875%, 2032 (a) 580,000 639,775
Pennsylvania Economic Development Financing Authority,
Finance Authority Facilities Rev. (Amtrak), "A", 6.25%, 2031 2,000,000 2,116,740
Philadelphia, PA, Industrial Development Authority Rev.
(Host Marriott LP), 7.75%, 2017 3,255,000 3,275,441
Port Corpus Christi, TX, Industrial Development Authority
Rev. (Citgo Petroleum Corp.), 8.25%, 2031 700,000 732,480
Tooele County, UT, Hazardous Waste Treatment Rev. (Union
Pacific Corp.), 5.7%, 2026 385,000 402,379
-------------
$ 16,135,713
--------------------------------------------------------------------------------------------------
Industrial Revenue - Paper - 6.4%
--------------------------------------------------------------------------------------------------
Bedford County, VA, Industrial Development Authority Rev.
(Nekoosa Packaging), "A", 6.55%, 2025 $ 1,000,000 $ 1,029,080
Butler, AL, Industrial Development Board, Solid Waste
Disposal Rev. (Georgia Pacific Corp.), 5.75%, 2028 155,000 151,733
Columbus County, NC, Industrial Facilities & Pollution
Control Financing Authority (International Paper, Co.),
"A", 6.15%, 2021 5,000,000 5,145,450
Delta County, MI, Economic Development Corp., Environmental
Improvements Rev. (Mead Westvaco Escanaba), "A",
6.25%, 2012 (c) 1,000,000 1,127,650
Delta County, MI, Economic Development Corp., Environmental
Improvements Rev. (Mead Westvaco Escanaba), "B",
6.45%, 2012 (c) 500,000 564,845
Effingham County, GA, Development Authority, Solid Waste
Disposal Rev. (Fort James), 5.625%, 2018 850,000 834,224
Hodge, LA, Utilities Rev. (Stone Container Corp.), 7.45%, 2024 3,335,000 3,730,064
Lowndes County, MS, Solid Waste Disposal & Pollution Control
Rev. (Weyerhaeuser Co.), 6.8%, 2022 2,000,000 2,357,720
Navajo County, AZ, Industrial Development Authority (Stone
Container Corp.), 7.2%, 2027 880,000 910,870
Onondaga County, NY, Industrial Development Authority Rev.,
Solid Waste Disposal Rev. (Solvay Paperboard LLC),
6.8%, 2014 1,000,000 1,045,480
West Point, VA, Industrial Development Authority, Solid
Waste Disposal Rev. (Chesapeake Corp.), 6.25%, 2019 1,815,000 1,815,472
West Point, VA, Industrial Development Authority, Solid
Waste Disposal Rev. (Chesapeake Corp.), "A", 6.375%, 2019 700,000 700,357
York County, SC, Pollution Control Rev. (Bowater, Inc.),
"A", 7.4%, 2010 830,000 831,942
-------------
$ 20,244,887
--------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Entertainment & Tourism - 0.9%
--------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority Rev.,
East Valley Tourist (Cabazon Casino), "A", 9.25%, 2020 (a) $ 1,155,000 $ 1,259,504
Mississippi Development Bank, Special Obligation (Diamond
Lakes Utilities), 6.25%, 2017 1,000,000 1,019,140
New York City, NY, City Industrial Development Agency Rev.,
Liberty IAC/InterActiveCorp, 5%, 2035 620,000 605,331
-------------
$ 2,883,975
--------------------------------------------------------------------------------------------------
Miscellaneous Revenue - Other - 2.3%
--------------------------------------------------------------------------------------------------
Austin, TX, Convention Center (Convention Enterprises,
Inc.), "A", 6.6%, 2021 $ 400,000 $ 422,372
Austin, TX, Convention Center (Convention Enterprises,
Inc.), "A", 6.7%, 2028 600,000 634,236
Baltimore, MD, Convention Center Hotel Rev., "B",
5.875%, 2039 295,000 308,074
Cleveland Cuyahoga County, OH, Port Authority Rev.
(Cleveland City), "B", 4.5%, 2030 1,320,000 1,287,766
Cleveland-Cuyahoga County, OH, Port Authority Rev.
(Fairmount), "B", 5.125%, 2025 190,000 191,923
Cleveland-Cuyahoga County, OH, Port Authority Rev. (Myers
University), "E", 5.6%, 2025 135,000 139,714
Dayton Montgomery County, OH, Port Authority Rev. (Parking
Garage), 6.125%, 2024 1,130,000 1,219,440
Gallery Certificate Trust, PA, Parking Rev., FSA,
4.5%, 2013 (a) 785,000 770,493
San Antonio, TX, Convention Center, Hotel Financial Corp.,
Contract Rev. (Empowerment Zone), "A", AMBAC, 5%, 2034 695,000 702,096
Southwestern Illinois Development Authority Rev., Solid
Waste Disposal Rev., 5.9%, 2014 310,000 312,359
Summit County, OH, Port Authority Building (Seville), "A",
5.1%, 2025 205,000 206,620
Summit County, OH, Port Authority Building (Twinsburg
Township), "D", 5.125%, 2025 160,000 161,619
Summit County, OH, Port Authority Building (Workforce Policy
Board), "F", 4.875%, 2025 915,000 907,589
Toledo Lucas County, OH, Port Authority Development Rev.
(Northwest Ohio Bond Fund), "C", 5.125%, 2025 90,000 89,285
-------------
$ 7,353,586
--------------------------------------------------------------------------------------------------
Multi-Family Housing Revenue - 5.0%
--------------------------------------------------------------------------------------------------
Bay County, FL, Housing Finance Authority, Multi-family Rev.
(Andrews Place II Apartments), FSA, 5%, 2035 $ 210,000 $ 210,431
Bay County, FL, Housing Finance Authority, Multi-family Rev.
(Andrews Place II Apartments), FSA, 5.1%, 2046 390,000 390,796
Bexar County TX, Multi-Family Housing Rev. (American
Opportunity Housing), "A", MBIA, 5.7%, 2021 1,250,000 1,296,813
Charter Mac Equity Issuer Trust, 7.1%, 2009 1,000,000 1,075,980
Charter Mac Equity Issuer Trust, 6%, 2019 (a) 2,000,000 2,153,680
Eaglebend, CO, Affordable Housing Corp., Multi-Family Rev.
(Housing Project), "A", 6.4%, 2017 1,000,000 997,390
Florida Multi-Family Housing Finance Agency Rev. (Center
Court Apartments), 8.5%, 2006 (c) 830,000 852,601
GMAC Municipal Mortgage Trust, "B-1", 5.6%, 2039 (a) 1,000,000 1,024,770
GMAC Municipal Mortgage Trust, "C-1", 5.7%, 2040 (a) 500,000 495,990
Indianapolis, IN, Multi-Family Rev. (Cambridge Station
Apartments II), FNMA, 5.25%, 2039 465,000 469,529
Metropolitan Government of Nashville & Davidson County, TN,
Health & Educational & Housing Facilities Board Rev.
(Berkshire Place), GNMA, 6%, 2023 500,000 520,525
Munimae, TE, Bond Subsidiary LLC, 6.875%, 2009 2,000,000 2,138,840
Munimae, TE, Bond Subsidiary LLC, 5.4%, 2049 (a) 1,000,000 996,610
North Charleston, SC, Housing Authority Rev. (Horizon
Village), "A", GNMA, 5.15%, 2048 445,000 431,601
San Bernardino County, CA (Equity Residential/Redlands),
"A", 5.2%, 2029 2,000,000 2,040,180
Seattle, WA, Housing Authority Rev., Capped Fund Program
(High Rise Rehab), "I", FSA, 5%, 2025 670,000 664,231
-------------
$ 15,759,967
--------------------------------------------------------------------------------------------------
Sales & Excise Tax Revenue - 0.2%
--------------------------------------------------------------------------------------------------
Desloge, MO, Tax Increment Rev. (U.S. Highway 67 Street
Redevelopment), 5.2%, 2020 $ 500,000 $ 495,795
--------------------------------------------------------------------------------------------------
Single Family Housing - Local - 2.6%
--------------------------------------------------------------------------------------------------
Cook County, IL, Single Family Mortgage Rev., "A", 0%, 2015 $ 55,000 $ 12,675
Corpus Christi, TX, Housing Finance Authority Rev.,
"B", 0%, 2011 2,580,000 1,555,353
Dallas, TX, Housing Finance Corp., Single Family Mortgage
Rev., MBIA, 0%, 2016 2,820,000 967,880
Jefferson Parish, LA, Single Family Mortgage Rev., GNMA,
6.625%, 2023 285,000 292,755
Jefferson Parish, LA, Single Family Mortgage Rev., GNMA,
6.75%, 2030 425,000 440,105
Jefferson Parish, LA, Single Family Mortgage Rev., GNMA,
6.3%, 2032 735,000 762,563
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", FNMA, 5.55%, 2037 1,000,000 1,059,470
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 6.45%, 2029 450,000 461,210
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A", GNMA, 5.65%, 2037 780,000 820,755
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-1", GNMA, 5.75%, 2037 280,000 296,103
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
"A-5", GNMA, 5.9%, 2037 205,000 221,449
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
Mortgage Backed Securities Program, "A-2", GNMA, 5.6%, 2029 725,000 768,674
Sedgwick & Shawnee Counties, KS, Single Family Housing Rev.,
Mortgage Backed Securities Program, "A-2",GNMA, 5.75%, 2037 555,000 587,967
-------------
$ 8,246,959
--------------------------------------------------------------------------------------------------
Single Family Housing - State - 2.7%
--------------------------------------------------------------------------------------------------
Colorado Housing & Finance Authority Rev., "A-2",
7.15%, 2014 $ 8,000 $ 8,143
Colorado Housing & Finance Authority Rev., "A-2", AMBAC,
6.6%, 2028 365,000 375,424
Colorado Housing & Finance Authority Rev., "C-2",
5.9%, 2023 200,000 207,890
Colorado Housing & Finance Authority Rev., "C-2", FHA,
6.6%, 2032 200,000 206,140
Colorado Housing & Finance Authority Rev., "C-3", FHA,
6.375%, 2033 90,000 92,079
Colorado Housing & Finance Authority Rev., "D-2",
6.9%, 2029 430,000 443,898
Georgia Housing & Finance Authority Rev., 5.65%, 2021 2,490,000 2,536,015
Louisiana Housing Finance Agency, Single Family Mortgage
Rev., GNMA, 6.4%, 2032 160,000 162,304
Minnesota Housing Finance Agency Rev., Residential Housing
Finance, "B", 4.8%, 2023 225,000 226,114
Missouri State Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.35%, 2032 330,000 338,514
Missouri State Housing Development Commission, Single Family
Mortgage Rev. (Home Loan Program), GNMA, 6.85%, 2032 170,000 175,617
Nebraska Investment Finance Authority Single Family Mortgage
Rev., 0%, 2015 5,900,000 2,509,801
Nebraska Investment Finance Authority, "C", GNMA,
6.25%, 2021 460,000 472,213
New Hampshire Housing Finance Authority Rev., "B",
5.875%, 2030 100,000 100,743
Texas Affordable Housing Corp., Single Family Mortgage Rev.,
"B", 5.25%, 2039 745,000 766,225
-------------
$ 8,621,120
--------------------------------------------------------------------------------------------------
Solid Waste Revenue - 1.7%
--------------------------------------------------------------------------------------------------
Delaware County, PA, Industrial Development Authority Rev.,
Resource Recovery Facilities, (American Ref-fuel), "A",
6.5%, 2008 $ 1,600,000 $ 1,653,392
Massachusetts Development Finance Agency Rev. (Ogden
Haverhill Associates), 6.7%, 2014 725,000 790,511
Massachusetts Industrial Finance Agency, Resource Recovery
Rev. (Ogden Haverhill Associates), 5.6%, 2019 2,850,000 2,942,568
-------------
$ 5,386,471
--------------------------------------------------------------------------------------------------
State & Local Agencies - 1.9%
--------------------------------------------------------------------------------------------------
Chicago, IL, Public Building Commission, Building Rev.,
RITES, FGIC, 9.307%, 2016 (v)(z) $ 1,300,000 $ 1,519,570
Chicago, IL, Public Building Commission, Building Rev.,
RITES, FGIC, 9.307%, 2017 (v)(z) 1,050,000 1,232,364
College Park, GA, Industrial Development Authority Rev.
(Civic Center), AMBAC, 5.75%, 2010 (c) 1,000,000 1,098,300
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement Rev., Enhanced, "B", 5.375%, 2010 (c) 2,000,000 2,125,660
-------------
$ 5,975,894
--------------------------------------------------------------------------------------------------
Student Loan Revenue - 0.2%
--------------------------------------------------------------------------------------------------
Access to Loans for Learning, California Student Loan Rev.,
7.95%, 2030 $ 650,000 $ 680,713
--------------------------------------------------------------------------------------------------
Tax - Other - 1.8%
--------------------------------------------------------------------------------------------------
Black Hawk, CO, Device Tax Rev., 5.625%, 2021 $ 250,000 $ 252,038
Dade County, FL, Special Obligations Rev., Capital
Appreciation Bond, "B", AMBAC, 0%, 2008 (c) 15,080,000 3,085,217
New Jersey Economic Development Authority Rev. Cigarette
Tax, 5.5%, 2024 340,000 354,236
New Jersey Economic Development Authority Rev. Cigarette
Tax, 5.75%, 2029 615,000 651,814
New Jersey Economic Development Authority Rev. Cigarette
Tax, 5.5%, 2031 270,000 280,390
New Jersey Economic Development Authority Rev. Cigarette
Tax, 5.75%, 2034 410,000 432,009
Virgin Islands Public Finance Authority Rev., 6%, 2006 250,000 252,033
Virgin Islands Public Finance Authority Rev., "E",
5.875%, 2018 500,000 524,575
-------------
$ 5,832,312
--------------------------------------------------------------------------------------------------
Tax Assessment - 5.3%
--------------------------------------------------------------------------------------------------
Allegheny County, PA, Redevelopment Authority Rev.
(Pittsburgh Mills), 5.1%, 2014 $ 235,000 $ 241,357
Allegheny County, PA, Redevelopment Authority Rev.
(Pittsburgh Mills), 5.6%, 2023 150,000 156,594
Arborwood Community Development District, Florida Capital
Improvement Rev. (Master Infrastructure Projects), "A",
5.35%, 2036 630,000 624,229
Arborwood Community Development District, Florida Capital
Improvement Rev. (Master Infrastructure Projects), "B",
5.1%, 2014 250,000 246,790
Atlanta, GA, Tax Allocation (Eastside Project), "B",
5.6%, 2030 815,000 830,461
Atlanta, GA, Tax Allocation (Princeton Lakes Project),
5.5%, 2031 555,000 555,216
Capital Region Community Development District, FL, Capital
Improvement Rev., "B", 5.95%, 2006 65,000 65,000
Chicago IL, Ryan Garfield Tax Increment Allocation,
10.125%, 2007 425,000 424,928
Concord Station Community Development District, FL, Capital
Improvement Rev., 5%, 2015 290,000 286,317
Concorde Estates Community Development District, FL, Capital
Improvement Rev., "B", 5%, 2011 620,000 617,880
Fishhawk Community Development District, FL, 5.125%, 2009 740,000 737,380
Katy, TX, Development Authority Rev., 5.8%, 2011 825,000 849,024
Katy, TX, Development Authority Rev., "B", 6%, 2018 925,000 952,898
Killarney, FL, Community Development District, "B",
5.125%, 2009 375,000 373,673
Lakes by the Bay South Community Development District, FL,
Special Assessment, "B", 5.3%, 2009 1,025,000 1,022,479
Lancaster County, SC, Assessment Rev. (Sun City Carolina
Lakes), 5.45%, 2037 110,000 111,112
Markham, IL, Tax Increment Rev., 9%, 2012 935,000 936,992
Middle Village Community Development District, FL, Special
Assessment, "B", 5%, 2009 395,000 394,317
New Port Tampa Bay Community Development District, FL,
Special Assessment, "B", 5.3%, 2012 440,000 436,753
North Springs Improvement District, FL, Special Assessment
Rev. (Parkland Golf Country Club), "B-1", 5.125%, 2015 350,000 346,021
North Springs Improvement District, FL, Special Assessment
Rev. (Parkland Golf Country Club), "B-2", 5.125%, 2015 165,000 163,228
Old Palm Community Development District, FL, Special
Assessment (Palm Beach Gardens), "A", 5.9%, 2035 250,000 255,825
Old Palm Community Development District, FL, Special
Assessment (Palm Beach Gardens), "B", 5.375%, 2014 360,000 361,354
Panther Trace, FL, Community Development District Rev., "B",
5%, 2010 980,000 972,954
Parkway Center, FL, Community Development District Rev.,
"B", 5.625%, 2014 1,260,000 1,271,718
Paseo, FL, Community Development District, "B",
4.875%, 2010 505,000 498,076
Preserve at Wilderness Lake, FL, Community Development
District, Capital Improvement, "B", 5%, 2009 185,000 184,649
Prince George's County, MD, Special Obligations (National
Harbor Project), 5.2%, 2034 245,000 242,935
Reunion East Community Development District, FL, Special
Assessment, 5.9%, 2007 100,000 100,226
Sterling Hill Community Development District, FL, Capital
Improvement Rev., 5.5%, 2010 350,000 350,228
Tuscany Reserve Community Development District, FL, "B",
5.25%, 2016 510,000 509,352
Villasol Community Development District, FL, Special
Assessment Rev., "B", 5.375%, 2008 365,000 365,018
Watergrass Community Development District, FL, Special
Assessment Rev., "B", 4.875%, 2010 935,000 926,931
West Villages Improvement District, FL, Rev. (Special
Assessment - Unit of Development No. 3), 5.5%, 2037 480,000 481,536
-------------
$ 16,893,451
--------------------------------------------------------------------------------------------------
Tobacco - 6.3%
--------------------------------------------------------------------------------------------------
Badger, WI, Tobacco Asset Securitization Corp., 6.125%, 2027 $ 4,065,000 $ 4,288,169
California County, CA, Tobacco Securitization Corp., Tobacco
Settlement, L.A. County, "A", 0%, 2041 485,000 376,627
California Statewide Financing Authority, Tobacco
Settlement, 5.625%, 2029 1,775,000 1,833,344
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico,
"A", 0%, 2050 4,000,000 261,720
Children's Trust Fund, Tobacco Settlement Rev., Puerto Rico,
"B", 0%, 2055 4,000,000 138,680
District of Columbia, Tobacco Settlement, 6.25%, 2024 1,150,000 1,218,678
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement, 7.8%, 2042 1,000,000 1,184,840
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement, "A", 5%, 2021 720,000 724,486
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement, "A-1", 6.25%, 2033 785,000 853,075
Golden State, CA, Tobacco Securitization Corp., Tobacco
Settlement, "A-1", 6.625%, 2040 125,000 138,154
Iowa Tobacco Settlement Authority, Tobacco Settlement Rev.,
Asset Backed, "B", 5.3%, 2011 (c) 2,000,000 2,124,740
Iowa Tobacco Settlement Authority, Tobacco Settlement Rev.,
Asset Backed, "B", 0% to 2007, 5.6% to 2034 1,635,000 1,521,237
Louisiana Tobacco Settlement Authority, 5.5%, 2030 1,435,000 1,489,071
New Jersey Tobacco Settlement Authority, 5.75%, 2032 950,000 985,720
Rockland Tobacco Asset Securitization Corp., NY, Tobacco
Asset Backed, "C", 0%, 2060 11,045,000 191,631
South Carolina Tobacco Settlement Authority, 6.375%, 2028 1,075,000 1,148,562
South Carolina Tobacco Settlement Authority, "B", 6%, 2022 1,260,000 1,319,321
Tobacco Settlement Financing Corp., 5.625%, 2037 50,000 51,094
Tobacco Settlement Financing Corp., 7%, 2041 15,000 17,047
Washington Tobacco Settlement Authority, 6.5%, 2026 155,000 168,611
-------------
$ 20,034,807
--------------------------------------------------------------------------------------------------
Toll Roads - 1.0%
--------------------------------------------------------------------------------------------------
E-470 Public Highway Authority, Colorado Rev., Capital
Appreciation, "B", MBIA, 0%, 2027 $ 4,115,000 $ 1,370,048
Niagara Falls, NY, Bridge Commission, Toll Rev., RITES,
FGIC, 6.476%, 2015 (v)(z) 1,500,000 1,728,810
-------------
$ 3,098,858
--------------------------------------------------------------------------------------------------
Transportation - Special Tax - 2.8%
--------------------------------------------------------------------------------------------------
Missouri Highways & Transportation Commission, State Road
Rev., "A", 5.625%, 2018 $ 4,500,000 $ 4,804,830
Telluride, CO, Real Estate Transfer Assessment Rev. (Gondola
Transit Co.), ETM, 11.5%, 2012 (c) 2,900,000 3,954,585
-------------
$ 8,759,415
--------------------------------------------------------------------------------------------------
Universities - Colleges - 2.9%
--------------------------------------------------------------------------------------------------
California Educational Facilities Authority Rev. (L.A.
College of Chiropractic), 5.6%, 2017 $ 750,000 $ 723,165
Houston, TX, Community College Systems, MBIA,
7.875%, 2025 2,500,000 3,002,850
Illinois Educational Facilities Authority Rev. (Augustana
College), "A", 5.625%, 2022 400,000 420,032
Illinois Finance Authority Rev. (Illinois Institute of
Technology), "A", 5%, 2036 480,000 481,469
Louisiana State University (Health Sciences Center Project),
MBIA, 6.375%, 2031 2,500,000 2,735,625
Private Colleges & Universities Authority, GA, Rev. (Mercer
University Project), "A", 5.375%, 2029 240,000 244,438
Savannah, GA, Economic Development Authority Rev. (College
of Art & Design, Inc.), 6.5%, 2009 (c) 625,000 683,363
University of Arkansas, University Rev. (UAMS Campus), "B",
MBIA, 5%, 2034 300,000 309,210
University of Colorado Enterprise Systems Rev., Refunding &
Improvement, FGIC, 5%, 2030 635,000 656,031
-------------
$ 9,256,183
--------------------------------------------------------------------------------------------------
Universities - Secondary Schools - 1.1%
--------------------------------------------------------------------------------------------------
California Statewide Communities, Development Authority Rev.
(Escondido Charter High School), 7.5%, 2023 $ 570,000 $ 604,246
California Statewide Communities, Development Authority Rev.
(Escondido Charter High School), 7.5%, 2036 1,000,000 1,056,770
Maryland Industrial Development Financing Authority,
Economic Development Authority Rev., (Our Lady of Good
Council), "A", 6%, 2035 150,000 158,601
Michigan Municipal Bond Authority Rev. (YMCA Service
Learning Academy), 7.625%, 2021 1,000,000 1,061,590
Pima County, AZ, Industrial Development Authority Education
Rev. (Arizona Charter Schools), "C", 6.75%, 2031 500,000 519,175
-------------
$ 3,400,382
--------------------------------------------------------------------------------------------------
Utilities - Cogeneration - 2.0%
--------------------------------------------------------------------------------------------------
Alaska Industrial Development Export Authority, Power Rev.,
Upper Lynn Canal Regional Power, 5.8%, 2018 $ 830,000 $ 799,240
Carbon County, PA, Industrial Development Authority Rev.
(Panther Creek Partners), 6.65%, 2010 2,055,000 2,160,545
Klamath Falls, OR, Electric Rev. (Klamath Cogeneration),
6%, 2025 2,260,000 1,810,486
Pennsylvania Economic Development Financing Authority Rev.,
Resources Recovery Rev. (Colver), "G", 5.125%, 2015 350,000 341,474
Pennsylvania Economic Development Financing Authority Rev.,
Resources Recovery Rev. (Northampton Generating),
6.4%, 2009 350,000 347,498
Pennsylvania Economic Development Financing Authority Rev.,
Resources Recovery Rev. (Northampton Generating),
6.5%, 2013 1,000,000 986,720
-------------
$ 6,445,963
--------------------------------------------------------------------------------------------------
Utilities - Investor Owned - 10.0%
--------------------------------------------------------------------------------------------------
Brazos River Authority, TX, Authority Texas Rev. (Reliant
Energy, Inc.), "A", 5.375%, 2019 $ 500,000 $ 506,585
Brazos River Authority, TX, Authority Texas Rev. (Reliant
Energy, Inc.), "B", AMBAC, 5.125%, 2020 2,000,000 2,065,660
Brazos River Authority, TX, Pollution Control Rev. (Texas
Utility Co.), "B", 6.3%, 2032 315,000 341,586
Brazos River Authority, TX, Pollution Control Rev. (Texas
Utility Co.), "C", 6.75%, 2038 715,000 793,421
Calcasieu Parish, LA, Industrial Development Board,
Pollution Control Rev. (Entergy Gulf States, Inc.),
5.45%, 2010 1,250,000 1,268,125
Clark County, NV, Industrial Development Rev. (Southwest Gas
Corp.), "A", AMBAC, 4.85%, 2035 1,055,000 1,032,296
Connecticut Development Authority, Pollution Control Rev.
(Connecticut Light & Power Co.), 5.85%, 2028 2,000,000 2,110,540
Connecticut Development Authority, Pollution Control Rev.
(Connecticut Light & Power Co.), 5.95%, 2028 2,270,000 2,389,901
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), 5.8%, 2022 2,105,000 2,134,344
Farmington, NM, Pollution Control Rev. (New Mexico Public
Service), "A", 6.3%, 2016 2,195,000 2,275,513
Forsyth, MT, Pollution Control Rev. (Northwestern Corp.),
AMBAC, 4.65%, 2023 970,000 967,653
Forsyth, MT, Pollution Control Rev. (Portland General),
5.2%, 2033 230,000 235,828
Matagorda County, TX (Centerpoint Energy), 5.6%, 2027 1,500,000 1,544,610
Matagorda County, TX, Pollution Control Rev. (Reliant
Energy), 5.95%, 2030 1,655,000 1,692,204
Mecklenburg County, VA, Industrial Development Authority
Rev. (UAE Mecklenburg LP), 6.5%, 2017 800,000 871,416
New Hampshire Business Finance Authority, Pollution Control
Rev. (Public Service of New Hampshire), 6%, 2021 1,000,000 1,037,650
Ohio Air Quality Development Authority, Pollution Control
Rev. (Cleveland Electric), "B", 6%, 2020 3,000,000 3,116,700
Pima County, AZ, Industrial Development Authority Rev.
(Tucson Electric Power Co.), "A", 6.1%, 2025 650,000 652,665
Pittsylvania County, VA, Industrial Development Authority
Rev., 7.5%, 2014 3,000,000 3,046,020
Port Morrow, OR, Pollution Control Rev. (Portland General
Electric), 5.2%, 2033 550,000 566,885
Trinity River Authority, TX, Pollution Control Rev. (TXU
Electric Co.), 6.25%, 2028 500,000 540,335
West Feliciana Parish, LA, Pollution Control Rev. (Gulf
States Utilities Co.), 5.8%, 2015 1,500,000 1,510,170
West Feliciana Parish, LA, Pollution Control Rev. (Gulf
States Utilities Co.), 5.8%, 2016 1,000,000 1,005,150
-------------
$ 31,705,257
--------------------------------------------------------------------------------------------------
Utilities - Municipal Owned - 2.4%
--------------------------------------------------------------------------------------------------
North Carolina Eastern Municipal Power Agency, Power Systems
Rev., "B", 5.55%, 2014 $ 2,150,000 $ 2,267,992
North Carolina Municipal Power Agency (Catawba Electric
Rev.), "B", 6.5%, 2020 2,000,000 2,178,040
Seattle, WA, Municipal Light & Power Rev., 5.625%, 2017 3,000,000 3,201,990
Southern California Public Power Authority (Transmission
Project Rev.), RIBS, 8.167%, 2012 (v) 100,000 100,296
-------------
$ 7,748,318
--------------------------------------------------------------------------------------------------
Water & Sewer Utility Revenue - 2.6%
--------------------------------------------------------------------------------------------------
Everett, WA, Water & Sewer Rev., MBIA, 5%, 2027 $ 280,000 $ 290,564
Louisville & Jefferson, KY, District Sewer & Drain System,
"A", FGIC, 5.25%, 2037 865,000 917,367
Magnolia, TX, Water & Sewer System Rev., 5.15%, 2031 205,000 205,139
Mississippi Development Bank Special Obligations, Grenada,
MS, Water & Sewer Systems Project, "N", FSA, 5%, 2030 710,000 731,840
New York City, NY, Municipal Water & Sewer Finance Authority
Rev., 5.5%, 2010 (c) 5,000,000 5,393,450
Upland, CA, Public Financing Authority Rev., Water Systems
Improvement, AMBAC, 5%, 2033 850,000 867,366
-------------
$ 8,405,726
--------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (IDENTIFIED COST, $421,723,359) $ 446,965,162
--------------------------------------------------------------------------------------------------
Floating Rate Demand Notes - 0.1%
--------------------------------------------------------------------------------------------------
New Castle, PA, Area Hospital Authority (Jameson Memorial
Hospital), 3.9%, due 5/03/06, at Identified Cost $ 125,000 $ 125,000
--------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (IDENTIFIED COST, $421,848,359) (k) $ 447,090,162
--------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities - 3.4% 10,787,712
--------------------------------------------------------------------------------------------------
PREFERRED SHARES (ISSUED BY THE TRUST) - (44.1)% $(140,059,172)
--------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES - 100.0% $ 317,818,702
--------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
NOTIONAL PRINCIPAL CASH FLOWS UNREALIZED
AMOUNT OF CASH FLOWS PAID RECEIVED BY APPRECIATION
EXPIRATION CURRENCY CONTRACT BY THE FUND THE FUND (DEPRECIATION)
--------------------------------------------------------------------------------------------------
08/29/2016 USD $45,000,000 Fixed - 10 Year Floating - 7 Day $616,718
BMA Swap Index BMA Swap Index
(3.927%)
05/16/2018 USD $25,000,000 Fixed - 12 Year Floating - 7 Day 789,943
BMA Swap Index BMA Swap Index
(3.797%)
--------------------------------------------------------------------------------------------------
$1,406,661
--------------------------------------------------------------------------------------------------
At April 30, 2006 the trust had sufficient cash and/or securities to cover any
commitments under these derivative contracts.
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. At period end, the aggregate
value of these securities was $8,741,708, representing 2.8% of net assets
applicable to common shares.
(c) Refunded bond.
(k) As of April 30, 2006, the trust held securities fair valued in accordance
with the policies adopted by the Board of Trustees, aggregating $446,965,162
and 99.97% of market value provided by an independent pricing service using
an evaluated bid.
(q) Interest received was less than stated coupon rate.
(v) Inverse floating rate security.
(z) Restricted securities (excluding 144A issues) are not registered under the
Securities Act of 1933 and are subject to legal or contractual restrictions
on resale. These securities generally may be resold in transactions exempt
from registration or to the public if the securities subsequently are
registered. Disposal of these securities may involve time-consuming
negotiations and prompt sale at an acceptable price may be difficult. The
trust holds the following restricted securities:
TOTAL % OF
NET ASSETS
ACQUISITION ACQUISITION CURRENT APPLICABLE TO
RESTRICTED SECURITIES DATE COST MARKET VALUE COMMON SHARES
-------------------------------------------------------------------------------------------------------
Chicago, IL, O'Hare International Airport
Rev., RITES, XLCA, 7.417%, 2022 8/21/2003 $1,599,510 $1,740,528
Chicago, IL, Public Building Commission,
Building Rev., RITES, FGIC, 9.307%, 2016 3/11/1999 1,403,610 1,519,570
Chicago, IL, Public Building Commission,
Building Rev., RITES, FGIC, 9.307%, 2017 3/11/1999 1,123,542 1,232,364
Niagara Falls, NY, Bridge Commission,
Toll Rev., RITES, FGIC, 6.476%, 2015 5/21/1999 1,609,680 1,728,810
-------------------------------------------------------------------------------------------------------
Total Restricted Securities $6,221,272 2.0%
-------------------------------------------------------------------------------------------------------
The following abbreviations are used in the Portfolio of Investments and are
defined:
BMA Bond Market Assn.
COP Certificate of Participation
ETM Escrowed to Maturity
Insurers
AMBAC AMBAC Indemnity Corp.
FGIC Financial Guaranty Insurance Co.
FHA Federal Housing Administration
FNMA Federal National Mortgage Assn.
FSA Financial Security Assurance, Inc.
GNMA Government National Mortgage Assn.
MBIA MBIA Insurance Corp.
PSF Permanent School Fund
XLCA XL Capital Insurance Co.
Inverse Floaters
INFLOS Inverse Floating Security
RIBS Residual Interest Bonds
RITES Residual Interest Tax-Exempt Security
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Assets and Liabilities (unaudited)
This statement represents your trust's balance sheet, which details the assets
and liabilities comprising the total value of the trust.
AT 4/30/06
ASSETS
------------------------------------------------------------------------------------------
Investments, at value (identified cost, $421,848,359) $447,090,162
Cash 2,147,036
Receivable for investments sold 2,548,197
Interest receivable 8,360,383
Unrealized appreciation on interest rate swap agreements 1,406,661
Other assets 2,180
------------------------------------------------------------------------------------------
Total assets $461,554,619
------------------------------------------------------------------------------------------
LIABILITIES
------------------------------------------------------------------------------------------
Payable to dividend disbursing agent - common shares $162,873
Payable for investments purchased 3,228,281
Payable to affiliates
Management fee 29,101
Transfer agent and dividend disbursing costs 19,556
Administrative services fee 767
Payable for independent trustees' compensation 128,844
Accrued expenses and other liabilities 107,323
------------------------------------------------------------------------------------------
Total liabilities $3,676,745
------------------------------------------------------------------------------------------
PREFERRED SHARES
------------------------------------------------------------------------------------------
Series T and Series TH auction preferred shares (5,600 shares
issued and outstanding at $25,000 per share) at liquidation
value plus cumulative unpaid dividends $140,059,172
------------------------------------------------------------------------------------------
Net assets applicable to common shares $317,818,702
------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
------------------------------------------------------------------------------------------
Paid-in capital - common shares $313,457,019
Unrealized appreciation (depreciation) on investments 26,648,464
Accumulated net realized gain (loss) on investments (27,167,331)
Undistributed net investment income 4,880,550
------------------------------------------------------------------------------------------
Net assets applicable to common shares $317,818,702
------------------------------------------------------------------------------------------
Preferred shares, at value (5,600 shares issued and outstanding
at $25,000 per share) 140,000,000
------------------------------------------------------------------------------------------
Net assets including preferred shares $457,818,702
------------------------------------------------------------------------------------------
Common shares of beneficial interest outstanding (40,039,453
shares issued less 55,500 treasury shares) 39,983,953
------------------------------------------------------------------------------------------
Net asset value per share (net assets of $317,818,702/
39,983,953 shares of beneficial interest outstanding) $7.95
------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statement of Operations (unaudited)
This statement describes how much your trust earned in investment income and
accrued in expenses. It also describes any gains and/or losses generated by
trust operations.
SIX MONTHS ENDED 4/30/06
NET INVESTMENT INCOME
------------------------------------------------------------------------------------
Interest income $13,598,074
------------------------------------------------------------------------------------
Expenses
Management fee $1,745,081
Transfer agent and dividend disbursing costs 54,761
Administrative services fee 28,495
Independent trustees' compensation 22,334
Stock exchange fee 17,692
Preferred shares remarketing agent fee 173,704
Custodian fee 56,606
Shareholder communications 45,957
Auditing fees 38,484
Legal fees 4,787
Miscellaneous 66,733
------------------------------------------------------------------------------------
Total expenses $2,254,634
------------------------------------------------------------------------------------
Fees paid indirectly (19,646)
Reduction of expenses by investment adviser (1,085)
------------------------------------------------------------------------------------
Net expenses $2,233,903
------------------------------------------------------------------------------------
Net investment income $11,364,171
------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
------------------------------------------------------------------------------------
Realized gain (loss) (identified cost basis)
Investment transactions $260,225
Swap transactions 1,392,477
------------------------------------------------------------------------------------
Net realized gain (loss) on investments $1,652,702
------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)
Investments $1,221,732
Swap transactions (868,656)
------------------------------------------------------------------------------------
Net unrealized gain (loss) on investments $353,076
------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments $2,005,778
------------------------------------------------------------------------------------
Distributions declared from preferred shares $(2,138,316)
------------------------------------------------------------------------------------
Change in net assets from operations $11,231,633
------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Statements of Changes in Net Assets
This statement describes the increases and/or decreases in net assets
resulting from operations, any distributions, and any shareholder
transactions.
SIX MONTHS ENDED YEAR ENDED
4/30/06 10/31/05
(UNAUDITED)
CHANGE IN NET ASSETS
----------------------------------------------------------------------------------------
FROM OPERATIONS
----------------------------------------------------------------------------------------
Net investment income $11,364,171 $23,600,281
Net realized gain (loss) on investments 1,652,702 (9,378,554)
Net unrealized gain (loss) on investments 353,076 12,923,488
Distributions declared from preferred shares (2,138,316) (3,025,056)
----------------------------------------------------------------------------------------
Change in net assets from operations $11,231,633 $24,120,159
----------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS
----------------------------------------------------------------------------------------
From net investment income $(10,265,277) $(21,742,129)
----------------------------------------------------------------------------------------
Net asset value of shares issued to common shareholders in
reinvestment of distributions $656,359 $993,010
----------------------------------------------------------------------------------------
Total change in net assets $1,622,715 $3,371,040
----------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES
----------------------------------------------------------------------------------------
At beginning of period $316,195,987 $312,824,947
At end of period (including undistributed net investment
income of $4,880,550 and $5,919,972, respectively) $317,818,702 $316,195,987
----------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Financial Highlights
The financial highlights table is intended to help you understand the trust's financial performance for the semiannual
period and the past 5 fiscal years. Certain information reflects financial results for a single trust share. The total
returns in the table represent the rate by which an investor would have earned (or lost) on an investment in the trust
share class (assuming reinvestment of all distributions) held for the entire period.
SIX MONTHS YEARS ENDED 10/31
ENDED --------------------------------------------------------------
4/30/06 2005 2004 2003 2002 2001
(UNAUDITED)
Net asset value, beginning
of period $7.92 $7.86 $7.69 $7.61 $7.93 $7.79
-----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
-----------------------------------------------------------------------------------------------------------------------
Net investment income (d) $0.28 $0.59 $0.60 $0.61 $0.64 $0.64
Net realized and unrealized gain
(loss) on investments 0.06 0.10 0.16 0.04 (0.38) 0.18
Distributions declared to
shareholders on preferred shares (0.05) (0.08) (0.04) (0.04) (0.05) (0.10)
-----------------------------------------------------------------------------------------------------------------------
Total from investment operations $0.29 $0.61 $0.72 $0.61 $0.21 $0.72
-----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED
TO SHAREHOLDERS
-----------------------------------------------------------------------------------------------------------------------
From net investment income,
common shares $(0.26) $(0.55) $(0.55) $(0.53) $(0.53) $(0.53)
-----------------------------------------------------------------------------------------------------------------------
Preferred shares offering cost
charged to paid-in capital $-- $-- $-- $-- $-- $(0.05)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.95 $7.92 $7.86 $7.69 $7.61 $7.93
-----------------------------------------------------------------------------------------------------------------------
Common share market value, end of
period $8.23 $8.27 $7.83 $7.49 $7.15 $7.83
-----------------------------------------------------------------------------------------------------------------------
Total return at common market value
(%) (p)(r)(s) 2.73(n) 13.18 12.22 12.51 (2.23) 13.58
-----------------------------------------------------------------------------------------------------------------------
RATIOS (%) (TO AVERAGE NET ASSETS
APPLICABLE TO COMMON SHARES)
AND SUPPLEMENTAL DATA:
-----------------------------------------------------------------------------------------------------------------------
Expenses before expense
reductions (f)(p) 1.43(a) 1.44 1.46 1.51 1.56 1.49
Expenses after expense
reductions (f)(p) 1.43(a) 1.44 1.46 1.51 1.56 1.49
Net investment income (p) 7.23(a) 7.45 7.70 7.98 8.26 8.12
Portfolio turnover 9 14 9 11 16 26
Net assets at end of period
(000 Omitted) $317,819 $316,196 $312,825 $305,383 $302,010 $312,996
-----------------------------------------------------------------------------------------------------------------------
Financial Highlights - continued
SIX MONTHS YEARS ENDED 10/31
ENDED --------------------------------------------------------------
4/30/06 2005 2004 2003 2002 2001
(UNAUDITED)
SUPPLEMENTAL RATIOS (%)
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets including preferred
shares (f)(p) 1.00(a) 0.99 1.00 1.03 1.07 1.07
Preferred shares dividends 1.36(a) 0.95 0.49 0.48 0.68 1.28
Net investment income available to
common shares 5.87(a) 6.49 7.22 7.50 7.58 6.84
SENIOR SECURITIES:
-----------------------------------------------------------------------------------------------------------------------
Total preferred shares outstanding 5,600 5,600 5,600 5,600 5,600 5,600
Asset coverage per preferred
share (k) $81,764 $81,464 $80,862 $79,533 $79,090 $80,897
Involuntary liquidation preference
per preferred share $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Approximate market value per
preferred share $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
(a) Annualized.
(d) Per share data are based on average shares outstanding.
(f) Ratios do not reflect reductions from fees paid indirectly.
(k) Calculated by subtracting the trust's total liabilities (not including preferred shares) from the trust's total
assets and dividing this number by the number of perferred shares outstanding.
(n) Not annualized.
(p) Ratio excludes dividend payment on auction preferred shares.
(r) Certain expenses have been reduced without which performance would have been lower.
(s) From time to time the trust may receive proceeds from litigation settlements, without which performance would be
lower.
SEE NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS (unaudited)
(1) BUSINESS AND ORGANIZATION
MFS Municipal Income Trust (the trust) is a trust that is organized as a
Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as a closed-end management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL - The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
trust can invest up to 100% of its portfolio in high-yield securities rated
below investment grade. Investments in high-yield securities involve greater
degrees of credit and market risk than investments in higher-rated securities
and tend to be more sensitive to economic conditions. Municipal securities
backed by current or anticipated revenues from a specific project or specific
assets can be negatively affected by the discontinuance of the taxation
supporting the projects or assets or the inability to collect revenues for the
project or from the assets. If the Internal Revenue Service determines an
issuer of a municipal security has not complied with applicable tax
requirements, the security could decline in value, interest from the security
could become taxable and the trust may be required to issue Forms 1099-DIV.
INVESTMENT VALUATIONS - Debt instruments (other than short-term instruments),
including restricted debt instruments, are generally valued at an evaluated or
composite bid as reported by an independent pricing service. Values of debt
instruments obtained from pricing services can utilize both dealer-supplied
valuations and electronic data processing techniques, which take into account
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data. Short-term instruments with a maturity at issuance of
397 days or less are generally valued at amortized cost, which approximates
market value. Swaps are generally valued at a broker-dealer bid quotation.
Securities and other assets generally valued on the basis of information from
an independent pricing service may also be valued at a broker-dealer
quotation. The Board of Trustees has delegated primary responsibility for
determining or causing to be determined the value of the trust's investments
(including any fair valuation) to the adviser pursuant to valuation policies
and procedures approved by the Board. If the adviser determines that reliable
market quotations are not readily available, investments are valued at fair
value as determined in good faith by the adviser in accordance with such
procedures under the oversight of the Board of Trustees. Under the trust's
valuation policies and procedures, market quotations are not considered to be
readily available for many types of debt instruments. These investments are
generally valued at fair value based on information from independent pricing
services. These valuations can be based on both dealer-supplied valuations and
electronic data processing techniques, which take into account factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. The adviser may rely on independent pricing services or other
information (such as the correlation with price movements of similar
securities in the same or other markets; the type, cost and investment
characteristics of the security; the business and financial condition of the
issuer; and trading and other market data) to assist in determining whether to
fair value and at what value to fair value an investment. The value of an
investment for purposes of calculating the trust's net asset value can differ
depending on the source and method used to determine value. When fair
valuation is used, the value of investments used to determine the trust's net
asset value may differ from quoted or published prices for the same
investments.
DERIVATIVE RISK - The trust may invest in derivatives for hedging or non-
hedging purposes. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. When the trust uses derivatives as an investment to
gain market exposure, or for hedging purposes, gains and losses from
derivative instruments may be substantially greater than the derivative's
original cost. Derivative instruments include swap agreements.
SWAP AGREEMENTS - The trust may enter into swap agreements. A swap is an
exchange of cash payments between the trust and another party. Net cash
payments are exchanged at specified intervals and are recorded as a realized
gain or loss in the Statement of Operations. The value of the swap is adjusted
daily and the change in value is recorded as unrealized appreciation or
depreciation in the Statement of Operations. Risks may arise upon entering
into these agreements from the potential inability of counterparties to meet
the terms of their contract and from unanticipated changes in the value of the
financial index on which the swap agreement is based.
INTEREST RATE SWAP AGREEMENTS - Interest rate swap agreements are agreements
to exchange cash flows periodically based on a notional principal amount, such
as the exchange of fixed rate interest payments for floating rate interest
payments, which are based on a specific financial index, or the exchange of
two distinct floating rate payments. The net receivable or payable associated
with these payments is accrued daily and recorded as an unrealized gain or
loss, and any payments received or made are recorded as realized gains or
losses, in the Statement of Operations. The primary risk associated with
interest rate swap agreements is that unfavorable changes in the fluctuation
of interest rates could adversely impact the trust.
INVESTMENT TRANSACTIONS AND INCOME - Investment transactions are recorded on
the trade date. Interest income is recorded on the accrual basis. All premium
and discount is amortized or accreted for financial statement purposes in
accordance with U.S. generally accepted accounting principles. All premium and
original issue discount is amortized or accreted for tax reporting purposes as
required by federal income tax regulations. The trust may receive proceeds
from litigation settlements involving its portfolio holdings. Any proceeds
received are reflected in realized gain/loss in the Statement of Operations,
or in unrealized gain/loss if the security is still held by the trust. Legal
fees and other related expenses incurred to preserve and protect the value of
a security owned are added to the cost of the security; other legal fees are
expensed. Capital infusions made directly to the security issuer, which are
generally non-recurring, incurred to protect or enhance the value of high-
yield debt securities, are reported as additions to the cost basis of the
security. Costs that are incurred to negotiate the terms or conditions of
capital infusions or that are expected to result in a plan of reorganization
are reported as realized losses. Ongoing costs incurred to protect or enhance
an investment, or costs incurred to pursue other claims or legal actions, are
expensed.
FEES PAID INDIRECTLY - The trust's custody fee is reduced according to an
arrangement that measures the value of cash deposited with the custodian by
the trust. This amount, for the six months ended April 30, 2006, is shown as a
reduction of total expenses on the Statement of Operations.
TAX MATTERS AND DISTRIBUTIONS - The trust intends to continue to qualify as a
regulated investment company, as defined under Subchapter M of the Internal
Revenue Code, and to distribute all of its taxable and tax-exempt income,
including realized capital gains. Accordingly, no provision for federal income
tax is required in the financial statements.
Distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Certain capital accounts in the financial statements are periodically adjusted
for permanent differences in order to reflect their tax character. These
adjustments have no impact on net assets or net asset value per share.
Temporary differences which arise from recognizing certain items of income,
expense, gain or loss in different periods for financial statement and tax
purposes will reverse at some time in the future. Distributions in excess of
net investment income or net realized gains are temporary overdistributions
for financial statement purposes resulting from differences in the recognition
or classification of income or distributions for financial statement and tax
purposes. Book/tax differences primarily relate to expiration of capital loss
carryforwards, amortization and accretion of debt securities, defaulted bonds
and capitalized workout expenses. The tax character of distributions made
during the current period will be determined at fiscal year end.
The tax character of distributions declared to shareholders is as follows:
OCTOBER 31, 2005 OCTOBER 31, 2004
Ordinary income (including any
short-term capital gains) $60,086 $171,028
Tax-exempt income 24,707,099 23,043,028
--------------------------------------------------------------------
Total distributions $24,767,185 $23,214,056
--------------------------------------------------------------------
The federal tax cost and the tax basis components of distributable earnings
were as follows:
AS OF APRIL 30, 2006
Cost of investments $420,991,495
----------------------------------------------------------
Gross appreciation 27,920,016
Gross depreciation (1,821,349)
----------------------------------------------------------
Net unrealized appreciation (depreciation) $26,098,667
AS OF OCTOBER 31, 2005
Undistributed tax-exempt income 6,143,813
Undistributed ordinary income 181,879
Capital loss carryforwards (29,598,105)
Other temporary differences 1,869,597
Net unrealized appreciation (depreciation) 24,798,143
The aggregate cost above includes prior fiscal year end tax adjustments.
As of October 31, 2005, the trust had available capital loss carryforwards to
offset future realized gains. Such losses expire as follows:
EXPIRATION DATE
October 31, 2006 (1,383,806)
October 31, 2009 (2,847,429)
October 31, 2010 (2,883,947)
October 31, 2011 (10,944,821)
October 31, 2012 (1,858,513)
October 31, 2013 (9,679,589)
---------------------------------------
Total $(29,598,105)
---------------------------------------
(3) TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISER - The trust has an investment advisory agreement with
Massachusetts Financial Services Company (MFS) to provide overall investment
advisory and administrative services, and general office facilities. The
management fee is computed daily and paid monthly at an annual rate of 0.40%
of the trust's average daily net assets and 6.32% of gross investment income.
The management fee, from net assets and gross investment income, incurred for
the six months ended April 30, 2006 was equivalent to an annual effective rate
of 0.77% of the trust's average daily net assets including preferred shares.
TRANSFER AGENT - The trust pays a portion of transfer agent and dividend-
disbursing costs to MFS Service Center, Inc. (MFSC), a wholly-owned subsidiary
of MFS. MFSC receives a fee from the trust, for its services as registrar and
dividend-disbursing agent. The agreement provides that the trust will pay MFSC
an account maintenance fee of no more than $9.00 and a dividend services fee
of $0.75 per reinvestment. For the six months ended April 30, 2006, these fees
amounted to $32,366. MFSC also receives payment from the trust for out-of-
pocket expenses paid by MFSC on behalf of the trust. For the six months ended
April 30, 2006, these costs amounted to $15,030.
ADMINISTRATOR - MFS provides certain financial, legal, shareholder
communications, compliance, and other administrative services to certain funds
for which MFS acts as investment adviser. Under an administrative services
agreement, the funds may partially reimburse MFS the costs incurred to provide
these services, subject to review and approval by the Board of Trustees. Each
fund is charged a fixed amount plus a fee based on calendar year average net
assets. From July 1, 2005 through March 31, 2006, the trust's annual fixed
amount was $10,000. Effective April 1, 2006, the trust's annual fixed amount
is $17,500. The administrative services fee incurred for the six months ended
April 30, 2006 was equivalent to an annual effective rate of 0.0126% of the
trust's average daily net assets including preferred shares.
TRUSTEES' AND OFFICERS' COMPENSATION - The trust pays compensation to
Independent Trustees in the form of a retainer, attendance fees, and
additional compensation to Board and Committee chairpersons. The trust
does not pay compensation directly to Trustees or to officers of the trust
who are also officers of the investment adviser, all of whom receive
remuneration for their services to the trust from MFS. Certain officers and
Trustees of the trust are officers or directors of MFS and MFSC. The trust has
an unfunded, defined benefit plan for retired Independent Trustees which
resulted in a pension expense of $3,415. This amount is included in
Independent trustees' compensation for the six months ended April 30, 2006.
The deferred liability for retirement benefits payable to retired Trustees
amounted to $124,013 at April 30, 2006, and is included in payable for
independent trustees' compensation.
OTHER - This trust and certain other MFS funds (the funds) have entered into a
services agreement (the Agreement) which provides for payment of fees by the
funds to Tarantino LLC in return for the provision of services of an
Independent Chief Compliance Officer (ICCO) for the funds. The ICCO is an
officer of the funds and the sole member of Tarantino LLC. The funds can
terminate the Agreement with Tarantino LLC at any time under the terms of the
Agreement. For the six months ended April 30, 2006, the fee paid to Tarantino
LLC was $1,324. MFS has agreed to reimburse the trust for a portion of the
payments made by the funds to Tarantino LLC in the amount of $1,085, which is
shown as a reduction of total expenses in the Statement of Operations.
Additionally, MFS has agreed to bear all expenses associated with office
space, other administrative support, and supplies provided to the ICCO.
(4) PORTFOLIO SECURITIES
Purchases and sales of investments, other than U.S. government securities,
purchased option transactions, and short-term obligations, aggregated
$40,175,179 and $39,116,722 respectively.
(5) SHARES OF BENEFICIAL INTEREST
The trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest. The Trustees have
authorized the repurchase by the trust of up to 10% annually of its own shares
of beneficial interest. During the six months ended April 30, 2006, the trust
did not repurchase any shares. Transactions in the trust were as follows:
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2006 OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
Shares issued to shareholders in
reinvestment of distributions 82,568 $656,359 124,307 $993,010
-----------------------------------------------------------------------------
(6) LINE OF CREDIT
The trust and other affiliated funds participate in a $1 billion unsecured
line of credit provided by a syndication of banks under a credit agreement.
Borrowings may be made for temporary financing needs. Interest is charged to
each fund, based on its borrowings, at a rate equal to the Federal Reserve
funds rate plus 0.35%. In addition, a commitment fee, based on the average
daily, unused portion of the line of credit, is allocated among the
participating funds at the end of each calendar quarter. The commitment fee
allocated to the trust for the six months ended April 30, 2006 was $1,101, and
is included in miscellaneous expense on the Statement of Operations. The trust
had no significant borrowings during the six months ended April 30, 2006.
(7) AUCTION PREFERRED SHARES
The trust issued 2,800 shares of Auction Preferred Shares ("APS"), series T
and 2,800 of Auction Preferred Shares, series TH. Dividends are cumulative at
a rate that is reset every seven days for both series through an auction
process. During the six months ended April 30, 2006, the dividend rates ranged
from 2.50% to 3.86%. The trust pays an annual fee equivalent to 0.25% of the
preferred share liquidation value for remarketing efforts associated with the
preferred auction. The APS are redeemable at the option of the trust in whole
or in part at the redemption price equal to $25,000 per share, plus
accumulated and unpaid dividends. The APS are also subject to mandatory
redemption if certain requirements relating to their asset maintenance
coverage are not satisfied. The trust is required to maintain certain asset
coverage with respect to the APS as defined in the trust's By-Laws and the
Investment Company Act of 1940.
(8) CONCENTRATION OF CREDIT RISK
At April 30, 2006, 22.77% of securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial
institutions and financial guaranty assurance agencies. The percentage of
investments insured by or supported (backed) by a letter of credit from any
one institution or agency did not exceed 9.28% of total investments.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Shareholders of MFS Municipal Income Trust:
We have reviewed the accompanying statement of assets and liabilities of MFS
Municipal Income Trust (the "Trust"), including the portfolio of investments,
as of April 30, 2006, and the related statement of operations, changes in net
assets, and financial highlights for the six-month period ended April 30,
2006. These interim financial statements and financial highlights are the
responsibility of the Trust's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States),
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying interim financial statements and financial
highlights referred to above for them to be in conformity with accounting
principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the statement of changes
in net assets for the year ended October 31, 2005, and financial highlights
for each of the five years in the period ended October 31, 2005, and in our
report dated December 22, 2005, we expressed an unqualified opinion on such
statement of changes in net assets and financial highlights.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
June 23, 2006
BOARD REVIEW OF INVESTMENT ADVISORY AGREEMENT
A discussion regarding the Board's most recent review and renewal of the
Fund's investment advisory agreement is available by clicking on the fund's
name under "Select a fund" on the MFS Web site (mfs.com).
PROXY VOTING POLICIES AND INFORMATION
A general description of the MFS funds' proxy voting policies and procedures is
available without charge, upon request, by calling 1-800-225-2606, by visiting
the Proxy Voting section of mfs.com or by visiting the SEC's Web site at
http://www.sec.gov.
Information regarding how the fund voted proxies relating to portfolio
securities during the most recent twelve-month period ended June 30 is
available without charge by visiting the Proxy Voting section of mfs.com or by
visiting the SEC's Web site at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The trust will file a complete schedule of portfolio holdings with the
Securities and Exchange Commission (the Commission) for the first and third
quarters of each fiscal year on Form N-Q. The trust's Form N-Q may be reviewed
and copied at the:
Public Reference Room
Securities and Exchange Commission
100 F Street, NE, Room 1580
Washington, D.C. 20549
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-551-5850. The trust's Form N-Q is
available on the EDGAR database on the Commission's Internet Web site at
http://www.sec.gov, and copies of this information may be obtained, upon
payment of a duplicating fee, by electronic request at the following e-mail
address: publicinfo@sec.gov or by writing the Public Reference Section at the
above address.
A shareholder can also obtain the quarterly portfolio holdings report at
mfs.com.
CONTACT INFORMATION AND NUMBER OF SHAREHOLDERS
INVESTOR INFORMATION
Transfer Agent, Registrar and Dividend Disbursing Agent
Call 1-800-637-2304 any business day from 8 a.m. to 8 p.m. Eastern time
Write to: MFS Service Center, Inc.
P.O. Box 55024
Boston, MA 02205-5024
NUMBER OF SHAREHOLDERS
As of April 30, 2006, our records indicate that there are 3,088 registered
shareholders and approximately 13,667 shareholders owning trust shares
in "street" name, such as through brokers, banks, and other financial
intermediaries.
If you are a "street" name shareholder and wish to directly receive our
reports, which contain important information about the trust, please write or
call:
MFS Service Center, Inc.
P.O. Box 55024
Boston, MA 02205-5024
1-800-637-2304
M F S(SM)
INVESTMENT MANAGEMENT(R)
MFS Investment Management(R)
500 Boylston Street, Boston, MA 02116.
MFM-SEM-6/06 20M
ITEM 2. CODE OF ETHICS.
The Registrant has not amended any provision in its Code of Ethics (the "Code")
that relates to any element of the Code's definition enumerated in paragraph
(b) of Item 2 of this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for semi-annual reports.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments for each series of the Registrant is included as part
of the report to shareholders of such series under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable for semi-annual reports.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
General. Information regarding the portfolio managers of the MFS Municipal
Income Trust (the "Fund") provided as of April 30, 2006 is set forth below.
TITLE AND FIVE YEAR
PORTFOLIO MANAGER PRIMARY ROLE SINCE HISTORY
----------------- ------------ ----- --------------------
Gary A. Lasman Portfolio Manager April Vice President of MFS;
2006 employed in the
investment management
area of MFS since 2002;
Senior Municipal
Analyst for Liberty
Funds Group prior to
2002.
Geoffrey L. Schechter Portfolio Manager 2004 Senior Vice President of
MFS; employed in the
investment management
area of MFS since 1993
COMPENSATION. Portfolio manager total cash compensation as of April 30, 2006 is
a combination of base salary and performance bonus:
o Base Salary - Base salary represents a relatively smaller percentage of
portfolio manager total cash compensation (generally below 33%) than
incentive compensation.
o Performance Bonus - Generally, incentive compensation represents a majority
of portfolio manager total cash compensation. The performance bonus is
based on a combination of quantitative and qualitative factors, with more
weight given to the former (generally over 60%) and less weight given to
the latter.
>> The quantitative portion is based on pre-tax performance of all of the
accounts managed by the portfolio manager (which includes the Fund and
any other accounts managed by the portfolio manager) over a one-,
three- and five-year period relative to the appropriate Lipper peer
group universe and/or one or more benchmark indices with respect to
each account. The primary weight is given to portfolio performance
over a three-year time period with lesser consideration given to
portfolio performance over one- and five-year periods (adjusted as
appropriate if the portfolio manager has served for shorter periods).
>> The qualitative portion is based on the results of an annual internal
peer review process (conducted by other portfolio managers, analysts
and traders) and management's assessment of overall portfolio manager
contributions to the investment process (distinct from portfolio
performance).
Portfolio managers also typically benefit from the opportunity to participate
in the MFS Equity Plan. Equity interests in MFS or its parent company are
awarded by management, on a discretionary basis, taking into account tenure at
MFS, contribution to the investment process and other factors.
Finally, portfolio managers are provided with a benefits package including a
defined contribution plan, health coverage and other insurance, which are
available to other employees of MFS on substantially similar terms. The
percentage of compensation provided by these benefits depends upon the length
of the individual's tenure at MFS and salary level as well as other factors.
OWNERSHIP OF FUND SHARES. The following table shows the dollar range of equity
securities of the Fund beneficially owned by the Fund's portfolio manager as of
the Fund's semi-annual period ended April 30, 2006. The following dollar ranges
apply:
N. None
A. $1 - $10,000
B. $10,001 - $50,000
C. $50,001 - $100,000
D. $100,001 - $500,000
E. $500,001 - $1,000,000
F. Over $1,000,000
NAME OF PORTFOLIO MANAGER DOLLAR RANGE OF EQUITY SECURITIES IN FUND
------------------------- -----------------------------------------
Gary A. Lasman N
Geoffrey L. Schechter N
OTHER ACCOUNTS. In addition to the Fund, the Fund's portfolio manager is
responsible (either individually or jointly) for the day-to-day management of
certain other accounts, the number and total assets of which as of the Fund's
semi-annual period ended April 30, 2006 were as follows:
REGISTERED INVESTMENT OTHER POOLED INVESTMENT
COMPANIES VEHICLES OTHER ACCOUNTS
--------------------- ----------------------- --------------
NUMBER OF NUMBER OF NUMBER OF
NAME ACCOUNTS* TOTAL ASSETS* ACCOUNTS TOTAL ASSETS ACCOUNTS TOTAL ASSETS
Gary A. Lasman 2 $1.9 billion 0 N/A 0 N/A
Geoffrey L. Schechter 9 $6 billion 1 $226 million 2 $198.6
million
-----------------
* Includes the Fund.
Advisory fees are not based upon performance of any of the accounts identified
in the table above.
POTENTIAL CONFLICTS OF INTEREST. MFS seek to identify potential conflicts of
interest resulting from a portfolio manager's management of both the Fund and
other accounts and has adopted policies and procedures designed to address such
potential conflicts.
In certain instances there may be securities which are suitable for the Fund's
portfolio as well as for accounts with similar investment objectives of the
Adviser or subsidiary of the Adviser. Securities transactions for the Fund and
other accounts with similar investment objectives are generally executed on the
same day, or the next day. Nevertheless, it may develop that a particular
security is bought or sold for only one client even though it might be held by,
or bought or sold for, other clients. Likewise, a particular security may be
bought for one or more clients when one or more other clients are selling that
same security.
When two or more clients are simultaneously engaged in the purchase or sale of
the same security, the securities are allocated among clients in a manner
believed by MFS to be fair and equitable to each. It is recognized that in some
cases this system could have a detrimental effect on the price or volume of the
security as far as the Fund is concerned. In most cases, however, MFS believes
that the Fund's ability to participate in volume transactions will produce
better executions for the Fund.
MFS does not receive a performance fee for its management of the Fund. MFS
and/or a portfolio manager may have an incentive to allocate favorable or
limited opportunity investments or structure the timing of investments to favor
accounts other than the Fund--for instance, those that pay a higher advisory
fee and/or have a performance fee.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
-------------------------------------------------------------------------------
MFS Municipal Income Trust
-------------------------------------------------------------------------------
(C) (D)
TOTAL NUMBER MAXIMUM NUMBER
OF SHARES (OR APPROXIMATE
PURCHASED AS DOLLAR VALUE) OF
(B) PART OF SHARES THAT MAY
(A) AVERAGE PUBLICLY YET BE PURCHASED
TOTAL NUMBER PRICE ANNOUNCED UNDER
OF SHARES PAID PER PLANS O R THE PLANS
PERIOD PURCHASED SHARE PROGRAMS OR PROGRAMS
-------------------------------------------------------------------------------
11/1/05-11/30/05 0 n/a 0 3,979,505
-------------------------------------------------------------------------------
12/1/05-12/31/05 0 n/a 0 3,979,505
-------------------------------------------------------------------------------
1/1/06 - 1/31/06 0 n/a 0 3,979,505
-------------------------------------------------------------------------------
2/1/06 - 2/28/06 0 n/a 0 3,979,505
-------------------------------------------------------------------------------
3/1/06 - 3/31/06 0 n/a 0 3,994,370
-------------------------------------------------------------------------------
4/1/06 - 4/30/06 0 n/a 0 3,994,370
-------------------------------------------------------------------------------
TOTAL 0 n/a 0
-------------------------------------------------------------------------------
Note: The Board of Trustees approves procedures to repurchase Fund shares
annually. The notification to shareholders of the program is included in the
semi-annual and annual reports sent to shareholders. These annual programs
begin on March 1st of each year. The programs conform to the conditions of Rule
10b-18 of the Securities Exchange Act of 1934 and limit the aggregate number of
shares that may be repurchased in each annual period (March 1 through the
following February 28) to 10% of the Registrant's outstanding shares as of the
first day of the plan year (March 1). The aggregate number of Fund shares
available for repurchase for the March 1, 2006 plan year are 3,994,370.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to the procedures by which shareholders may send
recommendations to the Board for nominees to the Registrant's Board since the
Registrant last provided disclosure as to such procedures in response to the
requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the effectiveness of the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act")) as conducted within 90 days of
the filing date of this Form N-CSR, the registrant's principal financial
officer and principal executive officer have concluded that those
disclosure controls and procedures provide reasonable assurance that the
material information required to be disclosed by the registrant on this
report is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during
the second fiscal quarter of the period covered by the report that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an
exhibit.
(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2): Attached hereto.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act,
provide the certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17
CFR 240.13a-14(b) or 240.15d-14(b)) and Section 1350 of Chapter 63 of
Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A
certification furnished pursuant to this paragraph will not be deemed
"filed" for the purposes of Section 18 of the Exchange Act (15 U.S.C. 78r),
or otherwise subject to the liability of that section. Such certification
will not be deemed to be incorporated by reference into any filing under
the Securities Act of 1933 or the Exchange Act, except to the extent that
the registrant specifically incorporates it by reference: Attached hereto.
NOTICE
A copy of the Amended and Restated Declaration of Trust of the Registrant is on
file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are not binding upon
any of the Trustees or shareholders individually, but are binding only upon the
assets and property of the respective constituent series of the Registrant.
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) MFS MUNICIPAL INCOME TRUST
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By (Signature and Title)* MARIA F. DWYER
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Maria F. Dwyer, President
Date: June 23, 2006
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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)* MARIA F. DWYER
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Maria F. Dwyer, President (Principal Executive
Officer)
Date: June 23, 2006
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By (Signature and Title)* TRACY ATKINSON
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Tracy Atkinson, Treasurer (Principal Financial Officer
and Accounting Officer)
Date: June 23, 2006
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* Print name and title of each signing officer under his or her signature.