COLONIAL INTERMARKET INCOME TRUST I
One Financial Center, Boston, Massachusetts 02111
(617) 426-3750
Dear Shareholder:
Colonial InterMarket Income Trust I (Fund) will hold its Annual Meeting of
Shareholders (Meeting) on May 26, 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
April XX, 1999
CI-85/860G-0399 XXX-PS-99
<PAGE>
COLONIAL INTERMARKET INCOME TRUST I
One Financial Center, Boston, Massachusetts 02111
(617) 426-3750
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1999
Dear Shareholder:
The Annual Meeting of Shareholders (Meeting) of Colonial InterMarket
Income Trust I (Fund) will be held at the offices of Colonial Management
Associates, Inc. (Advisor), One Financial Center, Boston, Massachusetts, on
Wednesday, May 26, 1999, at 10:00 a.m. Eastern time, to:
1. Elect eight Trustees;
2. Approve an Amended and Restated Management Agreement providing for
a change in the method of calculating the fee payable to the
Advisor;
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 Board of Trustees,
Nancy L. Conlin, Secretary
April XX, 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>
ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
General Information
April XX, 1999
The enclosed proxy, which was first mailed on April XX, 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.
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 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 thirty percent 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 March 1, 1999, the Fund had
outstanding 11,009,000 shares of beneficial interest. Shareholders of record at
the close of business on March 1, 1999 will have one vote for each share held.
As of March 1, 1999, The Depository Trust Company (Cede & Company), 7 Hanover
Square, New York, New York 10004, owned of record 9,216,339 shares representing
84% 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
Amended and Restated Management Agreement, 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, Massachusetts 02111 or by calling
1-800-426-3750.
1. TO ELECT EIGHT TRUSTEES.
Ms. Verville and Messrs. Birnbaum, Carberry, Grinnell, Macera, Moody,
Sullivan and Stitzel (who have each agreed to serve) are proposed for election
as Trustees of the Fund. Ms. Verville will serve for one year, Messrs. Macera
and Stitzel will each serve two years, and Messrs. Carberry, Grinnell, Moody and
Sullivan will each serve three years, or until a successor is elected. Mr.
Birnbaum will retire as a trustee of the Fund at the end of 1999. The Board of
Trustees currently consists of Mss. Collins and 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 year indicated (assuming the persons
listed above are elected at the Meeting):
2000 2001 2002
---- ---- ----
Mr. Bleasdale Mr. Lowry Mr. Birnbaum
Mr. Carberry Mr. Mayer Mr. Grinnell
Ms. Collins Mr. Stitzel Mr. Moody
Mr. Macera Ms. Verville Mr. Sullivan
Mr. Neuhauser
The following table sets forth certain information about the Board of Trustees
of the Fund:
<TABLE>
<CAPTION>
Shares and
Percent of
Fund
Beneficially
Owned at
Name Trustee March 1,
(Age) since Principal Occupation (1) and 1999 (2)
Directorships
<S> <C> <C> <C>
Robert J. Birnbaum 1995 Consultant (formerly Special Counsel,
(71) Dechert Price & Rhoads -- law).
Director or Trustee: Colonial Funds, -0-
LAMCO Trust I, Liberty All-Star Equity
Fund, Liberty All-Star Growth Fund,
Inc., The Emerging Germany Fund.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares and
Percent of
Fund
Beneficially
Name Trustee Owned at
(Age) since Principal Occupation (1) and March 1,
Directorships 1999 (2)
<S> <C> <C> <C>
Tom Bleasdale 1989 Retired (formerly Chairman of the Board
(68) and Chief Executive Officer, Shore Bank
& Trust Company -- banking). Director -0-
or Trustee: Colonial Funds, Empire
Company Limited.
John V. Carberry * 1998 Senior Vice President of Liberty
(51) Financial Companies, Inc. (formerly
managing Director, Salomon Brothers -- -0-
investment banking). Director or
Trustee: Colonial Funds, LAMCO Trust I,
Liberty All-Star Equity Fund, Liberty
All-Star Growth Fund, Inc.
Lora S. Collins 1989 Attorney (formerly Attorney with Kramer,
(63) Levin, Naftalis & Frankel -- law). -0-
Trustee: Colonial Funds.
James E. Grinnell 1995 Private Investor. Director or Trustee:
(69) Colonial Funds, LAMCO Trust I, Liberty -0-
All-Star Equity Fund, Liberty All-Star
Growth Fund, Inc.
Richard W. Lowry 1995 Private Investor (formerly Senior Vice
(62) President -- Operations, The Rockport
Company). Director or Trustee: Colonial -0-
Funds, LAMCO Trust I, Liberty All-Star
Equity Fund, Liberty All-Star Growth
Fund, Inc.
Salvatore Macera 1998 Private Investor (formerly Executive
(67) Vice President of Itek Corp. and
President of Itek Optical & Electronics -0-
Industries, Inc. - electronics).
Trustee: Colonial Funds.
</TABLE>
<TABLE>
<CAPTION>
Shares and
Percent of
Fund
Beneficially
Name Trustee Owned at
(Age) Since Principal Occupation (1) and March 1,
Directorships 1999 (2)
<S> <C> <C> <C>
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, LAMCO Trust I,
Liberty All-Star Equity Fund, Liberty All-Star
Growth Fund, Inc., Hambrecht & Quist
Incorporated, Lee Enterprises, Inc., Johns
Manville.
James L. Moody, Jr. 1989 Retired (formerly Chairman of the Board,
(67) Chief Executive Officer and Director,
Hannaford Bros. Co. -- food
distributor). Director or Trustee: -0-
Colonial Funds, Penobscot Shoe Co.,
UNUM Corporation, IDEXX Laboratories,
Inc., Staples, Inc., Empire Company
Limited.
John J. Neuhauser 1992 Dean, School of Management, Boston
(56) College - higher education. Director or
Trustee: Colonial Funds, Liberty -0-
All-Star Equity Fund, LAMCO Trust I,
Liberty All-Star Growth Fund, Inc.,
Saucony, Inc.
Thomas E. Stitzel 1998 Professor of Finance, College of
(63) Business, Boise State University -
higher education; Business Consultant -0-
and Author. Trustee: Colonial Funds.
</TABLE>
<TABLE>
<CAPTION>
Shares and
Percent of
Fund
Beneficially
Name Trustee Owned at
(Age) Since Principal Occupation (1) and March 1,
Directorships 1999 (2)
<S> <C> <C> <C>
Robert L. Sullivan 1989 Retired Partner, KPMG LLP -- management
(71) consulting (formerly Management
Consulting, Saatchi and Saatchi
Consulting Ltd.; Principal and -0-
International Practice Director,
Management Consulting, Peat Marwick Main
& Co.). Trustee: Colonial Funds.
Anne-Lee Verville 1998 Consultant (formerly General Manager,
(53) Global Education Industry, and
President, Applications Solutions -0-
Division, IBM Corporation). Trustee or
Director: Colonial Funds, Enesco Group.
</TABLE>
* 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) (the 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 in the 1940 Act, because of his affiliation with Hambrecht & Quist
Incorporated (a registered broker-dealer).
(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 March 1, 1999, the Trustees and officers of the Fund as a group
beneficially owned less than 1% of the then outstanding shares of the
Fund.
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, 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:
<TABLE>
<CAPTION>
Shares and
Percent of
Fund
Beneficially
Executive Owned at
Name Officer March 1,
(Age) Since Office with Fund; Principal Occupation (3) 1999 (4)
<S> <C> <C> <C>
Stephen E. Gibson 1998 President of the Fund and of the Colonial
(45) Funds since June, 1998; Chairman of the Board
since July, 1998, Chief Executive Officer and
President since December, 1996, and Director
since July, 1996 of the Advisor (formerly
Executive Vice President from July, 1996 to -0-
December, 1996); Director, Chief Executive
Officer and President of Liberty Funds Group
LLC (LFG) 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, from June, 1992 to July,
1996).
</TABLE>
<TABLE>
<CAPTION>
Shares and
Percent of
Fund
Executive Beneficially
Name Officer Owned at
(Age) Since Office with Fund; Principal Occupation (3) March 1,
1999 (4)
<S> <C> <C> <C>
Timothy J. Jacoby 1996 Treasurer and Chief Financial Officer of the
(46) Fund and of the Colonial Funds since October,
1996 (formerly Controller and Chief
Accounting Officer from October, 1997 to
February, 1998); Treasurer since December,
1998 of LAMCO Trust I; Treasurer since -0-
October, 1996 of Liberty All-Star Equity Fund
and of Liberty All-Star Growth Fund, Inc.;
Senior Vice President since September, 1996
of the Advisor; Vice President, Chief
Financial Officer and Treasurer since
December, 1998 of LFG (formerly Vice
President, Chief Financial Officer and
Treasurer from July, 1997 to December, 1998
of TCG); Senior Vice President since August,
1998 of SR&F (formerly Senior Vice President,
Fidelity Accounting and Custody Services from
September, 1993 to September, 1996).
J. Kevin Connaughton Controller and Chief Accounting Officer of
(34) 1998 the Fund and of the Colonial Funds since
February, 1998; Controller since December,
1998 of LAMCO Trust I; Controller since -0-
April, 1998 of Liberty All-Star Equity Fund
and of Liberty All-Star Growth Fund, Inc.;
Vice President of the Advisor since February,
1998 (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).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares and
Percent of
Fund
Executive Beneficially
Name Officer Owned at
(Age) Since Office with Fund; Principal Occupation (3) March 1,
1999 (4)
<S> <C> <C> <C>
Nancy L. Conlin 1998 Secretary of the Fund and of the Colonial
(45) Funds since April, 1998 (formerly Assistant
Secretary from July, 1994 to April, 1998);
Director, Senior Vice President, General
Counsel, Clerk and Secretary of the Advisor
since April, 1998 (formerly Vice President,
Counsel, Assistant Secretary and Assistant -0-
Clerk from July, 1994 to April, 1998); Vice
President - Legal, General Counsel, Secretary
and Clerk of LFG since December, 1998
(formerly Vice President - Legal, General
Counsel, Secretary and Clerk of TCG from
April, 1998 to December, 1998; Assistant
Clerk from July, 1994 to April, 1998);
(formerly Partner at Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo from June, 1990 to
June, 1994).
</TABLE>
<PAGE>
(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) As of record on March 1, 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
A. Trustees' Compensation.
For the fiscal year ended November 30, 1998 and the calendar year ended
December 31, 1998, the Trustees received the following compensation for serving
as Trustees (5):
Total Compensation from
the Colonial Funds Paid
Aggregate Compensation from to the Trustees for the
the Fund for the Fiscal Year Calendar Year Ended
Trustee Ended November 30, 1998 December 31, 1998 (6)
- ------- ----------------------- ---------------------
Robert J. Birnbaum (7) $1,250 $ 99,429
Tom Bleasdale (7) 1,450(8) 115,000 (9)
John V. Carberry (10)(11) N/A N/A
Lora S. Collins (7) 1,225 97,429
<PAGE>
Total Compensation from
the Fund Funds Paid to
Aggregate Compensation from the Trustees for the
the Fund for the Fiscal Year Calendar Year Ended
Trustee Ended November 30, 1998 December 31, 1998 (6)
- ------- ----------------------- ---------------------
James E. Grinnell (7) $1,295(12) $103,071
Richard W. Lowry (7) 1,235 98,214
Salvatore Macera (13) --- 25,250
William E. Mayer (7) 1,299 99,286
James L. Moody, Jr. (7) 1,332(14) 105,857 (15)
John J. Neuhauser (7) 1,326 105,323
Thomas E. Stitzel (13) --- 25,250
Robert L. Sullivan (7) 1,331 104,100
Anne-Lee Verville (7)(10) 911(16) 23,445 (17)
(5) The Fund does not currently provide pension or retirement plan benefits
to the Trustees.
(6) At December 31, 1998, the Colonial Funds consisted of 56 open-end
management investment portfolios and 5 closed-end management investment
portfolios.
(7) Elected by the shareholders of Liberty Variable Investment Trust on
October 30, 1998.
(8) Includes $636 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.
(12) Includes $10 payable in later years as deferred compensation.
(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 $1,332 for the fiscal year ended November 30,
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 $911 for the fiscal year ended November 30, 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 calendar year ended December 31, 1998, certain of 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 the
Liberty All-Star Funds for the Calendar
Trustee Year Ended December 31, 1998 (19)
- ------- ----------------------------
Robert J. Birnbaum $25,000
John V. 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 Liberty All-Star Funds do not currently provide pension or
retirement plan benefits to the Directors or Trustees.
(19) The Liberty All-Star Funds are advised by Liberty Asset Management
Company (LAMCO). LAMCO is an indirect wholly-owned subsidiary of
Liberty Financial (an intermediate parent of the Advisor).
(20) Does not receive compensation because he is an affiliated Director or
Trustee and employee of Liberty Financial.
(21) Elected by the Trustees/Directors of the Liberty All-Star Funds on
June 30, 1998.
<PAGE>
(22) Elected by the shareholders of the Liberty All-Star Equity Fund on
April 22, 1998, and by the Directors 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.
B. Meetings and Committees.
During the fiscal year ended November 30, 1998, the Board of Trustees
held six meetings.
The Audit Committee of the Colonial Funds, consisting of Messrs.
Bleasdale, Grinnell, Lowry, Moody and Sullivan, all of whom are non-interested
Trustees, met three times during the Fund's fiscal year ended November 30, 1998.
The Audit Committee recommends to the Board of Trustees the independent
accountants to serve as auditors, reviews with the independent accountants the
results of the auditing engagement and internal accounting procedures 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, all of whom are
non-interested Trustees, met one time during the Fund's fiscal year ended
November 30, 1998. The Compensation Committee reviews compensation of the Board
of Trustees.
The Governance Committee of the Colonial Funds, consisting of Messrs.
Bleasdale, Lowry, Mayer, Moody and Sullivan (Mr. Mayer being the only interested
member), met six times during the Fund's fiscal year ended November 30, 1998.
The Governance 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 November 30, 1998, each of the
current Trustees attended more than 75% of the combined total of the meetings of
the Board of Trustees and the meetings of the committees of which such Trustee
is a member.
If any nominee listed above becomes unavailable for election, the
enclosed proxy may be voted for a substitute candidate in the discretion of the
proxy holder(s).
REQUIRED VOTE
A plurality of the votes cast at the Meetings, if a quorum is
represented, is required for the election of each Trustee.
2. APPROVAL OF AN AMENDED AND RESTATED MANAGEMENT AGREEMENT.
A. Description of Proposal.
The Advisor serves as the Fund's investment advisor under a management
agreement dated March 27, 1995 (the "Current Management Agreement"). At the
Meeting, shareholders of the Fund will be asked to approve an amended and
restated management agreement (the "New Management Agreement") to change the
base amount used to determine the Advisor's management fee. There are no other
changes being proposed to be made in the Current Management Agreement. The
proposed change to the Current Management Agreement will have no immediate
effect on the management fee. The proposed change would result in higher
management fees to the Advisor if the Fund uses financial leverage.
Leverage. The Fund's investment objective is to seek as high a level of
current income and total return as is consistent with prudent risk, by
diversifying investments primarily in U.S. and foreign government and
lower-rated corporate debt securities. The Fund seeks to achieve its objective
by investing in sectors of the fixed income securities markets. The Fund
currently does not use financial leverage. However, the Advisor may in the
future recommend to the Board of Trustees that the Fund use leverage through
bank borrowings or other investment management techniques to obtain higher
distributions to shareholders.
The net proceeds of leverage would be 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. Any incremental
return available from investing the new funds would be available for
distribution to shareholders and, if the rate of return on these investments
exceeds the rate on the leverage, should enhance the return of the shareholders.
Historically, prevailing long-term interest rates have generally been higher
than on the short-term rates that the Fund would have to pay for leverage.
However, there can be no assurance that the historical relationship between
short-term and long-term interest rates will continue.
The Fund would only utilize leverage when the Advisor believes that
such leverage will benefit the Fund and the shareholders, after taking into
account considerations such as the interest rates payable on the leverage, other
costs to the Fund of maintaining the leverage and interest income on the
portfolio securities purchased with the proceeds of such leverage. The issuance,
timing, amount and other terms of any such leverage is based on recommendations
by the Advisor subject to the approval and supervision of the Fund's Board of
Trustees and to a determination by the Board that such leverage is likely to
achieve benefits to shareholders.
Risks of Leverage. Although the use of leverage by the Fund creates an
opportunity for increased net income available for distribution to shareholders,
utilization of leverage entails special risks. Leverage could result in a
reduction of net income available for distribution to shareholders if the
interest rate on the leverage paid by the Fund exceeds the yield received by the
Fund on investments made with the proceeds of the leverage. In addition, the net
asset value and market value of the Fund's shares may be more volatile if the
Fund utilizes leverage.
The Proposed New Management Agreement. The Fund's Board of Trustees
approved the New Management Agreement on February 26, 1999, the form of which is
attached as Exhibit A. The form of the New Management Agreement is substantially
identical to the Current Management Agreement, except for the base amount of the
Fund's assets used to determine the Advisor's management fee. Under the terms of
the New Management Agreement, the monthly management fee at the annual rate of
0.75% would be based on the "Average Weekly Managed Assets" of the Fund, which
is defined in the New Management Agreement as follows:
"Average Weekly Managed Assets" of the Fund shall mean the average
weekly value of the total assets of the Fund less all accrued
liabilities of the Fund (other than the aggregate amount of any
outstanding borrowings constituting financial leverage)."
Under the terms of the Current Management Agreement, the Advisor is
paid a management fee of 0.75% on the net assets of the Fund, which does not
include the amount of any assets acquired by the Fund through the use of
leverage. In comparison, under the terms of the New Management Agreement, the
Advisor would be paid a management fee of 0.75% on the total assets of the Fund,
including assets attributable to leverage.
B. Expenses.
The table below summarizes the Fund's annual operating expenses of the
Fund's shares, based on expenses incurred in the fiscal year ended November 30,
1998. Because the Fund does not utilize leverage, the expenses of the Fund would
have been the same during the last fiscal year if the New Management Agreement
had been in effect.
Shareholder Transaction Expenses
Annual Expenses (as a % of average weekly net assets attributable to
shares)
Management fees 0.75%
Other expenses 0.18%
----
Total annual operating expenses 0.93%
====
Example
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
An investor would pay the $94 $295 $512 $1,138
following expenses on a $10,000
investment, assuming a 5% annual
return throughout the periods
C. Considerations by the Board of Trustees.
The Fund's Board of Trustees considered the proposal to amend the
Current Management Agreement at a meeting on February 26, 1999. Based upon the
evaluation of the materials presented by the Advisor, the Trustees unanimously
approved the fee structure proposed by the Advisor in the New Management
Agreement. In reaching its decision to approve the New Management Agreement, the
Board of Trustees considered many factors, among others: the benefits, under
appropriate market conditions, of leverage to the Fund's shareholders, including
potentially higher levels of distributions; the need of the Advisor to devote
personnel and resources to managing the Fund and the additional assets
attributable to leverage; and the comparability of the current and proposed
structure of the management fee to that of other financial companies that
utilize leverage.
D. Information Concerning the Advisor and its Affiliates.
The Advisor is a wholly-owned subsidiary of LFG, which in turn is an
indirect wholly-owned subsidiary of Liberty Financial. Liberty Financial is a
direct majority-owned subsidiary of Liberty Corporate Holdings, Inc., which in
turn is a direct wholly-owned subsidiary of LFC Management Corporation, which in
turn is a direct wholly-owned subsidiary of LFC Holdings, Inc., which in turn is
a direct wholly-owned subsidiary of Liberty Mutual Equity Corporation, which in
turn is a direct wholly-owned subsidiary of Liberty Mutual Insurance Company
(Liberty Mutual). As of March 31, 1999, Liberty Corporate Holdings, Inc. owned
XX% of Liberty Financial. Liberty Financial is a diversified and integrated
asset management organization which provides insurance and investment products
to individuals and institutions. Liberty Financial's, Liberty Corporate
Holdings, Inc.'s, LFC Management Corporation's and LFC Management Corporation's
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 and Liberty Mutual Equity Corporation's principal executive
offices are located at 175 Berkeley Street, Boston, Massachusetts 02117.
The directors of the Advisor are Nancy L. Conlin and Stephen E. Gibson.
Mr. Gibson is the principal executive officer of the Advisor. The principal
occupations of the Advisor's directors are as officers and directors of the
Advisor and certain of its affiliates. The address of the directors and
officers of the Advisor is One Financial Center, Boston, Massachusetts 02111.
The Advisor's compensation under the Current Management Agreement is
subject to reduction to the extent that in any year the expenses of the Fund
exceed the limits on investment company expenses imposed by any statute or
regulatory authority of any jurisdiction in which shares of the Fund are
qualified for offer and sale. No such limits are currently in effect.
The Current Management Agreement provides that, subject to the Board of
Trustees' supervision, the Advisor will manage the assets of the Fund in
accordance with its investment policies, purchase and sell securities and other
investments on behalf of the Fund and report results to the Board of Trustees
periodically. The Current Management Agreement also requires the Advisor to
furnish, at its expense (a) office space, supplies, facilities and equipment;
(b) executive and other personnel for managing the affairs of the Fund
(excluding custodial, transfer agency, dividend and plan agency services,
pricing and certain record keeping services); and (c) compensation to Trustees
who are directors, officers or employees of the Advisor or its affiliates.
The Current Management Agreement may be terminated at any time by the
Advisor, by the Board of Trustees or by vote of a majority of the outstanding
voting securities of the Fund without penalty on 60 days' written notice; shall
automatically terminate upon any assignment; and otherwise shall continue in
effect from year to year if approved annually (1) by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund and (2) by a
majority of the Trustees who are not "interested persons" as defined under the
1940 Act. The Board of Trustees approved the Current Management Agreement at a
meeting held on June 8, 1998. The Fund's shareholders approved the Current
Management Agreement at a Special Meeting of Shareholders held on February 15,
1995.
The Advisor provides bookkeeping and pricing services to the Fund
pursuant to a separate Service Contract under which the Advisor is paid a yearly
fee of $18,000 plus 0.0233% of the Fund's average net assets over $50 million.
For these services, the Fund paid the Advisor $35,000 for the fiscal year ended
November 30, 1998.
In addition to the fees described above, the Fund pays all of its
expenses not assumed by the Advisor, including, without limitation, fees and
expenses of the Independent Trustees, interest charges, taxes, brokerage
commissions, expenses of issue or redemption of shares, fees and expenses of
registering and qualifying shares of the Fund for distribution under federal and
state laws and regulations, custodial, auditing and legal expenses, expenses of
determining net asset value of the Fund's shares, expenses of providing reports
to shareholders, proxy statements and proxies to existing shareholders, and its
proportionate share of insurance premiums and professional association dues or
assessments. The Fund also is responsible for such non-recurring expenses as may
arise, including litigation in which the Fund may be a party, and other expenses
as determined by the Board of Trustees. The Fund may have an obligation to
indemnify its officers and Trustees with respect to litigation.
E. Other Funds Managed by the Advisor.
In addition to the services provided by the Advisor to the Fund, the
Advisor also provides management and other services and facilities to other
investment companies with different investment objectives than the Fund.
Information with respect to the assets of and management fees payable to the
Advisor by another fund having an investment objective similar to that of the
Fund, is set forth below:
<PAGE>
Total Net
Assets at
March 31, 1999 Annual Management Fee as a
(in millions) % of Average
Fund Daily Net Assets
- -------- --------------- -----------------------------
0.65% on the first $1 billion;
Colonial Strategic Income Fund 0.60% of any excess over $1
billion
F. Required Vote.
Approval of the New Management Agreement will require the affirmative
vote of a "majority of the outstanding voting securities" of the Fund (as
defined in the 1940 Act), which means the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the Fund or (2) 67% or more of the
shares of the Fund present at the Meeting if more than 50% of the outstanding
shares of the Fund are represented at the Meeting in person or by proxy.
The Board of Trustees unanimously recommends that shareholders of the
Fund vote FOR the New Management Agreement.
3. TO RATIFY THE SELECTION OF THE INDEPENDENT ACCOUNTANTS.
PricewaterhouseCoopers LLP was selected as independent accountants for
the Fund for the Fund's fiscal year ending November 30, 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).
If a quorum of shareholders (thirty percent 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
May 26, 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 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 advisor and affiliated persons of the
Fund's investment advisor (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 November 30, 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 XX, 1999. Shareholders who
wish to make a proposal for consideration at the 2000 Annual Meeting without
regard to whether it will be included in the Fund's Proxy Statement should
notify the Fund no later than (March XX, 2000). If a shareholder who wishes to
present a proposal fails to notify the Fund by such date, the proxies solicited
for the meeting will have discretionary authority to vote on the shareholder's
proposals if it is properly brought before the meeting. If a shareholder makes a
timely notification, the proxies may still exercise discretionary voting
authority under circumstances consistent with the SEC's proxy rules.
Shareholders are urged to vote, sign and mail their proxies immediately.
<PAGE>
EXHIBIT A
AMENDED AND RESTATED MANAGEMENT AGREEMENT
AGREEMENT dated as of May 26, 1999, between COLONIAL INTERMARKET INCOME TRUST I,
a Massachusetts business trust (Fund), and COLONIAL MANAGEMENT ASSOCIATES, INC.,
a Massachusetts corporation (Advisor), which amends and restates the Management
Agreement dated as of March 27, 1995 between the Fund and the Advisor.
In consideration of the promises and covenants herein, the parties agree as
follows:
1. The Advisor will manage the investment of the assets of the Fund in
accordance with its investment policies and will perform the other
services herein set forth, subject to the supervision of the Board of
Trustees of the Fund.
2. In carrying out its investment management obligations, the Advisor shall:
(a) evaluate such economic, statistical and financial information and
undertake such investment research as it shall believe advisable; (b)
purchase and sell securities and other investments for the Fund in
accordance with the procedures approved by the Board of Trustees; and
(c) report results to the Board of Trustees.
3. The Advisor shall furnish at its expense the following:
(a) office space, supplies, facilities and equipment; (b) executive and
other personnel for managing the affairs of the Fund (including
preparing financial information of the Fund and reports and tax returns
required to be filed with public authorities, but exclusive of those
related to custodial, transfer, dividend and plan agency services,
determination of net asset value and maintenance of records required by
Section 31(a) of the Investment Company Act of 1940, as amended, and the
rules thereunder (1940 Act)); and (c) compensation of Trustees who are
directors, officers, partners or employees of the Advisor or its
affiliated persons (other than a registered investment company).
4. The Advisor shall be free to render similar services to others so long
as its services hereunder are not impaired thereby.
5. The Fund shall pay the Advisor monthly a fee at the annual rate of 0.75%
of the Average Weekly Managed Assets of the Fund.
"Average Weekly Managed Assets" of the Fund shall mean the average weekly
value of the total assets of the Fund less all accrued liabilities of the
Fund (other than the aggregate amount of any outstanding borrowings
constituting financial leverage).
6. If the operating expenses of the Fund for any fiscal year exceed the
most restrictive applicable expense limitation for any state in which
shares are sold, the Advisor's fee shall be reduced by the excess but
not to less than zero.
Operating expenses shall not include brokerage, interest, taxes,
deferred organization expenses and extraordinary expenses, if any. The
Advisor may waive its compensation (and, bear expenses of the Fund) to
the extent that expenses of the Fund exceed any expense limitation the
Advisor declares to be effective.
7. This Agreement shall become effective as of the date of its execution,
and
(a) unless otherwise terminated, shall continue until two years from its
date of execution and from year to year thereafter so long as approved
annually in accordance with the 1940 Act; (b) may be terminated without
penalty on sixty days' written notice to the Advisor either by vote of
the Board of Trustees of the Fund or by vote of a majority of the
outstanding voting securities of the Fund; (c) shall automatically
terminate in the event of its assignment; and (d) may be terminated
without penalty by the Advisor on sixty days' written notice to the
Fund.
8. This Agreement may be amended in accordance with the 1940 Act.
9. For the purpose of the Agreement, the terms "vote of a majority of the
outstanding voting securities", "affiliated person" and "assignment"
shall have their respective meanings defined in the 1940 Act and
exemptions and interpretations issued by the Securities and Exchange
Commission under the 1940 Act.
10. In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Advisor, or reckless disregard of its obligations and
duties hereunder, the Advisor shall not be subject to any liability to
the Fund, to any shareholder of the Fund or to any other person, firm or
organization, for any act or omission in the course of, or connected
with, rendering services hereunder.
COLONIAL INTERMARKET INCOME TRUST I
By:-------------------------------
Title:
COLONIAL MANAGEMENT ASSOCIATES, INC.
By:-------------------------------
Title:
A copy of the document establishing the Fund is filed with the Secretary of The
Commonwealth of Massachusetts. This Agreement is executed by officers not as
individuals and is not binding upon any of the Trustees, officers or
shareholders of the Fund individually but only upon the assets of the Fund.
<PAGE>
COLONIAL INTERMARKET INCOME TRUST I
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 and Timothy J. Jacoby,
each of them, proxies of the undersigned, with power of substitution, to
vote at the Annual Meeting of Shareholders of Colonial InterMarket Income
Trust I (the "Trust"), to be held in Boston, Massachusetts, on Wednesday,
May 26, 1999 and at any adjournments, as follows on the reverse side of
this card.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE
- ------------------------------------------------------------------------------
Please sign exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------- -------------------------
- ------------------------- -------------------------
- ------------------------- -------------------------
<PAGE>
/X/ Please mark votes as in this example.
- -------------------------------------------
COLONIAL INTERMARKET INCOME TRUST I
- --------------------------------------------
Mark box at right if an address change or comment has been
noted on the reverse side of this card. / /
The Board of Trustees recommends a vote FOR the following Items:
1. ELECTION OFEIGHT TRUSTEES. (Item 1 of the Notice)
John V.Carberry James E. Ginnell
Robert J. Birnbaum James L. Moody, Jr.
Salvatore Macera Thomas Stitzel
Anne-Lee Verville Robert L. Sullivan
/ / 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. PROPOSAL TO APPROVE AN AMENDED AND RESTATED MANAGEMENT AGREEMENT
PROVIDING FOR A CHANGE IN THE METHOD OF CALCULATING THE FEE
PAYABLE TO THE ADVISOR.
(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
This proxy, when properly executed, will be voted in the manner directed
herein and, absent direction, will be voted FOR Items 1 through 3 above.
RECORD DATE SHARES:
