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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 811-08816
-----------------------------------------
Millennium Income Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
140 South Dearborn Drive, Suite 1620 Chicago, Illinois 60603
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
James A. Casselberry, Jr.
Trias Capital Management, Inc. 140 South Dearborn Street Chicago, Illinois 60603
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (312) 223-9400
----------------
Date of fiscal year end: September 30, 2003
---------------------------
Date of reporting period: September 30, 2003
---------------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
================================================================================
MILLENNIUM INCOME TRUST
-----------------------
TREASURERS' GOVERNMENT
----------------------
MONEY MARKET FUND
-----------------
ANNUAL REPORT
SEPTEMBER 30, 2003
INVESTMENT ADVISOR ADMINISTRATOR
------------------ -------------
TRIAS CAPITAL MANAGEMENT, INC. ULTIMUS FUND SOLUTIONS, LLC
140 South Dearborn Street P.O. Box 46707
Chicago, IL 60603 Cincinnati, OH 45246-0707
1.888.744.2337
================================================================================
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES - SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at amortized cost (Note 2) $2,519,772
Receivable from Investment Manager (Note 3) 78,688
Interest receivable 1,339
Other assets 1,166
----------
Total Assets 2,600,965
----------
LIABILITIES
Dividends payable 134
Payable to administrator (Note 3) 5,000
Other accrued expenses 28,067
----------
Total Liabilities 33,201
----------
NET ASSETS $2,567,764
==========
NET ASSETS CONSIST OF:
Paid-in capital $2,594,531
Accumulated net realized losses from
security transactions (26,767)
----------
NET ASSETS $2,567,764
==========
SHARES OF BENEFICIAL INTEREST OUTSTANDING (UNLIMITED
NUMBER OF SHARES AUTHORIZED, NO PAR VALUE) 2,580,131
==========
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE (Note 2) $ 1.00
==========
See accompanying notes to financial statements.
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income $ 140,212
----------
EXPENSES
Administration, fund accounting, shareholder services and
transfer agent fees (Note 3) 60,000
Professional fees 43,309
S & P rating expense 23,500
Investment management fees (Note 3) 20,304
Trustees' fees and expenses 12,289
Insurance expense 9,029
Custody fees 8,108
Postage and supplies 2,076
Registration and filing fees 1,939
Other expenses 842
----------
Total expenses 181,396
Fees waived and expenses reimbursed by the Investment
Manager (Note 3) (149,797)
----------
Net expenses 31,599
----------
NET INVESTMENT INCOME 108,613
----------
NET REALIZED GAINS FROM SECURITY TRANSACTIONS 887
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 109,500
==========
See accompanying notes to financial statements.
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002
------------- -------------
FROM OPERATIONS
Net investment income $ 108,613 $ 461,514
Net realized gains (losses) from security transactions 887 (1,892)
----------- -----------
Net increase in net assets resulting from operations 109,500 459,622
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (108,613) (461,514)
----------- -----------
CAPITAL CONTRIBUTION BY INVESTMENT MANAGER (NOTE 3) 14,400 --
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (a)
Proceeds from shares sold 8,507,376 27,020,709
Net asset value of shares issued in reinvestment
of distributions to shareholders 91,172 432,000
Payments for shares redeemed (24,569,504) (29,360,145)
----------- -----------
Net decrease in net assets from capital
share transactions (15,970,956) (1,907,436)
----------- -----------
TOTAL DECREASE IN NET ASSETS (15,955,669) (1,909,328)
NET ASSETS
Beginning of year 18,523,433 20,432,761
----------- -----------
End of year $ 2,567,764 $ 18,523,433
=========== ===========
(a) Capital share transactions are identical to the dollar values shown.
See accompanying notes to financial statements.
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2001 2000 1999
------------- ------------- ------------- ------------- -------------
PER SHARE DATA
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Capital contribution by Investment
Manager (Note 3) 0.00(a) -- -- -- --
Net investment income 0.010 0.019 0.050 0.057 0.049
Dividends from net investment income (0.010) (0.019) (0.050) (0.057) (0.049)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
TOTAL RETURN 0.97%(b) 1.92% 5.08% 5.89% 5.03%
========= ========= ========= ========= =========
RATIOS/SUPPLEMENTAL DATA
Net assets at end of year (000's) $ 2,568 $ 18,523 $ 20,433 $ 17,252 $ 65,541
Ratios net of fees waived and expenses
reimbursed by Investment Manager (Note 3)
Ratio of net expenses to average net assets 0.31% 0.29% 0.29% 0.25% 0.25%
Ratio of net investment income to average
net assets 1.08% 2.00% 4.79% 5.67% 4.92%
Ratios assuming no fees waived and expenses
reimbursed by Investment Manager (Note 3)
Ratio of expenses to average net assets 1.80% 0.89% 0.78% 0.77% 0.69%
Ratio of net investment income to
average net assets -0.41% 1.40% 4.30% 5.15% 4.48%
(a) Amount rounds to less than $0.01 per share.
(b) Had the Investment Manager not contributed capital to the Fund, the total
return would have been -0.03% (Note 3).
See accompanying notes to financial statements.
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS - SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
PAR VALUE VALUE
----------- -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 97.7%
Federal Home Loan Bank,
3.16%, due 10/29/2003 $ 100,000 $ 100,143
discount note, due 10/01/2003 500,000 500,000
--------
600,143
--------
Federal Home Loan Mortgage Corp,
discount note, due 10/07/2003 500,000 499,916
discount note, due 10/21/2003 710,000 709,602
--------
1,209,518
---------
Federal National Mortgage Association,
discount note, due 10/16/2003 700,000 699,708
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS $ 2,509,369
------------
REPURCHASE AGREEMENTS (a) - 0.4%
FACE AMOUNT
-----------
Fifth Third Bank,
0.60%, dated 9/30/2003, due 10/1/2003,
repurchase proceeds of $10,403 $ 10,403 $ 10,403
------------
TOTAL INVESTMENTS AT VALUE
(Amortized Cost $2,519,772) - 98.1% $ 2,519,772
OTHER ASSETS IN EXCESS OF LIABILITIES - 1.9% 47,992
------------
NET ASSETS - 100.0% $ 2,567,764
============
(a) Repurchase agreements are fully collateralized by U.S. Government agency
securities.
See accompanying notes to financial statements.
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Millennium Income Trust, formerly the Malachi Millennium Income Trust,
(the "Trust") is registered under the Investment Company Act of 1940, as
amended, as an open-end diversified management investment company. The
Trust was established as a Massachusetts business trust under a Declaration
of Trust dated August 19, 1994. The Trust consists of one series, the
Treasurers' Government Money Market Fund (the "Fund"). The Fund's
investment objective is to seek high current income consistent with
stability of capital and liquidity by investing in a portfolio of U.S.
Government securities.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Fund's significant accounting policies:
SECURITY VALUATION - Securities are valued on an amortized cost basis,
which approximates market value. This involves initially valuing a security
at its original cost and thereafter assuming a constant amortization to
maturity of any discount or premium.
SHARE VALUATION - The net asset value per share of the Fund is calculated
daily by dividing the total value of the Fund's assets, less liabilities,
by the number of shares outstanding.
INVESTMENT INCOME - Interest income is accrued as earned and includes,
where applicable, the pro-rata amortization of premium or accretion of
discount.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment income are
declared daily and paid on the last business day of each month. Net
realized short-term capital gains, if any, may be distributed throughout
the year and net realized long-term capital gains, if any, are distributed
at least once each year. Income distributions and capital gain
distributions are determined in accordance with income tax regulations
which may differ from accounting principles generally accepted in the
United States. For the years ended September 30, 2003 and 2002, there were
no differences between the book basis and tax basis of distributions.
SECURITY TRANSACTIONS - Investment transactions are accounted for on the
trade date. Securities sold are determined on a specific identification
basis.
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2003 (Continued)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - Repurchase agreements are collateralized by U.S.
Government securities and are valued at cost, which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held
in safekeeping in the Fund's custodian customer-only account at the Federal
Reserve Bank of Cleveland. At the time the Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will be equal to or exceed the face amount of
the repurchase agreement. In the event of a bankruptcy or other default of
the seller of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying security and losses. These losses would equal
the face amount of the repurchase agreement(s) and accrued interest, net of
any proceeds received in liquidation of the underlying securities. To
minimize the possibility of loss, the Fund enters into repurchase
agreements only with institutions deemed to be creditworthy under
guidelines established by the Board of Trustees.
ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities at the date of the financial statements
and the reported amount of income and expenses during the reporting period.
Actual results could differ from these estimates.
FEDERAL INCOME TAX - It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the
income distributed. Accordingly, no provision for income taxes has been
made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare and pay as
dividends in each calendar year at least 98% of its net investment income
(earned during the calendar year) and 98% of its net realized capital gains
(earned during the twelve months ended October 31) plus undistributed
amounts from prior years.
The following information is computed on a tax basis for each item as of
September 30, 2003:
Cost of portfolio investments $ 2,519,772
============
Capital loss carryforwards $ (26,767)
------------
Accumulated deficit $ (26,767)
============
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2003 (Continued)
- --------------------------------------------------------------------------------
The capital loss carryforwards as of September 30, 2003 in the table above
expire as follows:
Amount Expires September 30,
------ ---------------------
$ 19,379 2008
2,476 2009
3,986 2010
926 2011
-----------
$ 26,767
===========
The capital loss carryforwards may be utilized in the future years to
offset net realized capital gains, if any, prior to distributing such gains
to shareholders.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The President of the Trust is the chairman and controlling shareholder of
Trias Capital Management, Inc. ("Trias"), the Trust's investment manager.
Certain other officers of the Trust are officers of Ultimus Fund Solutions,
LLC ("Ultimus"), the Trust's administrator.
INVESTMENT MANAGEMENT AGREEMENT
The Fund's investments are managed by Trias pursuant to the terms of a
Management Agreement. Under the terms of the Management Agreement, the Fund
pays Trias a fee, which is computed and accrued daily and paid monthly at
the annual rate of .20% of its average daily net assets. In order to reduce
the Fund's operating expenses during the year ended September 30, 2003,
Trias voluntarily waived all of its investment management fees and
reimbursed the Fund for other operating expenses in order to limit the
Fund's total expense ratio to .25% of average daily net assets through
December 16, 2002 and .35% of such assets thereafter. During the year ended
September 30, 2003, the total of such fee waivers and expense
reimbursements was $149,797. As of September 30, 2003, the Adviser owed the
Fund $78,688 for expense reimbursements.
Additionally, during the year ended September 30, 2003, Trias made a
$14,400 capital contribution to the Fund to offset the effect of realized
losses incurred by the Fund. The effect of this contribution was to
increase the Fund's total return by 1.00% for the year ended September 30,
2003.
MUTUAL FUND SERVICES AGREEMENT
Under the terms of a Mutual Fund Services Agreement, Ultimus provides
administrative, fund accounting and pricing, and transfer agent and
shareholder services to the Fund. For these services, Ultimus receives a
base fee of $5,000 per month, plus an asset-based fee equal to the annual
rate of 0.10% of the Fund's average net assets in excess of $50 million but
less than $250 million; 0.075% of such assets in excess of $250 million but
less than $500 million; and 0.05% of such assets in excess of $500 million.
During the year ended September 30, 2003, Ultimus was paid $60,000 under
the Mutual Fund Services Agreement.
Report of Independent Auditors
To the Board of Trustees and Shareholders of
Millennium Income Trust
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Treasurers' Government Money Market Fund
(the "Fund") of the Millennium Income Trust, formerly Malachi Millennium Income
Trust, as of September 30, 2003, the related statement of operations for the
year then ended, and the statements of changes in net assets and financial
highlights for each of the two years then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights presented
herein for each of the respective years ended September 30, 2001 were audited by
other auditors who have ceased operations. Those auditors expressed an
unqualified opinion on the financial highlights in their report dated October
12, 2001.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of September 30, 2003, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasurers' Government Money Market Fund of the Millennium Income Trust as of
September 30, 2003, the results of its operations for the year then ended, and
the changes in its net assets and financial highlights for each of the two years
then ended, in conformity with accounting principles generally accepted in the
United States.
/s/ Ernst & Young LLP
Cincinnati, Ohio
October 24, 2003
MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
BOARD OF TRUSTEES AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
Overall responsibility for management of the Fund rests with the Board of
Trustees. The Trustees serve during the lifetime of the Trust and until its
termination, or until death, resignation, retirement or removal. The Trustees,
in turn, elect the officers of the Fund to actively supervise its day-to-day
operations. The officers have been elected for an annual term. The following are
the Trustees and executive officers of the Fund:
Position Held
Name of Trustee/Officer Address Age with the Trust Length of Time Served
- ----------------------- ------- --- -------------- ---------------------
*James A. Casselberry, Jr. 140 South Dearborn Street, Suite 1620 44 President, Since May 1997
Chicago, Illinois 60603 Secretary,
Treasurer and
Trustee
Marjorie H. O'Laughlin 6273 Brookline Drive 74 Trustee Since March 1995
Indianapolis, Indiana 46220
Barbara E. Wallace 2759 Deerfield Road 54 Trustee Since January 1995
Riverwoods, Illinois 60015
* Mr. Casselberry, as an affiliated person of the Adviser, is an "interested
person" of the Trust within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940.
Each Trustee oversees one portfolio of the Trust. The principal occupations of
the Trustees and executive officers of the Fund during the past five years and
public directorships held by the Trustees are set forth below:
James A. Casselberry is Chairman and Chief Executive Officer of the Adviser.
Marjorie H. O'Laughlin is retired Treasurer of the Health & Hospital Corporation
of Marion County (a municipal corporation created by the Indiana General
Assembly).
Barbara E. Wallace is retired Executive Vice President of SMG Marketing Group,
Inc. (a firm providing information and consulting to the health care industry).
Additional information about the Board of Trustees and Executive Officers may be
found in the Fund's Statement of Additional Information (SAI). To obtain a free
copy of the SAI, please call 1-888-534-2001.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge
upon request by calling toll-free 1-888-534-2001, or on the Securities and
Exchange Commission's website at http://www.sec.gov.
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. Pursuant to Item 10(a), a copy of its code
of ethics is filed as an exhibit to this Form N-CSR. During the period covered
by this report, the code of ethics has not been amended, and the registrant has
not granted an express or implied waiver from the provisions of the code of
ethics.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of trustees has determined that the registrant does not
have an audit committee financial expert serving on its audit committee. The
audit committee determined that, although none of its members meet the technical
definition of an audit committee financial expert, the members have sufficient
financial expertise to address any issues that are likely to come before the
committee. After discussion and evaluation of the accounting environment within
which the registrant operates, it was the consensus of the audit committee
members that it is not necessary at the present time for the committee to seek
to recruit an additional trustee who would qualify as an audit committee
financial expert.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required
ITEM 5. AUDIT COMMITTEE OF LISTED COMPANIES
Not required
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not required
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 301-2(c) under the Investment Company Act of
1940), the registrant's principal executive officer and principal financial
officer have concluded that such disclosure controls and procedures are
reasonably designed and are operating effectively to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to them by others within those entities, particularly during the
period in which this report is being prepared, and that the information required
in filings on Form N-CSR is recorded, processed, summarized, and reported on a
timely basis.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
half-year (the registrant's second fiscal half-year in the case of an annual
report) that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) 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: Attached hereto
(b) 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
Exhibit 99.CERT Certifications pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Exhibit 99.CODE.ETH Code of Ethics
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) Millennium Income Trust
---------------------------------------------------------------
By (Signature and Title)* /s/ James A. Casselberry, Jr.
--------------------------------------------------
James A. Casselberry, Jr., President and Treasurer
Date December 1, 2003
---------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James A. Casselberry, Jr.
--------------------------------------------------
James A. Casselberry, Jr., President and Treasurer
Date December 1, 2003
---------------------------------------
* Print the name and title of each signing officer under his or her signature.