COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
One Financial Center, Boston, Massachusetts 02111
(617) 426-3750
Dear Shareholder:
Colonial Investment Grade Muncipal 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. YOU CAN VOTE
EASILY AND QUICKLY [AT OUR WEB SITE, BY MAIL, BY FAX (NOT AVAILABLE FOR ALL
SHAREHOLDERS; REFER TO THE ENCLOSED PROXY INSERT)] OR IN PERSON. TO VOTE THROUGH
OUR WEB SITE, JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT APPEAR ON THE ENCLOSED
PROXY INSERT. PLEASE HELP YOUR FUND AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY
VOTING TODAY!
The Fund is using Corporate Investors Communications Corporation (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. If you have
any questions regarding the proxy statement, please feel free to call CIC at
1-800- . [Our hearing impaired shareholders may call Colonial Investors Service
Center, Inc., the Fund's transfer agent, at 1-800-528-6979 if you have special
TTD equipment.]
We appreciate your participation and prompt response in these matters, and thank
you for your continued support.
Sincerely,
Stephen E. Gibson, President
March , 1999
<PAGE>
COLONIAL INVESTMENT GRADE 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 Investment Grade
Municipal Trust (Fund) will be held at the offices of Colonial Management
Associates, Inc. (Adviser), One Financial Center, Boston, Massachusetts, on
Thursday, April 15, 1999, at 10:00 a.m. Eastern time, to:
1. Elect seven 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 , 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.
<PAGE>
4
PROXY STATEMENT
General Information
March , 1999
The enclosed proxy, which was first mailed on March, 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 Assistant Secretary or by voting in
person. Corporate Investors Communication Corporation (CIC) has been engaged by
the Fund to assist in the proxy solicitation process. The cost of this
assistance is not expected to exceed $ . 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
printing of proxy materials, mailing and tabultation of of votes. By voting as
soon as you receive your proxy materials, you will help to reduce the cost of
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 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. FAST), 7 Hanover
Square, New York, New York 10004, owned of record shares representing % 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 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
Adviser at One Financial Center, Boston, MA 02111 or by calling 1-800-426-3750.
<PAGE>
1. Election of Seven Trustees.
Ms. Collins, Ms. Verville and Messrs. Birnbaum, Carberry, Grinnell, Macera and
Stitzel (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. Birnbaum, Carberry, Grinnell and Macera will each to serve
for three years, or until a successor is elected. The Board of Trustees
currently consists of Ms. Collins, Ms. Verville and Messrs. Birnbaum, Bleasdale,
Carberry, Grinnell, Lowry, Macera, Mayer, Moody, Neuhauser, Stitzel and
Sullivan.
The Board of Trustees is divided into the following three classes, each
with a three year term expiring in the years indicated (assuming the persons
listed above are elected at the Meeting):
2000 2001 2002
- ---- ---- ----
Mr. Bleasdale Ms. Verville Ms. Collins
Mr. Mayer Mr. Lowry Mr. Birnbaum
Mr. Moody Mr. Stitzel Mr. Carberry
Mr. Neuhauser Mr. Sullivan Mr. Grinnell
Mr. Macera
The following table sets forth certain information about the Board of
Trustees:
<TABLE>
<CAPTION>
Shares
Beneficially
Owned and
Percent
of Fund at
Name Trustee February
(Age) Since Principal Occupation(1) and Directorships 17, 1999 (2)
<S> <C> <C>
Robert J. Birnbaum Retired (formerly Special Counsel, Dechert -0-
(71) 1995 Price & Rhoads--law). Director or Trustee:
Colonial Funds, Liberty All-Star Equity Fund,
Liberty All-Star Growth Fund, Inc., The
Emerging Germany Fund.
Tom Bleasdale Retired (formerly Chairman of the Board and -0-
(68) 1989 Chief Executive Officer, Shore Bank & Trust
Company--banking). Director or Trustee:
Colonial Funds, Empire Company Limited.
John V. Carberry(3) Senior Vice President of Liberty Financial -0-
(51) 1998 Companies, Inc. (formerly Managing Director,
Salomon Brothers--investment banking).
Director or Trustee: Colonial Funds.
Lora S. Collins Attorney (law) (formerly Attorney, Kramer, -0-
(63) 1992 Levin, Naftalis & Frankel--law). Trustee:
Colonial Funds.
James E. Grinnell Private Investor. Director or Trustee: -0-
(69) 1995 Colonial Funds, Liberty All-Star Equity Fund,
Liberty All-Star Growth Fund, Inc.
Richard W. Lowry Private Investor. Director or Trustee: -0-
(62) 1995 Colonial Funds, Liberty All-Star Equity Fund,
Liberty All-Star Growth Fund, Inc.
Salvatore Macera Private Investor. (formerly Executive Vice -0-
(67) 1998 President of Itek Corp. and President of Itek
Optical & Electronic Industries,
Inc.--electronics) Director or Trustee:
Colonial Funds.
William E. Mayer(3) Partner, Development Capital, LLC -0-
(58) 1994 (investments) (formerly Dean of the College
of Business and Management, University of
Maryland--higher education; Dean of the Simon
Graduate School of Business, University of
Rochester--higher education). Director or
Trustee: Colonial Funds, Hambrecht & Quist
Incorporated, Chart House Enterprises, Johns
Manville.
James L. Moody, Jr. Retired (formerly Chairman of the Board, -0-
(67) 1992 Chief Executive Officer and Director,
Hannaford Bros. Co. -food distributor).
Director or Trustee: Colonial Funds,
Penobscot Shoe Co., Staples, Inc., UNUM
Corporation, IDEXX Laboratories, Inc., Empire
Company Limited.
John J. Neuhauser Dean of the School of Management, Boston -0-
(56) 1992 College (higher education). Director or
Trustee: Colonial Funds, Hyde Athletic
Industries, Inc.
Thomas E. Stitzel Professor of Finance, College of Business,
(58) 1998 Boise State University (higher education);
Business Consultant and Author. Director or
Trustee: Colonial Funds.
Robert L. Sullivan Retired Partner, Peat Marwick Main & Co. -0-
(71) 1989 (management consulting) (formerly
self-employed Management Consultant).
Trustee: Colonial Funds.
Anne-Lee Verville Consultant. (formerly General Manager, Global -0-
(51) 1998 Education Industry and President,
Applications Solutions Division, IBM
Corporation--global education and global
applications). Director or 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.
(3) 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. (an indirect parent company of the Adviser).
Mr. Mayer is an "interested person," as defined in the 1940 Act,
because of his affiliation with Hambrecht & Quist Incorporated (a
registered broker-dealer).
In this Proxy Statement, the "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, LAMCO Trust I,
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.
The following table sets forth certain information about the executive officers
of the Fund:
<PAGE>
<TABLE>
<CAPTION>
Shares
Executive Beneficially
Name Officer Owned and
(Age) Since Percent of
Fund at
February
Office with Fund; Principal Occupation (4) 17,1999 (5)
<S> <C> <C>
Stephen E. Gibson President of the Fund and of the Colonial -0-
(45) Funds since June, 1998 is Chairman of the
1998 Board since July, 1998, Chief Executive
Officer and President since December 1996 and
Director, since July 1996 of the Adviser (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 of Stein Roe &
Farnham Incorporated (SR&F) since August, 1998
(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-
(52) Colonial Funds; Executive Vice President
1993 and Director of the Adviser; 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 of SR&F since
August, 1998.
Timothy J. Jacoby Treasurer and Chief Financial Officer of -0-
(46) 1996 the Fund and of the Colonial Funds since
October, 1996 (formerly Controller and Chief
Accounting Officer from October, 1997 to February,
1998); Senior Vice President since September, 1996 of
the Adviser; 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-
(34) 1998 the Fund and of the Colonial Funds since
February, 1998; Vice President since
February, 1998 of the Adviser (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; Vice President, The Boston
Company (subsidiary of Mellon Bank) from December,
1993 to March, 1994).
Nancy L. Conlin Secretary of the Fund and of the Colonial -0-
(45) 1998 Funds since April, 1998 (formerly Assistant
Secretary from July, 1994 to April, 1998); Director,
Senior Vice President, General Counsel, Clerk and
Secretary of the Adviser 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 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 from June, 1990 to June,
1994)
</TABLE>
(4) Except as otherwise noted, each individual has held the office
indicated or other offices in the same company for the last five years.
(5) 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
The members of the Board of Trustees received the following compensation
from the Fund for the fiscal year ended December 31, 1998 and from the Colonial
Funds Complex for the calendar year ended December 31, 1998 for serving as
Trustees (7):
<PAGE>
Trustees and Trustees' Fees
For the fiscal year ended October 31, 1998 and the calendar year ended December
31, 1998, the Trustees received the following compensation for serving as
Trustees:
- ---------------------------- -------------------- -----------------------
Total Compensation
Aggregate From The Fund Complex
Compensation Paid To The Trustees
From Fund For The For The Calendar Year
Fiscal Year Ended Ended
Trustee December 31, 1998 December 31, 1998(6)
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Robert J. Birnbaum (7) $1,267 $99,429
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Tom Bleasdale ( 7) 1,463(8) 115,000 (9)
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
John E. Carberry (10, 11) -0- -0-
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Lora S. Collins (7) 1,241 97,429
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
James E. Grinnell (7) 1,312(12) 103,071
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
William D. Ireland, Jr. 550 35,333
(13)
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Richard W. Lowry (7) 1,250 98,214
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Salvatore Macera (14) -0- 25,250
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
William E. Mayer (7) 1,315 99,286
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
James L. Moody, Jr. (7) 1,347(15) 105,857 (16)
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
John J. Neuhauser (7) 1,342 105,323
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
George L. Shinn (13) 499 31,334
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Thomas E. Stitzel (14) -0- 25,250
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Robert L. Sullivan (7) 1,349 104,100
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Anne-Lee Verville (7, 10) 933(17) 23,445 (18)
- ---------------------------- -------------------- -----------------------
- ---------------------------- -------------------- -----------------------
Sinclair Weeks, Jr. (13) 539 34,333
- ---------------------------- -------------------- -----------------------
(5) The Fund does not currently provide pension or retirement plan benefits to
the Trustees.
(6) On December 31, 1998, the complex consisted of 47 open-end management
investment portfolios in the Colonial Funds (Colonial Funds) and 9 open-end
management investment portfolios in at the Liberty Variable Investment
Trust (LVIT) (together, the Fund Complex).
(7) Elected by the shareholders of LVIT on October 30, 1998.
(8) Includes $644 payable in later years as deferred compensation.
(9) Includes $52,000 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) Includes $11 payable in later years as deferred compensation.
(13) Retired as a Trustee of the Trust on April 24, 1998.
(14) 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. (15) Total compensation of $1,347 for the fiscal year ended December
31, 1998 will be payable in later years as deferred compensation. (16)
Total compensation of $105,857 for the calendar year ended December 31,
1998 will be payable in later years as deferred compensation. (17) Total
compensation of $933 for the fiscal year ended December 31, 1998 will be
payable in later years as deferred compensation. (18) 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): (5)
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 (10, 20) N/A
James E. Grinnell 25,000
Richard W. Lowry 25,000
William E. Mayer (21) 14,000
John J. Neuhauser (22) 25,000
(5) 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).
(6) Elected by the trustees of the Liberty All-Star Funds on June 30, 1998.
(7) 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.
(8) 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, Grnnell, 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. Brimbaum 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 will consider candidates for
Trustee recommended by shareholders. Written recommendations with supporting
information should be directed to the Committee in care of the Fund.
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 Adviser
The Adviser 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 Adviser and its affiliates.
2. Amendments to the Trust's Agreement and Declaration of Trust to Permit the
Issuance of Preferred Shares of the Trust.
At a meeting on February 26, 1998, the Board of Trustees unanimously
approved and recommended the approval by shareholders of an amendment to the
Trust's Agreement and Declaration of Trust (the "Declaration of Trust") that
would authorize the issuance by the Trust of multiple classes or series of
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 Trust
("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 concluded that the issuance of $___ - $___ 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 noted that, historically, the
Trust 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
Trust of any issuance of preferred shares will increase the net assets of the
Trust, and therefore will increase the dollar amount of the investment advisory
and service fees payable by the Trust to the Adviser, since these fees are
calculated as a percentage of the net assets of the Trust. However, the advisory
fees as a percentage of the Trust's net assets would not change as a result of
the issuance of preferred shares.
<PAGE>
Proposed Issuance of Preferred Shares
The Board of Trustees of the Trust has approved the issuance of the proposed
preferred shares in one or more initial series, which would be identical except
for the dates of issuance, 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 Board 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
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 Trust up to __ years).
The Trust would have the right to redeem the 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.
The Trust would have the proceeds of the issuance of the series available
for investment in accordance with the Trust's investment objectives and
policies. The Trust 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 Trust's investments exceed 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 Trust 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 Trust 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 Trust'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 Trust expects
that it would consider the redemption of preferred shares, to the extent
possible or permitted by the terms of such shares.
The Trust 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
Trust and may require that the Trust 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 Trust.
Moreover, if shareholder approval of such securities were postponed until a
specific need arose, the delay could, in some instances, deprive the Trust of
opportunities otherwise available.
<PAGE>
Certain Federal Income Tax Considerations
General. Set forth below is a general description of certain federal income tax
consequences, to the Trust and to the holders of common shares of the Trust, of
the possible issuance by the Trust 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 Trust 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
Trust 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 Trust expects, however, that to the extent possible
it would purchase or redeem preferred shares to maintain compliance with such
asset coverage requirements. If the Trust failed to qualify for taxation as a
regulated investment company under the Code in any taxable year, the Trust 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 Trust 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 Trust'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 Trust might under certain circumstances be required to recognize net
unrealized gains for federal income tax purposes.
To the extent that the Trust has net tax-exempt income from its investments,
dividends paid by the Trust from its net investment income may be designated by
the Trust as "exempt-interest dividends," which are not subject to federal
income tax. If the Trust 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 Trust 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 Trust 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 Trust. As a regulated investment
company, the Trust 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 Trust 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 Trust 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 Trust would not be permitted to issue
preferred shares unless immediately after such issuance the value of the Trust'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 Trust's sub-classification as a closed-end investment
company, changes in the classification of the Trust 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 Trust 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 Trust
would not be permitted to pay or declare dividends (except a dividend payable in
shares of the Trust) or other distributions on the common shares, or the
purchase of any common shares by the Trust, unless the asset coverage test
described above under "General" would be met, after giving effect to the
dividend or distribution.
As of _____________ __, 1999, the Trust had total assets of $______ and
total liabilities of $_________ and had not borrowed any money. Accordingly, as
of such date the Trust could issue senior securities representing preferred
stock having an involuntary liquidation preference of $____________.
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 Trust'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 Trust's portfolio investments and the yield
received by the Trust 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 Trust's portfolio for a
given period of time. It is not possible to predict now the effect on the net
asset value of the Trust'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
Trust's common shares. Furthermore, since the proposed initial series would be
redeemable on or about any dividend payment date at the option of the Trust,
those preferred shares could be redeemed if, after issuance, redemption were
considered advisable by the Trustees.
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 Board representation,
of the preferred shares could make it more difficult for the Trust 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 Trust 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 Trust's
Board of Trustees is not currently aware of any efforts, pending or threatened,
to acquire control of the Trust or to force an open-ending, merger or sale of
assets by the Trust, or the liquidation or dissolution of the Trust. 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 Trust in a way that might enhance the return on the Trust's
common shares.
The flexibility to issue preferred shares as well as common shares could enhance
the Board'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 Trust'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 Trust 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 Trust. Specifically, the Trust'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 Trust to an open-end investment company
would require the favorable vote of the holders of at least two-thirds of the
shares of the Trust 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 Trust to an open-end investment company, the
Trust 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 Trust.
Recommendation of the Trustees
The Board of Trustees of the Trust recommend a vote "For" the proposed
amendments to the Declaration of Trust creating a class of preferred shares of
the Trust. 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.
<PAGE>
3. 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, 2 and 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 the meeting of shareholders of
Colonial High Income Municipal Trust and Colonial Municipal Income Trust. It is
anticipated that such 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, the Fund's investment adviser and affiliated persons of the
Fund's investment adviser (Section 16 reporting persons), to file with the
Securities and Exchange Commission 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.
<PAGE>
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 , 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 and 3 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.
The second paragraph of Section 4 of Article V of the Agreement and
Declaration of Trust is amended in its entirety as follows:
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 662/3 % 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 662/3% 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
662/3% 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.
<PAGE>
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
This Proxy is Solicited on Behalf of the Board of Trustees
PROXY
The undersigned shareholder hereby appoints William J. Ballou, 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
"Trust"), 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 Carberry Lora Collins
Robert Birnbaum James Grinnell
Salvatore Macera Thomas 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
<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.
