30
NEWPORT TIGER FUND
One Financial Center, Boston, Massachusetts 02111
(617) 426-3750
Dear Shareholder:
Newport Tiger Fund (Fund) will hold a Special Meeting of Shareholders (Meeting)
on October 30, 1998 at 10:00 a.m. Eastern Time, at the offices of Colonial
Management Associates, Inc. (CMA), the Fund's administrator. A table summarizing
the proposals, the voting process, (Exhibit A attached hereto) and formal Notice
of Special Meeting of Shareholders appear on the next few pages, 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 TOLL-FREE TELEPHONE, BY MAIL, BY FAX (NOT
AVAILABLE FOR ALL SHAREHOLDERS; REFER TO THE ENCLOSED PROXY INSERT) OR IN
PERSON. TO VOTE THROUGH OUR WEB SITE OR BY TELEPHONE, 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!
CMA is using Shareholder Communications Corporation (SCC), 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 SCC 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 SCC at
1-800-733-8481, ext. 400. 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.
<PAGE>
We appreciate your participation and prompt response in these matters, and thank
you for your continued support.
Sincerely,
Stephen E. Gibson
President
September 9, 1998
NT-85/496F-0998
<PAGE>
EXHIBIT A
The following table lists the proposals and on what page of the proxy statement
they are discussed in greater detail.
Proposals Page
Proposal 1 Election of a Board of Trustees. Page X
Proposal 2 Amend Fundamental Investment Policies Page X
Regarding Borrowing and Lending.
Proposal 3 Approve Changes to Investment Policies and Page X
Restrictions.
Proposal 4 Amend and Restate the Agreement and Declaration Page X
of Trust.
Proposal 5 Approve Fundamental Policies for a Master Page X
Fund/Feeder Fund Structure.
A. VOTING PROCESS.
You can vote in any one of the five ways:
a. By internet by visiting our Web site at www.libertyfunds.com and
clicking on "Proxy Voting");
b. By telephone at the 800 number indicated on the proxy insert;
c. By mail, by filling out and returning the enclosed proxy card;
d. By fax (not available for all shareholders; refer to the enclosed
proxy insert); or
e. In person at the Meeting.
Shareholders who owned shares on the Record Date, August 21, 1998, are entitled
to vote at the special meeting. Shareholders are entitled to cast one vote for
each share owned on the Record Date. We encourage you to vote by internet or by
telephone, using the 12-digit or 14 digit "control" number that appears on the
enclosed proxy card. Either voting method will reduce Fund expenses by saving
postage costs. If you choose to vote by mail or by fax, and you are an
individual account owner, please sign exactly as your name appears on the proxy
card. Either owner of a joint account may sign the proxy card, but the signer's
name must exactly match one that appears on the card. Whichever method you
choose, please carefully read the proxy statement which outlines in more detail
the proposals you are asked to vote on.
<PAGE>
NEWPORT TIGER FUND
One Financial Center, Boston, Massachusetts 02111
(617) 426-3750
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 30, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (Meeting) of
Newport Tiger Fund (Fund), the only series of Colonial Trust VII (Trust), will
be held at the offices of Liberty Funds Distributor, Inc., the Fund's
distributor, and Colonial Management Associates, Inc. (CMA), the Fund's
administrator, One Financial Center, Boston, Massachusetts 02111 on Friday,
October 30, 1998 at 10:00 a.m. Eastern Time. The purpose of the Meeting is to
consider and act upon the following proposals and to transact such other
business as may properly come before the Meeting or any adjournments thereof.
PROPOSALS:
1. Election of a Board of Trustees;
2. Amend fundamental investment policies regarding borrowing and
lending;
3. Approve changes to the Fund's investment policies and restrictions;
4. Amend and restate the Agreement and Declaration of Trust;
5. Approve policies for a master fund /feeder fund structure; and
6. 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
September 9, 1998
NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. YOU CAN VOTE EASILY AND QUICKLY AT OUR WEB SITE, BY
TOLL-FREE TELEPHONE, BY MAIL, BY FAX (NOT AVAILABLE FOR ALL
SHAREHOLDERS; REFER TO THE ENCLOSED PROXY INSERT) OR IN PERSON.
JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT APPEAR ON YOUR ENCLOSED
PROXY INSERT. PLEASE HELP YOUR FUND AVOID THE EXPENSE OF A
FOLLOW-UP MAILING BY VOTING TODAY!
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS
NEWPORT TIGER FUND
PROXY STATEMENT
General Information
September 9, 1998
This proxy statement is divided into fourparts:
Part 1. Overview Page X
Part 2. Proposals Page X
Part 3. Information regarding voting and shareholder meetings Page X
Part 4. Fund Information Page X
If at any time you have any questions regarding the information contained in the
proxy statement, please feel free to call SCC at 1-800-733-8481, ext. 400. This
proxy statement was first mailed to shareholders on September 9, 1998.
PART 1. OVERVIEW
The Board of Trustees (Trustees) of Colonial Trust VII (Trust) on behalf of
Newport Tiger Fund (Fund), of which the Fund is the only series, has called a
Special Meeting of Shareholders (Meeting) for 10:00 a.m. Eastern Time, Friday,
October 30, 1998, for the purposes described in the accompanying Notice of
Special Meeting of Shareholders and as summarized below. The purpose of this
Proxy Statement is to provide you with additional information regarding the
proposals to be voted on at the Meeting and to request your proxy to vote in
favor of the proposals.
Set forth below is a summary of each proposal that the Trustees recommend that
you consider:
PROPOSAL 1. ELECTION OF A BOARD OF TRUSTEES.
We ask that you consider the election of thirteen nominees as members of the
Trustees. Each nominee, if elected, will serve as a trustee of Trust until the
next meeting of shareholders or until a successor is elected, or until death,
resignation, removal or retirement.
<PAGE>
PROPOSAL 2. AMEND FUNDAMENTAL INVESTMENT POLICIES REGARDING BORROWING
AND LENDING.
We ask that you approve amending the fundamental policies regarding borrowing
and lending so that we can establish an interfund lending program for the Fund.
This program would permit your Fund to borrow money from another Colonial Mutual
Fund as needed to satisfy redemption requests. In addition, the program would
allow your Fund to lend money to another Colonial Mutual Fund to meet its
temporary borrowing needs.
Normally, the Fund has sufficient cash to satisfy daily redemption requests.
However, there are times when the Fund could be short on cash which would delay
payment of redemption proceeds for up to seven days. Generally, the interfund
lending program would allow the Fund to meet redemption requests on the next
business day after the request was received. The Trustees believe that the
program will benefit the Fund by facilitating the Fund's flexibility to use the
most cost-effective alternative to satisfy these short-term borrowing
requirements.
The interfund lending program includes a number of safeguards to make sure it is
fair and beneficial to the Fund. One especially important safeguard is that the
Fund will not participate in the program unless borrowing and lending money
through the program provides at least as favorable an interest rate than
borrowing and lending money through a bank.
PROPOSAL 3. APPROVE CHANGES TO INVESTMENT POLICIES.
We ask that you approve changes to the fundamental investment policies and
restrictions. The Trustees believe that by minimizing the number of policies
that can be changed only by shareholder vote, the Trustees and the Fund will
have greater flexibility to modify Fund policies, as appropriate, in response to
changing markets and in light of new investment opportunities and instruments.
The Trustees do not anticipate that the changes, individually or in the
aggregate, will result at this time in a material change in the level of
investment risk associated with an investment in the Fund.
PROPOSAL 4. AMEND AND RESTATE THE AGREEMENT AND DECLARATION OF TRUST.
We ask that you approve amending and restating the Trust's Agreement and
Declaration of Trust to maintain conformity among the organizational documents
for the funds in the Colonial Mutual Funds family. The proposed changes are not
expected to have any material effect on the operation or portfolio management of
the Fund. Adoption of the amended and restated Agreement and Declaration will
not alter in any way the Trustees' existing fiduciary obligations to act with
due care and in the shareholders' interests.
PROPOSAL 5. APPROVE POLICES FOR A MASTER FUND/FEEDER FUND STRUCTURE.
We ask that you approve policies so that your Fund can convert to a master
fund/feeder fund structure. Currently, the Fund's fundamental policies do not
allow for such a structure. The Trustees have no present plans to convert the
Fund to a master fund/feeder fund structure; however, in the future, it may be
advantageous to convert the Fund to obtain greater efficiencies. Obtaining your
approval now would eliminate expenses and delays associated with subsequent
shareholder meetings. The decision to convert your Fund at a later date would
only happen if the Trustees believe it is in the best interest of both you and
your Fund.
PART 2. PROPOSALS
PROPOSAL 1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect four new members as well as the
currently serving members of the Board of Trustees of the Trust. All of the
nominees listed below, except for the proposed four new members (Ms. Verville
and Messrs. Carberry and Macera and Dr. Stitzel), are currently members of the
Board of Trustees of the Newport Tiger Fund, five closed-end funds and
thirty-seven open-end funds and have served in that capacity continuously since
originally elected or appointed. Ms. Verville, Messrs. Carberry and Macera and
Dr. Stitzel were recommended for election as trustees of the Trust by the
Trustees at a meeting held on June 18, 1998. Each of the nominees elected will
serve as a Trustee of the Trust until the next meeting of shareholders of the
Trust is called for the purpose of electing a board of trustees, and until a
successor is elected and qualified or until death, retirement, resignation,
removal or retirement. The persons named in the enclosed proxy card intend to
vote at the Meeting in favor of the election of the nominees named below as
trustees of the Trust if so instructed.
<PAGE>
The following table sets forth certain information about each nominee:
Year of
Election or
Recommended
for Election
Nominee Name & Age Principal Occupation(1) and Directorships as Trustee
Robert J. Birnbaum Retired (formerly Special Counsel, Dechert 1995
(70) Price & Rhoads (law) from September, 1988 to
December, 1993). Director or Trustee:
Liberty All-Star Equity Fund, Liberty
All-Star Growth Fund, Inc., The Emerging
Germany Fund.
Tom Bleasdale Retired (formerly Chairman of the Board and 1987
(68) Chief Executive Officer, Shore Bank & Trust
Company (banking) from 1992 to 1993).
Director: Empire Company Limited.
John Carberry(2) Senior Vice President of Liberty Financial 1998
(51) Companies, Inc. (formerly Managing Director,
Salomon Brothers).
Lora S. Collins Attorney (formerly Attorney, Kramer, Levin, 1991
(62) Naftalis & Frankel (law) from September, 1986
to November, 1996).
James E. Grinnell Private Investor since November, 1988. 1995
(68) Director or Trustee: Liberty All-Star Equity
Fund, Liberty All-Star Growth Fund, Inc.
Richard W. Lowry Private Investor since August, 1987. 1995
(62) Director or Trustee: Liberty All-Star Equity
Fund, Liberty All-Star Growth Fund, Inc.
Salvatore Macera Private investor (formerly Executive Vice 1998
(67) President of Itek Corp. and President of Itek
Optical & Electronic Industries, Inc.).
Trustee: Liberty Variable Investment Trust,
Stein Roe Variable Investment Trust.
William E. Mayer(3) Partner, Development Capital, LLC 1994
(57) (investments) (formerly Dean of the College
of Business and Management, University
of Maryland (higher education) from October,
1992 to November, 1996; Dean of the Simon
Graduate School of Business,
University of Rochester (higher education)
from October, 1991 to July, 1992).
Director or Trustee: Hambrecht & Quist
Incorporated, Chart House Enterprises,
Johns Manville.
James L. Moody, Jr. Retired (formerly Chairman of the Board from 1986
(66) May, 1994 to May, 1997, Chief Executive
Officer and Director from May, 1973 to May,
1992, Hannaford Bros. Co.
(food distributor)). Director or Trustee:
Penobscot Shoe Co., Staples, Inc., UNUM
Corporation, IDEXX Laboratories, Inc., Empire
Company Limited.
John J. Neuhauser Dean of the School of Management, Boston 1985
(55) College (higher education) since 1977.
Director: Hyde Athletic Industries, Inc.
Thomas E. Stitzel Professor of Finance, College of Business, 1998
(58) Boise State University (higher education);
Business consultant and author. Trustee:
Liberty Variable Investment Trust, Stein Roe
Variable Investment Trust.
Robert L. Sullivan Retired Partner, KPMG Peat Marwick LLP 1989
(70) (management consulting) (formerly
self-employed management consultant).
Anne-Lee Verville Consultant (formerly General Manager, Global 1998
(51) Education Industry from 1994 to 1997
(industry), and President, Applications
Solutions Division from 1991 to 1994,
IBM Corporation (industry)).
Trustees' Compensation; Meetings and Committees
A. Trustees' Compensation.
The Trustees serve as trustees of the Colonial Mutual Funds family (including
the Fund), for which each Trustee will receive an annual retainer of $45,000 and
attendance fees of $8,000 for each regular joint meeting and $1,000 for each
special joint meeting. Committee chairs and the lead Trustee receive an annual
retainer of $5,000 and Committee chairs receive $1,000 for each special meeting
attended on a day other than a regular joint meeting day. Committee members
receive an annual retainer of $1,000 and $1,000 for each special meeting
attended on a day other than a regular joint meeting day. Two-thirds of the
Trustees' fees are allocated among the Colonial Mutual Funds based on each
Colonial Mutual Fund's relative net assets, and one-third of the fees are
divided equally among the Colonial Mutual Funds.
Further information concerning the Trustees' compensation is disclosed under
Part 4. Fund information on page ___.
B. Meetings and Committees.
The Trust's current Trustees consists of one interested and eight non-interested
Trustees.
The Trust's Audit Committee, consisting of Messrs. Bleasdale, Grinnell, Lowry,
Moody and Sullivan all of whom are non-interested Trustees, 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 Trust's Compensation Committee, consisting of Ms. Collins and Messrs.
Birnbaum, Grinnell and Neuhauser, all of whom are non-interested Trustees,
reviews compensation of the Board of Trustees.
The Trust's Governance Committee, consisting of Messrs. Bleasdale, Lowry, Mayer,
Moody and Sullivan, recommends to the Board of 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 Trust.
The Trust's Board of Trustees and the Committees held the following number of
meetings during the Fund's fiscal year ended December 31, 1997:
Number of Meetings Held
Board of Trustees 6
Audit Committee 2
Compensation Committee 2
Governance Committee 5
During the fiscal year ended December 31, 1997, each of the current Trustees
attended more than 75% of the meetings of the Trustees and the committees of
which such Trustee is a member.
If any nominee listed above becomes unavailable for election, the enclosed proxy
card may be voted for a substitute nominee in the discretion of the proxy
holder(s).
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR PROPOSAL 1.
REQUIRED VOTE FOR PROPOSAL 1
A plurality of the votes cast at the Meeting, if a quorum is represented, is
required for the election of each Trustee.
PROPOSAL 2. TO AMEND FUNDAMENTAL INVESTMENT POLICIES REGARDING
BORROWING AND LENDING
A. Purpose of This Proposal.
The Trustees have approved an interfund lending program for the Funds and
related changes to the Fund's investment policies on borrowing. The program will
allow one fund in the Colonial Mutual Funds family (including the Fund) to lend
money to another fund in the Colonial Mutual Funds family (including the Fund)
if it makes good financial sense for both funds to do so. The Fund and the funds
in the Colonial Mutual Funds family do not currently intend to use this program
to leverage their investments. The Fund and the funds in the Colonial Mutual
Funds family have submitted an application to the Securities and Exchange
Commission (SEC) to participate in such a program.
B. Reasons for the Fund to Participate in an Interfund Lending Program.
When available cash is not sufficient to meet shareholder redemptions, it may be
advantageous for the Fund to borrow money for a short time instead of raising
cash by selling portfolio securities, which would be disruptive to the Fund's
investment strategy. The Trustees believe that the program will benefit the Fund
by facilitating the Fund's flexibility to use the most cost-effective
alternative to satisfy these short-term borrowing requirements. The Trustees
also believe that the fund needing cash may be able to obtain lower interest
rates on short-term borrowing through an interfund lending program and that the
fund lending the cash may be able to obtain a rate of return with interest rates
on alternative short-term investments. Interfund lending would be permitted only
if the terms are at least as favorable as the terms the Fund could otherwise
negotiate with a third party and if the transaction is conducted in accordance
with certain safeguards set forth on page ___. These safeguards are generally
imposed by the SEC as conditions to the SEC's authorization to enter into such a
program.
C. Current Policy on Borrowing.
Normally, the Fund has sufficient cash to satisfy daily redemption requests.
However, there are times when the Fund could be short on cash while awaiting
settlement of its securities trades (typically a three business day process).
Pursuant to current law, the Fund could defer payment of sale proceeds for up to
seven days. However, generally, the interfund lending program would allow the
Fund to borrow money to meet redemption requests on the next business day after
the request is received. The Fund and the funds in the Colonial Mutual Funds
family currently maintain a $200 million committed credit facility with Bank of
America National Trust and Savings Association for short-term borrowing needs.
It is expected that the interfund lending program will supplement, rather than
replace, the credit facility as a means of satisfying these borrowing needs.
D. Current Policy on Lending.
The Fund maintains cash reserves to satisfy daily redemption requests. The Fund
may put its cash reserves to work by entering into repurchase agreements whereby
the Fund buys a security from a bank or dealer, which is obligated to buy it
back at a fixed price and time. Basically, the repurchase agreement arrangements
are loans from the Fund to the bank or dealer. The difference between the
purchase and resale prices represents the Fund's interest on the loan.
E. The Interfund Lending Program Will allow the Fund to Match the Borrowing
and Lending Needs of Different Funds.
The interfund lending program would allow CMA on any given day, to match up the
funds in the Colonial Mutual Funds family (including the Fund) wishing to borrow
money to satisfy redemption requests and the funds in the Colonial Mutual Funds
family (including the Fund) wishing to lend money to banks to generate
additional income. CMA could arrange loans between the matched funds in the
Colonial Mutual Funds family (including the Fund), pursuant to the master loan
agreement and the SEC's conditions for this program. By arranging loans between
the matched funds in Colonial Mutual Funds family (including the Fund) instead
of banks, the funds in Colonial Mutual Funds family (including the Fund) will be
able to borrow money more cost effectively and lend money more profitably.
F. Credit Risks.
When one fund in the Colonial Mutual Funds family (including the Fund) lends
money to another fund in the Colonial Mutual Funds family (including the Fund),
the lending fund is subject to credit risks if the borrowing fund fails to repay
the loan. The Fund presently faces similar risks when lending money to a bank
through repurchase agreements. The Trustees believes that the risk is extremely
minimal in both cases. To minimize credit risks, the Fund will not be permitted
to participate in the program unless participating in the program provides a
more favorable interest rate than the interest rate a bank can offer. Also, if
the Fund borrows or lends money through the program, the borrowing or lending
activity must be consistent with the Fund's investment objective and investment
policies. Other important safeguards for the Colonial Mutual Funds family
(including the Fund) include the following:
a. Interfund loan rates will be determined by a pre-established formula
based on quotations from independent banks.
b. If a fund in the Colonial Mutual Funds family (including the Fund) has
outstanding borrowings from all sources greater than 10% of its total
assets, then the fund must secure each additional outstanding interfund
loan by the pledge of segregated collateral.
c. A fund in the Colonial Mutual Funds family (including the Fund) may not
make interfund loans in excess of 5% (equity funds), 7.5% (bond funds)
or 10% (money market funds) of its net assets.
d. A fund in the Colonial Mutual Funds family (including the Fund)
interfund loan to any one fund shall not exceed 5% of the lending
fund's net assets.
e. An interfund loan may not be outstanding for more than seven days.
f. A fund in the Colonial Mutual Funds family (including the Fund)
interfund borrowings may not exceed 125% of the fund's total
redemptions for the preceding seven days.
g. CMA must allocate interfund loans on an equitable basis among funds
among in the Colonial Mutual Funds family (including the Fund), without
the intervention of the portfolio manager of any fund.
h. Quarterly reports must be made to the Trustees with respect to any
interfund loans and the Trustees will monitor the program to ensure
that the Fund's participation is appropriate.
G. Changes to Fundamental Policies to Permit Participation in the Interfund
Lending Program.
The Fund's current fundamental investment policies regarding borrowing and
lending do not allow for the interfund lending program. The Trustees recommend
that the Fund's shareholders vote to amend the current fundamental investment
policies on borrowing and lending to allow for such a program.
1. Borrowing Policies as Described Below.
a. The Fund's current fundamental investment policy with respect to
borrowing is as follows:
The Fund may borrow amounts in excess of 5% of the Fund's net
asset value, and only from banks as a temporary measure for
extraordinary or emergency purposes and not for investment in
securities. To avoid the untimely disposition of assets to meet
redemptions, the Fund may borrow up to 20% of the value of its
assets to meet redemptions. The Fund will not make other
investments while such borrowings are outstanding. The Fund will
not mortgage, pledge or in any other manner transfer, as security
for indebtedness, any of its assets. (Short-term credits necessary
for the clearance of purchases or sales of securities will not be
deemed to be borrowings by the Fund.)
b. The Trustees recommend amending the above fundamental investment
policy regarding borrowing for the Fund as set forth below. In
addition to amending this policy to permit interfund loans, the
Trustees recommend amending this policy to permit the Fund to
borrow up to 33 1/3% of the Fund's total assets. The Fund's
current policy of limiting borrowings to 10% of assets and only
for temporary or emergency purposes was adopted a number of years
ago in response to certain regulatory requirements or business or
industry conditions that no longer exist. The proposed changes
will not materially effect how the Fund is managed because the
Fund will continue its policy of not leveraging its assets.
The Fund may borrow from banks, other affiliated funds and other
persons to the extent permitted by applicable law, provided that
the Fund's borrowings shall not exceed 33 1/3% of the value of its
total assets (including the amount borrowed) less liabilities
(other than borrowings) or such other percentage permitted by law.
2. Lending Policies.
The Fund's current fundamental investment policy with respect to
lending is as follows:
The Fund may not make loans, except that the Fund may: (a) acquire for
investment a portion of an issue of bonds, debentures, notes or other
evidences of indebtedness of a corporation or government; (b) enter
into repurchase agreements, secured by U.S. government or Agency
securities.
a. The Trustees recommend amending the above fundamental investment
policy regarding lending for the Fund as set forth below. In
addition to amending these policies to permit interfund lending,
the Trustees recommend these policies to permit the Fund to engage
in securities lending without limitation. The Fund has no present
intention of engaging in securities lending.
The Fund may make loans (a) through lending of securities, (b) through
the purchase of debt instruments or similar evidences of indebtedness
typically sold privately to financial institutions, (c) through an
interfund lending program with other affiliated funds provided that no
such loan may be made if, as a result, the aggregate of such loans
would exceed 33 1/3% of the value of its total assets (taken at market
value at the time of such loans), and (d) through repurchase
agreements.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE FOR PROPOSAL 2.
REQUIRED VOTE FOR PROPOSAL 2
Approval requires the affirmative vote of a "majority of the outstanding voting
securities" (as defined in the 1940 Act), of the Fund 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.
PROPOSAL 3. CHANGE INVESTMENT POLICIES AND RESTRICTIONS
The Fund has adopted certain fundamental investment policies and restrictions
(fundamental restrictions) that are set forth in the Fund's prospectus and
statement of additional information, which may be changed only with shareholder
approval. Policies and restrictions that the Fund has not specifically
designated as being fundamental are considered to be "non-fundamental" and may
be changed by the Board of Trustees without shareholder approval.
Certain of the fundamental restrictions that the Fund has adopted in the past
reflect regulatory, business or industry conditions, practices or requirements
which at one time, for a variety of reasons, led to the imposition of
limitations on the management of the Fund's investments. With the passage of
time, the development of new practices and changes in regulatory standards,
several of these restrictions are considered by Fund management to be
unnecessary or unwarranted. Several restrictions were imposed by certain states
in which the Fund has qualified its shares for sale. Federal legislation has
preempted the States from imposing such restrictions with the enactment of the
National Securities Markets Improvement Act of 1996. Other fundamental
restrictions reflect federal regulatory requirements which remain in effect, but
which are not required to be stated as fundamental restrictions.
Accordingly, the Trustees have approved revisions to the Fund's fundamental
restrictions in order to simplify, modernize and make more uniform those
investment policies and restrictions that are required under the 1940 Act to be
fundamental, to reclassify certain fundamental restrictions as non-fundamental
restrictions and to eliminate those fundamental restrictions that are not
legally required.
The Trustees believe that by minimizing the number of policies that can be
changed only by shareholder vote, the Trustees and the Fund will have greater
flexibility to modify Fund policies, as appropriate, in response to changing
markets and in light of new investment opportunities and instruments. The Fund
will then be able to avoid the costs and delays associated with a shareholder
meeting when making changes to the non-fundamental investment policies that, at
a future time, the Trustees consider desirable. Although the proposed changes in
investment restrictions will allow the Fund greater investment flexibility to
respond to future investment opportunities, the Trustees do not anticipate that
the changes, individually or in the aggregate, will result at this time in a
material change in the level of investment risk associated with an investment in
the Fund.
The text of each proposed change to the Fund's fundamental restrictions is set
forth in the following pages. The text in the following pages also describes
those non-fundamental restrictions that would be adopted by the Trustees in
conjunction with the elimination of the fundamental restrictions under this
Proposal. Any non-fundamental restriction may be modified or eliminated by the
Trustees at any future date without further approval of shareholders.
A. FUNDAMENTAL RESTRICTIONS PROPOSED TO BE REVISED OR ELIMINATED
Restrictions proposed to be revised but remain fundamental:
Change No. 1
The 1940 Act requires the Fund to have a policy with respect to the
concentration of its assets in particular industries, with the Fund being
generally prohibited from reserving freedom of action with respect to its
ability to so concentrate its investments. "Concentration" is deemed by the SEC
and its Staff to mean investment of 25% or more of the Fund's assets in the
securities of issuers in a particular industry. The Fund's current restriction
does not make reference to the limitation of an investment that would be
considered to be deemed concentrated in a particular industry. In addition, the
policy is proposed to be further revised to provide that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
Current text
[The Fund may not] as to 75% of the Fund's assets, purchase the securities of
any issuer (other than obligations issued or guaranteed as to principal and
interest by the Government of the United States or any agency or instrumentality
thereof) if, as a result of such purchase, more than 5% of the Fund's total
assets would be invested in the securities of such issuer.
[The Fund may not] concentrate the Fund's investments in any industry.
Proposed text
[The Fund may] not concentrate more than 25% of the Fund's total assets in any
industry (other than obligations issued or guaranteed as to principal and
interest by the Government of the United States or any agency or instrumentality
thereof) or with respect to 75% of the Fund's assets, purchase the securities of
any issuer if, as a result of such purchase, more than 5% of the Fund's total
assets would be invested in the securities of such issuer, except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
Change No. 2
The 1940 Act requires the Fund to have a fundamental policy regarding the
underwriting of securities. The Trustees propose to amend the current policy to
make it clear that the restriction is not violated if the Fund is deemed, as a
technical matter, to be an underwriter by virtue of selling portfolio
securities. In addition, it is proposed to reclassify as a non-fundamental
restriction the restriction on investing in more than 10% of the Fund's assets
in unregistered securities.
Current text
[The Fund may not] act as an underwriter of securities of other issuers, except
that the Fund may invest up to 10% of the value of its total assets (at time of
investment) in portfolio securities which it might not be free to sell to the
public without registration of such securities under the Securities Act of 1933
or any foreign law restricting distribution of securities in a country of a
foreign issuer (restricted securities).
Proposed text
[The Fund may] underwrite securities issued by others only when disposing of
portfolio securities.
Change No. 3
The Fund has a fundamental restriction with respect to the purchase and sale of
futures contracts. The Trustees propose to amend the current fundamental
restriction to impose a limitation on such contracts and to standardize the
investment restriction with the other funds in the Colonial Mutual Funds family.
Current text
[The Fund may not] write or trade in put or call options.
Proposed text
[The Fund may] purchase and sell futures contracts and related options as long
as the total initial margin and premiums do not exceed 5% of total assets.
Change No. 4
The Fund has a fundamental restriction with respect to real estate acquisition.
The Board of Trustees proposes to amend the current fundamental restriction to
permit the holdings of real estate up to 5% of total assets as the result of
owning portfolio securities and to standardize the investment restriction with
the other funds in the Colonial Mutual Funds family.
Current text
[The Fund may not] purchase or sell real estate provided that liquid securities
of companies which deal in real estate or interests therein will not be deemed
to be investments in real estate.
Proposed text
[The Fund may] only own real estate acquired as the result of owning securities
and not more than 5% of total assets.
Change No. 5
The Board of Trustees recommends the establishment of an interfund lending
program for the Fund and other funds in the Colonial Mutual Funds family. Refer
to Proposal 2 on page __ for further discussion of the proposed interfund
lending program.
Current text
Lending restriction:
[The Fund may not] make loans, except that the Fund may: (a) acquire for
investment a portion of an issue of bonds, debentures, notes or other evidences
of indebtedness of a corporation or government; (b) enter into repurchase
agreements, secured by U.S. government or Agency securities.
Borrowing restriction:
[The Fund may not] borrow amounts in excess of 5% of the Fund's net asset value,
and only from banks as a temporary measure for extraordinary or emergency
purposes and not for investment in securities. To avoid the untimely disposition
of assets to meet redemptions, the Fund may borrow up to 20% of the value of its
assets to meet redemptions. The Fund will not make other investments while such
borrowings are outstanding. The Fund will not mortgage, pledge or in any other
manner transfer, as security for indebtedness, any of its assets. (Short-term
credits necessary for the clearance of purchases or sales of securities will not
be deemed to be borrowings by the Fund.)
Proposed text
Lending restriction:
[The Fund may] make loans (a) through lending of securities, (b) through the
purchase of debt instruments or similar evidences of indebtedness typically sold
privately to financial institutions, (c) through an interfund lending program
with other affiliated funds provided that no such loan may be made if, as a
result, the aggregate of such loans would exceed 33 1/3% of the value of its
total assets (taken at market value at the time of such loans), and (d) through
repurchase agreements.
Borrowing restriction:
[The Fund may] borrow from banks, other affiliated funds and other persons to
the extent permitted by applicable law, provided that the Fund's borrowings
shall not exceed 33 1/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings) or such other percentage
permitted by law.
<PAGE>
Restrictions proposed to be eliminated:
Change No. 6
The Trustees recommend eliminating the following investment restrictions.
a. [The Fund may not] purchase stock or securities of an issuer (other
than obligations of the United States or any agency or instrumentality
thereof) if such purchase would cause the Fund to own more than 10% of
any class of the outstanding stock or securities or more than 10% of
any class of voting securities of such issuer.
b. [The Fund may not] buy or sell commodities or commodity contracts,
provided, however, that the Fund may utilize not more than 1.00% of its
assets for deposits or commissions required to enter into forward
foreign currency contracts for hedging purposes as described under
"Miscellaneous Investment Practices".
c. [The Fund may not] invest in companies for the purpose of exercising
control.
d. [The Fund may not] invest in securities of other investment companies
except by purchase in the open market involving only customary broker's
commissions, or as part of a merger, consolidation, or acquisition of
assets.
e. [The Fund may not] issue senior securities.
f. [The Fund may not] participate on a joint and several basis in any
securities trading account.
g. [The Fund may not] purchase securities on margin, but the Fund may
utilize such short-term credits as may be necessary for clearance of
purchases or sales of securities.
h. [The Fund may not] invest in interests in oil, gas or other mineral
exploration or development programs, including leases.
B. INVESTMENT POLICIES PROPOSED TO BE MADE NON-FUNDAMENTAL
The Trustees recommend reclassifying the following investment restriction as a
non-fundamental restriction.
Change No. 7
Current text
[The Fund may not] engage in short sales.
Proposed text
[The Fund may not] have a short sales position, unless the Fund owns, or owns
rights (exercisable without payment) to acquire, an equal amount of securities.
C. CHANGES TO NON-FUNDAMENTAL INVESTMENT POLICIES
The Fund's current non-fundamental policy regarding illiquid assets has a
limitation of 10%. The Trustees intend to increase this limitation to 15%.
Although the Fund does not intend to increase its holdings of illiquid
securities above 10% of its assets, this change would put the Fund on a "level
playing field" with competitor funds and other funds in the Colonial Mutual
Funds family. This policy change does not require a shareholder vote.
Change No. 8
Current text
[The Fund may not] invest more than 10% of its assets in illiquid assets.
Proposed text
[The Fund may not] invest more than 15% of its assets in illiquid assets.
D. NON-FUNDAMENTAL INVESTMENT POLICIES TO BE ELIMINATED
The Trustees intend to eliminate the following policies. The adoption of the
following non-fundamental policy changes do not require shareholder approval and
are included in this proxy statement to clarify all the changes to the Fund's
investment restrictions and policies.
Change No. 9
[The Fund may not] purchase the securities of foreign issuers which are not
listed on a recognized domestic or foreign securities exchange, restricted
securities and issues which are not readily marketable, if such purchase would
cause the Fund to own such securities in excess of 15% of its net assets.
Change No. 10
[The Fund may not] engage in arbitrage transactions.
See Exhibit B for the full text of the current and proposed investment
restrictions.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE FOR PROPOSAL 3.
REQUIRED VOTE FOR PROPOSAL 3
Approval requires the affirmative vote of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Fund 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.
PROPOSAL 4. TO AMEND AND RESTATE THE AGREEMENT AND DECLARATION OF
TRUST
The Trust was established in 1991 by Liberty Financial Companies, Inc. (Liberty
Financial). When Liberty Financial acquired Newport Pacific Management, Inc.,
the predecessor Newport Tiger Fund was merged into the Trust and the Trust's
name was changed to its current name, Colonial Trust VII. As a result, the
Trust's existing Agreement and Declaration of Trust (Existing Declaration of
Trust) has a number of minor differences among it and the Declarations of Trust
of the other funds in the Colonial Mutual Funds family. In a continuing effort
to maintain conformity among the organizational documents for the funds in the
Colonial Mutual Funds family (including the Fund), the Trustees recommends that
the Trust's Existing Declaration of Trust be amended and restated to conform to
the Declaration of Trust adopted by the other funds in the Colonial Mutual Funds
family. The proposed changes to the Existing Declaration of Trust are not
expected to have any material effect on the operation or portfolio management of
the Fund. Adoption of the amended and restated Declaration of Trust (New
Declaration of Trust) will not alter in any way the Trustees' existing fiduciary
obligations to act with due care and in the shareholders' interests. A copy of
the proposed New Declaration of Trust is attached as Exhibit C.
<PAGE>
The differences between the Trust's Existing Declaration of Trust and the New
Declaration of Trust are as follows:
A. Termination of the Trust or a Series or Class of Shares The Existing
Declaration of Trust requires a shareholder vote to terminate the
Trust. The New Declaration of Trust provides that the trustees may
terminate the Trust by providing written notice to shareholders.
B. Trustees
1. Number
The Existing Declaration of Trust requires that the number of
trustees be fixed in writing by the trustees and that the number
of trustees be between 3 and 15. The New Declaration of Trust
does not require that the number be fixed in writing and only
requires that there be at least 3 trustees with no upper limit.
2. Appointment and Resignation
The Existing Declaration of Trust requires that each new trustee
be appointed in writing and must accept his or her appointment in
writing. Resignations must also be in writing under the Existing
Declaration of Trust. The New Declaration of Trust does not have
these requirements.
3. Removal
The Existing Declaration of Trust contemplates removal of a
trustee only for "cause" and in such case by a 2/3 vote of either
the trustees or shareholders. The New Declaration of Trust allows
for removal of a trustee, with or without cause, upon a vote by a
majority of the trustees or 2/3 of the shareholders.
4. Power of Attorney
The Existing Declaration of Trust provides that a trustee can
give another trustee his power of attorney, but only for up to 6
months in duration with the additional requirement that any
action taken by the trustees must be taken by at least two of the
trustees. The New Declaration of Trust does not contain any
restrictions with respect to powers of attorney.
C. Service Contracts
The Existing Declaration of Trust requires that the custodian agreement
be with a bank or trust company having capital, surplus and undivided
profits of at least $2 million. The New Declaration of Trust does not
impose this requirement.
D. Shareholder Votes
The Existing Declaration of Trust specifically requires a 2/3
shareholder vote in connection with any merger, consolidation or sale
of fund assets while the New Declaration of Trust is silent in this
regard.
E. Shares
The Existing Declaration of Trust requires that each new series or
class be established in writing setting forth the relative rights and
preferences of that class or series. The New Declaration of Trust does
not have such a requirement.
F. Shareholder Reports
The Existing Declaration of Trust requires semi-annual reports to
shareholders with financial statements which are audited at least
annually. The New Declaration of Trust is silent with respect to
shareholder reports.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE FOR PROPOSAL 4.
REQUIRED VOTE FOR PROPOSAL 4
Approval of the amended and restated Agreement and Declaration of Trust requires
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.
PROPOSAL 5. TO APPROVE POLICIES FOR A MASTER FUND/FEEDER FUND STRUCTURE
A. Overview of Master Fund/Feeder Fund Structure.
"Master fund/feeder fund" refers to a structure in which a fund (a feeder fund)
seeks to achieve its investment objective by investing all or substantially all
of its assets in shares of, or interests in, another fund (the master fund)
having a similar investment objective and policies as the feeder fund. The
master fund, in turn, invests in individual securities. Typically, a master fund
will have more than one feeder fund, with each feeder fund marketed to a
particular class or classes of investors or through a different distribution
channel. For example, shares of one feeder fund might be offered to individual
investors, shares of another feeder fund to institutions, and shares of a third
to retirement plans or their participants. The primary reason to use the master
fund/feeder fund structure is to provide a mechanism to pool, in a single master
fund, investments of different investor classes, resulting in a larger
portfolio, investment and administrative efficiencies and economies of scale.
The diagram below compares the Fund's current structure to a typical master
fund/feeder fund structure: CMA currently acts as administrator of three funds
that utilize a master fund/feeder fund structure, Colonial Global Utilities
Fund, Colonial Municipal Money Market Fund and Colonial Money Market Fund.
CURRENT STRUCTURE MASTER FUND/FEEDER FUND STRUCTURE
Fund Shareholders Fund Shareholders Other Feeder Fund Shareholders
------------ ------------ -------------- --------------
Individual Other Feeder Other Feeder
Securities Fund Fund* Fund* Fund*
------------ ------------ -------------- --------------
--------------
Individual
Securities Master Fund
--------------
*Each feeder fund holds only interests in the master fund
B. No Current Plans to Convert the Fund to a Master Fund/Feeder Fund
Structure.
The Trustees have no present plans to convert the Fund to a master fund/feeder
fund structure. However, in the future it may be advantageous for the Fund to be
converted in order to obtain greater efficiencies. The Trustees are proposing
new disclosure to the Fund's statement of additional information which would
eliminate having to obtain a subsequent shareholder vote before implementing a
conversion. This would eliminate the expenses and delays associated with a
subsequent shareholder meeting if the Fund wishes to convert to a master
fund/feeder fund structure. Any such conversion will be approved by the Trustees
and notification will be provided to shareholders.
<PAGE>
C. Management under a Master Fund/Feeder Fund Structure.
The Fund will not be managed significantly different under a master fund/feeder
fund structure. The master fund in which the assets of the feeder fund would
invest will have a similar investment objective and substantially the same
investment policies of the feeder fund. Therefore, the master fund will invest
in the same types of securities in which the feeder fund is authorized to
invest.
D. Changes to Fundamental Investment Policies to Allow the Conversion to a
Master Fund/Feeder Fund Structure.
Currently, the Fund has a fundamental investment policy that may not permit the
Fund to organize as a master fund/feeder fund. The Board of Trustees recommends
adding the following sentence to the Fund's statement of additional information
to clarify that the Fund may be organized as a master fund/feeder fund
structure:
Notwithstanding the investment policies and restrictions of the Fund, the Fund
may invest all or a portion of its investable assets in an open-end management
investment company with substantially the same investment objective, policies
and restrictions as the Fund.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE FOR PROPOSAL 5.
REQUIRED VOTE FOR PROPOSAL 5
Approval requires the affirmative vote of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Fund 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.
PART 3. INFORMATION REGARDING VOTING AND SHAREHOLDER MEETINGS.
This section provides further information regarding the methods of voting and
shareholder meetings.
A. Proxy Solicitation Methods.
Shareholders of the Fund entitled to vote at the Meeting will receive proxy
materials in the mail. The Fund has engaged the services of SCC to assist in the
solicitation of proxies. As the date approaches, if we have not received your
vote, you may receive a call from SCC reminding you to exercise your right to
vote.
B. Proxy Solicitation Costs.
The Fund will bear the cost of the solicitation which includes printing of proxy
materials, mailing and the tabulation of votes. By voting as soon as you receive
your proxy materials, you will help reduce the cost of additional mailings. The
cost of this assistance for your Fund is not expected to exceed $__________.
C. Record Date and Quorum.
Shareholders of record at the close of business on August 21, 1998 (Record Date)
will have one vote for each share held. Holders of 30% of Fund shares
outstanding on the Record Date constitute a quorum and must be present in person
or represented by proxy for business to be transacted at the Meeting. Regardless
of how you vote ("For," "Against" or "Abstain"), your shares will be counted as
present and entitled to vote for purposes of determining the presence of a
quorum. If 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), it will have the effect of votes (a)
present for purposes of determining a quorum for each proposal and (b) against
proposals 2 through 5. With respect to the election of Trustees, withheld
authority, abstentions and broker non-votes have no effect on the outcome of the
voting.
D. Revoking Your Proxy.
You may revoke your proxy at any time up until the voting results are announced
at the Meeting. You may revoke your vote by writing to the Secretary of the
Fund, Nancy L. Conlin, One Financial Center, 11th Floor, Boston, MA 02111-2621.
You may also revoke your proxy by voting again by one of the following five
ways: (a) by using your enclosed proxy card; (b) by calling toll-free at the 800
number indicated on the proxy insert, (c) by accessing our Web site,(d) by fax
(not available for all shareholders; refer to the enclosed proxy insert) or (e)
by voting in person at the Meeting.
E. Shareholder Proposals.
Proposals of shareholders which are intended to be considered for inclusion in
the Fund's proxy statement must be received within a reasonable amount of time
prior to any meeting. The Fund does not intend to hold a meeting in 1999.
F. Annual/Semi-annual Reports.
Further information concerning your Fund is contained in its most recent Annual
and/or Semi-annual Report to Shareholders, which are obtainable free of charge
by writing Colonial Management Associates, Inc. at One Financial Center, Boston,
Massachusetts 02111 or by calling 1-800-426-3750.
G. Litigation.
The Fund is not currently involved in any material litigation.
H. Other Matters.
As of the date of this proxy statement, only the business mentioned in proposals
1 through 5 of the Notice of the Special Meeting of Shareholders is contemplated
to be presented. If any procedural or other matters come before the Meeting,
your proxy shall be voted in accordance with the best judgement of the proxy
holder(s).
PART 4. FUND INFORMATION.
As of the Record Date, the Fund had the following outstanding shares of
beneficial interest:
Class A Class B Class C Class T Class Z
- ------- ------- ------- ------- -------
As of the Record Date, the following persons were known to own beneficially 5%
or more of the outstanding Class(es) of shares of the Fund:
Number
of Shares Percentage of
Class of Shares Name and Address Owned Shares Owned
<PAGE>
As of the Record Date, the current members of the Trustees and Ms. Verville,
Messrs. Carberry and Macera and Dr. Stitzel were known to beneficially own the
applicable outstanding Class(es) of shares of the Fund:
Class A Class B Class C Class T Class Z
Mr. Birnbaum
Mr. Bleasdale
Mr. Carberry
Ms. Collins
Mr. Grinnell
Mr. Lowry
Mr. Macera
Mr. Mayer
Mr. Moody
Dr. Neuhauser
Dr. Stitzel
Mr. Sullivan
Ms. Verville
The following table sets forth certain information about the executive officers
of the Trust:
Year of
Election as
Executive Officer Executive
Name & Age Office with the Trust; Principal Occupation(4) Officer
Stephen E. Gibson President of the Colonial Mutual Funds since June, 1998
(44) 1998; President, Chief Executive Officer and
Director, Colonial Management Associates, Inc.
(Adviser) and The Colonial Group, Inc. (TCG) since
December, 1996; Chairman of the Board and
Director, Liberty Financial Investments, Inc.
since December, 1996 (formerly Managing Director
of Marketing, Putnam Investments from June, 1992
to July, 1996).
Davey S. Scoon Vice President of the Colonial Mutual Funds since 1993
(51) June, 1993 (formerly Treasurer from March, 1985 to
June, 1993); Executive Vice President since
July, 1993 and Director since March, 1985 of the
Adviser (formerly Senior Vice President and
Treasurer from March, 1985 to July, 1993);
Executive Vice President and Chief Operating
Officer of TCG since March, 1995 (formerly
Vice President - Finance and Administration
and Treasurer from November, 1985 to March,
1995).
Year of
Election as
Executive Officer Executive
Name & Age Office with the Trust; Principal Occupation(5) Officer
Timothy J. Jacoby Treasurer and Chief Financial Officer of the 1996
(43) Colonial Mutual Funds since October, 1996
(formerly Controller and Chief Accounting Officer
from October, 1997 to February, 1998); Senior
Vice President of the Adviser since September, 1996
(formerly Senior Vice President,
Fidelity Accounting and Custody Services from
September, 1993 to August, 1990 and Assistant
Treasurer to Fidelity Group of Funds from
August, 1990 to September, 1993).
J. Kevin Controller and Chief Accounting Officer of the 1998
Connaughton Colonial Mutual Funds since February, 1998; Vice
(33) President of the Adviser 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;
Vice President, The Boston Company (subsidiary of
Mellon Bank) from December, 1993 to March, 1994;
Assistant Vice President and Tax Manager,
Mellon, Bank from March, 1992 to December, 1993).
Nancy L. Conlin Secretary of the Colonial Mutual Funds since 1998
(44) April, 1998 (formerly Assistant Secretary from
July, 1994 to April, 1998); Director, Senior
Vice President, General Counsel, Secretary and
Clerk of the Adviser since April, 1998
(formerly Vice President, Counsel, Assistant
Secretary and Assistant Clerk from July, 1994 to
April, 1998), Vice President - Legal, General
Counsel and Clerk of TCG since April, 1998
(formerly Assistant Clerk from July, 1994 to
April, 1998).
As of the Record Date, the executive officers and the current Trustees as a
group were known to beneficially own less than XX% of the outstanding Class(es)
of shares of the Fund.
The current Trustees received compensation from the Fund as of the Fund's fiscal
year end and for the calendar year ended December 31, 1997:
Total Compensation From the
Fund and Colonial Mutual
Aggregate Compensation
From Fund For The Fiscal Funds Paid to the Trustees
Year Ended For The Calendar Year Ended
Trustee December 31, 1997 December 31, 1977(6)
Robert J. Birnbaum $ 7,261 $93,949
Tom Bleasdale 7,486(7) 106,432(8)
Lora S. Collins 7,262 93,949
James E. Grinnell 7,851(9) 94,698(10)
Richard W. Lowry 7,319 94,968
William E. Mayer 6,945 89,949
James L. Moody, Jr. 7,614(11) 98,447(12)
John J. Neuhauser 7,340 94,989
Robert L. Sullivan 7,735 99,945
The following table sets forth the compensation paid to Messrs. Birnbaum,
Grinnell and Lowry in their capacities as Trustees or Directors of the Liberty
All-Star Equity Fund and the Liberty All-Star Growth Fund, Inc. (together,
Liberty Funds) for service during the calendar year ended December 31, 1997:
Total Compensation Paid To The Trustees
From the Liberty Funds For The Calendar Year
Trustee Ended December 31, 1997(13)
Robert J. Birnbaum $26,800
James E. Grinnell 26,800
Richard W. Lowry 26,800
The following table sets forth the compensation paid to Mr. Macera and Dr.
Stitzel in their capacities as Trustees of Liberty Variable Investment Trust
(LVIT Trust), which offers nine funds: Colonial Growth and Income Fund, Variable
Series; Stein Roe Global Utilities Fund, Variable Series; Colonial International
Fund for Growth, Variable Series; Colonial U.S. Stock Fund, Variable Series;
Colonial Strategic Income Fund, Variable Series; Newport Tiger Fund, Variable
Series; Liberty All-Star Equity Fund, Variable Series; Colonial Small Cap Value
Fund, Variable Series; and Colonial High Yield Securities Fund, Variable Series;
for serving during the fiscal year ended December 31, 1997:
Total Compensation From the LVIT
Trust and Investment Companies which
Aggregate 1997 are Series of the LVIT Trust in
Trustee Compensation(14) 1997(15)
Salvatore Macera $12,500 $33,500
Thomas E. Stitzel 12,500 33,500
<PAGE>
Exhibit B
CURRENT AND PROPOSED INVESTMENT POLICIES AND RESTRICTIONS OF THE FUND
{{Double parenthical}} language represents the proposed new language and the
[bracketed] language represents proposed deletions
FUNDAMENTAL INVESTMENT POLICIES
The Fund may:
1. {{Not concentrate more than 25% of the Fund's total assets in any
industry (other than obligations issued or guaranteed as to principal
and interest by the Government of the United States or any agency or
instrumentality thereof) or with respect}} [As] to 75% of the Fund's
assets, purchase the securities of any issuer [(other than obligations
issued or guaranteed as to principal and interest by the Government
of the United States or any agency or instrumentality thereof)] if,
as a result of such purchase, more than 5% of the Fund's total
assets would be invested in the securities of such issuer,
{{notwithstanding the investment policies and restrictions of the
Fund, the Fund may invest all or a portion of its investable assets
in an open-end management investment company with substantially the
same investment objective, policies and restrictions as the Fund}};
[2. Purchase stock or securities of an issuer (other than obligations of
the United States or any agency or instrumentality thereof) if such
purchase would cause the Fund to own more than 10% of any class of the
outstanding stock or securities or more than 10% of any class of
voting securities of such issuer;]
{{2.}}[3] {{Underwrite securities issued by others only when disposing
of portfolio securities}} [Act as an underwriter of securities of
other issuers, except that the Fund may invest up to 10% of the value
of its total assets (at the time of investment) in portfolio
securities which it might not be free to sell to the public without
registration of such securities under the Securities Act of 1933 or
any foreign law restricting distribution of securities in a country
of a foreign issuer (restricted securities)];
[4. Buy or sell commodities or commodity contracts, provided, however,
that the Fund may utilize more than 1.00% of its assets for deposits
or commissions required to enter into forward foreign currency
contracts for hedging purposes as described under "Miscellaneous
Investment Practice;"]
{{3.}}[5] [Borrow amounts in excess of 5% of the Fund's net asset value, and
only from banks as a temporary measure for extraordinary or
emergency purposes and not for investment in securities. To avoid
the untimely disposition of assets to meet redemptions, the Fund
may borrow up to 20% of the value of its assets to meet redemptions.
The Fund will not make other investments while such borrowings
are outstanding. The Fund will not mortgage, pledge or in any other
manner transfer, as security for indebtedness, any of its assets.
(Short-term credits necessary for the clearance of purchases or sales
of securities will not be deemed to be borrowings by the Fund)]
{{Borrow from banks, other affiliated funds and other persons to
the extent permitted by applicable law, provided that the
Fund's borrowings shall not exceed 33 1/3% of the value of its total
assets (including the amount borrowed) less liabilities
(other than borrowings) or such other percentage permitted by law}};
{{4.}}[6] Make loans {{(a) through lending of securities, (b) through the
purchase of debt instruments or similar evidences of indebtedness
typically sold privately to financial institutions, (c) through an
interfund lending program with other affiliated funds provided that
no such loan may be made if, as a result, the aggregate of such
loans would exceed 33 1/3% of the value of its total assets (taken at
market value at the time of such loans), and (d) through repurchase
agreements}}[except that the Fund may: (a) acquire for investment a
portion of an issue of bonds, debentures, notes or other evidences or
indebtedness of a corporation or government; (b) enter into
repurchase agreements, secured by U.S. government or Agency
securities];
[7. Invest in companies for the purpose of exercising control;]
[8. Invest in securities of other investment companies except by
purchase in the open market involving only customary broker's
commissions, or as part of a merger, consolidation, or acquisition
of assets;]
[9. Issue senior securities;]
[10. Concentrate the Fund's investments in any industry;]
[11. Participate on a joint or joint and several basis in any securities
trading account;]
{{5.}}[12]{{Purchase and sell futures contracts and related options as long as
the total initial margin and premiums do not exceed 5% of total
assets; and}}[Write or trade in put or call options;]
[13. Purchase securities on margin, but the Fund may utilize such
short-term credits as may be necessary for clearance of purchases
or sales of securities;]
[14. Engage in short sales;]
{{6.}}[15][Purchase or sell real estate provided that liquid securities of
companies which deal in real estate or interests therein will not be
deemed to be investments in real estate; and]{{Only own real estate
acquired as the result of owning securities and
not more than 5% of total assets}}.
[16. Invest in interest in oil, gas or other mineral exploration or
development programs, including leases.]
NON-FUNDAMENTAL INVESTMENT POLICIES
As non-fundamental investment policies which may be changed without a
shareholder vote, the Fund may not:
1. Invest more than {{15%}}[10%] of its net assets in illiquid assets;
{{and}}
{{2. Have a short sales position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of
securities.}}
[2. Purchase the securities of foreign issuers which are not listed on a
recognized domestic or foreign securities exchange, restricted
securities and issues which are not readily marketable, if such
purchase would cause the Fund to own such securities in excess of
15% of its net assets; and]
[3. Engage in arbitrage transations.]
<PAGE>
Exhibit C
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF COLONIAL TRUST VII
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at Boston,
Massachusetts, this ____ day of ___________ by the Trustees hereunder, and by
the holders of shares of beneficial interest to be issued hereunder as
hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an investment
company; and
WHEREAS, the Trustees have agreed to manage all property coming into their hands
as trustees of a Massachusetts business trust in accordance with the provisions
hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they may from time to time acquire in any
manner as Trustees hereunder, IN TRUST to manage and dispose of the same upon
the following terms and conditions for the pro rata benefit of the holders from
time to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Name
Section 1. This Trust shall be known as Colonial Trust VII and the Trustees
shall conduct the business of the Trust under that name or any other name as
they may from time to time determine.
Definitions
Section 2. Whenever used herein, unless otherwise required by the context or
specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established by this
Amended and Restated Agreement and Declaration of Trust, as amended from time to
time;
(b) "Trustees" refers to the Trustees of the Trust named herein or elected in
accordance with Article IV;
(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 series of Shares is authorized by the Trustees, the equal
proportionate units into which each series of Shares shall be divided from time
to time or, if more than one class of Shares of any series is authorized by the
Trustees, the equal proportionate units into which each class of such series of
Shares shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 and the Rules
and Regulations thereunder, all as amended from time to time;
(f) The terms "Affiliated Person," "Assignment," "Commission," "Interested
Person," "Principal Underwriter" and "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42) of the 1940 Act, whichever
may be applicable) shall have the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Amended and Restated 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.
ARTICLE II
PURPOSE
The purpose of the Trust is to provide investors a managed investment primarily
in securities, commodities and debt instruments.
ARTICLE III
SHARES
Division of Beneficial Interest
Section 1. The Shares of the Trust shall be issued in one or more series as the
Trustees may, without Shareholder approval, authorize. The Trustees may, without
Shareholder approval, divide the Shares of any series into two or more classes,
Shares of each such class having such preferences or special or relative rights
or privileges (including conversion rights, if any) as the Trustees may
determine and as are not inconsistent with any provision of this Declaration of
Trust. Each series shall be preferred over all other series in respect of the
assets allocated to that series. The beneficial interest in each series shall at
all times be divided into Shares, without par value, each of which shall, except
as the Trustees may otherwise authorize in the case of any series that is
divided into two or more classes, represent an equal proportionate interest in
the series with each other Share of the same series, none having priority or
preference over another. The number of Shares authorized shall be unlimited, 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 series or
class into a greater or lesser number without thereby changing the proportionate
beneficial interests in the series or class.
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 series and class and as to the number of Shares of each
series and class held from time to time by each Shareholder.
Investments in the Trust; Assets of the Series
Section 3. The Trustees shall accept investments in the Trust from such persons
and on such terms and, subject to any requirements of law, for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as they from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of each
series, together with all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to the series of Shares with
respect to which the same were received by the Trust for all purposes, subject
only to the rights of creditors, and shall be so handled upon the books of
account of the Trust and are herein referred to as "assets of" such series.
No Preemptive Rights
Section 4. Shareholders shall have no preemptive or other right to receive,
purchase or subscribe for any additional Shares or other securities issued by
the Trust.
Status of Shares and Limitation of Personal Liability
Section 5. Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in a court or elsewhere against the Trust or the Trustees, but only to
the rights of said decedent under this Trust. Ownership of Shares shall not
entitle the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust, shall have any power to bind personally any Shareholder, nor
except as specifically provided herein to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
ARTICLE IV
THE TRUSTEES
Election
Section 1. The number of Trustees shall be fixed by the Trustees, except that,
subsequent to any sale of Shares pursuant to a public offering, there shall be
not less than three Trustees. 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. Each Trustee elected by the Shareholders or by the
Trustees shall serve until the next meeting of Shareholders called for the
purpose of electing Trustees and until the election and qualification of his or
her successor, or until he or she sooner dies, resigns or is removed. 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. By vote of a majority of the Trustees then in office, the Trustees may
remove a Trustee with or without cause. At any meeting called for the purpose, a
Trustee may be removed, with or without cause, by vote of the holders of
two-thirds of the outstanding Shares.
Effect of Death, Resignation, etc. of a Trustee
Section 2. The death, declination, resignation, retirement, removal or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
Powers
Section 3. 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; they may fill vacancies in 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.
Without limiting the foregoing, the Trustees shall have power and authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options on and
lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with respect to
stock or other securities or property; and to execute and deliver proxies or
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust, whether
in bearer, unregistered or other negotiable form, or in the name of the Trustees
or of the Trust or in the name of a custodian, subcustodian or other depository
or a nominee or nominees or otherwise;
(f) Subject to the provisions of Article III, Section 3, to allocate assets,
liabilities and expenses of the Trust to a particular series of Shares or to
apportion the same among two or more series, provided that any liabilities or
expenses incurred by a particular series of Shares shall be payable solely out
of the assets of that series; and to the extent necessary or appropriate to give
effect to the preferences and special or relative rights and privileges of any
classes of Shares, to allocate assets, liabilities, income and expenses of a
series to a particular class of Shares of that series or to apportion the same
among two or more classes of Shares of that series;
(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security of which is
or was held in the Trust; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security held in the Trust;
(h) To join with other security holders in acting through a committee,
depository, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depository or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or against
the Trust on any matter in controversy, including but not limited to claims for
taxes;
(j) To enter into joint ventures, general or limited partnerships and any other
combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other obligations of any
person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property or
any part thereof to secure any of or all of such obligations;
(m) To purchase and pay for entirely out of Trust property such insurance as
they may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of the
Trust and payment of distributions and principal on its portfolio investments,
and insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers or managers, principal underwriters or independent
contractors of the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having held any such office
or position, or by reason of any action alleged to have been taken or omitted by
any such person as Shareholder, Trustee, officer, employee, agent, investment
adviser or manager, principal underwriter or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability; and
(n) To pay pensions for faithful service, as deemed appropriate by the Trustees,
and to adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other benefits,
for any or all of the Trustees, officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present or future
law or custom in regard to investments by Trustees. Except as otherwise provided
herein or from time to time in the By-Laws, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a meeting of the
Trustees (a quorum being present), within or without Massachusetts, including
any meeting held by means of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time, and participation by such means shall constitute
presence in person at a meeting, or by written consents of a majority of the
Trustees then in office.
Payment of Expenses by Trust
Section 4. The Trustees are authorized to pay or to cause to be paid out of the
principal or income of the Trust, or partly out of principal and partly out of
income, as they deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's officers,
employees, investment adviser or manager, principal underwriter, auditor,
counsel, custodian, transfer agent, Shareholder services agent and such other
agents or independent contractors, and such other expenses and charges, as the
Trustees may deem necessary or proper to incur, provided, however, that all
expenses, fees, charges, taxes and liabilities incurred or arising in connection
with a particular series of Shares, as determined by the Trustees, shall be
payable solely out of the assets of that series.
Ownership of Assets of the Trust
Section 5. Title to all of the assets of each series of Shares and of the Trust
shall at all times be considered as vested in the Trustees.
Advisory, Management and Distribution
Section 6. Subject to a favorable Majority Shareholder Vote, the Trustees may,
at any time and from time to time, contract for exclusive or nonexclusive
advisory and/or management services with Newport Fund Management, Inc., a
Virginia corporation, or any other corporation, trust, association or other
organization (the "Adviser"), every such contract to comply with such
requirements and restrictions as may be set forth in the By-Laws; and any such
contract may contain such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested, and to make changes in the Trust's
investments. The Trustees may also, at any time and from time to time, contract
with the Adviser or any other corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor or principal
underwriter for the Shares, every such contract to comply with such requirements
and restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a shareholder,
director, officer, partner, trustee, employee, manager, adviser, principal
underwriter or distributor or agent of or for any corporation, trust,
association or other organization, or of or for any parent or affiliate of any
organization, with which an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, shareholder services or
other agency contract may have been or may hereafter be made, or that any
organization, or any parent or affiliate thereof, is a Shareholders or has an
interest in the Trust, or that
(ii) any corporation, trust, association or other organization with which an
advisory or management contract or principal underwriter's or distributor's
contract, or transfer, Shareholder services or other agency contract may have
been or may hereafter be made also has an advisory or management contract, or
principal underwriter's or distributor's contract, or transfer, shareholder
services or other agency contract with one or more other corporations, trusts,
associations or other organizations, or has other business or interests shall
not affect the validity of any such contract or disqualify any Shareholder,
Trustee or officer of the Trust from voting upon or executing the same or create
any liability or accountability to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Voting Powers
Section 1. The Shareholders shall have power to vote only (i) for the election
of Trustees as provided in Article IV, Section 1, (ii) with respect to any
Adviser as provided in Article IV, Section 6, (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 not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (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. 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 be voted in the aggregate as a single class without
regard to series or class; except (1) when required by the 1940 Act or when the
Trustees shall have determined that the matter affects one or more series or
classes materially differently, Shares shall be voted by individual series or
class; and (2) when the Trustees have determined that the matter affects only
the interests of one or more series or classes, then only Shareholders of such
series or classes shall be entitled to vote thereon. 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 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.
Voting Power and Meetings
Section 2. Meetings of Shareholders of the Trust or of any series or class may
be called by the Trustees or such other person or persons as may be specified in
the By-Laws and held from time to time for the purpose of taking action upon any
matter requiring the vote or the authority of the Shareholders of the Trust or
any series or class as herein provided or upon any other matter deemed by the
Trustees to be necessary or desirable. Meetings of Shareholders of the Trust or
of any series or class shall be called by the Trustees or such other person or
persons as may be specified in the By-Laws upon written application. The
Shareholders shall be entitled to at least seven days' written notice of any
meeting of the Shareholders.
Quorum and Required Vote
Section 3. Thirty percent (30%) of the Shares entitled to vote shall be a quorum
for the transaction of business at a Shareholders' meeting, except that where
any provision of law or of this Declaration of Trust permits or requires that
holders of any series or class shall vote as a series or class, then thirty
percent (30%) of the aggregate number of Shares of that series or class entitled
to vote shall be necessary to constitute a quorum for the transaction of
business by that series or class. 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 any provision of law or of this Declaration of Trust permits or
requires that the holders of any series or class shall vote as a series or
class, then a majority of the Shares of that series or class vote on the matter
(or a plurality with respect to the election of a Trustee) shall decide that
matter insofar as that series or class is concerned.
Action by Written Consent
Section 4. Any action taken by Shareholders may be taken without a meeting if a
majority of Shareholder entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express provision of this
Declaration of Trust or the By-Laws) consent to the action in writing and such
written consents are filed with the records of the meetings of Shareholders.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
Additional Provisions
Section 5. The By-Laws may include further provisions for Shareholders' votes
and meetings and related matters.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
AND DETERMINATION OF NET ASSET VALUE
Distributions
Section 1. The Trustees may, but need not, each year distribute to the
Shareholders of each series or class 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. 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 of each series, 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 of any one or more series or classes 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 of the series or
otherwise, or all or part of any other principal of the Trust attributable to
the series. In the case of any series not divided into two or more classes of
Shares, each distribution pursuant to this Section 1 shall be made ratably
according to the number of Shares of the 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. In the case of any
series divided into two or more classes, each distribution pursuant to this
Section 1 may be made in whole or in such parts as the Trustees may determine to
the Shareholders of any one or more classes, and the distribution to the
Shareholders of any class shall be made ratably according to the number of
Shares of the class (but need not be made ratably according to the number of
Shares of the series, considered without regard to class) held by the several
Shareholders on the 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 7 of this Article VI.
Redemptions and Repurchases
Section 2. Any holder of Shares of the Trust may be presentation of a written
request, together with his or her certificates, if any, for such Shares, in
proper form for transfer, at the office of the Trust or at a principal office of
a transfer agent appointed by the Trust, redeem his or her Shares for the net
asset value thereof determined and computed in accordance with the provisions of
this Section 2 and the provisions of Section 7 of this Article VI.
Upon receipt by the Trust or its transfer agent of such written request for
redemption of Shares, such Shares shall be redeemed at the net asset value per
share of the appropriate series next determined after such Shares are tendered
in proper order for transfer to the Trust or determined as of such other time
fixed by the Trustees as may be permitted or required by the 1940 Act, provided
that no such tender shall be required in the case of Shares for which a
certificate or certificates have not been issued, and in such case such Shares
shall be redeemed at the net asset value per share of the appropriate series
next determined after such request has been received or determined at such other
time fixed by the Trustees as may be permitted or required by the 1940 Act.
The obligation of the Trust to redeem its Shares of each series or class as set
forth above in this Section 2 shall be subject to the conditions that during any
time of emergency, as hereinafter defined, such obligation may be suspended by
the Trust by or under authority of the Trustees for such period or periods
during such time of emergency as shall be determined by or under authority of
the Trustees. If there is such a suspension, any Shareholder may withdraw any
demand for redemption and any tender of Shares which has been received by the
Trust during any such period and any tender of Shares, the applicable net asset
value of which would but for such suspension be calculated as of a time during
such period. Upon such withdrawal, the Trust shall return to the Shareholder the
certificates therefor, if any. For the purposes of any such suspension, "time of
emergency" shall mean, either with respect to all Shares or any series of
Shares, any period during which:
(a) the New York Stock Exchange is closed other than for customary weekend and
holiday closings; or
(b) the Trustees or authorized officers of the Trust shall have determined, in
compliance with any applicable rules and regulations of the Securities and
Exchange Commission, either that trading on the New York Stock Exchange is
restricted, or that an emergency exists as a result of which (i) disposal of the
Trust of securities owned by it is not reasonably practicable or (ii) it is not
reasonably practicable for the Trust fairly to determine the current value of
its net assets; or
(c) the suspension or postponement of such obligations is permitted by order of
the Securities and Exchange Commission.
The Trust may also purchase, repurchase or redeem Shares in accordance with such
other methods, upon such other terms and subject to such other conditions as the
Trustees may from time to time authorize at a price not exceeding the net asset
value of such Shares in effect when the purchase or repurchase or any contract
to purchase or repurchase is made.
Payment in Kind
Section 3. Subject to any generally applicable limitation imposed by the
Trustees, any payment on redemption of Shares may, if authorized by the
Trustees, be made wholly or partly in kind, instead of in cash. Such payment in
kind shall be made by distributing securities or other property constituting, in
the opinion of the Trustees, a fair representation of the various types of
securities and other property then held by the series of Shares being redeemed
(but not necessarily involving a portion of each of the series' holdings) and
taken at their value used in determining the net asset value of the Shares in
respect of which payment is made.
Redemptions at the Option of the Trust
Section 4. The Trust shall have the right at its option and at any time to
redeem Shares of any Shareholder at the net asset value thereof as determined in
accordance with Section 7 of Article VI of this Declaration of Trust: (i) if at
such time such Shareholder owns fewer Shares than, or Shares having an aggregate
net asset value of less than, an amount determined from time to time by the
Trustees; or (ii) to the extent that such Shareholder owns Shares of a
particular series of Shares equal to or in excess of a percentage of the
outstanding Shares of that series (determined without regard to class)
determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares of the Trust representing a percentage equal to or in
excess of such percentage of the aggregate number of outstanding Shares of the
Trust or the aggregate net asset value of the Trust determined from time to time
by the Trustees.
Dividends, Distributions, Redemptions and Repurchases
Section 5. No dividend or distribution (including, without limitation, any
distribution paid upon termination of the Trust or of any series) with respect
to, nor any redemption or repurchase of, the Shares of any series (or of any
class) shall be effected by the Trust other than from the assets of such series
(or of the series of which such class is a part).
Additional Provisions Relating to Redemptions and Repurchases
Section 6. The completion of redemption of Shares shall constitute a full
discharge of the Trust and the Trustees with respect to such shares, and the
Trustees may require that any certificate or certificates issued by the Trust to
evidence the ownership of such Shares shall be surrendered to the Trustees for
cancellation or notation.
Determination of Net Asset Value
Section 7. The term "net asset value" of the Shares of each series or class
shall mean: (i) the value of all the assets of such series or class; (ii) less
the total liabilities of such series or class; (iii) divided by the number of
Shares of such series or class outstanding, in each case at the time of each
determination. The "number of Shares of such series or class outstanding" for
the purposes of such computation shall be exclusive of any Shares of such series
or class to be redeemed and not then redeemed as to which the redemption price
has been determined, but shall include Shares of such series or class presented
for repurchase and not then repurchased and Shares of such series or class to be
redeemed and not then redeemed as to which the redemption price has not been
determined and Shares of such series or class the sale of which has been
confirmed. 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.
The Trustees, or any officer or officers or agent of this Trust designated for
the purpose by the Trustees, shall determine the net asset value of the Shares
of each series or class, and the Trustees shall fix the times as of which the
net asset value of the Shares of each series or class shall be determined and
shall fix the periods during which any such net asset value shall be effective
as to sales, redemptions and repurchases of, and other transactions in, the
Shares of such series or class, except as such times and periods for any such
transaction may be fixed by other provisions of this Declaration of Trust or by
the By-Laws.
In valuing the portfolio investments of any series or class for determination of
net asset value per share of such series or class, securities for which market
quotations are readily available shall be valued at prices which, in the opinion
of the Trustees, or any officer or officers or agent of the Trust designated for
the purpose by the Trustees, most nearly represent the market value of such
securities, which may, but need not, be the most recent bid price obtained from
one or more of the market makers for such securities; other securities and
assets shall be valued at fair value as determined by or pursuant to the
direction of the Trustees. Notwithstanding the foregoing, short-term debt
obligations, commercial paper and repurchase agreements may be, but need not be,
valued on the basis of quoted yields for securities of comparable maturity,
quality and type, or on the basis of amortized cost. In determination of net
asset value of any series or class, dividends receivable and accounts receivable
for investments sold and for Shares sold shall be stated at the amounts to be
received therefor; and income receivable accrued daily on bonds and notes owned
shall be stated at the amount to be received. Any other assets shall be stated
at fair value as determined by the Trustees or such officer, officers or agent
pursuant to the Trustees' authority, except that no value shall be assigned to
good will, furniture, lists, reports, statistics or other noncurrent assets
other than real estate. Liabilities of any series or class for accounts payable
for investments purchased and for Shares tendered for redemption and not then
redeemed as to which the redemption price has been determined shall be stated at
the amounts payable therefor. In determining the net asset value of any series
or class, the person or persons making such determination on behalf of the Trust
may include in liabilities such reserves, estimated accrued expenses and
contingencies as such person or persons may in its, his or their best judgment
deem fair and reasonable under the circumstances. Any income dividends and gains
distributions payable by the Trust shall be deducted as of such time or times on
the record date therefor as the Trustees shall determine.
The manner of determining the net assets of any series or class or of
determining the net asset value of the Shares of any series or class may from
time to time be altered as necessary or desirable in the judgment of the
Trustees to conform to any other method prescribed or permitted by any
applicable law or regulation.
Determinations under this Section 7 made in good faith and in accordance with
the provisions of the 1940 Act shall be binding on all parties concerned.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
Compensation
Section 1. The Trustees as such shall be entitled to reasonable compensation
from the Trust; they may fix the amount of their compensation. Nothing herein
shall in any way prevent the employment of any Trustee for advisory, management,
legal, accounting, investment banking or other services and payment for the same
by the Trust.
Limitation of Liability
Section 2. The Trustees shall not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent, employee, adviser or principal
underwriter of the Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee, but nothing herein contained shall protect any
Trustee against any liability to which he or she would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate, Share or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
Trustees, Officers, etc.
Section 1. The Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a "Covered
Person") against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, except that no Covered Person shall be indemnified
against any liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such Covered Person's office. Expenses, including counsel fees so incurred by
any such Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), may be paid from time to
time by the Trust in advance of the final disposition of any such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such Covered
Person to repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article, provided
that (a) such Covered Person shall provide security for his undertaking, (b) the
Trust shall be insured against losses arising by reason of such Covered Person's
failure to fulfill his undertaking or (c) a majority of the Trustees who are
disinterested persons and who are not Interested Persons (provided that a
majority of such Trustees then in office act on the matter), or independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts (but not a full trial-type inquiry), that there is
reason to believe such Covered Person ultimately will be entitled to
indemnification.
Compromise Payment
Section 2. As to any matter disposed of (whether by a compromise payment,
pursuant to a consent decree or otherwise) without an adjudication in a decision
on the merits by a court, or by any other body before which the proceeding was
brought, that such Covered Person is liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office,
indemnification shall be provided if (a) approved as in the best interest of the
Trust, after notice that it involves such indemnification, by at least a
majority of the Trustees who are disinterested persons and are not interested
Persons (provided that a majority of such Trustees then in office act on the
matter), upon a determination, based upon a review of readily available facts
(but not a full trial-type inquiry) that such Covered Person is not liable to
the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office, or (b) there has been obtained an opinion in writing of
independent legal counsel, based upon a review of readily available facts (but
not a full-trial type inquiry) to the effect that such indemnification would not
protect such Covered Person against any liability to the Trust to which such
Covered Person would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. Any approval pursuant to this Section shall not prevent
the recovery from any Covered Person of any amount paid to such Covered Person
in accordance with this Section as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Indemnification Not Exclusive
Section 3. The right of indemnification hereby provided shall not be exclusive
of or affect any other rights to which any such Covered Person may be entitled.
As used in this Article VIII, the term "Covered Person" shall include such
person's heirs, executors and administrators, and a "disinterested person" is a
person against whom none of the actions, suits or other proceedings in question
or another action, suit or other proceeding on the same or similar grounds is
then or has been pending. Nothing contained in this article shall affect any
rights to indemnification to which personnel of the Trust, other than Trustees
and officers, and other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain liability insurance on
behalf of such persons.
Shareholders
Section 4. In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or, in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled to
be held harmless from and indemnified against all loss and expense arising from
such liability, but only out of the assets of the particular series of shares of
which he or she is or was a Shareholder.
<PAGE>
ARTICLE IX
MISCELLANEOUS
Trustees, Shareholders, etc. Not Personally Liable; Notice
Section 1. All persons extending credit to, contracting with or having any claim
against the Trust or a particular series of Shares shall look only to the assets
of the Trust or the assets of that particular series of Shares for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Declaration of
Trust shall protect any Trustee against any liability to which such Trustee
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustees or Trustee or as officers or officer
and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recital as he or
she or they may deem appropriate, but the omission thereof shall not operate to
bind any Trustees or Trustee of officers or officer or Shareholders or
Shareholder individually.
Trustee's Good Faith Action, Expert Advice, No Bond or Surety
Section 2. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his or her own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
<PAGE>
Liability of Third Persons Dealing with Trustees
Section 3. No person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Duration and Termination of Trust
Section 4. Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by vote of
Shareholders holding at least two-thirds of the Shares of each series entitled
to vote or by the Trustees by written notice to the Shareholders. Any series of
Shares may be terminated at any time by vote of Shareholders holding at least
two-thirds of the Shares of such series entitled to vote or by the Trustees by
written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more series of Shares, 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 of the series involved, ratably according to the number of
Shares of such series held by the several Shareholders of such series 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 of
Shares of that series, provided that any distribution to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
Filing of Copies, References, Headings
Section 5. The original or a copy of this instrument and of each amendment
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each amendment hereto shall be
filed by the Trust with the Secretary of State of The Commonwealth of
Massachusetts and with the Clerk of the City of Boston, as well as any other
governmental office where such filing may from time to time be required. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such amendments have been made and as to any matters in
connection with the Trust hereunder; and, with the same effect as if it were the
original, may rely on a copy certified by an officer of the Trust to be a copy
of this instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions such as "herein,"
"hereof" and "hereunder," shall be deemed to refer to this instrument as amended
or affected by any such amendments. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts, each of which shall be deemed an
original.
Applicable Law
Section 6. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type commonly called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Amendments
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 when authorized so to do by
a vote of Shareholders holding a majority of the Shares entitled to vote, except
that an amendment which shall affect the holders of one or more series or
classes of Shares but not the holders of all outstanding series and classes
shall be authorized by vote of the Shareholders holding a majority of the Shares
entitled to vote of each series and class affected and no vote of Shareholders
of a series or class not affected shall be required. 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.
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands in the City of
Boston, Massachusetts for themselves and their assigns, as of this ___ day of
____________, 1998.
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<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
Boston, ss. _______________, 1998
Then personally appeared the above-named Trustees and acknowledged the foregoing
instrument to be their free act and deed, before me,
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Notary Public
My commission expires: ____________
(Notary's Seal)
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(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) Mr. Carberry is an "interested person," as defined in the Investment Company
Act of 1940 (1940 Act), because of his affiliation with Liberty Financial
Companies, Inc. (Liberty Financial), an indirect majority-owned subsidiary of
Liberty Mutual Insurance Company.
(3) Mr. Mayer is an "interested person," as defined in the 1940 Act because o
his affiliation with Hambrecht & Quist Incorporated (a registered
broker-dealer).
(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) Except as otherwise noted, each individual has held the office indicated or
other offices in the same company for the last five years.
(6) The Fund does not currently provide pension or retirement plan benefits to
the Trustees. At December 31, 1997, the Colonial Mutual Funds consisted of 39
open-end and 5 closed-end management investment company portfolios.
(7) Includes $3,743 payable in later years as deferred compensation.
(8) Includes $57,454 payable in later years as deferred compensation.
(9) Includes $731 payable in later years as deferred compensation.
(10) Includes $4,797 payable in later years as deferred compensation.
(11) Total compensation of $7,614 for the fiscal year ended December 31, 1997
will be payable in later years as deferred compensation.
(12) Total compensation of $98,447 for the calendar year ended December 31, 1997
will be payable in later years as deferred compensation.
(13) The Liberty Funds are advised by Liberty Asset Management Company (LAMCO).
LAMCO is an indirect wholly-owned subsidiary of Liberty Financial Companies,
Inc. (an intermediate parent of the Administrator).
(14) Consists of Trustee fees in the amount of (i) a $5,000 annual retainer,
(ii) a $1,500 meeting fee for each meeting attended in person and (iii) a $500
meeting fee for each telephone meeting.
(15) Includes Trustee fees paid by the LVIT Trust and by Stein Roe Variable
Investment Trust.
PLEASE VOTE PROMPTLY
*********************************
Your vote is important, no matter how many shares you own. Please vote on the
reverse side of this proxy card and sign in the space(s) provided. Return your
completed proxy card in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted.
This proxy is solicited on behalf of the Board of Trustees. The signers of this
proxy hereby appoint William J. Ballou, Nancy L. Conlin, Stephen E. Gibson,
Timothy J. Jacoby and Davey S. Scoon each of them proxies of the signers, with
power of substitution to vote at the
Special Meeting of Shareholders to be held at Boston, Massachusetts, on Friday,
October 30, 1998, and at any adjournments, as specified herein, and in
accordance with their best judgement, on any other business that may properly
come before this meeting.
After careful review, the Board of Trustees unanimously has recommended a vote
"FOR" all matters.
<PAGE>
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, Massachusetts 02105-1722
NEWPORT TIGER FUND - CLASS __ SHARES
PLEASE READ BOTH SIDES OF THIS CARD
VOTE TODAY!
This proxy, when properly executed, will be voted in the manner directed herein
and, absent direction, will be voted FOR Items 1 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 Item:
Elect the Board of Trustees (Item 1 of the Notice).
Robert J. Birnbaum Salvatore Macera
Tom Bleasdale James L. Moody, Jr.
John Carberry John J. Neuhauser
Lora S. Collins Thomas E. Stitzel
James E. Grinnell Robert L. Sullivan
Richard W. Lowry Anne-Lee Verville
William E. Mayer
For All For All
Nominees Withhold Except
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Instruction: To withhold authority to vote for any individual nominee, mark the
"For All Except" box and strike a line through the name of the nominee. Your
shares will be voted for the remaining nominee.
To approve or disapprove amending fundamental investment policies regarding
borrowing and lending (Item 2 of the Notice)
For Against Abstain
|-| |-| |-|
<PAGE>
To approve or disapprove changes to fundamental investment policies (Item 3 of
the Notice).
For Against Abstain
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To approve or disapprove the amended and restated Agreement and Declaration of
Trust (Item 4 of the Notice).
For Against Abstain
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To approve or disapprove policies for a master fund/feeder fund structure (Item
5 of the Notice).
For Against Abstain
|-| |-| |-|
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 corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE BELOW |_|
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PLEASE MARK, SIGN DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. Date_________________
Shareholder sign here Co-owner sign here
<PAGE>
