COLONIAL HIGH INCOME MUNICIPAL TRUST
One Financial Center, Boston, Massachusetts 02111
(617) 426-3750
Dear Shareholder:
Colonial High Income Municipal Trust (Fund) will hold its Annual Meeting of
Shareholders (Meeting) on April 15, 1999 at 10:00 a.m., Eastern time, at the
offices of Colonial Management Associates, Inc., the Fund's investment advisor.
A formal Notice of Annual Meeting of Shareholders appears on the next page,
followed by the proxy statement which explains in more detail the proposals to
be considered. We hope that you can attend the Meeting in person; however, we
urge you in any event to vote your shares at your earliest convenience.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
HELP YOUR FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY!
The Fund is using Corporate Investor Communications, Inc. (CIC), a professional
proxy solicitation firm, to assist shareholders in the voting process. As the
date of the Meeting approaches, if we have not yet received your vote, you may
receive a telephone call from CIC reminding you to exercise your right to vote.
Please take a few moments to review the details of each proposal.
We appreciate your participation and prompt response in these matters, and thank
you for your continued support.
Sincerely,
Stephen E. Gibson, President
March 12, 1999
HI-85/815G-0399
1001-PS-99
<PAGE>
COLONIAL HIGH INCOME MUNICIPAL TRUST
One Financial Center, Boston, Massachusetts 02111
(617) 426-3750
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1999
Dear Shareholder:
The Annual Meeting of Shareholders (Meeting) of Colonial High
Income Municipal Trust (Fund) will be held at the offices of Colonial
Management Associates, Inc. (Advisor), One Financial Center, Boston,
Massachusetts, on Thursday, April 15, 1999, at 10:00 a.m., Eastern time, to:
1. Elect six Trustees;
2. Approve or disapprove amendments to the Fund's Agreement and
Declaration of Trust to permit the issuance of preferred shares
of the Fund;
3. Ratify the selection of independent accountants; and
4. Transact such other business as may properly come before the
Meeting or any adjournment thereof.
By order of the Trustees,
Nancy L. Conlin, Secretary
March 12, 1999
NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
IF A QUORUM IS NOT PRESENT AT THE MEETING, ADDITIONAL EXPENSES WILL BE
INCURRED TO SOLICIT ADDITIONAL PROXIES. TO AVOID THESE COSTS TO YOUR FUND,
PLEASE VOTE, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
IMMEDIATELY.
PROXY STATEMENT
General Information
March 12, 1999
The enclosed proxy, which was first mailed on or about March 12, 1999,
is solicited by the Trustees for use at the Meeting. All properly executed
proxies received in time for the Meeting will be voted as specified in the proxy
or, if no specification is made, in favor of each proposal referred to in the
Proxy Statement. The proxy may be revoked prior to its exercise by a later dated
proxy, by written revocation received by the Secretary or by voting in person.
Corporate Investor Communications, Inc. (CIC) has been engaged by the Fund to
assist in the proxy solicitation process. The cost of this assistance is not
expected to exceed $10,000. Solicitation may be made by mail, telephone,
telegraph, telecopy and personal interviews. Authorization to execute proxies
may be obtained by telephonically or electronically transmitted instructions.
The Fund will bear the cost of solicitation which includes the printing and
mailing of proxy materials and the tabulation of votes. By voting as soon as you
receive your proxy materials, you will help to reduce the cost of any additional
mailings.
Holders of a majority of the shares outstanding and entitled to vote
constitute a quorum and must be present in person or represented by proxy for
business to be transacted at the Meeting. On February 17, 1999, the Fund had
outstanding 31,059,288 shares of beneficial interest. Shareholders of record at
the close of business on February 17, 1999 will have one vote for each share
held. As of February 17, 1999, The Depository Trust Company (Cede & Co.), 7
Hanover Square, New York, New York 10004, owned of record 26,304,679 shares
representing 84.69% of the Fund's outstanding shares.
Votes cast by proxy or in person will be counted by persons appointed
by the Fund to act as election tellers for the Meeting. The tellers will count
the total number of votes cast "for" approval of the proposals for purposes of
determining whether sufficient affirmative votes have been cast. Where a
shareholder withholds authority or abstains, or the proxy reflects a "broker
non-vote" (i.e., shares held by brokers or nominees as to which (i) instructions
have not been received from the beneficial owners or persons entitled to vote
and (ii) the broker or nominee does not have discretionary voting power on a
particular matter) the shares will be counted as present and entitled to vote
for purposes of determining the presence of a quorum. With the respect to the
Declaration of Trust amendments, withheld authority, abstentions and broker
non-votes have the effect of a vote against the proposal. With respect to the
election of Trustees and ratification of independent accountants, withheld
authority, abstentions and broker non-votes have no effect on the outcome of the
voting.
Further information concerning the Fund is contained in its most recent
Annual Report to shareholders, which is obtainable free of charge by writing the
Advisor at One Financial Center, Boston, MA 02111 or by calling 1-800-426-3750.
1. Election of Six Trustees.
Ms. Verville, Ms. Collins and Messrs. Carberry, Macera, Stitzel
and Sullivan (who have each agreed to serve) are proposed for election as
Trustees of the Fund. Ms. Verville and Mr. Stitzel will each serve for two
years, and Ms Collins and Messrs. Carberry, Macera and Sullivan will
each to serve for three years or until a successor is elected. The Board of
Trustees currently consists of Ms. Collins and Ms. Verville and Messrs.
Birnbaum, Bleasdale, Carberry, Grinnell, Lowry, Mayer, Macera, Moody,
Neuhauser, Stitzel, and Sullivan.
The Board of Trustees is divided into the following three classes, each with a
term expiring in the year indicated (assuming the persons listed above are
elected at the Meeting):
2000 2001 2002
- ---- ---- ----
Mr. Birnbaum Mr. Bleasdale Mr. Carberry
Mr. Grinnell Mr. Lowry Ms. Collins
Mr. Mayer Mr. Neuhauser Mr. Macera
Mr. Moody Mr. Stitzel Mr. Sullivan
Ms. Verville
<TABLE>
<CAPTION>
The following table sets forth certain information about the Board of
Trustees:
<S> <C> <C>
Shares
Beneficially
Owned and
Percent
of Fund at
Name Trustee February
(Age) since Principal Occupation (1) and 17, 1999 (2)
Directorships
Robert J. Birnbaum 1995 Consultant (formerly Special Counsel, -0-
(71) Dechert Price & Rhoads--law). Director or
Trustee: Colonial Funds, LAMCO Trust I,
Liberty All-Star Equity Fund, Liberty
All-Star Growth Fund, Inc., The Emerging
Germany Fund.
Tom Bleasdale 1989 Retired (formerly Chairman of the Board -0-
(68) and Chief Executive Officer, Shore Bank &
Trust Company--banking). Director or
Trustee: Colonial Funds, Empire Company Limited.
John V. Carberry (*)1998 Senior Vice President of Liberty Financial -0-
(51) Companies, Inc. (formerly managing
Director, Salomon Brothers--Investment
Banking). Director or Trustee: Colonial
Funds LAMCO Trust I.
Lora S. Collins 1992 Attorney (law) (formerly Attorney Kramer, -0-
(63) Levin, Naftalis & Frankel--law).
Trustee: Colonial Funds.
James E. Grinnell 1995 Private Investor. Director or Trustee: -0-
(69) Colonial Funds, LAMCO Trust I, Liberty
All-Star Equity Fund, Liberty All-Star
Growth Fund, Inc.
Richard W. Lowry 1995 Private Investor (formerly Senior Vice -0-
(62) President--Operations, The Rockport
Company). Director or Trustee: Colonial
Funds, LAMCO Trust I, Liberty All-Star
Equity Fund, Liberty All-Star Growth
Fund, Inc.
Salvatore Macera 1998 Private Investor (formerly Executive Vice -0-
(67) President of Itek Corp. and President of
Itek Optical & Electronics Industries,
Inc.--electronics). Director or Trustee:
Colonial Funds.
William E. Mayer (*)1994 Partner, Development Capital, LLC -0-
(58) (investments) (formerly Dean, College of
Business and Management, University
of Maryland--higher education; Dean, Simon
Graduate School of Business, University of
Rochester--higher education; Chairman and
Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief
Executive Officer, The First Boston
Corporation). Director or Trustee: Colonial
Funds, Trust I, Liberty All-Star Equity
Fund, Liberty All-Star Growth Fund,
Inc., Hambrecht & Quist Incorporated,
Chart House Enterprises, Johns Manville.
James L. Moody, Jr. 1989 Retired (formerly Chairman of the Board, -0-
(67) Chief Executive Officer and Director,
Hannaford Bros. Co.--food distributor).
Director or Trustee: Colonial Funds,
LAMCO Trust I, Penobscot Shoe Co., UNUM
Corporation, IDEXX Laboratories, Inc.,
Staples, Inc., Empire Company Limited.
John J. Neuhauser 1992 Dean of the School of Management, Boston -0-
(56) College --higher education. Director or
Trustee: Colonial Funds, LAMCO Trust I,
Liberty All-Star Equity Fund, Liberty
All-Star Growth Fund, Inc., Hyde Athletic
Industries, Inc.
Thomas E. Stitzel 1998 Professor of Finance, College of Business, -0-
(63) Boise State University - higher education;
Business Consultant and Author. Director
or Trustee: Colonial Funds.
Robert L. Sullivan 1989 Retired Partner, KPMG LLP Management -0-
(71) Consulting (formerly Management
Consulting, Saatchi and Saatchi Consulting
Ltd., and Principal and International
Practice Director, Management Consulting,
Peat Marwick Main & Co.). Trustee:
Colonial Funds.
Anne-Lee Verville 1998 Consultant (formerly General Manager, -0-
(53) Global Education Industry, and President,
Applications Solutions Division, IBM
Corporation--global education and global
applications.). Trustee: Colonial Funds.
</TABLE>
(1) Except as otherwise noted, each individual has held the office
indicated or other offices in the same company for the last five years.
(2) On February 17, 1999, the Trustees and officers of the Fund as a group
beneficially owned less than 1% of the then outstanding shares of the
Fund.
(*) Mr. Carberry is an "interested person," as defined in the
Investment Company Act of 1940 (1940 Act) because of his
affiliation with Liberty Financial Companies, Inc. (Liberty
Financial) (an indirect parent company of the Advisor). Mr. Carberry
is the owner of common shares and other securities of Liberty
Financial. Mr. Mayer is an "interested person," as defined by the
1940 Act because of his affiliation with Hambrecht & Quist
Incorporated (a registered broker-dealer).
In this Proxy Statement, "Colonial Funds" means Colonial Trust I,
Colonial Trust II, Colonial Trust III, Colonial Trust IV, Colonial Trust V,
Colonial Trust VI, Colonial Trust VII, LFC Utilities Trust, Liberty Variable
Investment Trust Colonial High Income Municipal Trust, Colonial InterMarket
Income Trust I, Colonial Intermediate High Income Fund, Colonial Investment
Grade Municipal Trust and Colonial Municipal Income Trust.
<PAGE>
The following table sets forth certain information about the executive
officers of the Fund:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Shares
Executive Beneficially
Name Owned and
Officer Percent of
(Age) Fund at
Since February
Office with Fund; Principal Occupation (3) 17, 1999 (4)
Stephen E. Gibson President of the Fund and of the Colonial -0-
1998 Funds since June, 1998 is Chairman of the
Board since July, 1998, Chief Executive
(45) Officer and President since December
1996 and Director, since July 1996 of the
Advisor (formerly Executive Vice President
from July, 1996 to December, 1996);
Director, Chief Executive Officer and President
of COGRA, LLC (COGRA) since December, 1998
(formerly Director, Chief Executive Officer and
President of The Colonial Group, Inc. (TCG)
from December, 1996 to December, 1998);
Assistant Chairman since August, 1998 of Stein
Roe & Farnham Incorporated (SR&F) (formerly
Managing Director of Marketing of Putnam
Investments, June, 1992 to July, 1996).
Davey S. Scoon Vice President of the Fund and of the -0-
1993 Colonial Funds since June, 1993; Vice
(52) President since December, 1998 of LAMCO
Trust I; Executive Vice President since July
1993 and Director since March, 1995 of the
Advisor; Executive Vice President and Chief
Operating Officer since December, 1998 of
COGRA (formerly Executive Vice President
and Chief Operating Officer from March, 1995
to December, 1998 of TCG; Vice President -
Finance and Administration and Treasurer from
November, 1985 to March, 1995); Executive Vice
President since August, 1998 SR&F.
Timothy J.Jacoby Treasurer and Chief Financial Officer of -0-
1996 the Fund and of the Colonial Funds since
October, 1996; (formerly Controller and
(46) Chief Accounting Officer from October, 1997
to February, 1998); Treasurer since December,
1998 of LAMCO Trust I; Senior Vice President
since September, 1996 of the Advisor; Vice
President, Chief Financial Officer and Treasurer
since December, 1998 of COGRA (formerly Vice
President, Chief Financial Officer and Treasurer
from July, 1997 to December, 1998 of TCG); Senior
Vice President of SR&F since August, 1998
(formerly Senior Vice President, Fidelity
Accounting and Custody Services from September,
1993 to September, 1996).
J. Kevin Connaughton Controller and Chief Accounting Officer of -0-
1998 the Fund and of the Colonial Funds since
February, 1998; since December, 1998 of
(34) LAMCO Trust I; Vice President since February,
1998 of the Advisor (formerly Senior Tax Manager,
Coopers & Lybrand, LLP from April, 1996 to
January, 1998; Vice President, 440 Financial
Group/First Data Investor Services Group from
March, 1994 to April, 1996).
Nancy L. Secretary of the Fund and of the Colonial -0-
Conlin 1994 Funds since April, 1998 (formerly Assistant
Secretary from July, 1994 to April, 1998),
(45) is Director, Senior Vice President, General
Counsel, Clerk and Secretary of the Advisor
since April, 1998 (formerly Vice President,
Counsel, Assistant Secretary and Assistant
Clerk from July, 1994 to April, 1998): Vice
President Secretary and General Counsel of
COGRA since December, 1998 (formerly Vice
President - Secretary, Clerk and General
Counsel of TCG from April, 1998 to December,
1998; Assistant Clerk from July, 1994
to April, 1998 formerly Partner Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. from June 1990 to June 1994).
</TABLE>
(3) Except as otherwise noted, each individual has held the office
indicated or other offices in the same company for the last five years.
(4) On February 17, 1999, the Trustees and officers of the Fund as a group
beneficially owned less than 1% of the then outstanding shares of the
Fund.
Trustees' Compensation, Meetings and Committees For the
fiscal year ended December 31, 1998 and for the calendar year ended
December 31, 1998 the Trustees received the following compensation for serving
as Trustees (5):
Total Compensation From
Aggregate The Fund Complex Paid
Compensation To The
From Fund For The Trustees For The
Fiscal Year Ended Calendar Year Ended
Trustee December, 1998 December 31, 1998 (6)
Robert J. Birnbaum (7) $1,773 $99,429
Tom Bleasdale (7) 2,053 (8) 115,000 (9)
John E. Carberry (10, 11) N/A N/A
Lora S. Collins (7) 1,738 97,429
James E. Grinnell (7) 1,838 103,071
William D. Ireland, Jr.(12) 636 35,333
Richard W. Lowry (7) 1,751 98,214
Salvatore Macera (13) 000 25,250
William E. Mayer (7) 1,779 99,286
James L. Moody, Jr. (7) 1,887(14) 105,857 (15)
John J. Neuhauser (7) 1,878 105,323
George L. Shinn (12) 564 31,334
Thomas E. Stitzel (13) 000 25,250
Robert L. Sullivan (7) 1,866 104,100
Anne-Lee Verville (7, 10) 1,644(16) 23,445 (17)
Sinclair Weeks, Jr. (12) 617 34,333
(5) The Fund does not currently provide pension or retirement plan benefits
to the Trustees.
(6) On December 31, 1998, the Fund Complex consisted of 56 open-end
and 5 closed-end management investment.
(7) Elected by the shareholders of Liberty Variable Investment Trust on
October 30, 1998.
(8) Includes $935 payable in later years as deferred compensation.
(9) Includes payable in later years as deferred compensation.
(10) Elected by the Trustees of the closed-end Colonial Funds on June 18,
1998 and by the shareholders of the open-end Colonial Funds on
October 30, 1998.
(11) Does not receive compensation because he is an affiliated Trustee
and employee of Liberty Financial Companies, Inc. (Liberty Financial).
(12) Retired as a Trustee of the Fund on April 24, 1998.
(13) Elected by the shareholders of the open-end Colonial Funds on
October 30, 1998, and by the trustees of the closed-end Colonial Funds
on December 17, 1998.
(14) Total compensation of $1,887 for the fiscal year ended December 31,
1998 will be payable in later years as deferred compensation.
(15) Total compensation of $105,857 for the calendar year ended December 31,
1998 will be payable in later years as deferred compensation.
(16) Total compensation of $1,644 for the fiscal year ended December 31,
1998 will be payable in later years as deferred compensation.
(17) Total compensation of $23,445 for the calendar year ended December 31,
1998 will be payable in later years as deferred compensation.
For the fiscal year ended December 31, 1998, the Trustees
received the following compensation in their capacities as Trustees or
Directors of the Liberty All-Star Equity Fund and of the Liberty All-Star
Growth Fund, Inc. (together, Liberty All-Star Funds): (18)
Total Compensation From
Liberty All-Star Funds For The Calendar
Trustee Year Ended December 31, 1998 (19)
- ------- ---------------------------------
Robert J. Birnbaum $25,000
John E. Carberry (20, 21) N/A
James E. Grinnell 25,000
Richard W. Lowry 25,000
William E. Mayer (22) 14,000
John J. Neuhauser (23) 25,000
(18) The Funds do not currently provide pension or retirement plan benefits to
the trustees.
(19) The Liberty All-Star Funds are advised by Liberty Asset Management
Company (LAMCO). LAMCO is a indirect wholly-owned subsidiary of Liberty
Financial (an intermediate parent of the Advisor.
(20) Does not receive compensation because he is an affiliated trustee and
employee of Liberty Financial.
(21) Elected by the trustees of the Liberty All-Star Funds on June 30, 1998.
(22) Elected by the shareholders of the Liberty All-Star Equity Fund on
April 22, 1998 and by the trustees of the Liberty All-Star Growth Fund Inc.
on December 17, 1998.
(23) Elected by the shareholders of the Liberty All-Star Funds on April 22,
1998.
During the Fund's fiscal year ended December 31, 1998, the Board of Trustees
held six meetings.
The Audit Committee of the Colonial Funds, consisting of Messrs.
Bleasdale, Grinnell, Lowry, Moody, and Sullivan, met two times during the Fund's
fiscal year ended December 31, 1998. The Committee recommends to the Trustees
the independent accountants to serve as auditors, reviews with the independent
accountants the results of the auditing engagement and the internal accounting
procedures and controls, and considers the independence of the independent
accountants, the range of their audit services and their fees.
The Compensation Committee of the Colonial Funds, consisting of
Ms. Collins and Messrs. Birnbaum Grinnell and Neuhauser, met once during
the Fund's fiscal year ended December 31, 1998. The Committee reviews
compensation of the Board of Trustees.
The Governance Committee of the Colonial Funds, consisting of Messrs.
Bleasdale, Lowry, Mayer, Moody and Sullivan, met six times during the Fund's
fiscal year ended December 31, 1998. The Committee in its sole discretion
recommends to the Trustees among other things, nominees for Trustee and for
appointments to various committees. The Committee considers candidates for
election as Trustees.
During the Fund's fiscal year ended December 31, 1998, each of the
current Trustees, attended more than 75% of the meetings of the Board of
Trustees and the committees of which such Trustee is a member.
If any of the nominees listed above becomes unavailable for election,
the enclosed proxy will be voted for a substitute candidate in the discretion of
the proxy holder(s).
Required Vote
A plurality of the votes cast at the Meeting, if a quorum is
represented, is required for the election of each Trustee.
Description of the Advisor
The Advisor is a wholly-owned subsidiary of COGRA, which in turn is an
indirect wholly-owned subsidiary of Liberty Financial. Liberty Financial is an
indirect majority-owned subsidiary of Liberty Mutual Insurance Company (Liberty
Mutual). Liberty Financial is a diversified and integrated asset management
organization which provides insurance and investment products to individuals and
institutions. Its principal executive offices are located at 600 Atlantic
Avenue, 24th Floor, Boston, Massachusetts 02210. Liberty Mutual is an
underwriter of workers' compensation insurance and a Massachusetts-chartered
mutual property and casualty insurance company. The principal business
activities of Liberty Mutual's subsidiaries other than Liberty Financial are
property-casualty insurance, insurance services and life insurance (including
group life and health insurance products) marketed through its own sales force.
Liberty Mutual's principal executive offices are located at 175 Berkeley Street,
Boston, Massachusetts 02117. Liberty Mutual is deemed to be the controlling
entity of the Advisor and its affiliates.
2. Amendments to the Fund's Agreement and Declaration of Trust to Permit
the Issuance of Preferred Shares of the Fund.
At a meeting on February 26, 1998, the Board of Trustees unanimously
approved and recommended the approval by shareholders of an amendment to the
Fund's Agreement and Declaration of Trust (Declaration of Trust) that would
authorize the issuance by the Trust of multiple classes or series of shares (any
such additional classes or series of preferred shares are referred to herein as
the "preferred shares"), with rights as determined by the Board of Trustees, by
action of the Board of Trustees without further shareholder approval. The text
of the proposed amendments to the Declaration of Trust is included as Exhibit A
to this proxy statement. Holders of existing shares of beneficial interest of
the Fund (common shares) have no preemptive right to purchase or otherwise
acquire any preferred shares that might be issued.
Reasons for Authorization
At its meeting the Board of Trustees concluded that the issuance of up
to $120 million of floating rate preferred stock would be in the best interests
of the holders of common shares if the reinvestment rates of return for
long-term tax-exempt securities continued to be favorable. The Board of Trustees
noted that, historically, the Fund has been able to earn a considerably higher
return for its common shares in the past than it would likely have to pay on
preferred shares and that, therefore, the issuance of preferred shares may
increase the net investment income available to the holders of the common
shares. In considering whether to approve or disapprove the proposed amendments
to the Declaration of Trust, shareholders should consider not only the potential
advantages of the issuance of preferred shares discussed immediately below, but
also the income tax considerations discussed below under "Certain Federal Income
Tax Considerations," and the possible effects of dilution, leverage and certain
anti-takeover measures discussed below under "Risks of Issuance of Preferred
Shares". In addition, shareholders should be aware that the net proceeds to the
Fund of any issuance of preferred shares will increase the net assets of the
Fund, and therefore will increase the dollar amount of the investment advisory
and service fees payable by the Fund to the Advisor, since these fees are
calculated as a percentage of the net assets of the Fund. However, the advisory
fees as a percentage of the Fund's net assets would not change as a result of
the issuance of preferred shares.
Proposed Issuance of Preferred Shares
The Board of Trustees of the Fund has approved the issuance of the
proposed preferred shares in one or more initial series, which generally would
be similar but would potentially differ in a number of respects, including the
dates of issuance, the amount payable upon redemption or liquidation, the
potentially different application on the Fund's ability to redeem such shares,
certain voting rights, the dividend rates, dividend payment dates and dividend
periods, which would be determined at the time of issuance of each series. The
proposed initial series, which would have a variable dividend rate or rates,
would be structured to be suitable for investment by persons seeking income that
is exempt from federal income tax. The of Trustees believes that issuing such a
series or more than one series of preferred shares may be likely, in certain
circumstances, to increase the net investment income available for distribution
to the holders of the common shares because of the effect of leverage (see
"Risks of Issuance of Preferred Shares--Leverage" below), although there can be
no assurance that such increase would in fact be achieved.
Holders of the proposed initial series would be entitled to receive
cumulative dividends at a variable rate with respect to each such series that
would be set initially and at periodic intervals thereafter, through auctions,
at a level that would be intended to cause the preferred shares to trade at
their original offering price, subject to a ceiling set by reference to the
credit rating assigned to the shares and prevailing rates on certain short-term
securities. The dividends on the initial series would be intended, to the extent
possible, to qualify in their entirety as "exempt-interest dividends" which are
not subject to federal income tax under current law. To the extent that such
dividends did not so qualify, additional dividends might be paid or might
accumulate on the preferred shares so that, assuming payment, the net after-tax
return to a holder of the preferred shares would be the same as if all of the
dividends had qualified. See "Certain Federal Income Tax Considerations" below.
Auctions of the proposed initial series of preferred shares would generally be
held, and thereafter the dividend rate will generally be reset, periodically
over short time periods (generally seven days but at the option of the Fund up
to five years).
The Fund would generally, in most circumstances have the right to
redeem any initial series of preferred shares on or about any dividend payment
date, at a stated redemption price plus an amount equal to accumulated and
unpaid dividends, plus with respect to a redemption made at the Board of
Trustee's discretion during a specific rate period, a redemption premium .
The Fund would have the proceeds of the issuance of the series
available for investment in accordance with the Fund's investment objectives and
policies. The Fund would thus be able to invest the proceeds in longer-term
investments and would intend to invest the proceeds principally in longer-term
debt securities. Historically, prevailing long-term interest rates have
generally been higher than prevailing short-term rates.
Any incremental return available from investing new funds reduced by
expenses attributable thereto (net incremental return) would be available for
distribution to the holders of the common shares and, if the rate of return on
the Fund's investments exceeds the dividend rate on the preferred shares, should
enhance the return on the common shares. However, there can be no assurance that
the historical relationship between short-term and long-term interest rates will
always continue or that the Fund will receive any net incremental return that
would be available to the holders of the common shares. Because the holders of
the preferred shares would be entitled to receive dividends before the holders
of the common shares, if the dividend rate on the preferred shares were greater
than the net rate of return earned by the Fund on its portfolio investments, the
amounts available for distribution to the holders of the common shares could be
reduced. However, the Board of Trustees does not intend to approve the issuance
of the initial series unless it believes, at the time of such issuance, that the
return on the Fund's common shares is likely for the foreseeable future to be
enhanced by the issuance. In addition, if, after a series of preferred shares
were issued, the continuing payment of dividends on such shares had the effect
of reducing the return on the common shares, the Fund expects that it would
consider the redemption of preferred shares, to the extent possible or permitted
by the terms of such shares.
The Fund expects to seek a credit rating of the proposed initial series
of preferred shares from one or more national securities rating agencies. There
can, however, be no assurance that such credit ratings will be obtained. In
addition, obtaining such credit ratings will involve additional costs to the
Fund and may require that the Fund agree to various financial and operating
restraints as a condition of such credit ratings.
The discussion above describes an issuance of preferred shares
considered by the Board of Trustees. If the proposed amendments to the
Declaration of Trust concerning the issuance of additional classes or series of
shares are approved, and if the Board of Trustees determines to proceed with
issuance of one or more initial series of preferred shares, the terms of such
issuance may be the same as, or different from, the terms described above. The
proposed amendments to the Declaration of Trust would permit issuance of series
of additional classes or series of shares, including preferred shares, other
than the possible series described above, without further shareholder approval.
Such broad authorization at this time of additional classes or series of shares
will provide flexibility to take advantage of opportunities and possible future
circumstances in which the issuance of preferred shares might be desirable.
Requiring the shareholders to meet and approve each separate issuance of such
shares would be time-consuming and costly, particularly in those instances where
the number of shares to be issued may be small in relation to the total capital
of the Fund. Moreover, if shareholder approval of such securities were postponed
until a specific need arose, the delay could, in some instances, deprive the
Fund of opportunities otherwise available.
Certain Federal Income Tax Considerations
General. Set forth below is a general description of certain federal income tax
consequences to the Fund and to the holders of common shares of the Fund, of the
possible issuance by the Fund of the initial series of preferred shares
described above. If a series of preferred shares were issued with different
terms than those of the proposed initial series, different federal income tax
consequences than those described below might result. The description assumes
that the Fund will continue to qualify as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the Code), as it did in its most
recent fiscal year, so as to be relieved of federal income tax on net investment
income and net capital gains distributed to shareholders. If the Fund were
prohibited from paying dividends on its common shares by the asset coverage
requirements of the preferred shares described below under "Description of
Preferred Shares," its ability to meet the qualification requirements of the
Code might be impaired. The Fund expects, however, that to the extent possible
it would purchase or redeem preferred shares to maintain compliance with such
asset coverage requirements. If the Fund failed to qualify for taxation as a
regulated investment company under the Code in any taxable year, the Fund would
be subject to tax on its taxable income at corporate rates, and all
distributions from earnings and profits, including any distributions of net
tax-exempt income and net long-term capital gains, would be taxable to
shareholders as ordinary income. In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest (including an
interest charge measured by the underpayment rate established in section 6621 of
the Code on an amount equal to 50% of the Fund's earnings and profits for the
taxable year) and make substantial distributions before re-qualifying for
taxation as a regulated investment company. In addition, before re-qualifying,
the Fund might under certain circumstances be required to recognize net
unrealized gains for federal income tax purposes.
To the extent that the Fund has net tax-exempt income from its
investments, dividends paid by the Fund from its net investment income may be
designated by the Fund as "exempt-interest dividends," which are not subject to
federal income tax. If the Fund issues the proposed initial series of preferred
shares described above, then - in order to increase the marketability of the
series and thereby minimize the dividend rate required to be paid to make those
shares attractive to investors - the Fund intends to give holders of the shares
of the series priority over holders of common shares with respect to the payment
of dividends. If any of the dividends on the preferred shares is determined to
be from taxable capital gains or ordinary income, the terms of the preferred
shares may require the Fund to pay an extra amount of dividends on the preferred
shares in an amount sufficient to make each holder of the preferred shares whole
(on an after-tax basis) with respect to the estimated federal income tax which
the holder would be required to pay on the taxable distributions (gross-up
payments). The amount of any dividends payable to common shareholders would
normally be reduced by the amount of any such gross-up payments. Deduction for
Dividends Paid by the Fund. As a regulated investment company, the Fund is
generally entitled to a deduction for dividends paid to its shareholders out of
its ordinary income. Under Section 562(c) of the Code, a distribution will not
qualify for the deduction for dividends paid unless the distribution is pro
rata, with no preferences to any share of the Fund as compared with other shares
of the same class, and with no preference to one class of shares as compared
with another class except to the extent that the former is entitled (without
reference to waivers of their rights by shareholders) to such preference. The
Fund intends to make distributions in a manner that will allow such
distributions to qualify for the dividends-paid deduction.
Description of Preferred Shares
General. The proposed amendments to the Declaration of Trust would authorize the
Board of Trustees to establish at or prior to the time of issuance of the class
of preferred shares, or any series thereof, the issue price or prices, voting
rights, dividend rate or rates, redemption price, liquidation value, conversion
rights and such other terms and conditions of that class or series as the Board
of Trustees deems appropriate, without further action on the part of the common
shareholders. Under the 1940 Act, the Fund would not be permitted to issue
preferred shares unless immediately after such issuance the value of the Fund's
assets, less all liabilities and indebtedness not represented by senior
securities (including private or temporary borrowings), would be at least 200%
of (i) the aggregate amount of all debt securities, plus (ii) the aggregate
involuntary liquidation preference of any shares (such as the preferred shares)
having priority as to distribution of assets or payment of dividends over any
other shares.
Voting Rights. The 1940 Act requires that the holders of any preferred shares,
voting separately as a single class, have the right to elect at least two
Trustees at all times, and, subject to the prior rights, if any, of the holders
of any other class of senior securities outstanding, to elect a majority of the
Trustees at any time two years' dividends on the preferred shares are unpaid.
(In order to give effect to this right of the holders of preferred shares to
elect a majority of the Trustees in such circumstances, the proposed amendments
to the Declaration of Trust would remove the provision that fixes the maximum
number of Trustees at fifteen.) All other Trustees will be elected by the
holders of the common shares and the preferred shares, voting together as a
single class. The 1940 Act also requires that, in addition to any approval by
shareholders that might otherwise be required, the approval of the holders of a
majority of any outstanding preferred shares, voting separately as a class,
would be required to (a) adopt any plan of reorganization that would adversely
affect the preferred shares and (b) take any action requiring a vote of security
holders pursuant to Section 13(a) of the 1940 Act, including, among other
things, changes in the Fund's sub-classification as a closed-end investment
company, changes in the classification of the Fund from a non-diversified
investment company or changes in its fundamental investment policies and
restrictions. Holders of preferred shares shall have such other voting rights as
are required by law or are provided by the Trust's Board of Trustees at the time
of issuance of the shares, and holders of a particular series of preferred
shares may be entitled to vote as a separate series on certain matters.
Dividend and Liquidation Preference. Holders of preferred shares would be
entitled to receive dividends before holders of common shares, and would be
entitled to receive the liquidation value of their shares before any
distributions are made to holders of common shares should the Fund ever be
dissolved. The dividend rights and liquidation value of the class or any
particular series of preferred shares would be determined at the time of
issuance of shares of the class or series, subject to the requirement of the
1940 Act that the dividends payable on preferred shares be cumulative. The Fund
would not be permitted to pay or declare dividends (except a dividend payable in
shares of the Fund) or other distributions on the common shares, or the purchase
of any common shares by the Fund, unless the asset coverage test described above
under "General" would be met, after giving effect to the dividend or
distribution.
Risks of Issuance of Preferred Shares
Leverage. The issuance of preferred shares would create leverage which would
affect the amount of income available for distribution on the Fund's common
shares and the net asset value of the common shares. The initial dividend rate
or rates that would be paid on any class or series of preferred shares would be
determined at the time of issuance and would be the result of arms-length
negotiations with the underwriters and would depend on various factors including
market conditions prevailing at the time. The dividend rate will generally vary
from time to time after the initial issuance of a series of preferred shares. At
initial issuance or from time to time thereafter, the dividend rate could exceed
both the current yield on the Fund's portfolio investments and the yield
received by the Fund on investments made with the proceeds of the issuance of
the offering of preferred shares and, therefore, an offering of preferred shares
could result in a reduction of net investment income available for distribution
on common shares.
As a result of leverage, after giving effect to the liquidation
preference of any preferred shares issued, any increase or decrease in the net
asset value per common share would be somewhat greater than would have been the
case had no preferred shares been issued. In addition, the leverage effect
created by the issuance of preferred shares could magnify the effect on the
holders of common shares of any increase or decrease in the yield on the Fund's
portfolio for a given period of time. It is not possible to predict now the
effect on the net asset value of the Fund's common shares that might result from
the leverage effect of issuance of preferred shares. The Board of Trustees does
not intend to issue preferred shares unless it believes, at the time of such
issuance, that such issuance is likely for the foreseeable future to increase
the yield on the Fund's common shares. Furthermore, since the proposed initial
series would be generally, in most cases, redeemable on or about any dividend
payment date at the option of the Fund, those preferred shares may be redeemed
if, after issuance, redemption were considered advisable by the Board of
Trustees and the terms of the Shares permitted such redemption.
Dilution of Voting Rights. The voting rights of the outstanding common shares
would be diluted upon the issuance of any preferred shares, because the holders
of any preferred shares would have voting rights as described above under
"Description of Preferred Shares - Voting Rights." Voting rights in the Trust
are non-cumulative.
Other Considerations. The class voting requirements, and the Board of Trustees
representation, of the preferred shares could make it more difficult for the
Fund to engage in certain types of transactions that might be proposed by the
Board of Trustees and/or holders of common shares, such as a merger, sale of
assets, exchange of securities, liquidation of the Fund or conversion to an
open-end fund. Holders of preferred shares might have interests that differ from
holders of common shares and there can be no assurance that holders of preferred
shares will vote to approve transactions approved by holders of the common
shares. The Fund's Board of Trustees is not currently aware of any efforts,
pending or threatened, to acquire control of the Fund or to force an
open-ending, merger or sale of assets by the Fund, or the liquidation or
dissolution of the Fund. The purpose in presenting the proposed amendments to
shareholders at this time is not to have available a defensive technique
(although that would be a result of approval of the amendment), but to have
available a mechanism for increasing the capital of the Fund in a way that might
enhance the return on the Fund's common shares.
The flexibility to issue preferred shares as well as common shares
could enhance the Board of Trustee's ability to negotiate on behalf of the
shareholders in a takeover but might also render more difficult or discourage a
merger, tender offer or proxy contest, the assumption of control by the holder
of a large block of the Fund's securities and the removal of incumbent
management. The Declaration of Trust already includes certain defensive
provisions that are discussed in the following paragraph. The Board of Trustees
has no plans at this time to adopt or to ask shareholders to adopt any other
defensive or potentially defensive provisions.
The Declaration of Trust currently includes provisions that could have
the effect of limiting the ability of other entities or persons to acquire
control of the Fund or to change the composition of its Board of Trustees, and
could have the effect of depriving shareholders of an opportunity to sell their
shares at a premium over prevailing market prices by discouraging a third party
from seeking to obtain control of the Fund. Specifically, the Fund's Board of
Trustees is divided into three classes, each having a term of three years. The
term of one class expires at each annual meeting of shareholders. This provision
could delay for up to two years the replacement of a majority of the Board of
Trustees. In addition, conversion of the Fund to an open-end investment company
would require the favorable vote of the holders of at least two-thirds of the
shares of the Fund entitled to be voted on the matter. The 1940 Act requires
that the holders of the preferred shares vote separately from the holders of
common shares on this issue. Therefore, if the holders of preferred shares did
not approve the conversion of the Fund to an open-end investment company, the
Fund could not be converted to an open-end investment company even if the
holders of two-thirds or more of the common shares favored such a conversion.
Any amendments to the sections of the Declaration of Trust which relate to the
division of the Board of Trustees into three classes or to the requirement that
two-thirds of the outstanding shares vote to approve any conversion of the Trust
to an open-end company would themselves require approval by affirmative vote of
two-thirds of the outstanding shares of the Fund.
Recommendation of the Trustees
The Board of Trustees of the Fund recommend a vote "For" the proposed
amendments to the Declaration of Trust creating a class of preferred shares of
the Fund. Approval of the proposed amendments requires the affirmative vote of
the holders of 66 2/3% of the outstanding shares entitled to be voted at the
meeting.
3. Ratification of Independent Accountants.
PricewaterhouseCoopers LLP was selected as independent accountants for
the Fund for the Fund's fiscal year ending December 31, 1999 by unanimous vote
of the Board of Trustees, subject to ratification or rejection by the
shareholders. Neither PricewaterhouseCoopers LLP nor any of its partners has any
direct or material indirect financial interest in the Fund. A representative of
PricewaterhouseCoopers LLP will be available at the Meeting, if requested by a
shareholder in writing at least five days before the Meeting, to respond to
appropriate questions and make a statement (if the representative desires).
Required Vote
Ratification requires the affirmative vote of a majority of the shares
of the Fund voted at the Meeting.
4. Other Matters and Discretion of Attorneys Named in the Proxy.
As of the date of this Proxy Statement, only the business mentioned in Items 1
through 3 of the Notice of the Meeting is contemplated to be presented. If any
procedural or other matters properly come before the Meeting, the enclosed proxy
shall be voted in accordance with the best judgment of the proxy holder(s).
The Meeting is to be held at the same time as meetings of the shareholders of
Colonial Municipal Income Trust and Colonial Investment Grade Municipal Trust.
It is anticipated that the meetings will be held simultaneously. In the event
that any Fund shareholder at the Meeting objects to the holding of a
simultaneous meeting and moves for an adjournment of the meetings so that the
Meeting of the Fund may be held separately, the persons named as proxies will
vote in favor of such an adjournment.
If a quorum of shareholders (a majority of the shares entitled to vote
at the Meeting) is not represented at the Meeting or at any adjournment thereof,
or, even though a quorum is so represented, if sufficient votes in favor of the
Items set forth in the Notice of the Meeting are not received by April 15, 1999,
the persons named as proxies may propose one or more adjournments of the Meeting
for a period or periods of not more than ninety days in the aggregate and
further solicitation of proxies may be made. Any such adjournment may be
effected by a majority of the votes properly cast in person or by proxy on the
question at the session of the Meeting to be adjourned. The persons named as
proxies will vote in favor of such adjournment those proxies which they are
entitled to vote in favor of the Items set forth in the Notice of the Meeting.
They will vote against any such adjournment those proxies required to be voted
against any of such Items.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
Section 30(f) of the 1940 Act, as amended, require the Fund's Board of Trustees
and executive officers, persons who own more than ten percent of the Fund's
equity securities (Section 16 reporting persons), the Fund's investment advisor
and affiliated persons of the Fund's investment advisor to file with the
Securities and Exchange Commission (SEC) initial reports of ownership and
reports of changes in ownership of the Fund's shares and to furnish the Fund
with copies of all Section 16(a) forms they file. Based solely upon a review of
copies of such reports furnished to the Fund and on representations that no
other reports were required during the fiscal year ended December 31, 1998, the
Section 16 reporting persons complied with all Section 16(a) filings applicable
to them.
Date for Receipt of Shareholder Proposals
Proposals of shareholders which are intended to be considered for inclusion in
the Fund's proxy statement relating to the 2000 Annual Meeting of Shareholders
of the Fund must be received by the Fund at One Financial Center, Boston,
Massachusetts, 02111 on or before December 15, 1999.
Shareholders are urged to vote, sign and mail their proxies immediately.
<PAGE>
EXHIBIT A
Text of Proposed Amendments to Provisions of the Trust's Agreement and
Declaration of Trust (language proposed to be deleted is shown in brackets and
language proposed to be added is shown in italics)
Subsection (c) of Section 2 of Article I of the Agreement and
Declaration of Trust is amended to read in its entirety as follows:
(c) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be
divided from time to time or, if more than one class or series of
Shares is authorized by the Trustees, the equal proportionate
transferable units into which each class or series of shares shall be
divided from time to time;
Subsections (g) and (h) of Section 2 of Article I of the Agreement and
Declaration of Trust are amended to read in their entirety, and new subsections
(i) and (j) are added immediately thereafter, as follows:
(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time; [and]
(h) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time[.];
(i) The term "class" or "class of Shares" refers to the division of
Shares into two or more classes as provided in Article III, Section 1
hereof; and
(j) The term "series" or "series of Shares" refers to the division of
Shares representing any class into two or more series as provided in
Article III, Section 1 hereof.
Sections 1 and 2 of Article III of the Agreement and Declaration of
Trust are amended to read in their entirety as follows:
Division of Beneficial Interest
Section 1. [The beneficial interest in the Trust shall at all
times be divided into Shares of a single series, without par value,
each of which shall represent an equal proportionate interest in the
Trust with each other Share, none having priority or preference over
another.] The Trustees may, without Shareholder approval, authorize one
or more classes of Shares (which classes may be divided into two or
more series), Shares of each such class or series having such
preferences, voting powers, terms of redemption, if any, and special or
relative rights or privileges (including conversion rights, if any) as
the Trustees may determine and as shall be set forth in the By-Laws.
The number of Shares of each class or series authorized shall be
unlimited, except as the By-Laws may otherwise provide, and the Shares
so authorized may be represented in part by fractional shares. The
Trustees may from time to time divide or combine the Shares of any
class or series into a greater or lesser number without thereby
changing the proportionate beneficial interest in the [Trust] class or
series.
Ownership of Shares
Section 2. The ownership of Shares shall be recorded on the
books of the Trust or its transfer or similar agent. No certificates
certifying the ownership of Shares shall be issued except as the
Trustees may otherwise determine from time to time. The Trustees may
make such rules as they consider appropriate for the issuance of Share
certificates, the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar
agent of the Trust, as the case may be, shall be conclusive as to who
are the Shareholders of each class or series and as to the number of
Shares of each class or series held from time to time by each
Shareholder.
Sections 1 and 2 of Article IV of the Agreement and Declaration of
Trust are amended to read in their entirety as follows:
Number of Trustees and Term of Office
Section l. Subject to the voting powers of one or more classes
or series of Shares as set forth in the By-Laws, [T]the number of
Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be less than
three (3) [nor more than fifteen (15)]. No reduction in the number of
Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his term unless the Trustee is specifically
removed pursuant to Section 2 of this Article at the time of the
decrease. The Board of Trustees shall be divided into three classes.
[Within the limits above specified,] T[t]he number of Trustees in each
class shall be determined by resolution of the Board of Trustees. The
initial Trustees, each of whom shall serve until the first meeting of
Shareholders at which Trustees are elected and until his or her
successor is elected and qualified, or until he or she sooner dies,
resigns or is removed, shall be John A. McNeice, Jr. and such other
persons as the Trustee or Trustees then in office shall, prior to any
sale of Shares pursuant to a public offering, appoint. The term of
office of all of the initial Trustees shall expire on the date of the
first annual meeting of S[s]hareholders or special meeting in lieu
thereof, which annual or special meeting shall be called to be held not
more than fifteen months after Shares are first sold pursuant to a
public offering. The term of office of the first class shall expire on
the date of the second annual meeting of S[s]hareholders or any special
meeting in lieu thereof. The term of office of the second class shall
expire on the date of the third annual meeting of S[s]hareholders or
any special meeting in lieu thereof. The term of office of the third
class shall expire on the date of the fourth annual meeting of
S[s]hareholders or any special meeting in lieu thereof. Upon expiration
of the term of office of each class as set forth above, the number of
Trustees in such class, as determined by the Board of Trustees, shall
be elected for a term expiring on the date of the third annual meeting
of S[s]hareholders or any special meeting in lieu thereof following
such expiration to succeed the Trustees whose terms of office expire.
The Trustees shall be elected at an annual meeting of the
S[s]hareholders or a special meeting in lieu thereof, except as
provided in Section 2 of this Article.
Vacancies; Removal
Section 2. Subject to the voting powers of one or more classes
or series of Shares as set forth in the By-Laws, [A]any vacancies
occurring in the Board of Trustees may be filled by the Trustees if,
immediately after filling any such vacancy, at least two-thirds of the
Trustees then holding office shall have been elected to such office by
the Shareholders. In the event that at any time less than a majority of
the Trustees then holding office were elected to such office by the
Shareholders, the Trustees shall call a meeting of Shareholders for the
purpose of electing Trustees. At any meeting called for such purpose
and subject to the voting powers of one or more classes or series of
Shares as set forth in the By-Laws, a Trustee may be removed, with or
without cause, by vote of a majority of the outstanding S[s]hares of
the classes or series entitled to vote for the election of such
Trustee. By vote of a majority of the Trustees then in office, the
Trustees may remove a Trustee with or without cause.
The first paragraph of Section 4 of Article IV of the Agreement and
Declaration of Trust is amended to read in its entirety as follows:
<PAGE>
Powers
Section 4. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and
they shall have all powers necessary or convenient to carry out that
responsibility. Without limiting the foregoing, the Trustees may adopt
By-Laws not inconsistent with this Declaration of Trust providing for
the conduct of the business of the Trust and may amend and repeal them
to the extent that such By-Laws do not reserve that right to the
Shareholders[;] of one or more classes or series. Subject to the voting
power of one or more classes or series of shares as set forth in the
By-Laws, the Trustees [they] may fill vacancies in or add to their
number, including vacancies resulting from increases in their number,
and may elect and remove such officers and appoint and terminate such
agents as they consider appropriate; they may appoint from their own
number, and terminate, any one or more committees consisting of two or
more Trustees, including an executive committee which may, when the
Trustees are not in session, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; they may
appoint an advisory board, the members of which shall not be Trustees
and need not be Shareholders; they may employ one or more custodians of
the assets of the Trust and may authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities, retain a transfer
agent or a Shareholder services agent, or both, provide for the
distribution of Shares by the Trust, through one or more principal
underwriters or otherwise, set record dates for the determination of
Shareholders with respect to various matters, and in general delegate
such authority as they consider desirable to any officer of the Trust,
to any committee of the Trustees and to any agent or employee of the
Trust or to any such custodian or underwriter.
Sections 1, 2, 3 and 4 of Article V of the Agreement and Declaration of
Trust are amended to read in their entirety as follows:
Voting Powers
Section 1. Subject to the voting powers of one or more classes
or series of Shares as set forth in the By-Laws, [T]the Shareholders
shall have power to vote only (i) for the election or removal of
Trustees as provided in Article IV, Section 1, (ii) with respect to any
Adviser as provided in Article IV, Section 7, (iii) with respect to any
termination of this Trust to the extent and as provided in Article IX,
Section 4, (iv) with respect to any amendment of this Declaration of
Trust to the extent and as provided in Article IX, Section 7, (v) to
the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a
class action on behalf of the Trust or the Shareholders, (vi) with
respect to such additional matters relating to the Trust as may be
required by law, this Declaration of Trust, the By-Laws or any
registration of the Trust with the Securities and Exchange Commission
(or any successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote, except as
otherwise provided in the By-Laws. Notwithstanding any other provision
of this Declaration of Trust, on any matter submitted to a vote of
Shareholders, all Shares of the Trust then entitled to vote shall,
except as otherwise provided in the By-Laws or required by law, be
voted in the aggregate as a single class without regard to classes or
series of Shares. There shall be no cumulative voting in the election
of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the contrary
from any one of them. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the
challenger. Until Shares of a particular class or series are issued,
the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration of Trust or the By-Laws to be
taken by Shareholders as to such class or series.
Voting Power and Meetings
Section 2. There shall be an annual meeting of the Shareholders
on the date fixed in the By-Laws at the office of the Trust in Boston,
Massachusetts, or at such other place as may be designated in the call
thereof, which call shall be made by the Trustees. In the event that
such meeting is not held in any year on the date fixed in the By-Laws,
whether the omission be by oversight or otherwise, a subsequent special
meeting may be called by the Trustees and held in lieu of the annual
meeting with the same effect as though held on such date. Special
meetings of Shareholders of any or all classes or series may also be
called by the Trustees from time to time for the purpose of taking
action upon any matter requiring the vote or authority of the
Shareholders of such class or series as herein provided or upon any
other matter deemed by the Trustees to be necessary or desirable.
Written notice of any meeting of Shareholders shall be given or caused
to be given by the Trustees by mailing such notice at least seven days
before such meeting, postage prepaid, stating the time, place and
purpose of the meeting, to each Shareholder entitled to vote at such
meeting at the Shareholder's address as it appears on the records of
the Trust. If the Trustees shall fail to call or give notice of any
meeting of Shareholders for a period of 30 days after written
application by Shareholders holding at least 10% of the Shares then
outstanding of all classes and series entitled to vote at such meeting
requesting a meeting to be called for a purpose requiring action by the
Shareholders as provided herein or in the By-Laws, then Shareholders
holding at least 10% of the Shares then outstanding of all classes and
series entitled to vote at such meeting may call and give notice of
such meeting, and thereupon the meeting shall be held in the manner
provided for herein in case of call thereof by the Trustees.
Quorum and Required Vote
Section 3. A majority of the Shares entitled to vote on a
particular matter shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where the By-Laws require that
holders of any class or series shall vote as an individual class or
series, then a majority of the aggregate number of Shares of that class
or series entitled to vote shall be necessary to constitute a quorum
for the transaction of business by that class or series. Any lesser
number, however, shall be sufficient for adjournments. Any adjourned
session or sessions may be held within a reasonable time after the date
set for the original meeting without the necessity of further notice.
Except when a larger vote is required by any provision of this
Declaration of Trust or the By-Laws, a majority of the Shares voted
shall decide any questions and a plurality shall elect a Trustee,
provided that where the By-Laws require that the holders of any class
or series shall vote as an individual class or series a majority of the
Shares of that class or series voted on the matter (or a plurality with
respect to the election of a Trustee) shall decide that matter insofar
as that class or series is concerned.
Conversion
Section 4. Notwithstanding any other provision of this
Declaration of Trust, the conversion of the Trust from a "closed-end
company" to an "open-end company," as those terms are defined in
Sections 5(a)(2) and 5(a)(1), respectively, of the 1940 Act as in
effect on January 1, 1989, shall require the affirmative vote or
consent of the holders of at least 66 2/3% of the Shares of each class
entitled to vote. Such affirmative vote or consent shall be in addition
to the vote or consent of the holders of the Shares otherwise required
by law or by any agreement between the Trust and any national
securities exchange.
Section I of Article VI of the Agreement and Declaration of Trust is
amended to read in its entirety as follows:
Distributions
Section 1. The Trustees may, but need not, each year distribute
to the Shareholders of any or all classes or series such income and
gains, accrued or realized, as the Trustees may determine, after
providing for actual and accrued expenses and liabilities (including
such reserves as the Trustees may establish) determined in accordance
with good accounting practices and subject to the preferences, special
or relative rights and privileges of the various classes or series of
Shares. The Trustees shall have full discretion to determine which
items shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Distributions of
each year's income, if any be made, may be made in one or more
payments, which shall be in Shares, in cash or otherwise and on a date
or dates and as of a record date or dates determined by the Trustees.
At any time and from time to time in their discretion, the Trustees may
distribute to the Shareholders as of a record date or dates determined
by the Trustees, in Shares, in cash or otherwise, all or part of any
gains realized on the sale or disposition of property or otherwise, or
all or part of any other principal of the Trust. Each distribution
pursuant to this Section 1 to the Shareholders of a particular class or
series shall be made ratably according to the number of Shares of such
class or series held by the several Shareholders on the applicable
record date thereof, provided that no distribution need be made on
Shares purchased pursuant to orders received, or for which payment is
made, after such time or times as the Trustees may determine. Any such
distribution paid in Shares will be paid at the net asset value thereof
as determined in accordance with Section 2 of this Article VI, or at
such other value as may be specified by the By-Laws or as the Trustees
may from time to time determine, subject to applicable laws and
regulations then in effect.
The first paragraph of Section 2 of Article VI of the Agreement and
Declaration of Trust is amended to read in its entirety as follows:
Determination of Net Asset Value
Section 2. At such times as the Trust shall have outstanding
only one class or series of Shares, [T]the term "net asset value" of
the Shares shall mean: (i) the value of all the assets of the Trust;
(ii) less the total liabilities of the Trust; (iii) divided by the
number of Shares outstanding, in each case at the time of each
determination. Any fractions involved in the computation of net asset
value per share shall be adjusted to the nearer cent unless the
Trustees shall determine to adjust such fractions to a fraction of a
cent. At such times as the Trust shall have outstanding more than one
class or series of Shares, the term "net asset value" of the Shares
shall have such meaning, with respect to the Shares of any particular
class or series of Shares, as shall from time to time be specified in
the By-Laws.
Section 4 of Article IX of the Agreement and Declaration of Trust is
amended to read in its entirety as follows:
Duration and Termination of Trust
Section 4. Unless terminated as provided herein, the Trust shall
continue without limitation of time. Subject to the voting powers of
one or more classes or series of Shares as set forth in the By-Laws,
[T]the Trust may be terminated at any time by vote of Shareholders
holding at least 66 2/3 % of the Shares entitled to vote or by the
Trustees by written notice to the Shareholders.
Upon termination of the Trust, after paying or otherwise
providing for all charges, taxes, expenses and liabilities, whether due
or accrued or anticipated as may be determined by the Trustees, the
Trust shall in accordance with such procedures as the Trustees consider
appropriate reduce the remaining assets to distributable form in cash
or shares or other securities, or any combination thereof, and
distribute the proceeds to the Shareholders, ratably according to the
number of Shares held by the several Shareholders on the date of
termination, except to the extent otherwise required or permitted by
the preferences and special or relative rights and privileges of any
classes or series of Shares.
Section 7 of Article IX of the Agreement and Declaration of Trust is
amended to read in its entirety as follows:
Amendments
Section 7. (a) Except to the extent that the By-Laws or
applicable law may require a higher vote or the separate vote of one or
more classes or series of Shares, and [E]except as provided in
paragraph (b) of this Section 7, this Declaration of Trust may be
amended at any time by an instrument in writing signed by a majority of
the then Trustees (1) when authorized so to do by a vote of
Shareholders holding a majority of the Shares entitled to vote or (2)
without Shareholder approval as may be necessary or desirable in order
to authorize one or more classes or series of Shares as in Section 1 of
Article III. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision
contained herein shall not require authorization by Shareholder vote.
(b) Except to the extent that the By-Laws or applicable law may
require a higher vote or the separate vote of one or more classes or
series of Shares, [N]no amendment may be made under this Section 7
which shall amend, alter, change or repeal any of the provisions of
Article IV, Section 1, Article V, Section 4 or this paragraph (b)
unless the amendment effecting such amendment, alteration, change or
repeal shall receive the affirmative vote or consent of at least 66
2/3% of the Shares entitled to vote. Such affirmative vote or consent
shall be in addition to the vote or consent of the holders of Shares
otherwise required by law or by the terms of any agreement between the
Trust and any national securities exchange.
COLONIAL HIGH INCOME MUNICIPAL TRUST
This Proxy is Solicited on Behalf of the Board of Trustees
PROXY
The undersigned shareholder hereby appoints William J. Ballou, Suzan
M. Barron, Nancy L. Conlin, Stephen E. Gibson, Timothy J. Jacoby and Davey S.
Scoon, each of them proxies of the undersigned, with power of substitution, to
vote at the Annual Meeting of Shareholders of Colonial Investment Grade
Municipal Trust (the "Fund"), to be held in Boston, Massachusetts, on
Thursday, April 15, 1999 and at any adjournments, as follows on the reverse
side of this card.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE /SEE REVERSE SIDE/
/X/ Please mark votes as in this example.
This proxy when properly executed will be voted in the manner directed herein
and, absent direction, will be voted FOR the Items below. This proxy will be
voted in accordance with the holder's best judgement as to any other matter.
The Board of Trustees recommends a vote FOR the following Items:
1. ELECTION OF SEVEN TRUSTEES. (Item 1 of the Notice)
John V. Carberry
Lora S. Collins
Salvatore Macera
Robert L. Sullivan
Thomas E. Stitzel
Anne-Lee Verville
/ / FOR / / WITHHOLD / / FOR ALL EXCEPT
Instruction: To withhold authority to vote for any individual nominee, mark
the "For All Except" box and strike a line through that nominee's name in the
list above.
2. APPROVE OF DISAPPROVE AMENDMENTS TO THE FUND'S AGREEMENT AND
DECLARATION OF TRUST TO PERMIT THE ISSUANCE OF PREFERRED SHARES OF THE
FUND. (Item 2 of the Notice)
/ / FOR / / AGAINST / / WITHHOLD
3. PROPOSAL TO RATIFY THE SELECTION OF INDEPENDENT ACCOUNTANTS.
(Item 3 of the Notice)
/ / FOR / / AGAINST / / WITHHOLD
4. In their discretion upon such other matters as may properly
come before the meeting.
<PAGE>
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Please sign exactly as name or names appear hereon. Joint owners
should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature-------------- Date-------------- Signature----------- Date------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
