UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12.
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
COLONIAL HIGH INCOME MUNICIPAL TRUST
COLONIAL INTERMARKET INCOME TRUST I
COLONIAL INTERMEDIATE HIGH INCOME FUND
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
COLONIAL MUNICIPAL INCOME TRUST
(Name of Registrant as Specified in its Charter)
(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of filing fee (check the approximate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
COLONIAL HIGH INCOME MUNICIPAL TRUST
COLONIAL INTERMARKET INCOME TRUST I
COLONIAL INTERMEDIATE HIGH INCOME FUND
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
COLONIAL MUNICIPAL INCOME TRUST
May 2, 2007
Dear Shareholder:
The annual meeting of shareholders of each of Colonial California Insured
Municipal Fund, Colonial High Income Municipal Trust, Colonial InterMarket
Income Trust I, Colonial Intermediate High Income Fund, Colonial Investment
Grade Municipal Trust and Colonial Municipal Income Trust (collectively, the
"Funds") has been called to be held on June 22, 2007 at 2:00 p.m. Eastern time
at One Financial Center, 12th floor, Boston, Massachusetts 02111-2621.
Columbia Management Advisors, LLC ("Columbia"), the investment adviser and
administrator of the Funds, has agreed to sell certain assets used in its
business of managing the Funds and Colonial Insured Municipal Fund to
Massachusetts Financial Services Company, Inc. ("MFS"). Upon the closing of the
sale, each Fund's current investment advisory agreement with Columbia would
terminate and each Fund would enter into a new investment advisory agreement
with MFS pursuant to which MFS would serve as investment adviser to the Fund.
Therefore, the meeting will be held for the following purposes:
(1) to vote on a proposed new investment advisory agreement for each Fund
between such Fund and MFS;
(2) to vote on an amended and restated declaration of trust for each Fund,
contingent upon shareholder approval of (1) above;
(3) to elect trustees to the Board of Trustees of each Fund to replace all of
the current trustees of each Fund, contingent upon shareholder approval of
(1) above;
(4) to elect trustees to the Board of Trustees of each Fund so that those
current trustees whose terms will expire this year will continue to hold
office until the trustees elected pursuant to (3) above take office or until
the end of those current trustees' stated terms, whichever is earlier;
and to transact any other business that may properly come before the meeting or
any adjournments or postponements thereof.
INT-47/130575-0407
YOUR FUND'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH
PROPOSAL AND NOMINEE DESCRIBED IN THE ENCLOSED PROXY STATEMENT.
The enclosed proxy statement explains the proposals to be considered in greater
detail. Please read it carefully. Although we hope that you can attend the
meeting in person, we urge you in any event to vote your shares at your earliest
convenience in order to make sure that you are represented at the meeting.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU CAN VOTE
EASILY AND QUICKLY BY MAIL, BY TELEPHONE, VIA THE INTERNET OR IN PERSON. (VOTING
BY TELEPHONE OR INTERNET IS NOT AVAILABLE FOR ALL SHAREHOLDERS.) A SELF-
ADDRESSED, POSTAGE-PAID ENVELOPE HAS BEEN ENCLOSED FOR YOUR CONVENIENCE. PLEASE
HELP AVOID THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY.
We appreciate your participation and prompt response in these matters and thank
you for your continued support.
Sincerely,
Christopher L. Wilson
President
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
COLONIAL HIGH INCOME MUNICIPAL TRUST
COLONIAL INTERMARKET INCOME TRUST I
COLONIAL INTERMEDIATE HIGH INCOME FUND
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
COLONIAL MUNICIPAL INCOME TRUST
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111-2621
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 22, 2007
To the Shareholders:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Meeting")
of each of Colonial California Insured Municipal Fund, Colonial High Income
Municipal Trust, Colonial InterMarket Income Trust I, Colonial Intermediate High
Income Fund, Colonial Investment Grade Municipal Trust and Colonial Municipal
Income Trust (each a "Fund" and collectively, the "Funds") will be held at the
offices of the Funds at One Financial Center, 12th floor, Boston, Massachusetts
02111-2621, on June 22, 2007, at 2:00 p.m. Eastern time. The purpose of the
Meeting is to consider and to act upon the following matters:
(1) to vote on a proposed new investment advisory agreement for each Fund
between such Fund and Massachusetts Financial Services Company, Inc.;
(2) to vote on an amended and restated declaration of trust for each Fund,
contingent upon shareholder approval of (1) above;
(3) to elect trustees to the Board of Trustees of each Fund to replace all of
the current trustees of each Fund, contingent upon shareholder approval of
(1) above, as outlined below:
a. for each of Colonial California Insured Municipal Fund, Colonial High
Income Municipal Trust, Colonial Investment Grade Municipal Trust and
Colonial Municipal Income Trust:
i. ten trustees to be elected by the holders of common shares of
beneficial interest (the "Common Shares") and municipal auction
rate cumulative preferred shares (the "Preferred Shares") of the
Fund, voting together as a single class, and
ii. two trustees to be elected by the holders of Preferred Shares
only, voting as a single class; and
b. for each of Colonial InterMarket Income Trust I and Colonial
Intermediate High Income Fund:
i. twelve trustees to be elected by the holders of shares of
beneficial interest;
(4) to elect trustees to the Board of Trustees of each Fund so that those
current trustees whose terms will expire this year will continue to hold
office until the trustees elected pursuant to (3) above take office or until
the end of those current trustees' stated terms, whichever is earlier, as
outlined below:
a. Colonial California Insured Municipal Fund:
i. three trustees to be elected by the holders of Common Shares and
Preferred Shares of the Fund, voting together as a single class,
and
ii. two trustees to be elected by the holders of Preferred Shares
only, voting as a single class;
b. Colonial High Income Municipal Trust:
i. three trustees to be elected by the holders of Common Shares and
Preferred Shares of the Fund, voting together as a single class,
and
ii. two trustees to be elected by the holders of Preferred Shares
only, voting as a single class;
c. Colonial InterMarket Income Trust I:
i. three trustees to be elected by the holders of shares of
beneficial interest of the Fund;
d. Colonial Intermediate High Income Fund:
i. four trustees to be elected by the holders of shares of beneficial
interest of the Fund;
e. Colonial Investment Grade Municipal Trust:
i. three trustees to be elected by the holders of Common Shares and
Preferred Shares of the Fund, voting together as a single class,
and
ii. two trustees to be elected by the holders of Preferred Shares
only, voting as a single class; and
f. Colonial Municipal Income Trust:
i. three trustees to be elected by the holders of Common Shares and
Preferred Shares of the Fund, voting together as a single class,
and
ii. two trustees to be elected by the holders of Preferred Shares
only, voting as a single class;
and to transact any other business as may properly come before the Meeting or
any adjournments or postponements thereof.
The Board of Trustees of each Fund has fixed the close of business on April 10,
2007 as the record date for the determination of the shareholders of each Fund
entitled to notice of, and to vote at, the Meeting and any adjournments or
postponements thereof.
YOUR FUND'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH
PROPOSAL AND NOMINEE DESCRIBED IN THE ENCLOSED PROXY STATEMENT.
By the Order of the Trustees,
James R. Bordewick, Jr.
Secretary
YOUR VOTE IS IMPORTANT -- PLEASE RETURN YOUR PROXY PROMPTLY.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WE URGE YOU, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, TO INDICATE YOUR VOTING INSTRUCTIONS ON
THE ENCLOSED PROXY, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED,
WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. ALTERNATIVELY, ELIGIBLE
SHAREHOLDERS MAY VOTE BY TELEPHONE OR VIA THE INTERNET, PURSUANT TO THE
INSTRUCTIONS ON THE ENCLOSED PROXY. WE ASK YOUR COOPERATION IN MAILING YOUR
PROXY, OR VOTING BY TELEPHONE OR VIA THE INTERNET, PROMPTLY.
Dated: May 2, 2007
IMPORTANT INFORMATION TO HELP YOU UNDERSTAND AND VOTE ON THE PROPOSALS
The following questions and answers provide an overview of the matters on which
you are being asked to vote. The enclosed proxy statement contains more detailed
information about each proposal, and we encourage you to read it in its entirety
before voting. Your vote is important.
QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Columbia Management Advisors, LLC ("Columbia") recently entered into an
asset purchase agreement with Massachusetts Financial Services Company,
Inc. ("MFS") pursuant to which Columbia will sell certain assets used in
its business of managing your Fund and certain other closed-end funds to
MFS (the "Sale"), subject to certain conditions (as set forth in the
asset purchase agreement and as outlined in the enclosed proxy
statement). Columbia and MFS anticipate that, if those conditions are
met, the Sale will close in the third quarter of 2007.
MFS, headquartered in Boston, Massachusetts, is a registered investment
adviser and a subsidiary of Sun Life Financial, a Canadian financial
services company headquartered in Toronto, Ontario, Canada. MFS offers a
full spectrum of investment products to domestic and international
retail, business and institutional investors.
If and when the Sale closes, your Fund's investment advisory agreement
with Columbia would terminate, and your Fund would enter into a new
investment advisory agreement with MFS. The enclosed proxy statement
provides additional information about MFS, the proposed investment
advisory agreement for your Fund and other proposals on which the board
of trustees of your Fund is soliciting your vote. As explained in the
enclosed proxy statement, if approved by shareholders, the effectiveness
of certain proposals is contingent upon the closing of the Sale. Among
other conditions, the asset purchase agreement contemplates that the Sale
will close only if all Funds (and another closed-end fund managed by
Columbia) approve a new advisory agreement and elect certain nominees to
the boards of trustees. If the Sale does not close, only the reelection
of trustees will become effective. Each of these proposals is described
more fully in the enclosed proxy statement.
YOUR FUND'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
EACH PROPOSAL AND NOMINEE DESCRIBED IN THE ENCLOSED PROXY STATEMENT.
Q. WHY ARE YOU SENDING ME THIS INFORMATION?
A. You are receiving the enclosed proxy statement and proxy card because you
own shares of one or more of Colonial California Insured Municipal
Fund, Colonial High Income Municipal Trust, Colonial InterMarket Income
Trust I, Colonial Intermediate High Income Fund, Colonial Investment
Grade Municipal Trust and Colonial Municipal Income Trust and have the
right to vote on these important proposals concerning your investment.
Q. WHY AM I BEING ASKED TO VOTE ON A NEW INVESTMENT ADVISORY AGREEMENT?
A. If the Sale closes, Columbia would no longer serve as the investment
adviser to your Fund and your Fund's current investment advisory
agreement would terminate. In order for MFS to serve as the investment
adviser to your Fund, it must have an investment advisory agreement with
your Fund that has been approved by the Fund's shareholders. Under
applicable law, as a shareholder of your Fund, you have a right to vote
on your Fund's new investment advisory agreement with MFS.
Q. WHY AM I BEING ASKED TO VOTE ON A NEW DECLARATION OF TRUST?
A. Each Fund operates under an agreement and declaration of trust, which is
the Fund's organizational and governing document under Massachusetts law.
As noted above, if the Sale closes, MFS would serve as the investment
adviser to your Fund. MFS currently serves as investment adviser to six
closed-end funds. The declarations of trust of such funds vary in certain
ways (as described in the enclosed proxy statement) from your Fund's
agreement and declaration of trust. MFS has advised your Fund's board of
trustees that the adoption of a new declaration of trust that conforms to
the form of declaration of trust currently in place for closed-end funds
managed by MFS would make the administration of your Fund more efficient.
Q. WHY AM I BEING ASKED TO ELECT NEW TRUSTEES?
A. In connection with the Sale, your Fund's board of trustees has
recommended that shareholders elect a new slate of trustees who are more
familiar with MFS and with the management and operation of funds managed
by MFS. The proposed nominees currently serve as trustees of other funds
managed by MFS. Two of the proposed nominees, if elected, would be
"interested persons" (as defined in the Investment Company Act of 1940)
of your Fund by reason of their affiliation with MFS. The other proposed
nominees, if elected, would not be "interested persons" of your Fund. If
all of the proposed nominees are elected, your Fund's board of trustees
will consist of twelve trustees.
Your Fund's board of trustees also has recommended that shareholders re-
elect those current trustees of your Fund whose terms expire this year.
Those persons have consented to serve as trustees of your Fund during the
period from the shareholder meeting through the closing of the Sale, and,
in the event that the Sale does not close, to serve as trustees of your
Fund for the terms set forth in the enclosed proxy statement.
Q. IS MY FUND'S TOTAL OPERATING EXPENSE RATIO EXPECTED TO INCREASE AS A
RESULT OF THE SALE?
A. No. Although there can be no guarantee, it is anticipated that your
Fund's total operating expense ratio will decrease if the Sale closes.
The contractual investment advisory fee rates currently payable by your
Fund will not change, but the calculation methodology will change.
Although the change in calculation methodology could, in certain
circumstances, result in an increase or decrease in the amount of
investment advisory fees payable to MFS, MFS does not expect that any
such increase or decrease in the amount of investment advisory fees would
be material. If the Sale closes, it is expected that your Fund will
become party to, and pay fees to MFS under, a new administrative services
agreement. However, MFS has advised the board of trustees of your Fund
that the other expenses paid by your Fund are expected to decrease. MFS
also has agreed to limit the total operating expense ratios of certain
Funds to levels equal to or lower than the levels currently borne by such
Funds.
Q. HOW WILL THE SALE AFFECT ME AS A SHAREHOLDER?
A. Neither your Fund's investment objectives and principal investment
strategies nor the number of shares you hold will change as a result of
the closing of the Sale. MFS has advised the trustees of your Fund that
the current portfolio management personnel for your Fund will be replaced
by portfolio management personnel employed by MFS.
Q. WILL MY FUND'S NAME CHANGE?
A. Yes, MFS has advised the board of trustees of your Fund that your Fund's
name will change as a result of the Sale. The table below sets forth the
current name of each Fund and its corresponding new name.
CURRENT FUND NAME NEW FUND NAME
----------------- -------------
Colonial California Insured MFS California Insured Municipal
Municipal Fund Fund
Colonial High Income Municipal MFS High Income Municipal Trust
Trust
Colonial InterMarket Income MFS InterMarket Income Trust I
Trust I
Colonial Intermediate High MFS Intermediate High Income
Income Fund Fund
Colonial Investment Grade MFS Investment Grade Municipal
Municipal Trust Trust
Colonial Municipal Income Trust MFS High Yield Municipal Trust
Q. HOW DOES THE BOARD OF TRUSTEES OF MY FUND RECOMMEND THAT I VOTE?
A. The board of trustees of your Fund recommends that you vote "FOR" each
proposal and nominee described in the enclosed proxy statement.
Q. WILL MY FUND PAY FOR THIS PROXY SOLICITATION?
A. No. Columbia has agreed to bear these costs.
Q. HOW DO I VOTE MY SHARES?
A. For your convenience, there are several ways you can vote:
By Mail: Vote, sign and return the enclosed proxy card(s) in the enclosed
self-addressed, postage-paid envelope.
By Telephone: Call the toll-free number printed on the enclosed proxy
card(s). Voting by telephone is not available for all shareholders; proxy
cards for eligible shareholders will include a toll-free number.
By Internet: Access the website address printed on the enclosed proxy
card(s). Voting by internet is not available for all shareholders; proxy
cards for eligible shareholders will include a website address.
In Person: Attend the shareholder meeting as described in the enclosed
proxy statement. If you wish to attend the meeting, we would appreciate
your notifying us by calling 1-800-239-6813.
Q. WHY MIGHT I RECEIVE MORE THAN ONE PROXY CARD?
A. If you own shares of more than one Fund, you will receive a separate
proxy card for each such Fund.
Q. WHOM SHOULD I CALL FOR ADDITIONAL INFORMATION ABOUT THE ENCLOSED PROXY
STATEMENT?
A. If you need any assistance, or have any questions regarding the proposals
or how to vote your shares, please call your Fund's proxy solicitor, The
Altman Group, at 1-800-239-6813.
PROXY STATEMENT
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
COLONIAL HIGH INCOME MUNICIPAL TRUST
COLONIAL INTERMARKET INCOME TRUST I
COLONIAL INTERMEDIATE HIGH INCOME FUND
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
COLONIAL MUNICIPAL INCOME TRUST
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111-2621
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 22, 2007
The annual meeting of shareholders (together with any adjournments or
postponements thereof, the "Meeting") of each of Colonial California Insured
Municipal Fund, Colonial High Income Municipal Trust, Colonial InterMarket
Income Trust I, Colonial Intermediate High Income Fund, Colonial Investment
Grade Municipal Trust and Colonial Municipal Income Trust (each a "Fund" and
collectively, the "Funds") has been called to be held on June 22, 2007 at 2:00
p.m., Eastern time, at One Financial Center, 12th floor, Boston, Massachusetts
02111-2621, for the following purposes (each a "Proposal" and collectively, the
"Proposals"), each of which is described more fully herein:
(1) To vote on a proposed new investment advisory agreement for each Fund
between such Fund and Massachusetts Financial Services Company, Inc.
("MFS").
(2) To vote on an amended and restated declaration of trust for each Fund,
contingent upon shareholder approval of Proposal 1 above.
(3) To elect trustees to the Board of Trustees of each Fund to replace all of
the current trustees of each Fund, contingent upon shareholder approval of
Proposal 1 above.
(4) To elect trustees to the Board of Trustees of each Fund so that those
current trustees whose terms will expire this year will continue to hold
office until the trustees elected pursuant to Proposal 3 above take office
or until the end of those current trustees' stated terms, whichever is
earlier.
SOLICITATION OF PROXIES
This solicitation of proxies is being made by the Board of Trustees (the
"Board") of each Fund in connection with the Meeting and in connection with the
proposed sale by Columbia Management Advisors, LLC ("Columbia"), the Funds'
investment adviser, of certain assets used in its
1
business of managing the Funds and Colonial Insured Municipal Fund
(collectively, the "Colonial Closed-End Funds") to MFS. Solicitation of proxies
for use at the Meeting is being made by the mailing of this notice and proxy
statement with its enclosures on or about May 2, 2007. Shareholders of record at
the close of business on April 10, 2007 (the "Record Date") are entitled to
notice of and to vote at the Meeting. Shareholders of the Funds whose shares are
held by nominees, such as brokers, can vote their proxies by contacting their
respective nominees. In addition to the solicitation of proxies by mail,
officers and agents of the Funds and their affiliates may, without additional
compensation, solicit proxies by telephone, telegraph, facsimile or oral
communication. Solicitation also may be made by The Altman Group, a proxy
solicitation firm. The costs of soliciting proxies for the Colonial Closed-End
Funds, estimated to be approximately thirty-five thousand U.S. dollars
(US$35,000), plus reasonable out-of-pocket expenses and service fees, will be
borne by Columbia pursuant to the terms of the Asset Purchase Agreement (as
defined herein), and not by the Funds.
A shareholder may revoke a valid proxy at any time prior to its use by filing
with the secretary of the appropriate Fund a written revocation or duly executed
proxy bearing a later date. In addition, any shareholder who attends the Meeting
in person may vote by ballot at the Meeting, thereby canceling any proxy
previously given. (Note that merely attending the Meeting without voting will
not cancel a previously given proxy.) The persons named in the accompanying
proxy will vote as directed by the proxy, but in the absence of voting
directions in any proxy that is signed and returned, they intend to vote "FOR"
each Proposal and may vote in their discretion with respect to other matters not
now known to the Board that may be presented at the Meeting.
If you have questions regarding the Meeting agenda or the execution of the
proxy, call a representative toll-free at 1-800-239-6813.
GENERAL OVERVIEW
THE TRANSACTION
On April 10, 2007, Columbia entered into an asset purchase agreement with MFS
(the "Asset Purchase Agreement") to sell certain assets used in Columbia's
business of managing the Colonial Closed-End Funds to MFS (such transaction, the
"Sale"). Upon the closing of the Sale (the "Closing"), MFS will serve as
investment adviser to each Fund.
The Closing is subject to certain terms and conditions, including, among others:
(a) the approval by shareholders of each Colonial Closed-End Fund of a new
investment advisory agreement with MFS, as set forth in Proposal 1; (b) the
resignation of the current trustees of the Colonial Closed-End Funds and the
election by shareholders of the Colonial Closed-End Funds of such of the
2
nominees set forth in Proposal 3 as will create a new board of trustees for each
Colonial Closed-End Fund at least 75% of the members of which are not
"interested persons" (as such term is defined in the Investment Company Act of
1940, as amended (the "1940 Act")) of the Colonial Closed-End Funds; (c) the
obtaining of any necessary regulatory approvals by Columbia and MFS; and (d)
certain other conditions. Although there can be no assurance that the Sale will
close, if each of the terms and conditions is satisfied or waived, Columbia and
MFS anticipate that the Closing will occur in the third quarter of 2007.
Proposals relating to Colonial Insured Municipal Fund are discussed in a
separate proxy statement.
POST-TRANSACTION STRUCTURE AND OPERATIONS
As noted above, upon the Closing, MFS will become the investment adviser to each
Colonial Closed-End Fund. MFS currently does not anticipate any significant
changes to the organization or structure of the Funds other than: (a) a new name
for each Fund, as set forth above in the section of the enclosed materials
captioned "Questions and Answers"; (b) the election of new trustees, as set
forth in Proposal 3, and the appointment of new officers; (c) a change in
portfolio management personnel; (d) a change in independent registered public
accounting firm from PricewaterhouseCoopers LLP to Ernst & Young LLP, which is
the independent registered public accounting firm for other registered
investment companies managed by MFS; (e) the approval of an amended and restated
declaration of trust for each Fund, as set forth in Proposal 2; (f) a new
administrative services agreement with MFS pursuant to which MFS will provide
administrative services to the Funds; (g) the negotiation of new agreements with
existing service providers; and (h) a change in the expense reimbursement
arrangements for Colonial California Insured Municipal Fund and Colonial
Intermediate High Income Fund.
NEW INVESTMENT ADVISORY AGREEMENTS (PROPOSAL 1)
Columbia currently serves as investment adviser to each Colonial Closed-End
Fund. Upon the Closing, MFS will become the investment adviser to each Colonial
Closed-End Fund pursuant to a new investment advisory agreement. The proposed
investment advisory agreement with MFS for each Fund has similar terms and the
same contractual fee rates as the corresponding investment advisory agreement
for such Fund with Columbia, although MFS has advised the Board that it intends
to change the expense reimbursement arrangements for Colonial California Insured
Municipal Fund and Colonial Intermediate High Income Fund, as described more
fully below in the section captioned "Expense Reimbursement Arrangements".
Although the contractual investment advisory fee rate payable under each
proposed investment advisory agreement with MFS is the same as under the
corresponding investment advisory agreement with Columbia, the method for
calculating the fee is different. Under each proposed
3
investment advisory agreement with MFS, investment advisory fees would be
calculated based on average daily net assets, while under each corresponding
investment advisory agreement with Columbia, investment advisory fees are
calculated based on average weekly net assets. Although the change in
calculation methodology could, in certain circumstances, result in an increase
or decrease in the amount of investment advisory fees payable to MFS, MFS does
not expect that any such increase or decrease in the amount of investment
advisory fees would be material. If approved by shareholders, each new
investment advisory agreement with MFS will become effective, and each existing
investment advisory agreement with Columbia will terminate, upon the Closing. If
some but not all Colonial Closed-End Funds approve the new investment advisory
agreements, then the Closing may or may not occur with respect to some or all of
the Funds, at the option of MFS and Columbia.
NEW DECLARATIONS OF TRUST (PROPOSAL 2)
In connection with the Sale, MFS has proposed, and the Board has agreed, to
recommend to shareholders an amended and restated declaration of trust for each
Fund that will conform to the form of declaration of trust generally in effect
for the other closed-end registered investment companies managed by MFS. If the
Sale does not close for any reason, each Fund's existing agreement and
declaration of trust will remain in effect.
ELECTION OF TRUSTEES (PROPOSALS 3 AND 4)
In connection with the Sale, the Board has recommended that shareholders elect
new trustees to take office effective upon the Closing. The proposed nominees
set forth in Proposal 3 are trustees of other registered investment companies
managed by MFS. If the Sale closes, the current trustees and officers have
indicated that they will resign effective upon the Closing.
If the Sale does not close for any reason, the current trustees and officers
have indicated that they would not resign. The Board has recommended that
shareholders re-elect those current trustees whose terms expire at the Meeting.
The current trustees (including the trustees proposed for re-election) have
consented to serve as currently constituted during the period between the
Meeting and the Closing, and to serve as currently constituted in the event the
Sale does not close.
SHAREHOLDER VOTING SUMMARY
The table on the following page summarizes the Proposals and the shareholders of
the Funds who may vote with respect thereto.
4
COLONIAL COLONIAL COLONIAL
CALIFORNIA HIGH COLONIAL INVESTMENT
INSURED INCOME COLONIAL INTERMEDIATE GRADE COLONIAL
MUNICIPAL MUNICIPAL INTERMARKET HIGH INCOME MUNICIPAL MUNICIPAL
FUND TRUST INCOME TRUST I FUND TRUST INCOME TRUST
---------- --------- -------------- ------------ ---------- ------------
PROPOSAL 1: TO VOTE ON A PROPOSED NEW INVESTMENT ADVISORY AGREEMENT WITH MFS
New Advisory Agreement for
Colonial California Insured
Municipal Fund [X]
New Advisory Agreement for
Colonial High Income
Municipal Trust [X]
New Advisory Agreement for
Colonial InterMarket Income
Trust I [X]
New Advisory Agreement for
Colonial Intermediate High
Income Fund [X]
New Advisory Agreement for
Colonial Investment Grade
Municipal Trust [X]
New Advisory Agreement for
Colonial Municipal Income
Trust [X]
PROPOSAL 2: TO VOTE ON AN AMENDED AND RESTATED DECLARATION OF TRUST
Approval of Amended and
Restated Declaration of Trust
for Colonial California
Insured Municipal Fund(1) [X]
Approval of Amended and
Restated Declaration of Trust
for Colonial High Income
Municipal Trust(1) [X]
Approval of Amended and
Restated Declaration of Trust
for Colonial InterMarket
Income Trust I [X]
Approval of Amended and
Restated Declaration of Trust
for Colonial Intermediate
High Income Fund [X]
Approval of Amended and
Restated Declaration of Trust
for Colonial Investment Grade
Municipal Trust(1) [X]
Approval of Amended and
Restated Declaration of Trust
for Colonial Municipal Income
Trust(1) [X]
PROPOSAL 3: TO ELECT TRUSTEES TO THE BOARD TO REPLACE ALL OF THE CURRENT TRUSTEES
Election of Trustees for
Colonial California Insured
Municipal Fund(2) [X]
Election of Trustees for
Colonial High Income
Municipal Trust(2) [X]
Election of Trustees for
Colonial InterMarket Income
Trust I [X]
Election of Trustees for
Colonial Intermediate High
Income Fund [X]
Election of Trustees for
Colonial Investment Grade
Municipal Trust(2) [X]
Election of Trustees for
Colonial Municipal Income
Trust(2) [X]
5
COLONIAL COLONIAL COLONIAL
CALIFORNIA HIGH COLONIAL INVESTMENT
INSURED INCOME COLONIAL INTERMEDIATE GRADE COLONIAL
MUNICIPAL MUNICIPAL INTERMARKET HIGH INCOME MUNICIPAL MUNICIPAL
FUND TRUST INCOME TRUST I FUND TRUST INCOME TRUST
---------- --------- -------------- ------------ ---------- ------------
PROPOSAL 4: TO ELECT TRUSTEES TO THE BOARD TO REPLACE THOSE TRUSTEES WHOSE TERMS WILL EXPIRE THIS YEAR
Election of Trustees for
Colonial California Insured
Municipal Fund(2) [X]
Election of Trustees for
Colonial High Income
Municipal Trust(2) [X]
Election of Trustees for
Colonial InterMarket Income
Trust I [X]
Election of Trustees for
Colonial Intermediate High
Income Fund [X]
Election of Trustees for
Colonial Investment Grade
Municipal Trust(2) [X]
Election of Trustees for
Colonial Municipal Income
Trust(2) [X]
--------
(1) To be voted on (i) by the holders of common shares of beneficial interest
and the holders of municipal auction rate cumulative preferred shares
voting together as a single class and (ii) by the holders of municipal
auction rate cumulative preferred shares voting separately.
(2) As described below in more detail, certain nominees are to be elected by
the holders of common shares of beneficial interest and the holders of
municipal auction rate cumulative preferred shares voting together as a
single class and certain nominees are to be elected by the holders of
municipal auction rate cumulative preferred shares voting separately.
VOTING RIGHTS
Shareholders of each Fund at the close of business on the Record Date will be
entitled to be present and to give voting instructions at the Meeting with
respect to their shares owned as of the Record Date. Shareholders of each Fund
will be entitled to cast one vote on each Proposal and on each other matter on
which they are entitled to vote at the Meeting for each share owned on the
Record Date. Holders of common shares of beneficial interest of each Fund also
will be entitled to cast a proportionate fractional vote on each Proposal and on
each other matter on which they are entitled to vote at the Meeting for each
fractional common share of beneficial interest owned on the Record Date. As of
the Record Date, each Fund had the following number of shares of the following
6
classes outstanding, which in each case equals the number of votes to which the
shareholders of such class of such Fund are entitled:
SHARES OUTSTANDING
FUND COMMON PREFERRED TOTAL
---- --------------- ------------------ ---------------
Colonial California
Insured Municipal
Fund 2,780,771.1183 978 2,781,749.1183
Colonial High Income
Municipal Trust 31,243,761.0000 4,800 31,248,561.0000
Colonial InterMarket
Income Trust I 11,009,000.0000 N/A 11,009,000.0000
Colonial Intermediate
High Income Fund 21,003,495.6760 N/A 21,003,495.6760
Colonial Investment
Grade Municipal
Trust 11,509,000.0000 2,400 11,511,400.0000
Colonial Municipal
Income Trust 27,781,747.5973 3,600 27,785,347.5973
Votes cast in person or by proxy at the Meeting will be counted by persons
appointed by the Funds as tellers for the Meeting (the "Tellers"). For each of
Colonial California Insured Municipal Fund and Colonial Municipal Income Trust,
thirty percent (30%), and for each of Colonial High Income Municipal Trust,
Colonial Investment Grade Municipal Trust, Colonial Intermediate High Income
Fund and Colonial InterMarket Income Trust I, a majority, of the shares of the
Fund outstanding on the Record Date and entitled to vote, present at the Meeting
in person or represented by proxy, constitutes a quorum for the transaction of
business by the shareholders of the Fund.
If a quorum for any Fund is not present at the Meeting, or if a quorum is
present but sufficient votes to approve a Proposal on which that Fund's
shareholders are voting have not been received, or for any other reason deemed
appropriate by the persons named as proxies, the persons named as proxies may
propose one or more adjournments of the Meeting as to that Fund to permit
further solicitation of proxies. Any adjournment will require the affirmative
vote of a majority of the shares of that Fund present at the Meeting in person
or represented by proxy. If an adjournment is proposed with respect to one or
more Proposals for one or more Funds, the persons named as proxies will vote all
proxies that they are entitled to vote for each such Proposal "FOR" such
adjournment and will vote any proxies that they are required to vote against
each such
7
Proposal "AGAINST" such adjournment. The Meeting also may be postponed by the
Board.
The Funds expect that, before the Meeting, broker-dealer firms holding shares of
the Funds in "street name" for their customers will request voting instructions
from their customers and beneficial owners. If those instructions are not
received by the date specified by the broker-dealer firm, the Funds understand
that the broker-dealer firms that are members of the New York Stock Exchange may
not be able to vote on certain items to be considered at the Meeting on behalf
of their customers and beneficial owners under the rules of the New York Stock
Exchange. In determining whether a quorum is present, the Tellers will count
shares represented by proxies that reflect abstentions and "broker non-votes" as
shares that are present and entitled to vote. Because these shares will be
counted as present, but not as voting in favor of any Proposal, for purposes
other than adjournment, these shares will have the same effect as if they cast
votes against the Proposal. "Broker non-votes" are shares held by brokers or
nominees as to which (i) the broker or nominee does not have discretionary
voting power and (ii) the broker or nominee has not received instructions from
the beneficial owner or other person who is entitled to instruct how the shares
will be voted.
BENEFICIAL OWNERS
Appendix A to this proxy statement lists the persons that, to the knowledge of
the Funds, owned beneficially 5% or more of the outstanding shares of any class
of any Fund as of the Record Date. A shareholder who owns beneficially, directly
or indirectly, more than 25% of any Fund's voting securities may be deemed a
"control person" (as defined in the 1940 Act) of such Fund. The trustees and
officers of each Fund, in the aggregate, owned less than 1% of each Fund's
outstanding shares as of the Record Date. The Funds are aware of no arrangements
other than those disclosed herein the operation of which at a subsequent date
may result in a change in control of any Fund.
EXPENSES
The expenses incurred in connection with the solicitation of proxies for the
Meeting, including preparation, filing, printing, mailing and solicitation
expenses, legal fees, out-of-pocket expenses and expenses of any proxy
solicitation firm, will be paid by Columbia pursuant to the terms of the Asset
Purchase Agreement, and not by the Funds.
SHAREHOLDER REPORTS
EACH FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL REPORT
AND, IF APPLICABLE, ITS MOST RECENT SEMIANNUAL REPORT SUBSEQUENT TO
8
SUCH ANNUAL REPORT, TO ITS SHAREHOLDERS ON REQUEST. REQUESTS FOR A REPORT SHOULD
BE DIRECTED TO THE RELEVANT FUND BY MAIL TO ONE FINANCIAL CENTER, BOSTON,
MASSACHUSETTS 02111-2621, BY CALLING 1-800-426-3750 OR BY VISITING
WWW.COLUMBIAMANAGEMENT.COM/COLONIALFUNDS/HOME.HTM.
PROPOSAL 1
TO APPROVE A NEW INVESTMENT ADVISORY AGREEMENT WITH MFS
BACKGROUND
As discussed above, Columbia and MFS have entered into an Asset Purchase
Agreement pursuant to which Columbia will sell certain assets used in its
business of managing the Colonial Closed-End Funds to MFS. Accordingly,
shareholders of each Fund are being asked to approve a new investment advisory
agreement (a "New Advisory Agreement") between MFS and that Fund. If this
Proposal 1 is approved by shareholders of all Colonial Closed-End Funds, and if
certain other conditions to the Closing are satisfied or waived, it is
anticipated that the Closing will occur in the third quarter of 2007. If this
Proposal 1 is approved by some, but not all, Colonial Closed-End Funds, or other
closing conditions are not satisfied, then the Closing may or may not occur with
respect to some or all of the Funds, at the option of MFS and Columbia. Upon the
Closing, the investment advisory agreements currently in place between Columbia
and each Fund (each a "Current Advisory Agreement") will terminate, and the
relevant New Advisory Agreement between MFS and that Fund will take effect.
At a meeting held on April 10, 2007, the Board, including the trustees who are
not "interested persons" (as defined in Section 2(a)(19) of the 1940 Act) of the
Funds (collectively, the "Independent Trustees"), approved each New Advisory
Agreement by unanimous vote, subject to shareholder approval. A description of
the New Advisory Agreements is provided below under the caption "The New
Advisory Agreements." In addition, a summary of the considerations of the Board
with respect to the New Advisory Agreements is provided below under the caption
"Board Considerations."
9
THE CURRENT ADVISORY AGREEMENTS
As stated above, each Fund currently is party to an investment advisory
agreement with Columbia that was continued most recently at the Board's October
2006 meeting.
Under the Current Advisory Agreements, Columbia manages the investment of assets
of each Fund in accordance with its investment policies and provides other
services subject to the supervision of the Board. In carrying out its investment
management obligations, the Current Advisory Agreements provide that Columbia
will, among other things: (i) evaluate such economic, statistical and financial
information and undertake such investment research as it shall believe
advisable; (ii) purchase and sell securities and other investments for each Fund
in accordance with procedures approved by the Board; and (iii) report results to
the Board.
Under the Current Advisory Agreements, Columbia furnishes at its own expense:
(i) office space, supplies, facilities and equipment; (ii) executive and other
personnel for managing the affairs of each Fund (including preparing financial
information of each Fund and reports and tax returns required to be filed with
public authorities, but exclusive of those related to custodial, transfer,
dividend and plan agency services, determination of net asset value and
maintenance of records required by Section 31(a) of the 1940 Act); and (iii)
compensation of trustees who are directors, officers, partners or employees of
Columbia or its affiliated persons (other than a registered investment company).
The table below sets forth the date of each Current Advisory Agreement, the date
on which it was last submitted to a vote of shareholders of the applicable Fund
and the purpose of such submission.
FUND DATE OF AGREEMENT DATE OF SHAREHOLDER VOTE PURPOSE
---- ----------------- ------------------------ -------
Colonial California November 1, 2001 September 26, 2001 Change of control of
Insured Municipal adviser
Fund
Colonial High Income November 1, 2001 September 26, 2001 Change of control of
Municipal Trust adviser
Colonial InterMarket November 1, 2001 September 26, 2001 Change of control of
Income Trust I adviser
Colonial November 1, 2001 September 26, 2001 Change of control of
Intermediate High adviser
Income Fund
Colonial Investment November 1, 2001 September 26, 2001 Change of control of
Grade Municipal adviser
Trust
Colonial Municipal November 1, 2001 September 26, 2001 Change of control of
Income Trust adviser
10
The table below sets forth the aggregate amount of the investment advisory fees
paid by each Fund to Columbia, the aggregate amount of any other material
payments by each Fund to Columbia and/or its affiliates and the purpose of any
such payments for the fiscal year ended November 30, 2006.
INVESTMENT OTHER MATERIAL PURPOSE OF
FUND ADVISORY FEES PAYMENTS OTHER PAYMENTS
---- ------------- -------------- --------------
Colonial California Pricing & bookkeeping
Insured Municipal Fund $ 123,088 $ 85,499 fees
Colonial High Income Pricing & bookkeeping
Municipal Trust $2,437,948 $ 94,187 fees
Colonial InterMarket Pricing & bookkeeping
Income Trust I $ 749,269 $111,071 fees
Colonial Intermediate Pricing & bookkeeping
High Income Fund $ 487,522 $ 93,120 fees
Colonial Investment Pricing & bookkeeping
Grade Municipal Trust $1,193,113 $ 85,749 fees
Colonial Municipal Pricing & bookkeeping
Income Trust $1,639,559 $ 85,740 fees
THE NEW ADVISORY AGREEMENTS
Under the New Advisory Agreement for each Fund, MFS will, among other things:
(i) continuously furnish an investment program for the Fund; (ii) exercise
voting rights, rights to consent to corporate actions and other similar rights
with regard to the Fund's portfolio securities; (iii) place orders for the
purchase, sale and exchange of securities for the accounts of the Fund; and (iv)
enter into subadvisory contracts, if appropriate.
Under the New Advisory Agreement for each Fund, MFS will furnish at its own
expense investment advisory and administrative services, office space, certain
necessary equipment and clerical personnel, investment advisory facilities and
executive and supervisory personnel. The Fund will be responsible for all
expenses not specifically borne by MFS under the New Advisory Agreement,
including: expenses relating to the issuance of shares of the Fund; compensation
of trustees not affiliated with MFS; Investment Company Institute membership
dues allocable to the Fund; governmental fees, interest charges and taxes; fees
and expenses of independent auditors, legal counsel and transfer, registrar or
dividend disbursing agents of the Fund; expenses of repurchasing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing stock certificates, shareholder reports, notices, proxy statements and
reports to government officers and commissions; brokerage and other execution,
recording and settlement expenses; insurance premiums; custodian fees and
expenses; expenses of calculating the net asset value of shares of the Fund;
organizational and start up costs; non-recurring and extraordinary expenses,
including those relating to actions involving the Fund and indemnification of
the Fund's trustees and officers with respect thereto; and expenses relating to
the issuance, registration and qualification of shares of the Fund and,
generally, the preparation, printing and mailing of prospectuses for such
purposes.
11
The form of the New Advisory Agreement for each Fund is attached to this proxy
statement in Appendix B, and the description set forth in this proxy statement
of the form of the New Advisory Agreement is qualified in its entirety by
reference to Appendix B.
Under each New Advisory Agreement, MFS will be entitled to compensation at the
same contractual rates as under each corresponding Current Advisory Agreement.
Each New Advisory Agreement provides that compensation is calculated as a
percentage of average daily net assets, rather than as a percentage of average
weekly net assets, as in the Current Advisory Agreements. This change in
calculation methodology is meant to conform the New Advisory Agreements to
advisory agreements for other funds managed by MFS. Although the change in
calculation methodology could, in certain circumstances, result in an increase
or decrease in the amount of investment advisory fees payable to MFS, MFS does
not expect that any such increase or decrease in the amount of investment
advisory fees would be material. Except as noted below with respect to the
Colonial Intermediate High Income Fund, MFS also has advised the Board that it
will continue the management fee waiver arrangements currently in place for the
Funds. The table below sets forth for each Fund the annual contractual
investment advisory fee rate as a percentage of average weekly net assets(1) and
the annual rate of such fee after Columbia's waiver of investment advisory fees,
if any, for the fiscal year ended November 30, 2006:
ADVISORY FEE
FUND CONTRACTUAL ADVISORY FEE (NET OF WAIVER)
---- ------------------------ ---------------
Colonial California Insured
Municipal Fund 0.65% 0.45%(2)
Colonial High Income Municipal
Trust 0.75 0.75
Colonial InterMarket Income
Trust I 0.75 0.75
Colonial Intermediate High
Income Fund 0.65(3) 0.65(3)
Colonial Investment Grade
Municipal Trust 0.65 0.63(4)
Colonial Municipal Income Trust 0.65 0.65
--------
(1) Average weekly net assets include assets attributable to municipal auction
rate cumulative preferred shares for Funds that have such shares
outstanding.
(2) Columbia contractually agreed to waive a portion of its investment
advisory fee for the years ending November 30, 2006, 2007, 2008 and 2009
so that Colonial California Insured Municipal Fund's investment advisory
fee will not exceed the annual rates of 0.45%, 0.50%, 0.55% and 0.60%,
respectively. MFS has advised the Board that it will continue this
management fee waiver arrangement.
(3) In addition to the investment advisory fee set forth in the table,
Colonial Intermediate High Income Fund pays Columbia a monthly fee of 20%
of its monthly "leverage income" (as defined in its Current Advisory
Agreement). Columbia has voluntarily agreed to waive that fee. That waiver
may be terminated by Columbia at any time. MFS has advised the Board that
it does not intend to continue that waiver; however, MFS also has advised
the Board that it intends to institute a total operating expense cap, as
discussed more fully below.
(4) Columbia has voluntarily agreed to reduce the investment advisory fee
payable by Colonial Investment Grade Municipal Trust by 0.02% of average
weekly net assets. That waiver may be terminated by Columbia at any time.
MFS has advised the Board that it will continue this management fee waiver
arrangement.
12
The table below sets forth the total investment advisory fees (net of waiver, if
any) paid by each Fund to Columbia pursuant to its Current Advisory Agreement
during the fiscal year ended November 30, 2006, the total advisory fees (net of
waiver, if any) that would have been paid by each Fund to MFS pursuant to the
corresponding New Advisory Agreement, and the percentage difference between the
two.
TOTAL INVESTMENT ADVISORY FEES:
---------------------------------------
ACTUALLY PAID UNDER ESTIMATED PAYABLE
CURRENT ADVISORY UNDER NEW ADVISORY PERCENTAGE
FUND AGREEMENT AGREEMENT CHANGE
---- ------------------- ------------------ ----------
Colonial California Insured
Municipal Fund $ 123,088 $ 123,088 0%
Colonial High Income Municipal
Trust $2,437,948 $2,437,948 0%
Colonial InterMarket Income
Trust I $ 749,269 $ 749,269 0%
Colonial Intermediate High
Income Fund $ 487,522 $ 643,520(1) 32%(1)
Colonial Investment Grade
Municipal Trust $1,193,113 $1,193,113 0%
Colonial Municipal Income Trust $1,639,559 $1,639,559 0%
--------
(1) The increase results from the elimination of the waiver of fees based on
"leverage income," discussed above. Although the investment advisory fee
will increase, the net operating expense ratio will not increase as a
result of a total operating expense ratio cap, described more fully below
under the caption "Expense Reimbursement Arrangements".
Each New Advisory Agreement will continue in effect for a period of two years
from its effective date, on which date it will terminate unless its continuance
is "specifically approved at least annually" (i) by the vote of a majority of
the Independent Trustees of the relevant Fund at a meeting specifically called
for the purpose of voting on such approval, and (ii) by the Board or by the
"vote of a majority of the outstanding voting securities" of the relevant Fund.
Each New Advisory Agreement generally provides that it may be terminated at any
time, without penalty, by the Board or by the "vote of a majority of the
outstanding voting securities" of the relevant Fund, or by MFS, in each case on
not more than 60 days' nor less than 30 days' written notice to the other party.
Each New Advisory Agreement also shall automatically terminate in the event of
its "assignment". Each New Advisory Agreement may be amended with respect to the
relevant Fund only if such amendment is in writing signed by or on behalf of the
relevant Fund and MFS and is approved by the "vote of a majority of the
outstanding voting securities" of the relevant Fund (if such shareholder
approval is required by the 1940 Act).
As used herein, the terms "specifically approved at least annually," "vote of a
majority of the outstanding securities" and "assignment" are used with the
meanings thereof contemplated by the 1940 Act.
Like each Current Advisory Agreement with respect to Columbia, each New Advisory
Agreement provides that in the absence of willful misfeasance, bad
13
faith, gross negligence or reckless disregard of duties and obligations on the
part of MFS, MFS shall not be liable for any error of judgment or mistake of
law, for any loss arising out of any investment or for any act or omission in
the execution and management of the relevant Fund.
EXPENSE REIMBURSEMENT ARRANGEMENTS
Colonial California Insured Municipal Fund. Columbia has agreed to reimburse
Colonial California Insured Municipal Fund if its operating expenses (excluding
investment advisory fees, brokerage commissions, interest, taxes and
extraordinary expenses) exceed 0.20% annually of its average weekly net assets,
including assets attributable to municipal auction rate cumulative preferred
shares. MFS has advised the Board that, if the Sale closes, it will terminate
that expense reimbursement arrangement and agree to reimburse Colonial
California Insured Municipal Fund if its total operating expenses (excluding
taxes, brokerage and transaction costs, currency conversion costs, extraordinary
expenses, expenses associated with the Fund's investing activities and preferred
shares remarketing fees) exceed 0.70% and 0.75% annually of its average daily
net assets, including assets attributable to municipal auction rate cumulative
preferred shares, for the years ending November 30, 2007 and November 30, 2008,
respectively.
Colonial Intermediate High Income Fund. MFS also has advised the Board that, if
the Sale closes, it will agree to reimburse Colonial Intermediate High Income
Fund if its total operating expenses (excluding taxes, brokerage and transaction
costs, currency conversion costs, extraordinary expenses, expenses associated
with the Fund's investing activities and preferred shares remarketing fees)
exceed 1.00% annually of its average daily net assets. This agreement may be
amended, modified or rescinded only with the approval of the Fund's board of
trustees.
The estimated expense ratios for Colonial California Insured Municipal Fund and
Colonial Intermediate High Income Fund for the current fiscal year, assuming the
Sale closes and assuming the Sale does not close, are set forth in the tables
below under the caption "New Administrative Services Agreement." As set forth
thereunder, the total operating expense ratio of each Fund is expected to be
lower if the Sale closes than if it does not close.
NEW ADMINISTRATIVE SERVICES AGREEMENTS
If shareholders approve this Proposal 1 and the Closing occurs, it is expected
that each Fund also will enter into a new administrative services agreement (the
"Administrative Services Agreement") with MFS. Pursuant to the Administrative
Services Agreement, MFS will provide administrative services to the Funds,
including but not limited to the preparation of
14
financial information and related reports and the facilitation of audits
thereof; the negotiation of contracts with service providers regarding the
computation of net asset value, offering price, dividends, yields and other
values, and the oversight thereof; the administration and oversight of portfolio
securities valuations; the arrangement of organizational and registration
matters; the preparation and filing of regulatory filings, reports and related
materials; the administration and maintenance of certain compliance policies,
procedures and programs, and the monitoring thereof; the administration of
shareholder meetings; the provision of legal guidance; the preparation of
materials for and the facilitation of board and committee meetings; the
printing, production and delivery of shareholder communications and other
documents; and various oversight functions. As compensation for the provisions
of such administrative services, each Fund will pay to MFS a fee calculated as
follows: (i) a fixed annual fee of $17,500 plus (ii) an annual fee calculated as
a percentage of the average daily net assets of the Fund, as follows: 0.0000% of
such assets up to $50,000,000, plus 0.0175% of such assets in excess of
$50,000,000 but less than or equal to $750,000,000, plus 0.0170% of such assets
in excess of $750,000,000 but less than or equal to $1,500,000,000 plus 0.0165%
of such assets in excess of $1,500,000,000 but less than or equal to
$2,500,000,000, plus 0.0120% of such assets in excess of $2,500,000,000 but less
than or equal to $4,000,000,000, plus 0.0000% of such assets in excess of
$4,000,000,000. Such fees are subject to a ceiling and a floor each year
calculated with respect to fees payable to MFS by all funds for which MFS
provides services pursuant to the Administrative Services Agreement (which
includes funds other than the Funds).
The tables below set forth the Funds' estimated annual operating expense ratios
for the current fiscal year, assuming the Sale does not close and assuming that
the Closing occurred at the beginning of such period. Actual annual operating
expense ratios may differ from estimated annual operating expense ratios.
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
NO CLOSING CLOSING
---------- -------
Management Fee 0.65% 0.65%
Administrative Fee -- 0.03%
Other Expenses 0.46% 0.16%(1)
----- -----
Total Operating Expenses 1.11% 0.84%
Less Waiver/Reimbursement (0.15)%(2) (0.15)%(3)
----- -----
Net Operating Expenses 0.96%(2) 0.69%(3)
--------
(1) Estimated other expenses shown are based on contractual rates for services
provided to other funds advised by MFS. Actual other expenses may differ
from estimated other expenses.
15
(2) Columbia has agreed contractually to waive the management fee payable by
the Fund so that such management fee would not exceed 0.50%, 0.55% and
0.60% annually of average weekly net assets, including assets attributable
to municipal auction rate cumulative preferred shares, for the years
ending November 30, 2007, November 30, 2008 and November 30, 2009,
respectively. Columbia also agreed voluntarily to reimburse the Fund for
certain expenses so that total operating expenses (exclusive of management
fees, brokerage commissions, interest, taxes and extraordinary expenses,
if any) would not exceed 0.20% annually of average weekly net assets,
including assets applicable to municipal auction rate cumulative preferred
shares. If this reimbursement arrangement were reflected in the table, net
operating expenses would be 0.70%. This reimbursement arrangement may be
terminated by Columbia at any time.
(3) MFS has agreed in writing to waive the management fee payable by the Fund
so that such management fee does not exceed 0.50%, 0.55% and 0.60% of
average daily net assets, including assets attributable to municipal
auction rate cumulative preferred shares, for the years ending November
30, 2007, November 30, 2008 and November 30, 2009, respectively. MFS also
has agreed in writing to reimburse the Fund for certain expenses so that
total operating expenses (excluding taxes, brokerage and transaction
costs, currency conversion costs, extraordinary expenses, expenses
associated with the Fund's investing activities and preferred shares
remarketing fees) would not exceed 0.70% and 0.75% annually of average
daily net assets, including assets attributable to municipal auction rate
cumulative preferred shares, for the years ending November 30, 2007 and
November 30, 2008, respectively. MFS may terminate this reimbursement
arrangement only with the approval of the Fund's board.
The example expenses below show the expenses a shareholder would bear, assuming
that the Sale closes and assuming that the Sale does not close, given an
investment in the Fund, assuming that a shareholders has a $1,000 investment,
that the Fund returns 5% each year, that the operating expenses set forth above
remain the same throughout the indicated periods and that all dividends and
distributions are reinvested at net asset value. The example expenses should not
be considered a representation of future expenses of the Fund; actual expenses
may be greater or lesser than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
NO CLOSING $10 $32 $58 $132
CLOSING $ 7 $24 $44 $101
COLONIAL HIGH INCOME MUNICIPAL TRUST
NO CLOSING CLOSING
---------- -------
Management Fee 0.75% 0.75%
Administrative Fee -- 0.02%
Other Expenses 0.22%(1) 0.09%(1),(2)
---- ----
Total Operating Expenses 0.97% 0.86%
Less Waiver/Reimbursement -- --
---- ----
Net Operating Expenses 0.97% 0.86%
--------
(1) Other expenses include fees and expenses associated with the Fund's
investment in other investment companies (less than 0.01%).
16
(2) Estimated other expenses shown are based on contractual rates for services
provided to other funds advised by MFS. Actual other expenses may differ
from estimated other expenses.
The example expenses below show the expenses a shareholder would bear, assuming
that the Sale closes and assuming that the Sale does not close, given an
investment in the Fund, assuming that a shareholders has a $1,000 investment,
that the Fund returns 5% each year, that the operating expenses set forth above
remain the same throughout the indicated periods and that all dividends and
distributions are reinvested at net asset value. The example expenses should not
be considered a representation of future expenses of the Fund; actual expenses
may be greater or lesser than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
NO CLOSING $10 $31 $54 $119
CLOSING $ 9 $27 $48 $106
COLONIAL INTERMARKET INCOME TRUST I
NO CLOSING CLOSING
---------- -------
Management Fee 0.75% 0.75%
Administrative Fee -- 0.03%
Other Expenses 0.36% 0.15%(1)
---- ----
Total Operating Expenses 1.11% 0.93%
Less Waiver/Reimbursement -- --
---- ----
Net Operating Expenses 1.11% 0.93%
--------
(1) Estimated other expenses shown are based on contractual rates for services
provided to other funds advised by MFS. Actual other expenses may differ
from estimated other expenses.
The example expenses below show the expenses a shareholder would bear, assuming
that the Sale closes and assuming that the Sale does not close, given an
investment in the Fund, assuming that a shareholders has a $1,000 investment,
that the Fund returns 5% each year, that the operating expenses set forth above
remain the same throughout the indicated periods and that all dividends and
distributions are reinvested at net asset value. The example expenses should not
be considered a representation of future expenses of the Fund; actual expenses
may be greater or lesser than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
NO CLOSING $11 $35 $61 $135
CLOSING $ 9 $30 $51 $114
17
COLONIAL INTERMEDIATE HIGH INCOME FUND
NO CLOSING CLOSING
---------- -------
Management Fee 0.86% 0.86%
Administrative Fee -- 0.03%
Other Expenses 0.39% 0.17%(1)
---- -----
Total Operating Expenses 1.25% 1.06%
Less Waiver/Reimbursement --(2) (0.06)%(3)
---- -----
Net Operating Expenses 1.25%(2) 1.00%(3)
--------
(1) Estimated other expenses shown are based on contractual rates for services
provided to other funds advised by MFS. Actual other expenses may differ
from estimated other expenses.
(2) Pursuant to the terms of its investment advisory agreement with Columbia,
the Fund pays a management fee to Columbia equal to 0.65% of its average
weekly net assets, plus 20% of its monthly "leverage income" (as defined
in its Current Advisory Agreement). Columbia has agreed voluntarily to
waive the portion of its management fee attributable to "leverage income."
If this waiver were reflected in the table above, net operating expenses
would be 1.04%. This waiver may be terminated by Columbia at any time.
(3) MFS has agreed in writing to reimburse the Fund for certain expenses so
that total operating expenses (excluding taxes, brokerage and transaction
costs, currency conversion costs, extraordinary expenses, expenses
associated with the Fund's investing activities and preferred shares
remarketing fees) would not exceed 1.00% annually of average daily net
assets. This reimbursement arrangement will remain in effect through at
least the first anniversary of the Closing and thereafter may be
terminated by MFS only with the approval of the Fund's board.
The example expenses below show the expenses a shareholder would bear, assuming
that the Sale closes and assuming that the Sale does not close, given an
investment in the Fund, assuming that a shareholders has a $1,000 investment,
that the Fund returns 5% each year, that the operating expenses set forth above
remain the same throughout the indicated periods and that all dividends and
distributions are reinvested at net asset value. The example expenses should not
be considered a representation of future expenses of the Fund; actual expenses
may be greater or lesser than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
NO CLOSING $13 $40 $69 $151
CLOSING $10 $32 $55 $122
18
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
NO CLOSING CLOSING
---------- -------
Management Fee 0.65% 0.65%
Administrative Fee -- 0.02%
Other Expenses 0.26%(1) 0.10%(1),(2)
---- -----
Total Operating Expenses 0.91% 0.77%
Less Waiver/Reimbursement --(3) (0.02)%(4)
---- -----
Net Operating Expenses 0.91%(3) 0.75%(4)
--------
(1) Other expenses include fees and expenses associated with the Fund's
investment in other investment companies (less than 0.01%).
(2) Estimated other expenses shown are based on contractual rates for services
provided to other funds advised by MFS. Actual other expenses may differ
from estimated other expenses.
(3) Columbia agreed voluntarily to waive 0.02% of the management fee payable
by the Fund. If this waiver were reflected in the table, net operating
expenses would be 0.89%. This waiver may be terminated by Columbia at any
time.
(4) MFS has agreed in writing to waive 0.02% of the management fee payable by
the Fund. This waiver will remain in effect through at least the first
anniversary of the Closing and thereafter may be terminated by MFS only
with the approval of the Fund's board.
The example expenses below show the expenses a shareholder would bear, assuming
that the Sale closes and assuming that the Sale does not close, given an
investment in the Fund, assuming that a shareholders has a $1,000 investment,
that the Fund returns 5% each year, that the operating expenses set forth above
remain the same throughout the indicated periods and that all dividends and
distributions are reinvested at net asset value. The example expenses should not
be considered a representation of future expenses of the Fund; actual expenses
may be greater or lesser than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
NO CLOSING $9 $29 $50 $112
CLOSING $8 $24 $42 $ 93
19
COLONIAL MUNICIPAL INCOME TRUST
NO CLOSING CLOSING
---------- -------
Management Fee 0.65% 0.65%
Administrative Fee -- 0.02%
Other Expenses 0.24%(1) 0.11%(1),(2)
---- ----
Total Operating Expenses 0.89% 0.78%
Less Waiver/Reimbursement -- --
---- ----
Net Operating Expenses 0.89% 0.78%
--------
(1) Other expenses include fees and expenses associated with the Fund's
investment in other investment companies (less than 0.01%).
(2) Estimated other expenses shown are based on contractual rates for services
provided to other funds advised by MFS. Actual other expenses may differ
from estimated other expenses.
The example expenses below show the expenses a shareholder would bear, assuming
that the Sale closes and assuming that the Sale does not close, given an
investment in the Fund, assuming that a shareholders has a $1,000 investment,
that the Fund returns 5% each year, that the operating expenses set forth above
remain the same throughout the indicated periods and that all dividends and
distributions are reinvested at net asset value. The example expenses should not
be considered a representation of future expenses of the Fund; actual expenses
may be greater or lesser than those shown.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
NO CLOSING $ 9 $ 28 $ 49 $ 110
CLOSING $8 $25 $43 $ 97
COVENANTS REGARDING CERTAIN LEGAL REQUIREMENTS UNDER THE 1940 ACT
MFS has made certain covenants regarding compliance with Section 15(f) of the
1940 Act, which provides in pertinent part that an investment adviser or any of
its affiliated persons may receive any amount or benefit in connection with
certain transactions, such as the Sale, involving an assignment of an investment
advisory agreement as long as two conditions are satisfied.
The first condition requires that no "unfair burden" may be imposed on the
investment company as a result of such transactions, or as a result of any
express or implied terms, conditions or understandings applicable to such
transactions. The term "unfair burden," as defined in the 1940 Act, includes any
arrangement during the two-year period after the change in control whereby the
investment adviser (or predecessor or successor investment adviser), or any
interested person of any such investment adviser, receives or is entitled to
receive any compensation, directly or indirectly, from such investment company
or its
20
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of such investment company
(other than bona fide ordinary fees for principal underwriting services). No
such compensation arrangements are contemplated in the Sale. MFS has agreed with
Columbia to use its reasonable best efforts to ensure that neither the Sale nor
any terms, conditions or understandings applicable thereto will cause the
imposition of an "unfair burden" on the Funds.
The second condition requires that, during the three-year period immediately
following the closing of such transactions, at least 75% of the investment
company's board of trustees must not be "interested persons" (as defined in
Section 2(a)(19) of the 1940 Act) of the investment adviser or predecessor
investment adviser. The Board currently satisfies, the Nominees (as hereinafter
defined), if elected, would satisfy, and MFS has agreed with Columbia to use its
reasonable best efforts to ensure continued satisfaction of, such 75%
requirement.
INFORMATION REGARDING MFS
MFS is registered as an investment adviser under the Investment Advisers Act of
1940, as amended. MFS offers a full spectrum of investment products to domestic
and international retail, business and institutional investors. As of December
31, 2006, MFS had approximately $187 billion in assets under management. MFS
currently manages six closed-end funds. MFS' principal office address is 500
Boylston Street, Boston, MA 02116.
MFS currently manages one closed-end fund with investment objectives similar to
the Funds. The table below sets forth, for such fund, its net assets as of
October 31, 2006, its currently effective annual rate of management fee and any
currently effective management fee waivers.
FUND NAME NET ASSETS MANAGEMENT FEE MANAGEMENT FEE WAIVER
--------- ------------ --------------------- ---------------------
MFS Municipal Income $323,098,699 0.40% of average None
Trust daily net assets plus
6.32% of gross income
21
MFS's principal executive officers and directors and the principal occupation of
each are shown below. The address of each such principal executive officer and
director is c/o MFS Investment Management, 500 Boylston Street, Boston, MA
02116.
NAME PRINCIPAL OCCUPATION
---- --------------------
Donald Alexander Stewart Director, MFS; Chief Executive
Officer, Sun Life Financial,
Inc.
Martin Eric Beaulieu Executive Vice President, MFS
Robert James Manning Director, President, Chief
Executive Officer and Chief
Investment Officer, MFS
Robert Charles Pozen Director and Chairman, MFS
Maria Frances Dwyer Executive Vice President, Chief
Regulatory Officer and Chief
Compliance Officer, MFS
Paul Thomas Kirwan Executive Vice President and
Chief Financial Officer, MFS
Robin Ann Stelmach Executive Vice President and
Chief Operations Officer, MFS
Thomas A. Bogart Director, MFS; Executive Vice
President and Chief Legal
Officer, Sun Life Financial,
Inc.
Mark Neil Polebaum Executive Vice President,
General Counsel and Secretary,
MFS
MFS' Parents are shown below, along with their bases of control of MFS. For
purposes of this proxy statement, the term "Parent" has the meaning ascribed to
it in Item 22(a)(1)(ix) of Rule 14a-101 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
PARENT BASIS OF CONTROL IMMEDIATE PARENT BASIS OF CONTROL
------ ---------------- ---------------- ----------------
Sun Life Financial Shareholder Sun Life Financial Shareholder
Inc. Corp.
Sun Life Financial Indirect Owner Sun Life Assurance Shareholder
Corp. Company of
Canada -- U.S.
Operations Holdings,
Inc.
Sun Life Assurance Indirect Owner Sun Life Financial Shareholder
Company of (U.S.) Holdings,
Canada -- U.S. Inc.
Operations
Holdings, Inc.
Sun Life Financial Indirect Owner Sun Life Financial Shareholder
(U.S.) Holdings, (U.S.) Investments
Inc. LLC
Sun Life Financial Indirect Owner Sun Life of Canada Holder of Membership
(U.S.) Investments (U.S.) Financial Interests
LLC Services Holdings,
Inc.
Sun Life of Canada Indirect Owner N/A N/A
(U.S.) Financial
Services Holdings,
Inc.
MFS has advised the Board that no person not listed in the table above holds 10%
or more of the securities of MFS.
22
MFS has advised the Board that it has no financial condition that could impair
its ability to fulfill its obligations under the New Advisory Agreements.
Please see the section captioned "Arrangements for Selection as Nominee" in
Appendix E hereto for information regarding any arrangements or understandings
made in connection with the proposed New Advisory Agreements with respect to the
composition of the Board after the Closing.
BOARD CONSIDERATIONS
The Advisory Fees and Expenses Committee of the Board reviewed each of the New
Advisory Agreements and determined to recommend that the full Board approve
those agreements.
The Board received and reviewed, in advance of their meeting on April 10, 2007,
all materials that they, their legal counsel or MFS, the Funds' proposed
investment adviser, believed to be reasonably necessary for the Board to
evaluate and to determine whether to approve the New Advisory Agreements. Those
materials included, among other items, (i) information on the investment
performance of funds advised by MFS relative to the performance of peer groups
and performance benchmarks, (ii) information on each Fund's anticipated
investment advisory fees and other expenses, including, for certain of the
Funds, information about anticipated expense caps and fee waivers, (iii)
information about the anticipated profitability of the New Advisory Agreements
to MFS, and potential "fall-out" or ancillary benefits that MFS and its
affiliates may receive as a result of their relationships with the Funds and
(iv) additional information provided by MFS in response to a request of
independent legal counsel to the Independent Trustees. The Board also met with
representatives of MFS and considered other information such as (v) MFS'
financial condition, (vi) each Fund's investment objective and strategies and
the size, education and experience of the portfolio management staff MFS
proposes to manage the Funds, (vii) the anticipated use by MFS of "soft"
commission dollars to pay for research products and services, and (viii) MFS'
resources to be devoted to the Funds' investment policies and restrictions, and
MFS' policies on personal securities transactions and other compliance policies.
The Board had the opportunity to ask questions of, and to request additional
materials from, MFS and to consult in executive session with independent legal
counsel to the Independent Trustees.
In considering whether to approve the New Advisory Agreements, the Board,
including the Independent Trustees, did not identify any single factor as
determinative, and each trustee weighed various factors as he or she deemed
23
appropriate. The Board considered the following matters in connection with their
approval of the New Advisory Agreements:
The nature, extent and quality of the services to be provided to the Funds under
the New Advisory Agreements. The Board considered the nature, extent and
quality of the services to be provided by MFS and its affiliates to the Funds
and the resources to be dedicated to the Funds by MFS and its affiliates. Among
other things, the Board considered (i) MFS's ability, including its resources,
reputation and other attributes, to attract and retain highly qualified
research, investment advisory and supervisory investment professionals; (ii) the
portfolio management services to be provided by those investment professionals;
and (iii) that the services to be provided under the New Advisory Agreements and
the Administrative Services Agreement were comparable to the services provided
under the Current Advisory Agreements and other administrative agreements. After
reviewing the above and related factors, the Board concluded, within the context
of its overall conclusions regarding the New Advisory Agreements, that the
nature, extent and quality of services provided supported the approval of each
of the New Advisory Agreements.
Investment performance of funds advised by MFS. The Board reviewed information
about the performance of various funds advised by MFS over various time periods,
including information prepared by MFS showing that the performance of such funds
generally compared favorably to the performance of peer groups and performance
benchmarks. The Board also considered MFS' reputation generally and MFS'
commitment to the business of managing closed-end funds, including its
experience managing the six closed-end funds currently managed by MFS. After
reviewing the above and related factors, the Board concluded, within the context
of its overall conclusions regarding each New Advisory Agreement, that the
performance of MFS was sufficient, in light of other considerations, to warrant
the approval of each of the New Advisory Agreements.
The costs of the services to be provided and the profits to be realized by MFS
and its affiliates from their relationships with the Funds. The Board
considered the fees to be charged to the Funds for investment advisory services
as well as the anticipated total expense levels of the Funds. The Board
considered information about the investment advisory fees charged by MFS to a
closed-end fund, which were comparable to, and to institutional clients, which
were generally lower than, the investment advisory fees under the New Advisory
Agreements, and the scope of services provided to such clients relative to the
scope of services to be provided under the New Advisory Agreements. In
evaluating each Fund's anticipated investment advisory fees, the Board took into
account the fact that the investment advisory fee rates included in the New
Advisory Agreements were the same as those included in
24
the Current Advisory Agreements. The Board also took into account the demands
and complexity of the investment management of the Fund. The Board considered
the expense reductions that MFS anticipated would result from the shift to the
group of service providers currently employed for transfer agency, fund
accounting and custody services by funds advised by MFS.
The Board also considered the compensation to be received directly or indirectly
by MFS and its affiliates from their relationships with the Funds. The Board
reviewed information provided by MFS regarding the estimated profitability to
MFS and its affiliates of their relationships with the Funds, and information
about the allocation of expenses used to calculate profitability. When reviewing
profitability, the Board also considered court cases in which investment adviser
profitability was an issue in whole or in part, the performance of funds advised
by MFS, the anticipated expense levels of the Funds and the extent to which MFS
would implement expense caps for the Funds. After reviewing the foregoing and
related factors, the Board concluded, within the context of its overall
conclusions regarding each of the New Advisory Agreements, that the investment
advisory fees to be charged to each Fund were fair and reasonable, and that the
anticipated costs of the investment advisory services generally, and the related
anticipated profitability to MFS and its affiliates of their relationships with
the Funds, supported the approval of the New Advisory Agreements.
Economies of Scale. The Board considered the potential existence of economies
of scale in the provision of services by MFS to each Fund and whether those
economies would be shared with the Fund through breakpoints in the investment
advisory fees or other means, such as expense caps. The Board noted that several
of the Funds benefited from fee waivers, expense caps or both prior to the Sale,
and that those Funds were expected to continue to so benefit. In considering the
issues above, the Board also took note of the expected profitability to MFS and
its affiliates of their proposed relationships with the Funds, as discussed
above. After reviewing the above and related factors, the Board concluded,
within the context of its overall conclusions regarding each of the New Advisory
Agreements, that the extent to which economies of scale were expected to be
shared with the Funds supported the approval of each of the New Advisory
Agreements.
Other Factors. The Board also considered other factors, which included but were
not limited to the following:
- the compliance programs of MFS and the compliance-related resources that MFS
and its affiliates would provide to the Funds.
- the nature, quality, estimated cost and extent of administrative and
shareholder services to be performed by MFS and its affiliates, both under
25
the New Advisory Agreements and under separate agreements for the provision of
administrative services.
- so-called "fall-out benefits" to MFS, such as the engagement of its affiliates
to provide services to the Funds, as well as possible conflicts of interest
associated with those fall-out and other benefits.
Based on its evaluation of all factors that it deemed to be material, including
those factors described above, and assisted by the advice of independent
counsel, the Board, including all of the Independent Trustees, approved each of
the New Advisory Agreements.
REQUIRED VOTE AND RECOMMENDATION
Approval of a New Advisory Agreement on behalf of each Fund requires the
affirmative vote of a "majority of the outstanding voting securities" of such
Fund, which for this purpose means the affirmative vote of the lesser of (i)
more than 50% of the outstanding shares of such Fund or (ii) 67% or more of the
shares of such Fund present at the Meeting if more than 50% of the outstanding
shares of such Fund are present at the Meeting in person or represented by
proxy. For each of Colonial California Insured Municipal Fund, Colonial High
Income Municipal Trust, Colonial Investment Grade Municipal Trust and Colonial
Municipal Income Trust, holders of municipal auction rate cumulative preferred
shares ("Preferred Shares") and holders of common shares of beneficial interest
("Common Shares") vote together as a single class on this Proposal 1.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, HAS CONCLUDED THAT PROPOSAL 1 IS
IN THE BEST INTERESTS OF SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" PROPOSAL 1.
PROPOSAL 2
TO APPROVE AN AMENDED AND RESTATED DECLARATION OF TRUST
Each Fund, like other investment companies, is subject to comprehensive federal
laws and regulations (in particular, to the 1940 Act) and to state laws. The
Funds are subject to Massachusetts law because each Fund is a Massachusetts
business trust. Under Massachusetts law, a business trust generally operates
under an organizational document, usually called a declaration of trust, which
sets forth various provisions relating primarily to the authority and governance
of the business trust. Each Fund currently operates under its own agreement and
declaration of trust (each a "Current Declaration").
26
The Board recommends that shareholders of each Fund vote to approve an Amended
and Restated Declaration of Trust for each Fund (each a "Revised Declaration")
if Proposal 1 is approved. The Board believes that, if the New Advisory
Agreement for each Fund referenced in Proposal 1 is approved and the Sale
closes, in order to increase the efficiency of administration of the Funds by
MFS, it is in the best interests of shareholders to conform the Current
Declaration of each Fund to the form of declaration of trust used for other
closed-end funds advised by MFS.
Adoption of a Revised Declaration for each Fund will not alter any Fund's
current investments or investment policies.
A description of the material differences between each Current Declaration and
the form of proposed Revised Declaration is set forth in Appendix C.
If Proposal 1 and this Proposal 2 are approved by the shareholders of a Fund,
the Revised Declaration will become effective when a majority of the trustees of
that Fund has signed the Revised Declaration. Each Fund currently anticipates
that, if the requisite shareholder approvals are obtained and if the Closing
occurs, the Revised Declaration for such Fund will become effective immediately
after the Closing.
The foregoing discussion and the summary set forth in Appendix C hereto are
qualified in their entireties by reference to the form of Revised Declaration,
which is attached hereto in Appendix D.
MFS has indicated that it intends, following the Closing, to propose to the
trustees of each Fund that the bylaws of the Fund be amended to conform them
more closely to the bylaws of the other closed-end funds advised by MFS. Unlike
the Current Declarations, the proposed form of Revised Declaration does not
address quorum requirements for shareholder meetings. MFS has advised the Board
that the amended bylaws of the Funds will address quorum requirements for
shareholder meetings. MFS has also advised the Board that each Fund's quorum for
shareholder meetings will not change upon Closing.
REQUIRED VOTE AND BOARD RECOMMENDATION
For each of Colonial California Insured Municipal Fund, Colonial High Income
Municipal Trust, Colonial Investment Grade Municipal Trust and Colonial
Municipal Income Trust, approval of a Revised Declaration for each Fund requires
(i) the affirmative vote of at least 66 2/3% of the Common Shares and Preferred
Shares of such Fund entitled to vote, voting together as a single class, and
(ii) the affirmative vote of at least a majority of the Preferred Shares
outstanding on the Record Date.
27
For each of Colonial InterMarket Income Trust I and Colonial Intermediate High
Income Fund, approval of a Revised Declaration for each Fund requires the
affirmative vote of at least 66 2/3% of the shares of beneficial interest of
such Fund entitled to vote.
If the shareholders of a Fund fail to approve a Revised Declaration for such
Fund, or if the Sale does not close, the Fund's Current Declaration will remain
in effect. The Sale may close even if the Revised Declaration is not approved by
shareholders of any Fund.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, HAS CONCLUDED THAT PROPOSAL 2 IS
IN THE BEST INTERESTS OF SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" PROPOSAL 2.
PROPOSAL 3
TO ELECT TRUSTEES IF PROPOSAL 1 IS APPROVED
BACKGROUND
The current trustees of each Fund have indicated that, if the New Advisory
Agreements referenced in Proposal 1 are approved and the Closing occurs, they
will resign in order to facilitate the oversight of the Fund by the same board
of trustees that currently oversees other funds advised by MFS. The current
trustees of each Fund believe that the interests of shareholders would most
efficiently and effectively be represented by trustees who are more familiar
with MFS and with the management and operation of other funds advised by MFS.
Messrs. Robert E. Butler, David H. Gunning, William R. Gutow, Michael Hegarty,
J. Atwood Ives, Robert J. Manning, Lawrence T. Perera, Robert C. Pozen, J. Dale
Sherratt and Robert W. Uek, Dr. Lawrence H. Cohn and Ms. Laurie J. Thomsen (each
a "Nominee" and collectively, the "Nominees"), each of whom has agreed to serve,
have been nominated for election as trustees of each Fund. The Nominees would
serve in accordance with the Revised Declaration (or, if Proposal 2 is not
approved by shareholders, the Current Declaration) and the bylaws of each Fund.
At a meeting held on April 10, 2007, the Board, including the Independent
Trustees, nominated each Nominee for election by shareholders of each Fund if
Proposal 1 is approved by shareholders and the Closing occurs. If, prior to the
Meeting, any Nominee refuses or becomes unable to serve, or becomes unavailable
for election, the persons named as proxies may vote the enclosed proxy for a
substitute nominee in their discretion.
28
The Board of each Fund has fixed the number of trustees for that Fund at twelve,
contingent upon approval by the shareholders of that Fund of Proposal 1 and the
occurrence of the Closing.
NOMINEES
For each of Colonial California Insured Municipal Fund, Colonial High Income
Municipal Trust, Colonial Investment Grade Municipal Trust and Colonial
Municipal Income Trust, the following ten Nominees are proposed for election by
the holders of Common Shares and Preferred Shares, voting together as a single
class: Messrs. Butler, Gunning, Gutow, Hegarty, Manning, Perera, Pozen, Sherratt
and Uek and Dr. Cohn. The following two Nominees are proposed for election by
the holders of Preferred Shares: Mr. Ives and Ms. Thomsen.
The Nominees (excluding the Nominees to be elected by the holders of Preferred
Shares, voting separately), if elected, would be divided into three classes as
follows, each with a term expiring in the year indicated:
2008 2009 2010
---- ---- ----
Mr. Gutow Mr. Butler Dr. Cohn
Mr. Hegarty Mr. Gunning Mr. Manning
Mr. Uek Mr. Pozen Mr. Perera
Mr. Sherratt
If elected, Mr. Ives and Ms. Thomsen each will serve for one year or until his
or her successor is elected.
For each of Colonial InterMarket Income Trust I and Colonial Intermediate High
Income Fund, the following twelve Nominees are proposed for election by the
holders of shares of beneficial interest: Messrs. Butler, Gunning, Gutow,
Hegarty, Ives, Manning, Perera, Pozen, Sherratt and Uek, Dr. Cohn and Ms.
Thomsen.
The Nominees, if elected, would be divided into three classes as follows, each
with a term expiring in the year indicated:
2008 2009 2010
---- ---- ----
Mr. Gutow Mr. Butler Dr. Cohn
Mr. Hegarty Mr. Gunning Mr. Manning
Mr. Ives Mr. Pozen Mr. Perera
Mr. Uek Mr. Sherratt Ms. Thomsen
The Nominees have advised the Board that, if elected, they would intend to
impose a mandatory retirement age of 73 years.
29
REQUIRED VOTE
For each of Colonial California Insured Municipal Fund, Colonial High Income
Municipal Trust, Colonial Investment Grade Municipal Trust and Colonial
Municipal Income Trust, the affirmative vote of a plurality of the holders of
Common Shares and Preferred Shares, voting together as a single class, present
at the Meeting in person or represented by proxy, is required for the election
of each of Messrs. Butler, Gunning, Gutow, Hegarty, Manning, Perera, Pozen,
Sherratt and Uek and Dr. Cohn, and the affirmative vote of a plurality of the
holders of Preferred Shares, present at the Meeting in person or represented by
proxy, is required for the election of each of Mr. Ives and Ms. Thomsen.
For each of Colonial InterMarket Income Trust I and Colonial Intermediate High
Income Fund, the affirmative vote of a plurality of the holders of shares of
beneficial interest, present at the Meeting in person or represented by proxy,
is required for the election of each Nominee.
INFORMATION REGARDING NOMINEES
For information regarding the Nominees, please see Appendix E to this proxy
statement.
OWNERSHIP OF SHARES OF THE FUNDS BY NOMINEES
Appendix F to this proxy statement provides information, as of the Record Date,
regarding the beneficial ownership by the Nominees of equity securities in (a)
the Funds, (b) the Funds' "Family of Investment Companies" (as defined in Item
22(a)(1)(iv) of Rule 14a-101 under the Exchange Act), (c) an investment adviser
or principal underwriter of any Fund and (d) a person (other than a fund) in a
control relationship with an investment adviser or principal underwriter of any
Fund.
TRANSACTIONS IN SECURITIES OF MFS
None of the Nominees have purchased or sold any securities, in an amount
exceeding 1% of the outstanding securities, of MFS, its parent company or any
subsidiary of either.
LEGAL PROCEEDINGS
The Funds are aware of no material pending legal proceedings to which any
Nominee is a party adverse to any of the Funds or any affiliated person of any
of the Funds, or in which any Nominee has a material interest adverse to any of
the Funds or to any affiliated person of any of the Funds. The Funds further are
aware of no legal proceedings involving any Nominee that would be material to
30
an evaluation of the ability or integrity of any Nominee and that would require
disclosure under Item 401(f) of Regulation S-K under the Exchange Act.
REGULATORY INVESTIGATIONS SETTLED
In February, 2004, MFS reached agreement with the Commission, the New York
Attorney General ("NYAG") and the Bureau of Securities Regulation of the State
of New Hampshire ("NH") to settle administrative proceedings alleging false and
misleading information in certain MFS fund prospectuses regarding market timing
and related matters.
On March 31, 2004, MFS settled an administrative proceeding with the Commission
regarding disclosure of brokerage allocation practices in connection with fund
sales.
In 2001-2002, the Commission investigated MFS, among others, in relation to a
single trade in U.S. 30-year treasury bonds in October 2001. In order to settle
the matter, on September 4, 2003, MFS consented to an administrative censure and
a cease and desist order which requires MFS to maintain an inside information
policy which specifically deals with information received from consultants and
which specifically acknowledges that government debt instruments are covered. In
addition, MFS paid a fine to the SEC and undertook to reimburse its trading
partner for losses.
LEGAL PROCEEDINGS
Since December 2003, MFS, MFS Fund Distributors, Inc., MFS Service Center, Inc.,
MFS Corporation Retirement Committee, Sun Life Financial Inc., various MFS
funds, certain current and/or former trustees of the MFS funds, and certain
officers of MFS have been named as defendants in multiple lawsuits filed in
federal and state courts. The various lawsuits generally allege that some or all
of the defendants (i) permitted or acquiesced in market timing and/or late
trading in some of the MFS funds, and inadequately disclosed MFS' internal
policies concerning market timing and such matters, (ii) received excessive
compensation as fiduciaries with respect to the MFS funds, or (iii) permitted or
acquiesced in the improper use of fund assets by MFS to support the distribution
of MFS fund shares and inadequately disclosed MFS' use of fund assets in this
matter. The lawsuits assert that some or all of the defendants violated the
federal securities laws, including the Securities Act of 1933 and the Exchange
Act, the 1940 Act and the Investment Advisers Act of 1940, the Employee
Retirement Income Security Act of 1974 (ERISA), as well as fiduciary duties and
other violations of common law. The lawsuits variously have been commenced as
class actions or individual actions on behalf of investors who purchased, held
or redeemed shares of the MFS funds during specified periods, as ERISA actions
by participants in certain retirement plan
31
accounts on behalf of those accounts, or as derivative actions on behalf of the
MFS funds.
The lawsuits relating to market timing and related matters have been transferred
to, and consolidated before, the United States District Court for the District
of Maryland, as part of a multi-district litigation of market timing and related
claims involving several other fund complexes (In re Mutual Funds Investment
Litigation (Alger, Columbia, Janus, MFS, One Group, Putnam, Allianz Dresdner),
No. 1:04-md-15863 (transfer began March 19, 2004)). The market timing cases
related to the MFS funds include Riggs v. MFS et al., Case No. 04-CV-01162-JFM
(direct), Hammerslough v. MFS et al., Case No. 04-MD-01620 (derivative), Anita
Walker v. MFS et al., Case No. 1:04-CV-01758 (ERISA), and Reaves v. MFS Series
Trust I, et al., Case No. 1:05-CV-02220-JFM (Class B Shares).
The plaintiffs in these consolidated lawsuits generally seek injunctive relief
including removal of the named trustees, adviser and distributor, rescission of
contracts and 12b-1 plans, disgorgement of fees and profits, monetary damages,
punitive damages, attorney's fees and costs and other equitable and declaratory
relief. Two lawsuits alleging improper brokerage allocation practices and
excessive compensation are pending in the United States District Court for the
District of Massachusetts (Forsythe v. Sun Life Financial Inc., et al., No.
04cv10584 (GAO) (a consolidated action, first filed on March 25, 2004) and
Marcus Dumond, et al. v. Massachusetts Financial Servs. Co., et al., No.
04cv11458 (GAO) (filed on May 4, 2004)). The plaintiffs in these lawsuits
generally seek compensatory damages, punitive damages, recovery of fees,
rescission of contracts, an accounting, restitution, declaratory relief,
equitable and/or injunctive relief and attorney's fees and costs. Insofar as any
of the actions is appropriately brought derivatively on behalf of any of the MFS
funds, any recovery will inure to the benefit of the MFS funds. Several claims
of the various lawsuits have been dismissed; MFS and other named defendants
continue to defend the various lawsuits.
PROPOSED COMMITTEES OF THE BOARD
The Nominees have indicated that if they are elected, they intend to organize
committees of the board as follows:
AUDIT COMMITTEE
The audit committee ("MFS Audit Committee") would oversee the accounting and
auditing procedures for the Funds and, among other things, would consider the
selection of independent accountants for the Funds and the scope of the audit,
and would consider the effect on the independence of those accountants of any
non-audit services such accountants provide to the Funds and any audit
32
or non-audit services such accountants provide to MFS and/or certain MFS
affiliates. The MFS Audit Committee also would be responsible for establishing
procedures for the receipt, retention and treatment of complaints received by
the Funds regarding accounting, internal accounting controls, or auditing
matters and the confidential, anonymous submission of concerns regarding
questionable Fund accounting matters by officers of the Funds and employees of
the Funds' investment advisers, administrators or any other providers of
accounting-related services to the Funds. If all of the Nominees are elected by
shareholders, the members of the MFS Audit Committee would be Ms. Thomsen and
Messrs. Butler, Gutow, Sherratt and Uek.
COMPLIANCE AND GOVERNANCE COMMITTEE
The compliance and governance committee ("MFS Compliance and Governance
Committee") would oversee the development and implementation of the Funds'
regulatory and fiduciary compliance policies, procedures and practices under the
1940 Act and other applicable laws and would oversee compliance policies of MFS
and certain other service providers as they relate to Fund activities. The chief
compliance officer would report directly to the MFS Compliance and Governance
Committee and would assist in carrying out its responsibilities. In addition,
the MFS Compliance and Governance Committee would advise and make
recommendations to the full board on matters concerning trustee practices and
recommendations concerning the functions and duties of the committees of the
board. If all of the Nominees are elected by shareholders, the members of the
MFS Compliance and Governance Committee would be Messrs. Butler, Gunning, Gutow
and Sherratt and Dr. Cohn.
CONTRACTS REVIEW COMMITTEE
The contracts review committee ("MFS Contracts Review Committee") would request,
review and consider the information deemed reasonably necessary to evaluate the
terms of the investment advisory agreements that the Funds propose to renew or
continue, and would make its recommendations to the full board on these matters.
If all of the Nominees are elected by shareholders, the members of the MFS
Contracts Review Committee would be Ms. Thomsen, Messrs. Butler, Gunning, Gutow,
Hegarty, Ives, Perera, Sherratt and Uek and Dr. Cohn.
NOMINATION AND COMPENSATION COMMITTEE
The nomination and compensation committee ("MFS Nomination and Compensation
Committee") would recommend qualified candidates to the full board in the event
that a position is vacated or created. The MFS
33
Nomination and Compensation Committee would consider recommendations by
shareholders when a vacancy exists. If Nominees are elected by shareholders and
the Sale closes, shareholders wishing to recommend candidates for trustee for
consideration by the MFS Nomination and Compensation Committee may do so by
writing to the Funds' secretary at the principal executive office of the Funds.
Such recommendations must be accompanied by biographical and occupational data
on the candidate (including whether the candidate would be an "interested
person" of the Funds), a written consent of the candidate to be named as a
nominee and to serve as trustee if elected, record and ownership information for
the recommending shareholder with respect to the Funds, and a description of any
arrangements or understandings regarding recommendation of the candidate for
consideration. The MFS Nomination and Compensation Committee also would be
responsible for making recommendations to the full board regarding any necessary
standards or qualifications for service on the board. The MFS Nomination and
Compensation Committee also would review and make recommendations to the full
board regarding compensation for the trustees who are not "interested persons"
(as defined in Section 2(a)(19) of the 1940 Act) of the Funds. If all of the
Nominees are elected by shareholders, the members of the MFS Nomination and
Compensation Committee would be Ms. Thomsen, Messrs. Butler, Gunning, Gutow,
Hegarty, Ives, Perera, Sherratt and Uek and Dr. Cohn.
PORTFOLIO TRADING AND MARKETING REVIEW COMMITTEE
The portfolio trading and marketing review committee ("MFS Portfolio Trading and
Marketing Review Committee") would oversee the policies, procedures and
practices of the Funds with respect to brokerage transactions involving
portfolio securities as those policies, procedures, and practices are carried
out by MFS and its affiliates. The MFS Portfolio Trading and Marketing Review
Committee also would oversee the administration of the Funds' proxy voting
policies and procedures by MFS. In addition, the committee would receive reports
from MFS regarding the policies, procedures and practices of MFS and its
affiliates in connection with their marketing of shares of the MFS funds. If all
of the Nominees are elected by shareholders, the members of the MFS Portfolio
Trading and Marketing Review Committee would be Messrs. Gunning, Hegarty and
Perera and Dr. Cohn.
PRICING COMMITTEE
The pricing committee ("MFS Pricing Committee") would oversee the determination
of the value of the portfolio securities and other assets held by the Funds and
would determine or cause to be determined the fair value of securities and
assets for which market quotations are not "readily available" in accordance
with the 1940 Act. The MFS Pricing Committee would delegate
34
primary responsibility for carrying out these functions to MFS and MFS' internal
valuation committee pursuant to pricing policies and procedures approved by the
committee and adopted by the full board, which would include methodologies to be
followed by MFS to determine the fair values of portfolio securities and other
assets held by the Funds for which market quotations are not readily available.
The MFS Pricing Committee would meet periodically with the members of MFS'
internal valuation committee to review and assess the quality of fair valuation
and other pricing determinations made pursuant to the Funds' pricing policies
and procedures, and to review and assess the policies and procedures themselves.
If all of the Nominees are elected by shareholders, the members of the MFS
Pricing Committee would be Ms. Thomsen and Messrs. Hegarty, Perera and Uek.
SERVICES CONTRACTS COMMITTEE
The services contracts committee ("MFS Services Contracts Committee") would
review and evaluate the contractual arrangements of the Funds relating to
transfer agency, administrative, custody, pricing and bookkeeping services and
the lending of portfolio securities, and would make recommendations to the full
board on these matters. If all of the Nominees are elected by shareholders, the
members of the MFS Services Contracts Committee would be Ms. Thomsen and Messrs.
Gunning, Sherratt and Uek.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, HAS CONCLUDED THAT THE ELECTION
OF EACH NOMINEE AS A TRUSTEE OF THE FUNDS IF PROPOSAL 1 IS APPROVED BY
SHAREHOLDERS AND THE CLOSING OCCURS IS IN THE BEST INTERESTS OF SHAREHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF ALL NOMINEES.
PROPOSAL 4
TO ELECT TRUSTEES
BACKGROUND
The Board of each Fund has fixed the number of trustees for that Fund at ten. As
noted above, the Board of each Fund has approved increasing the number of
trustees of that Fund to twelve, provided that Proposal 1 is approved by
shareholders and that the Closing occurs.
For each of Colonial California Insured Municipal Fund, Colonial High Income
Municipal Trust, Colonial Investment Grade Municipal Trust and Colonial
Municipal Income Trust, trustees are divided into three classes, each having a
35
term of three years, with the term of each class expiring in a different year.
Generally, trustees are elected by the holders of Common Shares and the holders
of Preferred Shares, voting together as a single class. However, for each of
these Funds, the holders of Preferred Shares, voting separately, are entitled to
vote for two trustees. The class to which you are electing trustees and the term
of such class are set forth below.
For each of Colonial InterMarket Income Trust I and Colonial Intermediate High
Income Fund, trustees are divided into three classes, each having a term of
three years, with the term of each class expiring in a different year. Trustees
are elected by the holders of shares of beneficial interest. The class to which
you are electing trustees and the term of such class are set forth below.
The Board, including all Independent Trustees, has nominated the nominees set
forth below for election by shareholders, each to serve for the term set forth
below, unless Proposal 1 is approved by shareholders and the Closing occurs.
Each nominee has agreed to serve as a trustee of the relevant Fund if elected.
If, prior to the Meeting, any nominee refuses or becomes unable to serve, or
becomes unavailable for election, the persons named as proxies may vote for a
substitute nominee in their discretion. Under the terms of each Fund's
retirement policy, the trustees have a mandatory retirement age of 72 years,
which might cause a trustee to retire before the end of his or her stated term.
In particular, Mr. Stitzel, Mr. Lowry and Mr. Theobald are expected to retire in
April 2008, June 2008 and June 2009, respectively. Each current trustee of each
Fund, including each nominee set forth in this Proposal 4, has indicated his or
her intention to resign, effective at the Closing, if Proposal 1 is approved by
shareholders and the Closing occurs.
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
Messrs. Neuhauser and Theobald and Ms. Verville are proposed for election as
trustees of the Fund and are to be elected by the holders of Common Shares and
Preferred Shares, voting together as a single class. If elected, Messrs.
Neuhauser and Theobald and Ms. Verville each will serve for three years or until
a successor is elected. Messrs. Hacker and Stitzel are proposed for election as
trustees of the Fund and are to be elected separately by the holders of
Preferred Shares. If elected, Messrs. Hacker and Stitzel each will serve for one
year or until his successor is elected.
If each of the nominees set forth in the immediately preceding paragraph who is
to be elected by the holders of Common Shares and Preferred Shares, voting
together as a single class, is so elected, the Board (excluding trustees elected
by
36
holders of Preferred Shares, voting separately) will be divided into the
following three classes, each with a term expiring in the year indicated:
2008 2009 2010
---- ---- ----
Ms. Kelly Mr. Lowry Mr. Neuhauser
Mr. Simpson Mr. Mayer Mr. Theobald
Mr. Nelson Ms. Verville
REQUIRED VOTE
With respect to the election of Messrs. Neuhauser and Theobald and Ms. Verville,
the affirmative vote of a plurality of the holders of Common Shares and
Preferred Shares, voting together as a single class, present at the Meeting in
person or represented by proxy, is required for the election of each such
nominee. With respect to the election of Messrs. Hacker and Stitzel, the
affirmative vote of a plurality of the holders of Preferred Shares, present at
the Meeting in person or represented by proxy, is required for the election of
each such nominee.
COLONIAL HIGH INCOME MUNICIPAL TRUST
Messrs. Mayer, Nelson and Theobald are proposed for election as trustees of the
Fund and are to be elected by the holders of Common Shares and Preferred Shares,
voting together as a single class. If elected, Messrs. Mayer, Nelson and
Theobald each will serve for three years or until a successor is elected.
Messrs. Hacker and Stitzel are proposed for election as trustees of the Fund and
are to be elected separately by the holders of Preferred Shares. If elected,
Messrs. Hacker and Stitzel each will serve for one year or until his successor
is elected.
If each of the nominees set forth in the immediately preceding paragraph is
elected by the holders of Common Shares and Preferred Shares, voting together as
a single class, is so elected, the Board (excluding trustees elected by holders
of Preferred Shares, voting separately) will be divided into the following three
classes, each with a term expiring in the year indicated:
2008 2009 2010
---- ---- ----
Mr. Lowry Ms. Kelly Mr. Mayer
Mr. Neuhauser Ms. Verville Mr. Nelson
Mr. Simpson Mr. Theobald
REQUIRED VOTE
With respect to the election of Messrs. Mayer, Nelson and Theobald, the
affirmative vote of a plurality of the holders of Common Shares and Preferred
37
Shares, voting together as a single class, present at the Meeting in person or
represented by proxy, is required for the election of each such nominee. With
respect to the election of Messrs. Hacker and Stitzel, the affirmative vote of a
plurality of the holders of Preferred Shares, present at the Meeting in person
or represented by proxy, is required for the election of each such nominee.
COLONIAL INTERMARKET INCOME TRUST I
Messrs. Neuhauser and Theobald and Ms. Verville are proposed for election as
trustees of the Fund. If elected, Messrs. Neuhauser and Theobald and Ms.
Verville each will serve for three years or until a successor is elected.
If each of the nominees set forth in the immediately preceding paragraph is
elected by shareholders, the Board will be divided into the following three
classes, each with a term expiring in the year indicated:
2008 2009 2010
---- ---- ----
Mr. Lowry Mr. Hacker Mr. Neuhauser
Mr. Mayer Ms. Kelly Mr. Theobald
Mr. Stitzel Mr. Nelson Ms. Verville
Mr. Simpson
REQUIRED VOTE
The affirmative vote of a plurality of the holders of share of beneficial
interest of the Fund, present at the Meeting in person or represented by proxy,
is required for the election of each such nominee.
COLONIAL INTERMEDIATE HIGH INCOME FUND
Messrs. Simpson, Stitzel and Theobald and Ms. Verville are proposed for election
as trustees of the Fund. If elected, Messrs. Simpson, Stitzel and Theobald and
Ms. Verville each will serve for three years or until a successor is elected.
If each of the nominees set forth in the immediately preceding paragraph is
elected by shareholders, the Board will be divided into the following three
classes, each with a term expiring in the year indicated:
2008 2009 2010
---- ---- ----
Mr. Lowry Mr. Hacker Mr. Simpson
Mr. Mayer Ms. Kelly Mr. Stitzel
Mr. Nelson Mr. Neuhauser Mr. Theobald
Ms. Verville
38
REQUIRED VOTE
The affirmative vote of a plurality of the holders of share of beneficial
interest of the Fund, present at the Meeting in person or represented by proxy,
is required for the election of each such nominee.
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
Messrs. Mayer, Neuhauser and Theobald are proposed for election as trustees of
the Fund and are to be elected by the holders of Common Shares and Preferred
Shares, voting together as a single class. If elected, Messrs. Mayer, Neuhauser
and Theobald each will serve for three years or until a successor is elected.
Messrs. Hacker and Stitzel are proposed for election as trustees of the Fund and
are to be elected separately by the holders of Preferred Shares. If elected,
Messrs. Hacker and Stitzel each will serve for one year or until his successor
is elected.
If each of the nominees set forth in the immediately preceding paragraph who is
to be elected by the holders of Common Shares and Preferred Shares, voting
together as a single class, is so elected, the Board (excluding trustees elected
by holders of Preferred Shares, voting separately) will be divided into the
following three classes, each with a term expiring in the year indicated:
2008 2009 2010
---- ---- ----
Mr. Lowry Ms. Kelly Mr. Mayer
Mr. Nelson Mr. Simpson Mr. Neuhauser
Ms. Verville Mr. Theobald
REQUIRED VOTE
With respect to the election of Messrs. Mayer, Neuhauser and Theobald, the
affirmative vote of a plurality of the holders of Common Shares and Preferred
Shares, voting together as a single class, present at the Meeting in person or
represented by proxy, is required for the election of each such nominee. With
respect to the election of Messrs. Hacker and Stitzel, the affirmative vote of a
plurality of the holders of Preferred Shares, present at the Meeting in person
or represented by proxy, is required for the election of each such nominee.
COLONIAL MUNICIPAL INCOME TRUST
Messrs. Lowry, Neuhauser and Theobald are proposed for election as trustees of
the Fund and are to be elected by the holders of Common Shares and Preferred
Shares, voting together as a single class. If elected, Messrs. Lowry, Neuhauser
and Theobald each will serve for three years or until a successor is elected.
Messrs. Hacker and Stitzel are proposed for election as trustees of the Fund and
are to be elected separately by the holders of Preferred Shares. If elected,
39
Messrs. Hacker and Stitzel each will serve for one year or until his successor
is elected.
If each of the nominees set forth in the immediately preceding paragraph who is
to be elected by the holders of Common Shares and Preferred Shares, voting
together as a single class, is so elected, the Board (excluding trustees elected
by holders of Preferred Shares, voting separately) will be divided into the
following three classes, each with a term expiring in the year indicated:
2008 2009 2010
---- ---- ----
Mr. Mayer Ms. Kelly Mr. Lowry
Ms. Verville Mr. Nelson Mr. Neuhauser
Mr. Simpson Mr. Theobald
REQUIRED VOTE
With respect to the election of Messrs. Lowry, Neuhauser and Theobald, the
affirmative vote of a plurality of the holders of Common Shares and Preferred
Shares, voting together as a single class, present at the Meeting in person or
represented by proxy, is required for the election of each such nominee. With
respect to the election of Messrs. Hacker and Stitzel, the affirmative vote of a
plurality of the holders of Preferred Shares, present at the Meeting in person
or represented by proxy, is required for the election of each such nominee.
INFORMATION REGARDING TRUSTEES, NOMINEES AND OFFICERS
For information regarding the trustees and officers of the Funds and the
nominees set forth above, please see Appendix G to this proxy statement.
TRUSTEE AND OFFICER COMPENSATION
The trustees of each Fund also serve as trustees for certain other funds advised
by Columbia or its affiliates (the "Fund Complex"). For information regarding
the compensation of the trustees of the Funds, see Appendix H to this proxy
statement.
OWNERSHIP OF SHARES OF THE FUNDS BY TRUSTEES AND NOMINEES
Appendix I to this proxy statement provides information, as of the Record Date,
regarding the beneficial ownership by the trustees of the Funds and by the
nominees set forth in this Proposal 4 of equity securities in (a) the Funds, (b)
the Funds' "Family of Investment Companies" (as defined in Item 22(a)(1)(iv) of
Rule 14a-101 under the Exchange Act), (c) an investment adviser or principal
underwriter of any Fund and (d) a person (other than a fund) in a control
relationship with an investment adviser or principal underwriter of any Fund.
40
TRANSACTIONS IN SECURITIES OF COLUMBIA
No trustee or officer of any Fund has purchased or sold any securities, in an
amount exceeding 1% of the outstanding securities, of Columbia, its parent
company or any subsidiary of either.
LEGAL PROCEEDINGS
The Funds are aware of no material pending legal proceedings to which any
nominee set forth in this Proposal 4 is a party adverse to any of the Funds or
any affiliated person of any of the Funds, or in which any such nominee has a
material interest adverse to any of the Funds or to any affiliated person of any
of the Funds. The Funds further are aware of no legal proceedings involving any
such nominee that would be material to an evaluation of the ability or integrity
of any such nominee and that would require disclosure under Item 401(f) of
Regulation S-K under the Exchange Act.
On February 9, 2005, Columbia Management Advisors, Inc. (which has since merged
into Banc of America Capital Management, LLC (now named Columbia Management
Advisors, LLC)) and Columbia Funds Distributor, Inc. (which has been renamed
Columbia Management Distributors, Inc.) (the "Distributor") (collectively, the
"Columbia Group") entered into an Assurance of Discontinuance with the NYAG (the
"NYAG Settlement") and consented to the entry of a cease and desist order by the
Commission (the "SEC Order") on matters relating to mutual fund trading. The SEC
Order and the NYAG Settlement are referred to collectively as the "Settlements".
Under the terms of the SEC Order, the Columbia Group agreed, among other things,
to: pay $70 million in disgorgement and $70 million in civil money penalties;
cease and desist from violations of the antifraud provisions and certain other
provisions of the federal securities laws; maintain certain compliance and
ethics oversight structures; retain an independent consultant to review the
Columbia Group's applicable supervisory, compliance, control and other policies
and procedures; and retain an independent distribution consultant (see below).
The Columbia Funds have also voluntarily undertaken to implement certain
governance measures designed to maintain the independence of their boards of
trustees. The NYAG Settlement also, among other things, requires Columbia and
its affiliates to reduce management fees for certain Columbia Funds (including
the former Nations Funds) and other mutual funds collectively by $32 million per
year for five years, for a projected total of $160 million in management fee
reductions.
Pursuant to the procedures set forth in the SEC Order, the $140 million in
settlement amounts described above will be distributed in accordance with a
41
distribution plan developed by an independent distribution consultant and
approved by the SEC on April 6, 2007.
As a result of these matters or any adverse publicity or other developments
resulting from them, the market price of Fund shares could decline.
A copy of the SEC Order is available on the SEC website at http://www.sec.gov. A
copy of the NYAG Settlement is available as part of the Bank of America
Corporation Form 8-K filing on February 10, 2005.
In connection with the events described above, various parties have filed suit
against certain funds, the Trustees of the Columbia Funds, FleetBoston Financial
Corporation and its affiliated entities and/or Bank of America and its
affiliated entities.
On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred
these cases and cases against other mutual fund companies based on similar
allegations to the United States District Court in Maryland for consolidated or
coordinated pretrial proceedings (the "MDL"). Subsequently, additional related
cases were transferred to the MDL. On September 29, 2004, the plaintiffs in the
MDL filed amended and consolidated complaints. One of these amended complaints
is a putative class action that includes claims under the federal securities
laws and state common law, and that names Columbia, the Distributor, the
Trustees of the Columbia Funds, Bank of America Corporation and others as
defendants. Another of the amended complaints is a derivative action purportedly
on behalf of the Columbia Funds that asserts claims under federal securities
laws and state common law.
On February 25, 2005, Columbia and other defendants filed motions to dismiss the
claims in the pending cases. On March 1, 2006, for reasons stated in the court's
memoranda dated November 3, 2005, the U.S. District Court for the District of
Maryland granted in part and denied in part the defendants' motions to dismiss.
The court dismissed all of the class action claims pending against the Columbia
Funds Trusts. As to Columbia and the Distributor, the claims under the
Securities Act of 1933, the claims under Sections 34(b) and 36(a) of the 1940
Act and the state law claims were dismissed. The claims under Sections 10(b) and
20(a) of the Exchange Act and claims under Section 36(b) of the 1940 Act were
not dismissed.
On March 21, 2005, a purported class action was filed in Massachusetts state
court alleging that certain conduct, including market timing, entitled Class B
shareholders in certain Columbia Funds to an exemption from contingent deferred
sales charges upon early redemption ("the CDSC Lawsuit"). The CDSC Lawsuit was
removed to federal court in Massachusetts and the federal Judicial Panel
transferred the CDSC Lawsuit to the MDL.
42
On April 4, 2006, the plaintiffs and the Columbia defendants named in the MDL,
including the Columbia Funds, entered into a term sheet containing the principal
terms of a stipulation of settlement that would settle all Columbia-related
claims in the MDL described above, including the CDSC Lawsuit. On April 6, 2006,
the U.S. District Court for the District of Maryland stayed all actions with
respect to these Columbia-related claims. The settlement is subject to court
approval.
In 2004, the Columbia Funds' adviser and distributor and certain affiliated
entities and individuals were named as defendants in certain purported
shareholder class and derivative actions making claims, including claims under
the 1940 Act and the Investment Advisers Act of 1940 and state law. Certain
Columbia Funds were named as nominal defendants. The suits allege, inter alia,
that the fees and expenses paid by the funds are excessive and that the advisers
and their affiliates inappropriately used fund assets to distribute the funds
and for other improper purposes. On March 2, 2005, the actions were consolidated
in the Massachusetts federal court as In re Columbia Entities Litigation. The
plaintiffs filed a consolidated amended complaint on June 9, 2005. On November
30, 2005, the judge dismissed all claims by plaintiffs and entered final
judgment in favor of the defendants. The plaintiffs appealed to the United
States Court of Appeals for the First Circuit on December 30, 2005. A
stipulation and settlement agreement dated January 19, 2007 was filed in the
First Circuit on February 14, 2007, with a joint stipulation of dismissal and
motion for remand to obtain district court approval of the settlement. That
joint motion was granted and the appeal was dismissed. On March 6, 2007, the
case was remanded to the District Court, where the parties will seek court
approval of the settlement. The terms of the proposed settlement, if approved,
will require payments by the funds' adviser and/or its affiliates, including
payment of plaintiffs' attorneys' fees and notice to class members. In the event
that the settlement is not approved, the plaintiffs may elect to go forward with
their appeal and no opinion is expressed regarding the likely outcome or
financial impact of such an appeal on any fund.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, HAS CONCLUDED THAT THE ELECTION
OF EACH NOMINEE SET FORTH IN PROPOSAL 4 AS A TRUSTEE OF THE FUNDS IS IN THE BEST
INTERESTS OF SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF ALL SUCH NOMINEES.
43
INFORMATION REGARDING THE BOARD
COMMITTEES OF THE BOARD
The Board is responsible for the overall management and supervision of the
Funds' affairs and for protecting the interests of the Funds' shareholders. The
Board has created several committees to perform specific functions on behalf of
the Funds. The members of each committee, a description of each committee's
functions and a table setting forth the number of meetings held by the Board and
each committee during the last fiscal year appear below.
AUDIT COMMITTEE
Each Fund has an audit committee (the "Audit Committee") composed of only
Independent Trustees who meet the requirements for independence as set forth in
the listing standards of the New York Stock Exchange (the "NYSE") and the
American Stock Exchange (the "AMEX"). Each member of the Audit Committee must be
financially literate and at least one member must have prior accounting or
related financial management expertise. The Board has determined, in accordance
with applicable regulations of the NYSE and the AMEX, that each member of the
Audit Committee is financially literate and has prior accounting experience or
related financial management expertise. The current members of the Audit
Committee are Ms. Verville and Messrs. Hacker and Stitzel.
The Audit Committee adopted a revised written charter on February 10, 2004 which
sets forth the Audit Committee's structure, powers, duties and methods of
operation. A copy of the Audit Committee charter is available on the Funds'
website at www.columbiamanagement.com/ColonialFunds/Home.htm.
The Audit Committee serves as an independent and objective party to monitor the
Funds' accounting policies, financial reporting and internal control systems and
the work of the Funds' independent registered public accounting firm. The Audit
Committee also provides an open means of communication between the independent
registered public accounting firm, Columbia's internal accounting staff and the
Board. The principal functions of the Audit Committee are to assist Board
oversight of: (a) the integrity of each Fund's financial statements, (b) each
Fund's compliance with legal and regulatory requirements, (c) the independent
registered public accounting firm's qualifications and independence, (d) the
performance of Columbia's internal audit function and (e) the independent
registered public accounting firm. The Audit Committee has direct responsibility
for the appointment, compensation, retention and oversight of the work of the
independent registered public accounting firm (including resolution of financial
reporting disagreements between management and such independent registered
public accounting firm) for the purpose of
44
preparing or issuing an audit report or performing other review or attest
services for the Funds.
GOVERNANCE COMMITTEE
Each Fund has a governance committee (the "Governance Committee"). Messrs.
Lowry, Mayer, Simpson and Theobald are members of the Governance Committee of
each Fund. Messrs. Lowry, Simpson and Theobald are Independent Trustees who meet
the requirements for independence as set forth in the listing standards of the
NYSE and the AMEX. Mr. Mayer is an "interested person" (as defined in the 1940
Act) of the Funds. The Governance Committee performs the functions typically
performed by nominating and compensation committees. Among other things, members
of the Governance Committee who are Independent Trustees recommend to the Board
nominees for trustee and the Governance Committee recommends to the Board
nominees for appointment to various committees, performs periodic evaluations of
the effectiveness of the Board, reviews and recommends to the Board policies and
practices to be followed in carrying out the trustees' duties and
responsibilities and reviews and makes recommendations to the Board regarding
the compensation of the Independent Trustees. Members of the Governance
Committee who are Independent Trustees consider candidates for trustees
identified by any reasonable source, including current Independent Trustees,
Fund management, Fund shareholders and other persons or entities. On October 12,
2005 the Governance Committee adopted a written charter that sets forth the
Governance Committee's structure, duties, powers and methods of operation. A
copy of the Governance Committee charter was attached as Appendix F to the proxy
statement delivered to shareholders of the Funds in connection with the Funds'
annual meeting of shareholders held on May 24, 2006.
ADVISORY FEES AND EXPENSES COMMITTEE
Each Fund has an advisory fees and expenses committee (the "Advisory Fees and
Expenses Committee"). The current members of the Advisory Fees and Expenses
Committee are Ms. Kelly and Messrs. Mayer, Nelson and Neuhauser. The Advisory
Fees and Expenses Committee's functions include reviewing and making
recommendations to the Board regarding contracts requiring the approval of a
majority of the Independent Trustees and regarding other contracts that may be
referred to it by the Board.
45
COMPLIANCE COMMITTEE
Each Fund has a compliance committee (the "Compliance Committee"). The current
members of the Compliance Committee are Mses. Kelly and Verville and Messrs.
Nelson, Simpson and Stitzel. The Compliance Committee's functions include
providing oversight of the monitoring processes and controls of the Fund. The
Compliance Committee supervises legal and regulatory matters and internal rules,
policies, procedures and standards (other than those relating to accounting
matters) and oversees compliance by the Funds' investment adviser, principal
underwriter and transfer agent.
RECORD OF BOARD AND COMMITTEE MEETINGS
The Board and its committees held the following numbers of meetings during the
fiscal year ended November 30, 2006:
Board: 7
Audit Committee: 8
Governance Committee: 3
Advisory Fees and Expenses Committee: 6
Compliance Committee: 9
During the fiscal year ended November 30, 2006, each of the trustees attended
more than 75% of the meetings of the Board and of each committee of which such
trustee was a member. The Funds do not have a formal policy on trustee
attendance at the annual meetings of shareholders. No trustees attended the 2006
annual meeting of shareholders of the Funds.
AUDIT COMMITTEE REPORT
At a meeting of the Audit Committee on January 18, 2007, the Audit Committee:
(i) reviewed and discussed with management each Fund's audited financial
statements for the most recently completed fiscal year and (ii) discussed with
PricewaterhouseCoopers LLP ("PwC"), each Funds' independent registered public
accounting firm, the matters required to be discussed by the American Institute
of Certified Public Accountants ("AICPA") Auditing Standards Board Statement on
Auditing Standards No. 61 and other professional standards and regulatory
requirements. At a meeting of the Audit Committee on February 6, 2007, the Audit
Committee obtained from PwC a formal written statement consistent with AICPA
Independence Standards Board Standard No. 1, describing all relationships
between PwC and the Funds that might bear on PwC's independence, discussed with
PwC any relationships that may affect its objectivity and independence, and
based on such statement and discussions, satisfied itself as to PwC's
independence. Based on its review and discussion, the Audit Committee
46
recommended to the Board that the audited financial statements for each Fund be
included in that Fund's annual report to shareholders.
Based on the recommendation from the Audit Committee and on its own review, the
Board selected PwC as the independent registered public accounting firm for each
Fund for the fiscal year ending November 30, 2007. Representatives of PwC are
not expected to be at the Meeting, but have been given the opportunity to make a
statement if they so desire and will be available should any matter arise
requiring their presence.
AUDIT COMMITTEE PRE-APPROVAL OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
SERVICES
The Audit Committee is required to pre-approve the engagement of each Fund's
independent registered public accounting firm to provide audit and non-audit
services to that Fund and non-audit services to that Fund's investment adviser
or any entity controlling, controlled by or under common control with that
investment adviser that provides ongoing services to that Fund (an "Adviser
Affiliate") if the engagement relates directly to the operations and financial
reporting of that Fund. The engagement may be entered into pursuant to pre-
approval policies and procedures established by the Audit Committee.
The Audit Committee has adopted a Policy for Engagement of Independent
Accountants for Audit and Non-Audit Services (the "Policy") for the pre-approval
of audit and non-audit services provided to each Fund and non-audit services
provided to each Fund's investment adviser and Adviser Affiliates if the
engagement relates directly to the operations or financial reporting of the
applicable Fund. The Policy sets forth the procedures and conditions pursuant to
which services to be performed by the Funds' independent registered public
accounting firm are to be pre-approved. Unless a type of service receives
general pre-approval under the Policy, it requires specific pre-approval by the
Audit Committee if it is to be provided by the independent registered public
accounting firm. The Audit Committee may amend the Policy from time to time and
must review and approve the Policy at least annually.
The Policy provides for general pre-approval by the Audit Committee of certain:
(i) audit services to the Funds; (ii) audit-related services to the Funds; (iii)
tax services to the Funds; (iv) other services to the Funds; and (v) Fund-
related services to the Funds' investment adviser and its Adviser Affiliates.
The Policy requires the Fund treasurer and/or the director of board
administration to submit to the Audit Committee, at least annually, a schedule
of the types of services that are subject to general pre-approval. The schedule
must provide a description of each type of service that is subject to general
pre-approval and, where possible, will provide estimated fee caps for each
instance of providing each service. The general pre-approval and related fees
relate to the
47
fiscal year of the Funds. At least annually, the Audit Committee will review and
approve the types of services and review the projected fees for the next fiscal
year, and may add to or subtract from the list of pre-approved services from
time to time. In addition to the fees for each individual service, the Audit
Committee has the authority to implement a fee cap on the aggregate amount of
non-audit services provided to any Fund. The fee amounts listed on the schedules
will be updated to the extent necessary at each regularly scheduled meeting of
the Audit Committee.
When specific pre-approval is required, management must submit a written request
to the Audit Committee detailing the proposed engagement and explaining the
purpose of using the independent registered public accounting firm for such
engagement. The Audit Committee reviews the request at its next regularly
scheduled meeting. In cases when the timing of the management request is
critical, the chairperson of the Audit Committee has the authority to approve
the request or to call a special meeting of the Audit Committee to consider the
request.
FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table sets forth the aggregate fees billed by PwC to each Fund for
the last two fiscal years for professional services rendered for (i) audit
services, including the audit of each Fund's financial statements and services
normally provided in connection with statutory and regulatory filings or
engagements for those fiscal years; (ii) audit-related services associated with
the review of the Funds' semi-annual financial statements and, for all Funds
other than Colonial InterMarket Income Trust I and Colonial Intermediate High
Income Fund, procedures relating to reports required by rating agencies; (iii)
tax services and, primarily, reviews of Fund tax returns; and (iv) other
services.
48
AUDIT AUDIT-RELATED TAX ALL OTHER
YEAR FEES FEES FEES FEES
---- ------- ------------- ------ ---------
Colonial California Insured
Municipal Fund 2006 $26,900 $13,730 $4,104 $0
2005 $24,148 $13,205 $3,612 $0
Colonial High Income
Municipal Trust 2006 $32,000 $13,730 $3,800 $0
2005 $28,988 $13,205 $3,063 $0
Colonial InterMarket Income
Trust I 2006 $33,900 $ 4,100 $2,805 $0
2005 $30,758 $ 3,890 $2,500 $0
Colonial Intermediate High
Income Fund 2006 $39,000 $ 4,100 $2,805 $0
2005 $35,488 $ 3,890 $2,500 $0
Colonial Investment Grade
Municipal Trust 2006 $27,800 $13,730 $3,800 $0
2005 $25,038 $13,205 $3,062 $0
Colonial Municipal Income
Trust 2006 $32,000 $13,730 $3,904 $0
2005 $28,988 $13,205 $3,062 $0
All of the audit fees, audit-related fees, tax fees and other fees billed by PwC
for services provided to the Funds for the fiscal years ended November 30, 2006
and November 30, 2005 were pre-approved by the Audit Committee. There were no
amounts that were approved by the Audit Committee pursuant to the de minimis
exception.
The aggregate amount of fees paid for non-audit services billed to the Funds,
the Funds' investment adviser and the Adviser Affiliates was $589,838 for the
fiscal year ended November 30, 2006 and $333,899 for the fiscal year ended
November 30, 2005.
There were no amounts billed by PWC in the fiscal years ended November 30, 2006
and November 30, 2005 for audit-related services or tax services provided to the
Funds' investment adviser or the Adviser Affiliates for engagements that related
directly to the operations or financial reporting of the Funds. The aggregate
amounts billed by PwC in the fiscal years ended November 30, 2006 and November
30, 2005 for other services provided to the Funds' investment adviser or Adviser
Affiliates for engagements related directly to the operations or financial
reporting of the Funds were $505,500 and $255,500, respectively. These services
included internal control reviews of Columbia.
The Audit Committee has determined that the provision of the services described
above to the Funds' investment adviser and the Adviser Affiliates is compatible
with maintaining the independence of PwC.
49
If Proposal 1 is approved by shareholders of the Funds and the Closing occurs,
it is anticipated that PwC will resign as the Funds' independent registered
public accounting firm due to independence issues. It is anticipated that the
Funds will engage Ernst & Young LLP as their independent registered public
accounting firm. Ernst & Young LLP currently is the independent registered
public accounting firm for other investment companies managed by MFS.
TRUSTEE NOMINATION PROCESS
The Board has adopted a policy relating to the consideration of candidates for
trustee proposed by shareholders. Under that policy as currently in effect,
members of the Governance Committee who are Independent Trustees consider, among
other things, whether prospective nominees have distinguished records in their
primary careers, personal and professional integrity and substantive knowledge
in areas important to the Board's operations, such as a background or education
in finance, auditing, securities law, the workings of the securities markets or
investment advice. For candidates to serve as Independent Trustees, independence
from the Funds' investment adviser, its affiliates and the Funds' other
principal service providers is critical, as is an independent and questioning
mind set. In each case, the members of the Governance Committee who are
Independent Trustees will evaluate whether a candidate is an "interested
person," as defined in Section 2(a)(19) of the 1940 Act, and "independent" under
the listing standards of the NYSE and the AMEX. Members of the Governance
Committee who are Independent Trustees also consider whether a prospective
candidate's workload would be consistent with regular attendance at Board
meetings and would allow him or her to be available for service on Board
committees and to devote the additional time and effort necessary to stay
apprised of Board matters and the rapidly changing regulatory environment in
which the Funds operate. Different substantive areas may assume greater or
lesser significance at particular times, in light of a Board's present
composition and its perceptions about future issues and needs.
Members of the Governance Committee who are Independent Trustees initially
evaluate prospective candidates on the basis of their resumes, considered in
light of the criteria discussed above. Those prospective candidates that appear
likely to be able to fill a significant need of the Board are contacted by a
member of the Governance Committee who is an Independent Trustee by telephone to
discuss the position. If there appears to be sufficient interest, an in-person
meeting with one or more of the members of the Governance Committee who are
Independent Trustees is arranged. If a member of the Governance Committee who is
an Independent Trustee, based on the results of such contacts, believes he or
she has identified a viable candidate, he or she airs the matter with the other
members of the Governance Committee who are
50
Independent Trustees for input. Any request by Fund management to meet with the
prospective candidate is given appropriate consideration. The Funds have not
paid a fee to third parties to assist in finding nominees.
Shareholders of a Fund who wish to nominate a candidate to the Board may send
information regarding prospective candidates to the Governance Committee, in
care of the relevant Fund, at One Financial Center, Boston, Massachusetts 02111-
2621. The information should include evidence of the shareholders' Fund
ownership, a full listing of the proposed candidate's education, experience,
current employment and date of birth, the names and addresses of at least three
professional references, information as to whether the candidate is an
"interested person" under the 1940 Act and "independent" under the applicable
NYSE or AMEX listing standards and such other information as may be helpful to
the members of the Governance Committee who are Independent Trustees in
evaluating the candidate. All satisfactorily completed information packages
regarding a candidate will be forwarded to a member of the Governance Committee
for consideration. Recommendations for candidates will be evaluated in light of
anticipated vacancies and whether the number of trustees of a Fund is expected
to be increased. All nominations from Fund shareholders will be considered.
There may be times when the Governance Committee does not recruit new trustees.
In such case, shareholder recommendations are maintained on file pending the
active recruitment of trustees.
The foregoing policy is subject to change at any time by the Board.
CERTAIN RELATED TRANSACTIONS AND MANAGEMENT INDEBTEDNESS
There have been no transactions or series of similar transactions, since the
beginning of the Funds' last fiscal year, and there are no currently proposed
transactions, to which any Fund was or is to be a party, in which the amount
involved exceeded $120,000 and in which any officer of any Fund or any security
holder who is known by any Fund to own of record or beneficially more than 5% of
any class of such Fund's shares, or any member of the immediate family of any
such person, had or will have a direct or indirect material interest other than
the acquisition of Fund shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Funds' trustees and officers,
persons who own in excess of 10% of any Fund's outstanding shares and certain
officers and directors of any Fund's investment adviser (collectively, "Section
16 Reporting Persons") to file with the Securities and Exchange Commission (the
"Commission") initial reports of beneficial ownership and reports of changes in
beneficial ownership of shares of any of the Funds. Section 16 Reporting
51
Persons are required by Commission regulations to furnish the Funds with copies
of all Section 16(a) forms that they file. To the Funds' knowledge, based solely
on a review of the copies of such reports furnished to the Funds, and on
representations made, all Section 16 reporting persons complied with all Section
16(a) filing requirements applicable to them.
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
Management of the Funds does not know of any matters to be presented at the
Meeting other than those described in this proxy statement. If other business
should properly come before the Meeting, the persons named as proxies will vote
thereon in accordance with their best judgment.
INVESTMENT ADVISER
The current investment adviser to the Funds is Columbia Management Advisors,
LLC. Its business address is One Financial Center, Boston, Massachusetts 02111-
2621.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The current independent registered public accounting firm of the Funds is
PricewaterhouseCoopers LLP. Its business address is 125 High Street, Boston,
Massachusetts 02110. If Proposal 1 is approved by shareholders of the Funds and
the Closing occurs, it is anticipated that the Funds will engage Ernst & Young
LLP as their independent registered public accounting firm. Ernst & Young LLP's
business address is 200 Clarendon Street, Boston, Massachusetts 02116.
SHAREHOLDER PROPOSALS
Under the proxy rules of the Commission, shareholder proposals that meet tests
contained in those rules may, under certain conditions, be included in a Fund's
proxy materials for an annual shareholders' meeting. Under the proxy rules,
proposals submitted for inclusion in the proxy materials for the 2008 annual
meeting must be received by the relevant Fund on or before January 2, 2008. The
fact that a Fund receives a shareholder proposal in a timely manner does not
ensure inclusion of the proposal in the proxy materials since there are other
requirements in the proxy rules relating to such inclusion.
Shareholders who wish to make a proposal at the 2008 annual meeting that will
not be included in the Funds' proxy materials must notify the relevant Fund on
or before March 18, 2008. If a shareholder who wishes to submit a proposal
52
fails to timely notify the relevant Fund, the persons named as proxies for the
meeting will have discretionary authority to vote on the shareholder's proposal
if it is properly brought before the meeting. If a shareholder makes a timely
notification, the persons named as proxies may still exercise discretionary
voting authority under circumstances consistent with the Commission's proxy
rules.
You may submit shareholder proposals to a Fund c/o the Secretary of the Fund,
One Financial Center, Mail Stop MA5-515-11-05, Boston, Massachusetts 02111-2621.
If the closing occurs, you may submit shareholder proposals to a Fund c/o the
Secretary of the Fund, 500 Boylston Street, Boston, Massachusetts 02116.
SHAREHOLDER COMMUNICATIONS
Shareholders may communicate with the trustees as a group or individually. Any
such communications should be sent to the Board of a Fund or to an individual
trustee in writing, c/o the Secretary of the relevant Fund, at One Financial
Center, Mail Stop MA5-515-11-05, Boston, MA 02111-2621. The Secretary may
determine not to forward to the Board or to a trustee any letter that does not
relate to the business of a Fund.
PROXY STATEMENT DELIVERY
"Householding" is the term used to describe the practice of delivering one copy
of a document to a household of shareholders instead of delivering one copy of a
document to each shareholder in the household. Shareholders of the Funds who
share a common address and who have not opted out of the householding process
should receive a single copy of the proxy statement together with one proxy card
for each account. If you received more than one copy of the proxy statement, you
may elect to household in the future; if you received a single copy of the proxy
statement, you may opt out of householding in the future; and you may, in any
event, obtain an additional copy of this proxy statement by writing to the
appropriate Fund at the following address: One Financial Center, Boston,
Massachusetts 02111-2621, or by calling the appropriate Fund at the following
number: 1-800-426-3750.
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A PRE-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE, AND TOUCH-TONE
53
TELEPHONE AND INTERNET VOTING IS AVAILABLE FOR ELIGIBLE INVESTORS.
------------------------------
James R. Bordewick, Jr.
Secretary
May 2, 2007
54
APPENDIX A
BENEFICIAL OWNERS OF FUND SHARES IN EXCESS OF 5%
As of the Record Date, to the knowledge of management of the Funds, no person
owned beneficially (or of record) more than 5% of the outstanding shares of any
class of any Fund, except as set forth below:
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
SHARES
BENEFICIALLY
OWNED
NAME AND ADDRESS OF BENEFICIAL OWNER AND -----------------
CLASS OF SHARES OWNED NUMBER PERCENT
---------------------------------------- ------- -------
First Trust Portfolios L.P. 143,138 5.2%
1001 Warrenville Road
Lisle, Illinois 60532
(Common Shares)
COLONIAL HIGH INCOME MUNICIPAL TRUST
SHARES
BENEFICIALLY
OWNED
NAME AND ADDRESS OF BENEFICIAL OWNER AND -------------------
CLASS OF SHARES OWNED NUMBER PERCENT
---------------------------------------- --------- -------
First Trust Portfolios L.P. 1,882,467 6.0%
1001 Warrenville Road
Lisle, Illinois 60532
(Common Shares)
COLONIAL INTERMARKET INCOME TRUST I
SHARES
BENEFICIALLY
OWNED
NAME AND ADDRESS OF BENEFICIAL OWNER AND -----------------
CLASS OF SHARES OWNED NUMBER PERCENT
---------------------------------------- ------- -------
Sit Investment Associates, Inc. 633,300 5.75%
3300 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
COLONIAL INTERMEDIATE HIGH INCOME FUND
SHARES
BENEFICIALLY
OWNED
NAME AND ADDRESS OF BENEFICIAL OWNER AND -------------------
CLASS OF SHARES OWNED NUMBER PERCENT
---------------------------------------- --------- -------
First Trust Portfolios L.P. 2,146,345 10.2%
1001 Warrenville Road
Lisle, Illinois 60532
A-1
APPENDIX B
FORM OF NEW ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this th day of 2007,
by and between , a Massachusetts business trust (the "Trust") listed
on Appendix A attached hereto, and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
Delaware corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an investment company registered
under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide services to the Trust on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto as herein set forth, the parties covenant and agree as follows:
ARTICLE 1. DUTIES OF THE ADVISER. (a) The Adviser shall provide the Trust with
such investment advice and supervision as the latter may from time to time
consider necessary for the proper supervision of its assets. The Adviser shall
act as investment adviser to the Trust and as such shall furnish continuously an
investment program and shall determine from time to time what securities or
other instruments shall be purchased, sold or exchanged and what portion of the
assets of the Trust shall be held uninvested, subject always to the restrictions
of the Trust's Declaration of Trust, dated , and By-Laws, each as
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Trust's then-current Prospectus and
Statement of Additional Information. The Adviser also shall exercise voting
rights, rights to consent to corporate actions and any other rights pertaining
to the Trust's portfolio securities in accordance with the Adviser's policies
and procedures as presented to the Trustees of the Trust from time to time.
Should the Trustees at any time, however, make any definite determination as to
the investment policy and notify the Adviser thereof in writing, the Adviser
shall be bound by such determination for the period, if any, specified in such
notice or until similarly notified that such determination shall be revoked.
(b) The Adviser shall take, on behalf of the Trust, all actions which it deems
necessary to implement the investment policies determined as provided above,
B-1
and in particular to place all orders for the purchase or sale of portfolio
securities or other instruments for the Trust's account with brokers or dealers
selected by it, and to that end, the Adviser is authorized as the agent of the
Trust to give instructions to the Custodian of the Trust as to the deliveries of
securities or other instruments and payments of cash for the account of the
Trust. In connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser is directed to seek for the Trust the best
overall price and execution available from responsible brokerage firms, taking
account of all factors it deems relevant, including by way of illustration:
price; the size of the transaction; the nature of the market for the security;
the amount of the commission; the timing and impact of the transaction taking
into account market prices and trends; the reputation, experience and financial
stability of the broker or dealer involved; and the quality of services rendered
by the broker or dealer in other transactions. In fulfilling this requirement,
the Adviser shall not be deemed to have acted unlawfully or to have breached any
duty, created by this Agreement or otherwise, solely by reason of its having
caused the Trust to pay a broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Adviser
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Trust and to other
clients of the Adviser as to which the Adviser exercises investment discretion.
(c) Subject to the general supervision and control of the Trustees of the Trust
and under the terms and conditions set forth in this Agreement, the Trust
acknowledges and agrees that it is contemplated that Adviser may, at its own
expense, select and contract with one or more investment advisers ("Sub-
Advisers") to manage the investment operations and composition of the Trust and
render investment advice for the Trust, including the purchase, retention, and
disposition of the investments, securities and cash contained in the Trust,
subject always to the restrictions of the Trust's Declaration and the By-Laws,
to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Trust's then-current Prospectus and
Statement of Additional Information; provided, that any contract with an Sub-
Adviser (a "Sub-Advisory Agreement") shall be in compliance with and approved as
required by the Investment Company Act of 1940 and the Rules, Regulations and
orders thereunder or in accordance with exemptive relief granted by the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940.
(d) Subject always to the direction and control of the Trustees of the Trust,
Adviser will have (i) overall supervisory responsibility for the general
B-2
management and investment of the Trust's assets; (ii) full discretion to select
new or additional Sub-Advisers for the Trust; (iii) full discretion to enter
into and materially modify existing Sub-Advisory Agreements with Sub-Advisers;
(iv) full discretion to terminate and replace any Sub-Adviser; and (v) full
investment discretion to make all determinations with respect to the investment
of the Trust's assets not then managed by an Sub-Adviser. In connection with
Adviser's responsibilities herein, Adviser will assess the Trust's investment
focus and will seek to implement decisions with respect to the allocation and
reallocation of the Trust's assets among one or more current or additional Sub-
Advisers from time to time, as Adviser deems appropriate, to implement the
Trust's investment policies determined as provided above. In addition, Adviser
(in conjunction with the Trust's Independent Chief Compliance Officer) will
oversee (or, in the event that the Adviser does not require a Sub-Advisor to
assume responsibility therefore under the Sub-Advisory Agreement, shall be
responsible for) compliance of each Sub-Adviser with the investment objectives,
policies and restrictions of the Trust (or portions of the Trust) under the
management of such Sub-Adviser, and review and report to the Trustees of the
Trust on the performance of each Sub-Adviser. Adviser will furnish, or cause the
appropriate Sub-Adviser(s) to furnish, to the Trust such statistical
information, with respect to the investments that the Trust (or portions of the
Trust) may hold or contemplate purchasing, as the Trust may reasonably request.
Further, Adviser (in conjunction with the Trust's Independent Chief Compliance
Officer) will oversee compliance of each Sub-Adviser with the compliance program
of the Trust (or portions of the Trust) under the management of such Sub-
Adviser, as well as the compliance program of the Sub-Adviser as such program
relates to the Sub-Adviser's management of the Trust. On Adviser's own
initiative, Adviser will apprise, or cause the appropriate Sub-Adviser(s) to
apprise, the Trust of important developments materially affecting the Trust (or
any portion of the Trust that they advise) and will furnish the Trust, from time
to time, with such information as may be appropriate for this purpose. Further,
Adviser agrees to furnish, or cause the appropriate Sub-Adviser(s) to furnish,
to the Trustees of the Trust such periodic and special reports as the Trustees
of the Trust may reasonably request. In addition, Adviser agrees to cause the
appropriate Sub-Adviser(s) to furnish to third-party data reporting services all
currently available standardized performance information and other customary
data as may be appropriate.
(e) Subject to the provisions of Article 6, the Adviser shall not be liable for
any error of judgment or mistake of law by any Sub-adviser or for any loss
arising out of any investment made by any Sub-adviser or for any act or omission
in the execution and management of the Trust by any Sub-adviser.
ARTICLE 2. ALLOCATION OF CHARGES AND EXPENSES. (a) The Adviser shall furnish at
its own expense investment advisory and administrative
B-3
services, office space, equipment and clerical personnel necessary for servicing
the investments of the Trust and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Trust. The Adviser
shall arrange, if desired by the Trust, for directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law.
(b) It is understood that the Trust will pay all of its own expenses incurred in
its operations and the offering of the Trust's shares, unless specifically
provided otherwise in this Agreement or except to the extent that the Adviser
agrees in a written instrument executed by the Adviser (specifically referring
to this Article 2(b)) to assume or otherwise pay for specified expenses of the
Trust, including, without limitation: compensation of Trustees "not affiliated"
with the Adviser; governmental fees; interest charges; taxes; membership dues in
the Investment Company Institute allocable to the Trust; fees and expenses of
independent auditors, of legal counsel, and of any transfer agent, registrar or
dividend disbursing agent of the Trust; expenses of repurchasing and redeeming
shares and servicing shareholder accounts; expenses of preparing, printing and
mailing stock certificates, shareholder reports, notices, proxy statements and
reports to governmental officers and commissions; brokerage and other expenses
connected with the execution, recording and settlement of portfolio security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Trust, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of shares of the Trust; organizational and start up costs; such non-
recurring or extraordinary expenses as may arise, including those relating to
actions, suits or proceedings to which the Trust is a party or otherwise may
have an exposure, and the legal obligation which the Trust may have to indemnify
the Trust's Trustees and officers with respect thereto; and expenses relating to
the issuance, registration and qualification of shares of the Trust and the
preparation, printing and mailing of prospectuses for such purposes (except to
the extent that any Distribution Agreement to which the Trust is a party
provides that another party is to pay some or all of such expenses).
(c) The payment or assumption by the Adviser of any expenses of the Trust that
the Adviser is not obligated by this Agreement or otherwise to pay or assume
shall not obligate the Adviser to pay or assume the same or any similar expenses
of the Trust on any subsequent occasion.
ARTICLE 3. COMPENSATION OF THE ADVISER. For the services to be rendered and the
facilities provided, the Trust shall pay to the Adviser an investment advisory
fee computed and paid monthly as set forth in Appendix A
B-4
attached hereto. If the Adviser shall serve for less than the whole of any
period specified in this Article 3, the compensation paid to the Adviser will be
prorated.
ARTICLE 4. ADDITIONAL SERVICES. Should the Trust have occasion to request the
Adviser or its affiliates to perform administrative or other additional services
not herein contemplated or to request the Adviser or its affiliates to arrange
for the services of others, the Adviser or its affiliates will act for the Trust
upon request to the best of its ability, with compensation for the services to
be agreed upon with respect to each such occasion as it arises. No such
agreement for additional services shall expand, reduce or otherwise alter the
obligations of the Adviser, or the compensation that the Adviser is due, under
this Agreement.
ARTICLE 5. COVENANTS OF THE ADVISER. The Adviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust's distributor, if
any, as principals in making purchases or sales of securities or other property
for the account of the Trust, except as permitted by the Investment Company Act
of 1940 and any rules, regulations or orders of the Securities and Exchange
Commission thereunder, will not take a long or short position in the shares of
the Trust except as permitted by the applicable law, and will comply with all
other provisions of the Declaration and the By-Laws and the then-current
Prospectus and Statement of Additional Information of the Trust relative to the
Adviser and its directors and officers.
ARTICLE 6. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution and management of
the Trust, except for willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations hereunder. As used in this
Article 6, the term "Adviser" shall include directors, officers and employees of
the Adviser as well as that corporation itself.
ARTICLE 7. ACTIVITIES OF THE ADVISER. (a) The Trust acknowledges that the
services of the Adviser to the Trust are not exclusive, the Adviser being free
to render investment advisory and/or other services to others. The Trust further
acknowledges that it is possible that, based on their investment objectives and
policies, certain funds or accounts managed by the Adviser or its affiliates may
at times take investment positions or engage in investment techniques which are
contrary to positions taken or techniques engaged in on behalf of the Trust.
Notwithstanding the foregoing, the Adviser will at all times endeavor to treat
all of its clients in a fair and equitable manner.
B-5
(b) The Trust acknowledges that whenever the Trust and one or more other funds
or accounts advised by the Adviser have available monies for investment,
investments suitable and appropriate for each shall be allocated in a manner
believed by the Adviser to be fair and equitable to each entity. Similarly,
opportunities to sell securities or other investments shall be allocated in a
manner believed by the Adviser to be fair and equitable to each entity. The
Trust acknowledges that in some instances this may adversely affect the size of
the position that may be acquired or disposed of for the Trust.
(c) It is understood that the Trustees, officers and shareholders of the Trust
are or may be or become interested in the Adviser, as directors, officers,
employees, or otherwise and that directors, officers and employees of the
Adviser are or may become similarly interested in the Trust, and that the
Adviser may be or become interested in the Trust as a shareholder or otherwise.
ARTICLE 8. MFS NAME. The Trust acknowledges that the names "Massachusetts
Financial Services," "MFS" or any derivatives thereof or logos associated with
those names (collectively, the "MFS Marks") are the valuable property of the
Adviser and its affiliates. The Adviser grants the Trust a non-exclusive and
non-transferable right and sub-license to use the MFS Marks only so long as the
Adviser serves as investment adviser to the Trust. The Trust agrees that if the
Adviser for any reason no longer serves as investment adviser to the Trust, and
the Adviser so requests, that the Trust promptly shall cease to use the MFS
Marks and promptly shall amend its registration statement to delete any
references to the MFS Marks. Likewise, the Trust agrees that if the Adviser for
any reason no longer serves as investment adviser to the Trust, and the Adviser
so requests, the Trust promptly shall cease to use the MFS Marks and promptly
shall amend its Declaration of Trust to delete any references to the MFS Marks.
The Trust acknowledges that the Adviser may permit other clients to use the MFS
Marks in their names or other material. For purposes of this Article, the Trust
shall be deemed to have taken the required action "promptly" if such action is
taken within 90 days of the Adviser no longer serving as the investment adviser
to the Trust, or from the date of the Adviser's request, as the case may be.
ARTICLE 9. DURATION, TERMINATION AND AMENDMENT OF THIS AGREEMENT. (a) This
Agreement shall become effective with respect to the Trust on the date first
written above if approved by the shareholders of the Trust, on the Effective
Date for the Trust, as set forth in Appendix A attached hereto. Thereafter, this
Agreement will remain in effect with respect to the Trust for a period of two
years from the Trust's Effective Date as set forth in Appendix A, on which date
it will terminate for the Trust unless its continuance is "specifically approved
at least annually" (i) by the vote of a majority of the Trustees of the Trust
who are not "interested persons" of the Trust or of the
B-6
Adviser at a meeting specifically called for the purpose of voting on such
approval, and (ii) by the Board of Trustees of the Trust, or by "vote of a
majority of the outstanding voting securities" of the applicable Trust.
(b) This Agreement may be terminated as to the Trust at any time without the
payment of any penalty by the Trustees or by "vote of a majority of the
outstanding voting securities" of the applicable Trust, or by the Adviser, in
each case on not more than sixty days' nor less than thirty days' written notice
to the other party. This Agreement shall automatically terminate in the event of
its "assignment".
(c) This Agreement may be amended with respect to the Trust only if such
amendment is in writing signed by or on behalf of the Trust and the Adviser and
is approved by "vote of a majority of the outstanding voting securities" of the
applicable Trust (if such shareholder approval is required by the Investment
Company Act of 1940).
ARTICLE 10. SCOPE OF TRUST'S OBLIGATIONS. A copy of the Trust's Declaration of
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts. The Adviser acknowledges that the obligations of or arising out
of this Agreement are not binding upon any of the Trust's Trustees, officers,
employees, agents or shareholders individually, but are binding solely upon the
assets and property of the Trust. If this Agreement is executed by the Trust,
the Adviser further acknowledges that the assets and liabilities of the Trust
are separate and distinct and that the obligations of or arising out of this
Agreement concerning the Trust are binding solely upon the assets or property of
the Trust and not upon the assets or property of any other Trust.
ARTICLE 11. DEFINITIONS AND INTERPRETATIONS. The terms "specifically approved
at least annually," "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified, and shall be construed
in a manner consistent with, the Investment Company Act of 1940 and the rules
and regulations promulgated thereunder. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the Investment Company Act of 1940, the Investment
Advisers Act of 1940, the Securities Act of 1933, or the Securities Exchange Act
of 1934 (collectively, the "Federal Securities Acts") shall be resolved by
reference to such term or provision of the Federal Securities Acts and to
interpretations thereof, if any, by United States federal courts or, in the
absence of any controlling decisions of any such court, by rules or regulations
of the Securities and Exchange Commission. Where the effect of a requirement of
the Federal Securities Acts reflected in any provision of this Agreement is
B-7
revised by rule or regulation of the Securities and Exchange Commission, such
provisions shall be deemed to incorporate the effect of such rule or regulation.
ARTICLE 12. RECORD KEEPING. The Adviser will maintain records in a form
acceptable to the Trust and in compliance with the rules and regulations of the
Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
ARTICLE 13. MISCELLANEOUS. (a) This Agreement contains the entire understanding
and agreement of the parties with respect to the subject matter hereof.
(b) Headings in this Agreement are for ease of reference only and shall not
constitute a part of the Agreement.
(c) Should any portion of this Agreement for any reason be held void in law or
equity, the remainder of the Agreement shall be construed to the extent possible
as if such voided portion had never been contained herein.
(d) This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions thereof,
except that questions of interpretation shall be resolved in accordance with the
provisions of Article 11 above.
B-8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered in their names and on their behalf by the undersigned officers
thereunto duly authorized, all as of the day and year first above written. The
undersigned officer of the Trust has executed this Agreement not individually,
but as an officer under the Declaration and the obligations of this Agreement
are not binding upon any of the Trustees, officers or shareholders of the Trust,
individually, but bind only the trust estate.
-----------------------------------
[Trust]
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By:
-----------------------------------
Name: Robert J. Manning
Title: Chief Executive Officer
B-9
APPENDIX A
COMPENSATION TO THE ADVISER
[FOR COLONIAL CALIFORNIA INSURED MUNICIPAL FUND ONLY:]
The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of 0.65% of the Trust's average daily net
assets including assets applicable to the auction preferred shares (average
daily net assets being computed for this purpose without deducting any liability
for money borrowed for investment in accordance with the Trust's investment
objective and policies).
[FOR COLONIAL MUNICIPAL INCOME TRUST ONLY:]
The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of 0.65% of the Trust's average daily net
assets including assets applicable to the auction preferred shares (average
daily net assets being computed for this purpose without deducting any liability
for money borrowed for investment in accordance with the Trust's investment
objective and policies).
[FOR COLONIAL INTERMARKET INCOME TRUST I ONLY:]
The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of 0.75% of the Trust's average daily net
assets (average daily net assets being computed for this purpose without
deducting any liability for money borrowed for investment in accordance with the
Trust's investment objective and policies).
[FOR COLONIAL INTERMEDIATE HIGH INCOME FUND ONLY:]
The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of 0.65% of the Trust's average daily net
assets (average daily net assets being computed for this purpose without
deducting any liability for money borrowed for investment in accordance with the
Trust's investment objective and policies) and in addition, the fund shall pay
the Advisor monthly a fee equal to 20% of the Fund's Leverage Income; provided,
however, if the Fund's Leverage Income is less than zero then the Advisor shall
pay the Fund 20% of the Funds Leverage Income.
B-10
"Leverage Income" shall mean:
(gross income of (% of Fund's average (interest and other
the Fund for such daily total assets borrowing expenses
month) represented by associated with leverage
x leverage as of the - for such month)
last day of such month)
[FOR COLONIAL HIGH INCOME MUNICIPAL TRUST ONLY:]
The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of 0.75% of the Trust's average daily net
assets including assets applicable to the auction preferred shares (average
daily net assets being computed for this purpose without deducting any liability
for money borrowed for investment in accordance with the Trust's investment
objective and policies).
[FOR COLONIAL INVESTMENT GRADE MUNICIPAL TRUST ONLY:]
The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of 0.65% of the Trust's average daily net
assets including assets applicable to the auction preferred shares (average
daily net assets being computed for this purpose without deducting any liability
for money borrowed for investment in accordance with the Trust's investment
objective and policies).
B-11
APPENDIX C
DESCRIPTION OF MATERIAL DIFFERENCES BETWEEN CURRENT DECLARATION AND FORM OF
REVISED DECLARATION
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
SHAREHOLDER LIABILITY: The Trust shall A shareholder or former A shareholder or former A shareholder or former
indemnify and hold each shareholder held to be shareholder held to be shareholder held to be
shareholder or former personally liable personally liable personally liable
shareholder harmless solely by reason of his solely by reason of his solely by reason of his
against all claims in or her being or having or her being or having or her being or having
connection with Trust been a shareholder is been a shareholder is been a shareholder is
property or the acts, entitled to be held entitled to be held entitled to be held
obligations or affairs harmless from and harmless from and harmless from and
of the Trust to which indemnified against all indemnified against all indemnified against all
such shareholder may loss and expense loss and expense loss and expense
become subject solely arising from such arising from such arising from such
by reason of his or her liability. liability. liability.
being or having been a
shareholder.
Every written Every note, bond, Every note, bond, Every note, bond,
obligation, contract, contract, instrument, contract, instrument, contract, instrument,
instrument, certificate or certificate or certificate or
certificate, share, undertaking made or undertaking made or undertaking made or
other security of the issued by the Trustees issued by the Trustees issued by the Trustees
Trust or undertaking or by any officers or or by any officers or or by any officers or
made or issued by the officer must recite officer must recite officer must recite
Trustees or officers that the same was that the same was that the same was
shall recite that the executed or made by or executed or made by or executed or made by or
same is executed or on behalf of the Trust on behalf of the Trust on behalf of the Trust
made by or on behalf of or by them as Trustees or by them as Trustees or by them as Trustees
Trustees and that the or as officers and that or as officers and that or as officers and that
obligations of such obligations of such obligations of such obligations of such
instrument are not instrument are not instrument are not instrument are not
binding on any of the binding upon any of binding upon any of binding upon any of
Trustees, officers or them or shareholders them or shareholders them or shareholders
shareholders individually. individually. individually.
individually.
SHAREHOLDER VOTING Shareholders have the Subject to the voting Subject to the voting Shareholders have the
RIGHTS: power to vote only (i) powers of one or more powers of one or more power to vote only (i)
for the election, when classes or series of classes or series of for the election or
submitted to shares as set forth in shares as set forth in removal of Trustees;
shareholders, or the bylaws, the bylaws, (ii) with respect to
removal of Trustees; shareholders have the shareholders have the any investment advisory
(ii) with respect to power to vote only (i) power to vote only(i) or management contract;
any investment advisory for the election or for the election or (iii) with respect to
or management contract removal of Trustees; removal of Trustees; any termination, by the
for which a shareholder (ii) with respect to (ii) with respect to shareholders, of the
vote is required by the any investment advisory any investment advisory Trust; (iv) with
1940 Act; (iii) with or management contract; or management contract; respect to any
respect to termination, (iii) with respect to (iii) with respect to amendment of the
by the shareholders, of any termination, by the any termination, by the Declaration of Trust
the Trust; (iv) with shareholders, of the shareholders, of the that requires
respect to any Trust; (iv) with Trust; (iv) with shareholder
amendment of the respect to any respect to any authorization; (v) with
Declaration of Trust amendment of the amendment of the respect to derivative
that requires Declaration of Trust Declaration of Trust actions similar to a
shareholder approval; that requires that requires Massachusetts
(v) with respect to any shareholder shareholder corporation; and (vi)
merger, consolidation authorization; (v) with authorization; (v) with with respect to any
or sale of assets where respect to derivative respect to derivative other matters required
shareholder actions similar to a actions similar to a by law, the
authorization is Massachusetts Massachusetts organizational
required; (vi) with corporation; and (vi) corporation; and (vi) documents, registration
respect to derivative with respect to any with respect to any with the Commission or
actions similar other matters required other matters required other regulators or
by law, the by law, the deemed desirable by the
organizational organizational Board.
documents, registration documents, registration
with the Commission or with the Commission or
other regulators or other regulators or
deemed desirable by the deemed desirable by the
Board. Board.
C-1
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
to a Massachusetts
corporation; (vii) with
respect to any
conversion of the Trust
to an ''open-end
company"; and (viii)
with respect to certain
transactions with
principal shareholders;
and (ix) with respect
to any other matters
required by the
organizational
documents, registration
with the Commission or
other regulators or
deemed desirable by the
Board.
A shareholder is Except as provided in Except as provided in Each whole share or
entitled to one vote the by-laws, each whole the by-laws, each whole fractional share is
for each share owned by share or fractional share or fractional entitled to one vote or
such shareholder on share is entitled to share is entitled to a proportionate
each matter on which one vote or a one vote or a fractional vote,
such shareholder is proportionate proportionate respectively.
entitled to vote, and fractional vote, fractional vote,
each fractional share respectively. respectively. Except when a larger
is entitled to a vote is required by the
proportionate On any matter submitted On any matter submitted provisions of the
fractional vote. to a vote of to a vote of Declaration of Trust or
shareholders, all shareholders, all the bylaws, a majority
Except as otherwise shares of the Trust shares of the Trust of the shares voted
required by law or the then entitled to vote then entitled to vote shall decide any
organizational shall, except as shall, except as questions and a
documents, shares otherwise provided in otherwise provided in plurality shall elect a
representing a majority the by-laws or required the by-laws or required Trustee.
of the shares voted in by law, be voted in the by law, be voted in the
person or by proxy aggregate as a single aggregate as a single
shall decide any class without regard to class without regard to
questions and a classes or series of classes or series of
plurality shall elect a shares. shares.
Trustee.
Except when a different Except when a larger
vote is required by the vote is required by the
provisions of the provisions of the
Declaration of Trust or Declaration of Trust or
the by-laws, a majority the bylaws, a majority
of the shares voted of the shares voted
shall decide any shall decide any
questions and a questions and a
plurality shall elect a plurality shall elect a
Trustee, provided that Trustee, provided that
where the bylaws where the bylaws
require that the require that the
holders of any class or holders of any class or
series shall vote as an series shall vote as an
individual class or individual class or
series, a majority of series, a majority of
the shares of that the shares of that
class or series voted class or series voted
on the matter (or a on the matter (or a
plurality with respect plurality with respect
to the election of a to the election of a
Trustee) shall decide Trustee) shall decide
that matter insofar as that matter insofar as
that class or series is that class or series is
concerned. concerned.
C-2
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
SHAREHOLDERS MEETINGS: Issue not addressed in If the Trustees shall If the Trustees shall If the Trustees shall
the Declaration of fail to call or give fail to call or give fail to call or give
Trust. notice of any meeting notice of any meeting notice of any meeting
of shareholders for 30 of shareholders for 30 of shareholders for 30
days after written days after written days after written
application requesting application requesting application requesting
a meeting by a meeting by a meeting by
shareholders holding at shareholders holding at shareholders holding at
least 10% of the shares least 10% of the shares least 10% of the shares
then outstanding of all then outstanding of all then outstanding, then
classes and series classes and series shareholders holding at
entitled to vote at entitled to vote at least 10% of the shares
such meeting, then such meeting, then then outstanding may
shareholders holding at shareholders holding at call and give notice of
least 10% of the shares least 10% of the shares such meeting.
then outstanding may then outstanding may
call and give notice of call and give notice of
such meeting. such meeting
SHAREHOLDER QUORUM: Issue not addressed in 30% of the shares A majority* of the A majority of the
the Declaration of entitled to vote on a shares entitled to vote shares entitled to vote
Trust, but intended to particular matter shall on a particular matter shall be a quorum.
be addressed in the be a quorum, except shall be a quorum,
Bylaws as described in where the by-laws except where the bylaws
Proposal 2. require that holders of require that holders of
any class or series any class or series
shall vote as an shall vote as an
individual class or individual class or
series, in which case series, in which case a
30% of the aggregate majority* of the
number of shares of aggregate number of
that class or series is shares of that class or
necessary to constitute series is necessary to
a quorum. constitute a quorum.
* Colonial Municipal
Income Trust
provides that 30% of
the shares entitled
to vote shall be a
quorum.
SHAREHOLDER CONSENT: Majority consent Majority consent (or Majority consent (or Majority consent (or
required for such larger proportion such larger proportion such larger proportion
shareholder action as required by any as required by any as required by any
taken without a express provision of express provision of express provision of
meeting, as relates to the Declaration of the Declaration of the Declaration of
approval of merger/ Trust or bylaws) Trust or bylaws) Trust or bylaws)
consolidation or required for required for required for
amendments to the shareholder action shareholder action shareholder action
Declaration of Trust. taken without a taken without a taken without a
meeting. meeting. meeting.
NOTICE TO SHAREHOLDERS: Any notices to which a Notice of shareholder Notice of shareholder Notice of shareholder
shareholder may be meetings is to be meetings is to be meetings is to be
entitled and any and mailed, postage mailed, postage mailed, postage
all communications prepaid, not less than prepaid, not less than prepaid, not less than
shall be deemed duly seven days in advance. seven days in advance. seven days in advance.
served (i) if mailed, Notice must state the Notice must state the
postage prepaid, (ii) time, place and purpose time, place and purpose Notice must state the
if sent by electronic of the meeting. of the meeting. time, place and purpose
transmission to of the meeting.
shareholder, (iii) if
mailed or sent by
electronic delivery to
one or more members of
shareholder's
household, or (iv) if
otherwise sent in
accordance with
applicable law or
regulation.
Notice is not expressly
required for
shareholder meetings.
C-3
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
POWER TO AMEND Except where Except to the extent Except to the extent The Declaration of
DECLARATION OF TRUST: shareholder the bylaws or the bylaws or Trust may be amended at
authorization is applicable law require applicable law require any time by an
required, the a higher vote or a a higher vote or a instrument in writing
Declaration of Trust separate vote of one or separate vote of one or signed by a majority of
may be amended by the more classes or series more classes or series the then Trustees when
Trustees, to change the of shares, the of shares, the authorized so to do by
name or principal Declaration of Trust Declaration of Trust vote of a majority of
office of the Trust, to may be amended at any may be amended at any the shares entitled to
supply any omission, to time by an instrument time by an instrument vote with respect to
cure, correct or in writing signed by a in writing signed by a such amendment, except
supplement any majority of the then majority of the then that shareholder
ambiguous, defective or Trustees when Trustees when authorization is not
inconsistent provision authorized so to do by authorized so to do by required for amendments
or if the Trustees deem vote of a majority of vote of a majority of to change the name of
it necessary or the shares entitled to the shares entitled to the Trust, supply any
advisable, to conform vote with respect to vote with respect to omission, cure any
the Declaration of such amendment, except such amendment, except ambiguity or cure,
Trust to the that shareholder that shareholder correct or supplement
requirements of authorization is not authorization is not any defective or
applicable law. required for amendments required for amendments inconsistent provision.
to authorize one or to authorize one or
Shareholders have the more classes or series more classes or series
right to vote on any of shares, to change of shares, to change
amendment that would the name of the Trust, the name of the Trust,
affect their right to supply any omission, supply any omission,
vote, any amendment cure any ambiguity or cure any ambiguity or
that requires a cure, correct or cure, correct or
shareholder approval supplement any supplement any
under law or the defective or defective or
trust's registration inconsistent provision. inconsistent provision.
statement, any
amendment to the
declaration of trust
provision regarding
amendment and any other
amendment submitted to
them by the trustees.
Except as provided
below, any amendment on
which the shareholders
have the right to vote
shall require a
majority shareholder
vote.
No amendment may be Except to the extent Except to the extent No amendment may be
made which shall amend, the bylaws or the bylaws or made which repeals
alter, change or repeal applicable law require applicable law require certain provisions
any of the provisions a higher vote or a a higher vote or a relating to the number
relating to term of separate vote, no separate vote, no and term of Trustees,
trustees, termination amendment may be made amendment may be made the conversion to an
of the trust, which repeals certain which repeals certain open-end fund or this
amendments to the provisions relating to provisions relating to provision*, unless such
declaration of trust, the number and term of the number and term of amendment shall receive
merger, consolidation Trustees, the Trustees, the the affirmative vote of
or sale of assets; conversion to an open- conversion to an open- 66 2/3% of the shares
conversion and certain end fund or this end fund or this entitled to vote.
transactions unless the provision, unless such provision, unless such
amendment effecting amendment shall receive amendment shall receive * Colonial Intermarket
such amendment, the affirmative vote of the affirmative vote of Income Trust I also
alteration, change or 66 2/3% of the shares 66 2/3% of the shares requires a 66 2/3%
repeal shall receive entitled to vote. entitled to vote. vote to amend the
the affirmative vote or provision relating
consent of sixty-six to the duration and
and two-thirds percent termination of
(66 2/3%) of the shares Trust.
outstanding and
entitled to vote.
C-4
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
TERMINATION OF TRUST: Shareholders have the Subject to the voting Subject to the voting The Trust may be
right to terminate the powers of one or more powers of one or more terminated at any time
Trust upon a two-thirds classes or series of classes or series of by vote of shareholders
vote of outstanding shares as set forth in shares as set forth in holding at least 66
shares of the Trust. the bylaws, the Trust the bylaws, the Trust 2/3% of the shares
may be terminated at may be terminated at entitled to vote.
any time by vote of any time by vote of
shareholders holding at shareholders holding at
least 66 2/3% of the least 66 2/3% of the
shares entitled to shares entitled to
vote. vote.
Trustees may terminate Trustees may terminate Trustees may terminate Trustees may terminate
the Trust by written the Trust by written the Trust by written the Trust by written
notice to shareholders. notice to the notice to the notice to the
shareholders. shareholders. shareholders.
MERGER OR CONSOLIDATION The Declaration of Issue not addressed in Issue not addressed in Issue not addressed in
TRUST: Trust provides that a the Declaration of the Declaration of the Declaration of
consolidation, merger Trust. Trust. Trust.
or sale of assets may
be authorized by a two-
thirds shareholder vote
at a meeting called for
such purpose, or by
written consent,
without a meeting, of
the holders of not less
than two-thirds of such
shares, provided,
however, that if such
merger, consolidation,
sale, lease or exchange
is recommended by the
Trustees, the vote or
written consent of the
holders of a majority
of shares outstanding
and entitled to vote,
shall be sufficient
authorization.
CONVERSION: Notwithstanding any The conversion of the The conversion of the At the first annual
other provision of this Trust from a ''closed- Trust from a "closed- meeting or special
Declaration, the end company" to an end company" to an meeting held after
conversion of the Trust ''open-end company," "open-end company", November 1, 1993*, the
from a ''closed-end together with any together with any Trustees shall submit
company" to an ''open- necessary amendments to necessary amendments to to shareholders a
end company," as those the Declaration of the Declaration of proposal for conversion
terms are defined in Trust to permit such a Trust to permit such a from a ''closed-end
the 1940 Act, shall conversion, require the conversion, require the company" to an ''open-
require the affirmative affirmative vote of 66 affirmative vote of 66 end company," if: (i)
vote or consent of the 2/3% of shares of each 2/3% of shares of each shares have traded on
holders of sixty-six class entitled to vote. class entitled to vote. the principal security
and two-thirds percent exchange where listed
(66 2/3%) of the shares at an average discount
outstanding and from net asset value of
entitled to vote. more than 10%,
determined on the basis
of the discount as of
the end of the last
trading day in each
week during the period
of 12 calendar weeks
preceding November 1,
1993*, and (ii) during
such year the Trust
receives at its
principal executive
office written requests
from the holders of 10%
or more of the
outstanding shares that
such proposal be
submitted to
shareholders.
The conversion of the
Trust from a ''closed-
C-5
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
end company" to an
''open-end company"
require the affirmative
vote of 66 2/3% of
shares entitled to
vote.
* December 1, 1994 for
Colonial Investment
Income Trust I.
REMOVAL OF TRUSTEES: A Trustee may be At any meeting called At any meeting called At any meeting called
removed at any meeting for such purpose and for such purpose and for such purpose, a
of shareholders by a subject to the voting subject to the voting Trustee may be removed,
vote of shares powers of one or more powers of one or more with or without cause,
representing two-thirds classes or series of classes or series of by vote of a majority
of the outstanding shares as set forth in shares as set forth in of the outstanding
shares of the Trust the bylaws, a Trustee the bylaws, a Trustee shares.
entitled to vote for may be removed, with or may be removed, with or
the election of such without cause, by vote without cause, by vote
trustee. of 75% of the of a majority of the
outstanding shares of outstanding shares of
the classes or series the classes or series
entitled to vote for entitled to vote for
the election of such the election of such
Trustee. Trustee.
A Trustee may be The Trustees may remove The Trustees may remove The Trustees may remove
removed at any time, a Trustee, with or a Trustee, with or a Trustee, with or
with or without cause, without cause, by vote without cause, by vote without cause, by vote
by written instrument of 75% of the Trustees of a majority of the of a majority of the
signed by at least then in office. Trustees then in Trustees then in
three-quarters of the office. office.
Trustees, specifying
the date when such
removal shall become
effective.
TRUSTEE LIABILITY: No Trustee, advisory Trustees are not Trustees are not Trustees are not
Trustee, officer or responsible or liable responsible or liable responsible or liable
employee or agent will for any neglect or for any neglect or for any neglect or
be liable whatsoever to wrongdoing of any wrongdoing of any wrongdoing of any
any person in officer, agent, officer, agent, officer, agent,
connection with Trust employee, adviser, or employee, adviser, or employee, adviser, or
property or the affairs principal underwriter principal underwriter principal underwriter
of the Trust, and no of the Trust. No of the Trust. No of the Trust. No
Trustee or advisory Trustee is responsible Trustee is responsible Trustee is responsible
Trustee will be liable for the act or omission for the act or omission for the act or omission
or responsible in any of any other Trustee. of any other Trustee. of any other Trustee.
event for any neglect Trustee is not Trustee is not Trustee is not
or wrongdoing of any protected against any protected against any protected against any
officer, employee or liability to which he liability to which he liability to which he
agent of the Trust or or she would otherwise or she would otherwise or she would otherwise
for the act or omission be subject by reason of be subject by reason of be subject by reason of
of any other Trustee. willful misfeasance, willful misfeasance, willful misfeasance,
Trustees, advisory bad faith, gross bad faith, gross bad faith, gross
Trustees, officers, negligence or reckless negligence or reckless negligence or reckless
employees and agents disregard of the duties disregard of the duties disregard of the duties
are not protected involved in the conduct involved in the conduct involved in the conduct
against any liability of his or her office. of his or her office. of his or her office.
to the Trust or its
shareholders 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 or position
with or on behalf of
the Trust.
C-6
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
TRUSTEE The Trust will The Trust will The Trust will The Trust will
INDEMNIFICATION: indemnify each of its indemnify each of its indemnify each of its indemnify each of its
Trustees, advisory Trustees and officers Trustees and officers Trustees and officers
Trustees and officers (including persons who (including persons who (including persons who
against all liability serve at the Trust's serve at the Trust's serve at the Trust's
and all expenses request as trustees or request as trustees or request as trustees or
reasonably incurred by officers of another officers of another officers of another
him or her in organization in which organization in which organization in which
connection with any the Trust has any the Trust has any the Trust has any
proceeding in which interest as a interest as a interest as a
that individual becomes shareholder, creditor shareholder, creditor shareholder, creditor
involved as a party or or otherwise) against or otherwise) against or otherwise) against
otherwise by virtue of all liabilities and all liabilities and all liabilities and
being or having been a expenses, including expenses, including expenses, including
Trustee, advisory amounts paid in amounts paid in amounts paid in
Trustee or officer and satisfaction of satisfaction of satisfaction of
against amount paid or judgments, in judgments, in judgments, in
incurred by that compromise, as fines compromise, as fines compromise, as fines
individual in and penalties, and as and penalties, and as and penalties, and as
settlement thereof. No counsel fees, counsel fees, counsel fees,
indemnification will be reasonably incurred by reasonably incurred by reasonably incurred by
provided to a Trustee, such person while in such person while in such person while in
advisory Trustee or office or thereafter, office or thereafter, office or thereafter,
officer of the Trust: by reason of the by reason of the by reason of the
(i) against any indemnified person's indemnified person's indemnified person's
liability to the Trust service as a Trustee or service as a Trustee or service as a Trustee or
or the shareholders by officer. The Trust will officer. The Trust will officer. [The Trust
reason of a final not indemnify its not indemnify its will not indemnify its
adjudication by the Trustees and officers Trustees and officers Trustees and officers
court that such person with respect to any with respect to any with respect to any
engaged in willful matter in which such matter in which such matter in which such
misfeasance, bad faith, person has been finally person has been finally person has been finally
gross negligence or adjudicated in a adjudicated in a adjudicated in a
reckless disregard of decision on the merits decision on the merits decision on the merits
the duties involved in not to have acted in not to have acted in not to have acted in
the conduct of that good faith in the good faith in the good faith in the
individual's office; or reasonable belief that reasonable belief that reasonable belief that
(ii) with respect to such person's action such person's action such person's action
any matter as to which was in the best was in the best was in the best
such person has been interests of the Trust. interests of the Trust. interests of the
finally adjudicated not The Trust will not The Trust will not Trust.]* The Trust will
to have acted in good indemnify its Trustees indemnify its Trustees not indemnify its
faith in the reasonable and officers against and officers against Trustees and officers
belief that the any liability to the any liability to the against any liability
individual's action was Trust or to its Trust orto its to the Trust or to its
in the best interest of shareholders to which shareholders to which shareholders to which
the Trust. he or she would he or she would he or she would
otherwise be subject by otherwise be subject by otherwise be subject by
reason of willful reason of willful reason of willful
misfeasance, bad faith, misfeasance, bad faith, misfeasance, bad faith,
gross negligence or gross negligence or gross negligence or
reckless disregard of reckless disregard of reckless disregard of
the duties involved in the duties involved in the duties involved in
the conduct of such the conduct of such the conduct of such
person's office. person's office. person's office.
C-7
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
No indemnification will In the absence of a In the absence of a In the absence of a
be provided in the final decision on the final adjudication on final adjudication on
event of a settlement merits by an the merits that such the merits that such
or other disposition adjudicating body that person is liable by person is liable by
not involving a final such person is liable reason of willful reason of willful
adjudication resulting by reason of willful misfeasance, bad faith, misfeasance, bad faith,
in a payment by a misfeasance, bad faith, gross negligence or gross negligence or
Trustee, advisory gross negligence or reckless disregard of reckless disregard of
Trustee or officer, reckless disregard of the duties involved in the duties involved in
unless there has been a the duties involved in the conduct of their the conduct of their
determination that such the conduct of their office or did not act office [or did not act
person did not engage office or did not act in good faith in the in good faith in the
in willful misfeasance, in good faith in the reasonable belief that reasonable belief that
bad faith, gross reasonable belief that his or her actions were his or her actions were
negligence or reckless his or her actions were in the best interests in the best interests
disregard of duties in the best interests of the Trust, of the Trust]*,
involved in the conduct of the Trust, indemnification will be indemnification will be
of that individual's indemnification will be provided if (a) provided if (a)
office by the court or provided if (a) approved as in the best approved as in the best
other body approving approved as in the best interests of the Trust, interests of the Trust,
the settlement or other interests of the Trust, after notice that it after notice that it
disposition or by a after notice that it involves such involves such
reasonable involves such indemnification, by at indemnification, by at
determination that the indemnification, by at least a majority of the least a majority of the
individual did not least a majority of the disinterested, non- disinterested, non-
engage in such conduct: disinterested, non- party Trustees acting party Trustees acting
(i) by vote of a Party Trustees acting on the matter (provided on the matter (provided
majority of the on the matter (provided that a majority of the that a majority of the
disinterested, non- that a majority of the disinterested Trustees disinterested Trustees
party Trustees; or (ii) disinterested Trustees then in office act on then in office act on
by written opinion of then in office act on the matter) upon a the matter) upon a
the then-current legal the matter) upon a determination that such determination that such
counsel to the determination that such person acted in good person [acted in good
disinterested Trustees person acted in good faith in the reasonable faith in the reasonable
or other legal counsel faith in the reasonable belief that his or her belief that his or her
chosen by the majority belief that his or her actions were in the actions were in the
of the disinterested, actions were in the best interest of the best interest of the
non-party Trustees. best interest of the Trust and is not liable Trust and]* is not
Trust and is not liable to the Trust or its liable to the Trust or
to the Trust or its shareholders by reason its shareholders by
shareholders by reason of willful misfeasance, reason of willful
of willful misfeasance, bad faith, gross misfeasance, bad faith,
bad faith, gross negligence or reckless gross negligence or
negligence or reckless disregard of the duties reckless disregard of
disregard of the duties involved in the conduct the duties involved in
involved in the conduct of his or her office the conduct of his or
of his or her office or or(b) there has been her office or (b) there
(b) there has been obtained an opinion in has been obtained an
obtained an opinion in writing of independent opinion in writing of
writing of independent legal counsel to the independent legal
legal counsel to the effect that such person counsel to the effect
effect that such person acted in good faith and that such person [acted
acted in good faith and such indemnification in good faith]* and
such indemnification would not protect such such indemnification
would not protect such person against any would not protect such
person against any liability to the Trust person against any
liability to the Trust to which such person liability to the Trust
to which such person would otherwise be to which such person
would otherwise be subject by reason of would otherwise be
subject by reason of willful misfeasance, subject by reason of
willful misfeasance, bad faith, gross willful misfeasance,
bad faith, gross negligence or reckless bad faith, gross
negligence or reckless disregard of the duties negligence or reckless
disregard of the duties involved in the conduct disregard of the duties
involved in the conduct of his or her office. involved in the conduct
of his or her office. of his or her office.
* Bracketed language
does not apply to
Colonial
Intermediate High
Income Fund.
C-8
CURRENT DECLARATIONS
---------------------------------------------------------------------------
COLONIAL HIGH INCOME
MUNICIPAL TRUST,
COLONIAL COLONIAL INTERMEDIATE
COLONIAL CALIFORNIA MUNICIPAL INCOME TRUST HIGH
INSURED AND INCOME FUND AND
MUNICIPAL FUND AND COLONIAL INVESTMENT COLONIAL
COLONIAL GRADE INTERMARKET INCOME
REVISED DECLARATION INSURED MUNICIPAL FUND MUNICIPAL TRUST TRUST I
----------------------- ----------------------- ----------------------- -----------------------
LEGAL EXPENSES: Legal expenses Legal expenses may be Legal expenses may be Legal expenses may be
associated with paid from time to time paid from time to time paid from time to time
authorized by the Trust in advance by the Trust in advance by the Trust in advance
indemnification shall of the final of the final of the final
be advanced by the disposition of any such disposition of any such disposition of any such
Trust prior to final proceeding if the Trust proceeding if the Trust proceeding if the Trust
disposition thereof receives a written receives a written receives an undertaking
upon receipt of an undertaking by the undertaking by the by the indemnified
undertaking by or on indemnified person to indemnified person to person to reimburse the
behalf of the reimburse the Trust in reimburse the Trust in Trust in the event it
indemnified person to the event it is the event it is is ultimately
repay such amount if it ultimately determined ultimately determined determined that the
is ultimately that the indemnified that the indemnified indemnified person is
determined that such person is not entitled person is not entitled not entitled to such
person is not entitled to such indemnification to such indemnification indemnification and (a)
to indemnification, and (a) the indemnified and (a) the indemnified the indemnified person
provided that (a) the person provides person provides provides security for
indemnified person security for his security for his his undertaking, or (b)
provides security for undertaking, or (b) the undertaking, or (b) the the Trust is insured
his undertaking or the Trust is insured Trust is insured against losses arising
Trust is insured against losses arising against losses arising by reason of such
against such losses, or by reason of such by reason of such indemnified person's
(b) a majority of the indemnified person's indemnified person's failure to fulfill his
disinterested, non- failure to fulfill his failure to fulfill his or her undertaking, or
party Trustees or or her undertaking, or or her undertaking, or (c) a majority of the
independent legal (c) a majority of the (c) a majority of the disinterested, non-
counsel, through a disinterested, non- disinterested, non- party Trustees
written opinion, party Trustees party Trustees (provided that a
determine that the (provided that a (provided that a majority of such
indemnified person majority of such majority of such Trustees then in office
ultimately will be Trustees then in office Trustees then in office act on the matter) or
found entitled to act on the matter) or act on the matter) or independent legal
indemnification. independent legal independent legal counsel, as expressed
counsel, as expressed counsel, as expressed in a written opinion,
in a written opinion, in a written opinion, determines that there
determines that there determines that there is reason to believe
is reason to believe is reason to believe that the indemnified
that the indemnified that the indemnified person ultimately will
person ultimately will person ultimately will be found entitled to
be found entitled to be found entitled to indemnification.
indemnification. indemnification.
DERIVATIVE ACTIONS: No shareholder shall Issue not addressed. Issue not addressed Issue not addressed.
have the right to bring
or maintain any court
action, proceeding or
claim on behalf of the
Trust without first
making demand on the
Trustees requesting the
Trustees to bring or
maintain such action,
proceeding or claim.
Such demand shall be
excused only when the
plaintiff makes a
specific showing that
irreparable injury to
the Trust would
otherwise result, or if
a majority of the
Trustees or a majority
of any committee
established to consider
the merits of such
action, has a material
personal financial
interest in the action
at issue.
C-9
APPENDIX D
FORM OF REVISED DECLARATION
DECLARATION OF TRUST
OF
------------
DATED AS OF , 2007
D-1
TABLE OF CONTENTS
PAGE
----
ARTICLE I -- Name and Definitions D-4
SECTION 1.1 Name D-4
SECTION 1.2 Definitions D-4
ARTICLE II -- Trustees D-6
SECTION 2.1 Number of Trustees D-6
SECTION 2.2 Term of Office of Trustees D-6
SECTION 2.3 Resignation and Appointment of Trustees D-7
SECTION 2.4 Vacancies D-7
SECTION 2.5 Delegation of Power to Other Trustees D-8
ARTICLE III -- Powers of Trustees D-8
SECTION 3.1 General D-8
SECTION 3.2 Investments D-8
SECTION 3.3 Legal Title D-10
SECTION 3.4 Issuance and Repurchase of Securities D-10
SECTION 3.5 Borrowing Money; Lending Trust Property D-10
SECTION 3.6 Delegation D-10
SECTION 3.7 Collection and Payment D-10
SECTION 3.8 Expenses D-11
SECTION 3.9 Manner of Acting; By-Laws D-11
SECTION 3.10 Miscellaneous Powers D-11
ARTICLE IV -- Investment Adviser, Distributor, Custodian
and Transfer Agent D-12
SECTION 4.1 Investment Adviser D-12
SECTION 4.2 Distributor D-12
SECTION 4.3 Custodian D-13
SECTION 4.4 Transfer Agent D-13
SECTION 4.5 Parties to Contract D-13
ARTICLE V -- Limitations of Liability of Shareholders,
Trustees and Others D-14
SECTION 5.1 No Personal Liability of Shareholders D-14
SECTION 5.2 Limitation of Liability of Trustees and
Others D-14
SECTION 5.3 Mandatory Indemnification D-15
SECTION 5.4 No Bond Required D-17
D-2
PAGE
----
SECTION 5.5 No Duty of Investigation; Notice in Trust
Instruments D-17
SECTION 5.6 Good Faith Action; Reliance on Experts D-18
SECTION 5.7 Derivative Actions D-18
ARTICLE VI -- Shares of Beneficial Interest D-19
SECTION 6.1 Beneficial Interest D-19
SECTION 6.2 Rights of Shareholders D-19
SECTION 6.3 Trust Only D-19
SECTION 6.4 Issuance of Shares D-19
SECTION 6.5 Register of Shares D-20
SECTION 6.6 Transfer of Shares D-20
SECTION 6.7 Notices D-21
SECTION 6.8 Voting Powers D-21
ARTICLE VII -- Determination of Net Asset Value, Net
Income and Distributions D-22
ARTICLE VIII -- Duration; Termination of Trust;
Amendment; Mergers, etc. D-22
SECTION 8.1 Duration D-22
SECTION 8.2 Termination of Trust D-22
SECTION 8.3 Amendment Procedure D-23
SECTION 8.4 Merger, Consolidation and Sale of Assets D-24
SECTION 8.5 Incorporation, Reorganization D-24
SECTION 8.6 Conversion D-25
SECTION 8.7 Certain Transactions D-25
ARTICLE IX -- Miscellaneous D-27
SECTION 9.1 Filing D-27
SECTION 9.2 Governing Law D-27
SECTION 9.3 Principal Office D-28
SECTION 9.4 Counterparts D-28
SECTION 9.5 Reliance by Third Parties D-28
SECTION 9.6 Provisions in Conflict with Law or
Regulations D-28
Signature Page D-29
D-3
DECLARATION OF TRUST
Of
------------
Dated as of , 2007
This DECLARATION OF TRUST is made this th day of , 2007 by the
Trustees;
WHEREAS, the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the Trust assets be
divided into transferable Shares of Beneficial Interest (without par value)
issued in one or more series, as hereinafter provided;
NOW THEREFORE, the Trustees hereby confirm that all money and property
contributed to the Trust hereunder shall be held and managed in trust for the
benefit of holders, from time to time, of the Shares of Beneficial Interest
(without par value) issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. Name. The name of the Trust is .
SECTION 1.2. Definitions. Wherever they are used herein, the following terms
have the following respective meanings:
(a) "Advisory Trustee" means any person, which may include a former Trustee,
appointed by resolution of the Trustees to serve the Board in an advisory
capacity, for such period and in accordance with such terms and conditions as
are determined by the Trustees. An Advisory Trustee shall serve at the pleasure
of the Trustees and may be removed by the Trustees at any time and for any
reason, with or without cause, and may resign at any time by an instrument in
writing signed by that Advisory Trustee and delivered to the Trust. Advisory
Trustees, in their capacity as such, are not Trustees or officers of the Trust
for any purpose and shall have no legal, voting or other powers or obligations
of Trustees or officers hereunder, and shall not perform the functions of the
Trustees or officers in any manner.
(b) "By-Laws" means the By-laws referred to in Section 3.9 hereof, as from time
to time amended.
(c) "Commission" has the meaning given that term in the 1940 Act.
(d) "Declaration" means this Declaration of Trust, as amended from time to time.
Reference in this Declaration of Trust to "Declaration," "hereof," "herein"
D-4
and "hereunder" shall be deemed to refer to this Declaration rather than the
article or section in which such words appear.
(e) "Distributor" means a party furnishing services to the Trust pursuant to any
contract described in Section 4.2 hereof.
(f) "Interested Person" has the meaning given that term in the 1940 Act.
(g) "Investment Adviser" means a party furnishing services to the Trust pursuant
to any contract described in Section 4.1 hereof.
(h) "Majority Shareholder Vote" has the same meaning as the phrase "vote of a
majority of the outstanding voting securities" as defined in the 1940 Act.
(i) "1940 Act" means the Investment Company Act of 1940 and the Rules and
Regulations thereunder, as amended from time to time, and as such Act or the
Rules and Regulations thereunder may apply to the Trust pursuant to any
exemptive order or similar relief or interpretation issued by the Commission
under such Act.
(j) "Person" means and includes individuals, corporations, limited liability
companies, partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities, and governments and agencies and
political subdivisions thereof, whether domestic or foreign.
(k) "Shareholder" means a record owner of outstanding Shares.
(l) "Shares" means the Shares of Beneficial Interest into which the beneficial
interest in the Trust shall be divided from time to time. The term "Shares"
includes fractions of Shares as well as whole Shares.
(m) "Transfer Agent" means a party furnishing services to the Trust pursuant to
any transfer agency contract described in Section 4.4 hereof.
(n) "Trust" means the trust hereunder.
(o) "Trust Property" means any and all property, real or personal, tangible or
intangible, which is owned or held by or for the account of the Trust or the
Trustees.
(p) "Trustees" means the persons who have signed the Declaration, so long as
they shall continue in office in accordance with the terms hereof, and all other
persons who may from time to time be duly elected or appointed, qualified and
serving as Trustees in accordance with the provisions hereof, and reference
herein to a Trustee or the Trustees shall refer to such person or persons in
their capacity as trustees hereunder. For the avoidance of any doubt, an
"Advisory Trustee" as defined in Section 1.2(a) is not a Trustee for any purpose
hereunder.
D-5
ARTICLE II
TRUSTEES
SECTION 2.1. Number of Trustees. The number of Trustees shall be such number
as shall be fixed from time to time by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be less than three (3)
nor more than fifteen (15). No reduction in the number of Trustees shall have
the effect of removing any Trustee from office prior to the expiration of his or
her term unless the Trustee is specifically removed pursuant to Section 2.2
hereof at the time of the decrease.
SECTION 2.2. Term of Office of Trustees. The Board of Trustees shall be
divided into three classes. Within the limits above specified, the number of
Trustees in each class shall be determined by resolution of the Board of
Trustees. The term of office of the first class shall expire on the date of the
first annual meeting of Shareholders or special meeting in lieu thereof
following January 1, 2008. The term of office of the second class shall expire
on the date of the second annual meeting of Shareholders or special meeting in
lieu thereof. The term of office of the third class shall expire on the date of
the third annual meeting of Shareholders or special meeting in lieu thereof.
Upon expiration of the term of office of each class as set forth above, the
number of Trustees in such class, as determined by the Board of Trustees, shall
be elected for a term expiring on the date of the third annual meeting of
Shareholders or special meeting in lieu thereof following such expiration to
succeed the Trustees whose terms of office expire. The Trustees shall be elected
at an annual meeting of the Shareholders or special meeting in lieu thereof
called for that purpose, except as provided in Section 2.3 hereof.
Each Trustee shall hold office until the earlier of his or her death or the
election and qualification of his or her successor; except that:
(a) any Trustee may resign his or her trust (without need for prior or
subsequent accounting) by an instrument in writing signed by that Trustee and
delivered to the Trust, which shall take effect upon such delivery or upon such
later date as is specified therein;
(b) any Trustee may be removed at any time, with or without cause, by written
instrument signed by at least three-quarters of the Trustees, specifying the
date when such removal shall become effective;
(c) any Trustee who has attained a mandatory retirement age established pursuant
to any written policy adopted from time to time by at least two-thirds of the
Trustees shall, automatically and without action of such Trustee or the
remaining Trustees, be deemed to have retired in accordance with the terms
D-6
of such policy, effective as of the date determined in accordance with such
policy; and
(d) a Trustee may be removed at any meeting of Shareholders by a vote of Shares
representing two-thirds of the outstanding Shares of the Trust entitled to vote
for the election of such Trustee.
Upon the resignation, retirement or removal of a Trustee, or his or her
otherwise ceasing to be a Trustee, that individual shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in the
name of the resigning, retiring or removed Trustee. Upon the incapacity or death
of any Trustee, that Trustee's legal representative shall execute and deliver on
his or her behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
Except to the extent expressly provided in a written agreement to which the
Trust is a party or in a written policy adopted by the Trustees, no resigning or
removed Trustee shall have any right to any compensation for any period
following his or her resignation or removal, or any right to damages on account
of such removal.
SECTION 2.3. Resignation and Appointment of Trustees. In case of the
declination, death, resignation, retirement or removal of any of the Trustees,
or in case a vacancy shall, by reason of an increase in number of Trustees, or
for any other reason, exist, a majority of the remaining Trustees may fill such
vacancy by appointing such other individual as they in their discretion shall
see fit. Any such appointment shall not become effective, however, until the
person appointed shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of the Declaration. An appointment of a Trustee
may be made by the Trustees then in office in anticipation of a vacancy to occur
by reason of retirement, resignation, removal or increase in number of Trustees
effective at a later date, provided that said appointment shall become effective
only at or after the effective date of said retirement, resignation, removal or
increase in number of Trustees. The power of appointment is subject to all
applicable provisions of the 1940 Act.
SECTION 2.4. Vacancies. The death, declination, resignation, retirement,
removal or incapacity of the Trustees, or any of them, shall not operate to
annul the Trust or to revoke any existing agency created pursuant to the terms
of the Declaration. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in Section 2.3, or while any Trustee is
incapacitated, the other Trustees in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by the Declaration, and only such other Trustees shall
be
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counted for the purposes of the existence of a quorum or the taking of any
action to be taken by the Trustees. A written instrument certifying the
existence of such vacancy or incapacity signed by a majority of the Trustees
shall be conclusive evidence of the existence thereof.
SECTION 2.5. Delegation of Power to Other Trustees. Subject to requirements
imposed by the 1940 Act and other applicable law, any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees; provided that in no case shall fewer than
two Trustees personally exercise the powers granted to the Trustees under the
Declaration except as otherwise expressly provided herein.
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1. General. Subject to the provisions of the Declaration, the
Trustees shall have exclusive and absolute control over the Trust Property and
over the business of the Trust to the same extent as if the Trustees were the
sole owners of the Trust Property and business in their own right, but with such
powers of delegation as may be permitted by the Declaration. The Trustees shall
have power to conduct the business of the Trust and carry on its operations in
any and all of its branches and maintain offices both within and without The
Commonwealth of Massachusetts, in any and all states of the United States of
America, in the District of Columbia, and in any and all commonwealths,
territories, dependencies, colonies, possessions, agencies or instrumentalities
of the United States of America and of foreign governments, and to do all such
other things and execute all such instruments as the Trustees deem necessary,
proper or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of the Declaration, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as limiting
the aforesaid power or any other power of the Trustees hereunder. Such powers of
the Trustees may be exercised without order of or resort to any court.
SECTION 3.2. Investments. (a) The Trustees shall have the power:
(i) to conduct, operate and carry on the business of an investment
company;
(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute,
lend
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or otherwise deal in or dispose of securities of every nature and kind,
U.S. and foreign currencies, any form of gold or other precious metal,
commodity contracts, any form of option contract, contracts for the future
acquisition or delivery of fixed income or other securities, derivative
instruments of every kind, "when-issued" or standby contracts, and all
types of obligations or financial instruments, including, without
limitation, all types of bonds, debentures, stocks, negotiable or non-
negotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, bankers' acceptances, and other securities of any kind, issued,
created, guaranteed or sponsored by any and all Persons, including, without
limitation,
(A) states, territories and possessions of the United States and the District of
Columbia and any political subdivision, agency or instrumentality of any such
Person,
(B) the U.S. Government, any foreign government, or any political subdivision or
any agency or instrumentality of the U.S. Government or any foreign government,
(C) any international instrumentality,
(D) any bank or savings institution, or
(E) any corporation or organization organized under the laws of the United
States or of any state, territory or possession thereof, or under any foreign
law;
to retain Trust assets in cash and from time to time to change the investments
in which the assets of the Trust are invested; and to exercise any and all
rights, powers and privileges of ownership or interest in respect of any and all
such investments of every kind and description, including, without limitation,
the right to consent and otherwise act with respect thereto, with power to
designate one or more Persons to exercise any of said rights, powers and
privileges in respect of any of said investments; and
(iii) to carry on any other business in connection with or incidental
to any of the foregoing powers, to do everything necessary, proper or
desirable for the accomplishment of any purpose or the attainment of any
object or the furtherance of any power hereinbefore set forth, and to do
every other act or thing incidental or appurtenant to or connected with the
aforesaid purposes, objects or powers.
(b) The Trustees shall not be limited to investing in securities or obligations
maturing before the possible termination of the Trust, nor shall the Trustees be
limited by any law limiting the investments which may be made by fiduciaries.
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(c) Notwithstanding any other provision of the Declaration to the contrary, the
Trustees shall have the power in their discretion without any requirement of
approval by Shareholders to either invest all or a portion of the Trust
Property, or sell all or a portion of such Trust Property and invest the
proceeds of such sales, in one or more other investment companies to the extent
not prohibited by the 1940 Act.
SECTION 3.3. Legal Title. Legal title to all Trust Property shall be vested in
the Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other Person or
nominee, on such terms as the Trustees may determine. The right, title and
interest of the Trustees in the Trust Property shall vest automatically in each
person who may hereafter become a Trustee. Upon the resignation, retirement,
removal or death of a Trustee, such Trustee shall automatically cease to have
any right, title or interest in any of the Trust Property, and the right, title
and interest of such Trustee in the Trust Property shall vest automatically in
the remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
SECTION 3.4. Issuance and Repurchase of Securities. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject
to the provisions set forth in Articles VII and VIII hereof, to apply to any
such repurchase, redemption, retirement, cancellation or acquisition of Shares
any funds of the Trust or other Trust Property, whether capital or surplus or
otherwise.
SECTION 3.5. Borrowing Money; Lending Trust Property. The Trustees shall have
power to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the Trust Property, to
endorse, guarantee, or undertake the performance of any obligation, contract or
engagement of any other Person and to lend Trust Property.
SECTION 3.6. Delegation. The Trustees shall have power to delegate from time
to time to such of their number or to officers, employees, any Investment
Adviser, Distributor, custodian, agent or independent contractor of the Trust
the doing of such things and the execution of such instruments either in the
name of the Trust or the names of the Trustees or otherwise as the Trustees may
deem appropriate or expedient.
SECTION 3.7. Collection and Payment. The Trustees shall have power to collect
all property due to the Trust; to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims relating
to the Trust Property; to foreclose any security interest securing any
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obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
SECTION 3.8. Expenses. The Trustees shall have the power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of the Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees, Trustees and Advisory
Trustees.
SECTION 3.9. Manner of Acting; By-Laws. Except as otherwise provided herein,
in the 1940 Act or 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 Trustees at which a
quorum is present, including any meeting held by means of a conference telephone
circuit or similar communications equipment by means of which all persons
participating in the meeting can hear each other, or by written consents of two-
thirds of the Trustees. The Trustees may adopt By-Laws not inconsistent with the
Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-Laws to the extent permitted therein at any time.
SECTION 3.10. Miscellaneous Powers. Without limiting the foregoing, the
Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust;
(b) enter into joint ventures, partnerships and any other combinations or
associations;
(c) elect and remove such officers and appoint and terminate such agents or
employees as they consider appropriate, in each case with or without cause, and
appoint and terminate any one or more committees which may exercise some or all
of the power and authority of the Trustees as the Trustees may determine;
(d) purchase, and pay for out of Trust Property, such insurance as they may deem
necessary or appropriate for the conduct of the business of the Trust,
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 Shareholders, any administrator, Trustees,
Advisory Trustees, officers, employees, agents, any Investment Adviser, any
Distributor, selected dealers or independent contractors of the Trust against
all claims arising by reason of holding any such position or by reason of any
action taken or omitted by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability;
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(e) establish pension, profit-sharing, Share purchase, deferred compensation,
and other retirement, incentive and benefit plans for any Trustees, officers,
employees or agents of the Trust;
(f) to the extent permitted by law, indemnify any person with whom the Trust has
dealings, including any Investment Adviser, administrator, custodian,
Distributor, Transfer Agent, shareholder servicing agent and any dealer, to such
extent as the Trustees shall determine;
(g) guarantee indebtedness or contractual obligations of others;
(h) determine and change the fiscal year of the Trust and the method by which
its accounts shall be kept; and
(i) adopt a seal for the Trust, provided that the absence of such seal shall not
impair the validity of any instrument executed on behalf of the Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT
SECTION 4.1. Investment Adviser. Subject to applicable requirements of the
1940 Act, the Trustees may in their discretion from time to time enter into one
or more investment advisory or management contracts whereby the other party to
each such contract shall undertake to furnish the Trust such management,
investment advisory, statistical and research facilities and services,
promotional activities, and such other facilities and services, if any, as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine. Notwithstanding
any provision of the Declaration, the Trustees may delegate to the Investment
Adviser authority (subject to such general or specific instructions as the
Trustees may from time to time adopt) to effect purchases, sales, loans or
exchanges of assets of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of the Investment Adviser (and all without further
action by the Trustees). Any of such purchases, sales, loans or exchanges shall
be deemed to have been authorized by all the Trustees. Such services may be
provided by one or more Persons.
SECTION 4.2. Distributor. Subject to applicable requirements of the 1940 Act,
the Trustees may in their discretion from time to time enter into one or more
exclusive or non-exclusive distribution contracts providing for the sale of
Shares, whereby the Trust may either agree to sell the Shares to the other party
to any such contract or appoint any such other party its sales agent for such
Shares. In either case, any such contract shall be on such terms and conditions
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as the Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of the Declaration or the
By-Laws; and such contract may also provide for the repurchase or sale of Shares
by such other party as principal or as agent of the Trust and may provide that
such other party may enter into selected dealer agreements or agency agreements
with securities dealers or other Persons to further the purpose of the
distribution or repurchase of the Shares. Such services may be provided by one
or more Persons.
SECTION 4.3. Custodian. The Trustees may in their discretion from time to time
enter into one or more contracts whereby the other party to each such contract
shall undertake to furnish such custody services to the Trust as the Trustees
shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of the 1940 Act,
the Declaration or the By-Laws. The Trustees may authorize any custodian to
employ one or more sub-custodians from time to time to perform such of the
services of the custodian as the Trustees shall from time to time consider
desirable. Services described in this Section may be provided by one or more
Persons.
SECTION 4.4. Transfer Agent. The Trustees may in their discretion from time to
time enter into one or more transfer agency or sub-transfer agency and
shareholder servicing contracts whereby the other party to each such contract
shall undertake to furnish such transfer agency and/or shareholder services to
the Trust as the Trustees shall from time to time consider desirable and all
upon such terms and conditions as the Trustees may in their discretion
determine, provided that such terms and conditions are not inconsistent with the
provisions of the Declaration or the By-Laws. Such services may be provided by
one or more Persons.
SECTION 4.5. Parties to Contract. Any contract of the character described in
any Section of this Article IV may be entered into with any Person, although one
or more of the Trustees or officers of the Trust may be an officer, partner,
director, trustee, shareholder, or member of such other party to the contract,
and no such contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship; nor shall any Person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust under or by reason of any such contract or accountable for
any profit realized directly or indirectly therefrom, provided that the contract
when entered into was not inconsistent with the provisions of this Article IV or
the By-Laws. The same Person may be the other party to contracts entered into
pursuant to Sections 4.1, 4.2, 4.3 and 4.4 above, and any individual may be
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financially interested or otherwise affiliated with Persons who are parties to
any or all of the contracts mentioned in this Section 4.5.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
SECTION 5.1. No Personal Liability of Shareholders. No Shareholder or former
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust solely by reason of being or having been a Shareholder. The Trust shall
indemnify and hold each Shareholder and former Shareholder harmless from and
against all claims and liabilities to which such Shareholder may become subject
solely by reason of his or her being or having been a Shareholder (other than
taxes payable by virtue of owning Shares), and shall reimburse such Shareholder
for all legal and other expenses reasonably incurred by him in connection with
any such claim or liability. The rights accruing to a Shareholder or former
Shareholder under this Section 5.1 shall not exclude any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder or
former Shareholder in any appropriate situation even though not specifically
provided herein. The Trust shall, upon request by a Shareholder or former
Shareholder, assume the defense of any claim made against such Shareholder for
any act or obligation of the Trust and satisfy any judgment thereon from the
assets of the Trust.
Section 5.2. Limitation of Liability of Trustees and Others. (a) No Trustee,
Advisory Trustee, officer or employee or agent of the Trust shall be subject to
any liability whatsoever to any Person in connection with Trust Property or the
affairs of the Trust, and no Trustee or Advisory Trustee shall be responsible or
liable in any event for any neglect or wrongdoing of any officer, employee or
agent of the Trust or for the act or omission of any other Trustee or Advisory
Trustee. For the sake of clarification and without limiting the foregoing, the
appointment, designation or identification of a Trustee as the Chair of the
Trustees, the lead or assistant lead independent Trustee, a member or Chair of a
committee of the Trustees, an expert on any topic or in any area (including an
audit committee financial expert) or any other special appointment, designation
or identification given to a Trustee, shall not (a) impose on that person any
duty, obligation or liability that is greater than the duties, obligations and
liabilities imposed on that person as a Trustee in the absence of the
appointment, designation or identification or (b) affect in any way such
Trustee's rights or entitlement to indemnification, and no Trustee who has
special skills or expertise, or is appointed, designated or identified as
aforesaid, shall (x) be held
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to a higher standard of care by virtue thereof or (y) be limited with respect to
any indemnification to which such Trustee would otherwise be entitled.
Notwithstanding anything to the contrary in this Section 5.2(a) or otherwise,
nothing in the Declaration shall protect any Trustee, Advisory Trustee, officer,
employee or agent of the Trust against any liability to the Trust or its
Shareholders to which he, she or it 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, her or its office or position with or on
behalf of the Trust.
(b) All persons extending credit to, contracting with or having claim against
the Trust shall look solely to the assets of the Trust for payment under such
credit, contract or claim; and neither any Trustee or Advisory Trustee, nor any
of the Trust's officers, employees or agents, whether past, present or future,
shall be personally liable therefor.
SECTION 5.3. Mandatory Indemnification. (a) Subject to the exceptions and
limitations contained in paragraph (b) below:
(i) every person who is or has been a Trustee, Advisory Trustee or
officer of the Trust (hereinafter referred to as a "Covered Person") shall
be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him or her in connection with any claim,
action, suit or proceeding in which that individual becomes involved as a
party or otherwise by virtue of being or having been a Trustee, Advisory
Trustee or officer and against amounts paid or incurred by that individual
in the settlement thereof;
(ii) the words "claim," "action," "suit" or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the
words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement or
compromise, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) against any liability to the Trust or the Shareholders by reason
of a final adjudication by the court or other body before which the
proceeding was brought that the Covered Person engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of that individual's office;
(ii) with respect to any matter as to which the Covered Person shall
have been finally adjudicated not to have acted in good faith in the
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reasonable belief that that individual's action was in the best interest of
the Trust; or
(iii) in the event of a settlement involving a payment by a Trustee,
Advisory Trustee or officer or other disposition not involving a final
adjudication as provided in paragraph (b)(i) or (b)(ii) above resulting in
a payment by a Covered Person, unless there has been either a determination
that such Covered Person did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of that individual's office by the court or other body approving
the settlement or other disposition or by a reasonable determination, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry) that that individual did not engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees (as defined below)
acting on the matter (provided that a majority of the Disinterested Trustees
then in office act on the matter); or
(B) by written opinion of (i) the then-current legal counsel to the Trustees who
are not Interested Persons of the Trust or (ii) other legal counsel chosen by a
majority of the Disinterested Trustees (or if there are no Disinterested
Trustees with respect to the matter in question, by a majority of the Trustees
who are not Interested Persons of the Trust) and determined by them in their
reasonable judgment to be independent.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be a Covered Person and shall inure to
the benefit of the heirs, executors and administrators of such person. Nothing
contained herein shall limit the Trust from entering into other insurance
arrangements or affect any rights to indemnification to which Trust personnel,
including Covered Persons, may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim, action,
suit, or proceeding of the character described in paragraph (a) of this Section
5.3 shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the Covered Person to repay such
amount if it is ultimately determined that the Covered Person is not entitled to
indemnification under this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or
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(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or legal counsel meeting the requirement in Section
5.3(b)(iii)(B) above in a written opinion, shall determine, based upon a
review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the Covered Person
ultimately will be found entitled to indemnification.
As used in this Section 5.3 a "Disinterested Trustee" is one (i) who is not an
"Interested Person" of the Trust (including anyone who has been exempted from
being an "Interested Person" by any rule, regulation or order of the
Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.
(e) With respect to any such determination or opinion referred to in clause
(b)(iii) above or clause (d)(ii) above, a rebuttable presumption shall be
afforded that the Covered Person has not engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office in accordance with pronouncements of the
Commission.
SECTION 5.4. No Bond Required. No Trustee, Advisory Trustee or officer shall
be obligated to give any bond or other security for the performance of any of
his or her duties hereunder.
SECTION 5.5. No Duty of Investigation; Notice in Trust Instruments. No
purchaser, lender, shareholder servicing agent, Transfer Agent or other Person
dealing with the Trustees or any officer, employee or agent of the Trust shall
be bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent or
be liable for the application of money or property paid, loaned, or delivered to
or on the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking, and every other act or thing whatsoever executed in
connection with the Trust shall be conclusively presumed to have been executed
or done by the executors thereof only in their capacity as Trustees under the
Declaration or in their capacity as officers, employees or agents of the Trust.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees or officers
shall recite that the same is executed or made by them not individually, but as
or on behalf of Trustees under the Declaration, and that the obligations of any
such instrument are not binding upon any of the Trustees, officers or
Shareholders individually, but bind only the Trust estate, and may contain any
further recital deemed appropriate, but the omission of such recital shall not
operate to bind any of the Trustees,
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officers or Shareholders individually. The Trustees may maintain insurance for
the protection of the Trust Property, Shareholders, Trustees, Advisory Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
SECTION 5.6. Good Faith Action; Reliance on Experts. The exercise by the
Trustees or the officers of the Trust of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. The Trustees or the officers of the
Trust shall not be liable for errors of judgment or mistakes of fact or law.
Each Trustee and officer or employee of the Trust shall, in the performance of
his or her duties, be under no liability and fully and completely justified and
protected with regard to any act or any failure to act resulting from reliance
in good faith upon the books of account or other records of the Trust, upon
advice of counsel, or upon reports made to the Trust by any of its officers or
employees or by the Investment Adviser, the Distributor, Transfer Agent,
custodian, any shareholder servicing agent, selected dealers, accountants,
appraisers or other experts or consultants selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether such counsel
or expert may also be a Trustee.
SECTION 5.7. Derivative Actions. No Shareholder shall have the right to bring
or maintain any court action, proceeding or claim on behalf of the Trust without
first making demand on the Trustees requesting the Trustees to bring or maintain
such action, proceeding or claim. Such demand shall be excused only when the
plaintiff makes a specific showing that irreparable injury to the Trust would
otherwise result, or if a majority of the Board of Trustees, or a majority of
any committee established to consider the merits of such action, has a material
personal financial interest in the action at issue. A Trustee shall not be
deemed to have a personal financial interest in an action or otherwise be
disqualified from ruling on a Shareholder demand by virtue of the fact that such
Trustee receives remuneration from his or her service on the Board of Trustees
of the Trust or on the boards of one or more investment companies with the same
or an affiliated investment adviser or underwriter, or the amount of such
remuneration.
Such demand shall be mailed to the Secretary or Clerk of the Trust at the
Trust's principal office and shall set forth in reasonable detail the nature of
the proposed court action, proceeding or claim and the essential facts relied
upon by the Shareholder to support the allegations made in the demand. The
Trustees shall consider such demand within 45 days of its receipt by the Trust.
In their sole discretion, the Trustees may submit the matter to a vote of
Shareholders of the Trust, as appropriate. Any decision by the Trustees to
bring, maintain or settle (or not to bring, maintain or settle) such court
action, proceeding or claim, or to
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submit the matter to a vote of Shareholders, shall be made by the Trustees in
their business judgment and shall be binding upon the Shareholders. Any decision
by the Trustees to bring or maintain a court action, proceeding or suit on
behalf of the Trust shall be subject to the right of the Shareholders under
Section 6.8 of the Declaration to vote on whether or not such court action,
proceeding or suit should or should not be brought or maintained.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1. Beneficial Interest. The interest of the beneficiaries hereunder
may be divided into transferable Shares of Beneficial Interest (without par
value). The number of Shares authorized hereunder is unlimited. All Shares
issued hereunder including, without limitation, Shares issued in connection with
a dividend in Shares or a split of Shares, shall be fully paid and non-
assessable.
SECTION 6.2. Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be called upon
to assume any losses of the Trust or suffer an assessment of any kind by virtue
of their ownership of Shares. The Shares shall be personal property giving only
the rights specifically set forth in the Declaration. The Shares shall not
entitle the holder to preference, preemptive, appraisal, conversion or exchange
rights. By becoming a Shareholder each Shareholder shall be held expressly to
have assented to and agreed to be bound by the provisions of the Declaration.
SECTION 6.3. Trust Only. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
SECTION 6.4. Issuance of Shares. The Trustees, in their discretion may, from
time to time without vote of the Shareholders, issue Shares, in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times, and on such terms as the Trustees may deem
D-19
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with, the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares. The Trustees may from time to time divide or combine the
Shares into a greater or lesser number without thereby changing their
proportionate beneficial interests in Trust Property. Contributions to the Trust
may be accepted for whole Shares and/or 1/1,000ths of a Share or integral
multiples thereof.
SECTION 6.5. Register of Shares. A register or registers shall be kept at the
principal office of the Trust or at an office of the Transfer Agent which shall
contain the names and addresses (which may be addresses for electronic delivery)
of the Shareholders and the number of Shares held by them respectively and a
record of all transfers thereof. Such register shall be conclusive as to who are
the holders of the Shares and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to that Shareholder as provided herein or
in the By-Laws, until the Shareholder has given his or her address to the
Transfer Agent or such other officer or agent of the Trustees as shall keep the
said register for entry thereon. The Trustees, in their discretion, may
authorize the issuance of Share certificates and promulgate appropriate rules
and regulations as to their use.
SECTION 6.6. Transfer of Shares. Shares shall be transferable on the records
of the Trust only by the record holder thereof or by the record holder's agent
thereunto authorized in writing, upon delivery to the Trustees or, if there is a
Transfer Agent with respect to such Shares, the Transfer Agent of a duly
executed instrument of transfer together with any certificate or certificates
(if issued) for such Shares and such evidence of the genuineness of each such
execution and authorization and of other matters as may reasonably be required.
Upon such delivery the transfer shall be recorded on the register of the Trust.
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
any Transfer Agent or registrar nor any officer, employee or agent of the Trust
shall be affected by any notice of the proposed transfer.
Any Person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent; but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be
D-20
affected by any notice of such death, bankruptcy or incompetence, or other
operation of law.
SECTION 6.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given (i)
if mailed, postage prepaid, addressed to any Shareholder of record at the
Shareholder's last known address as recorded on the register of the Trust, (ii)
if sent by electronic transmission to the Shareholder of record at the
Shareholder's last known address for electronic delivery as recorded on the
register of the Trust, (iii) if mailed or sent by electronic delivery to one or
more members of the Shareholder's household in accordance with applicable law or
regulation, or (iv) if otherwise sent in accordance with applicable law or
regulation.
SECTION 6.8. Voting Powers. The Shareholders shall have power to vote only (i)
for the election of Trustees when that issue is submitted to Shareholders, and
for the removal of Trustees as provided in Section 2.2 hereof, (ii) with respect
to any investment advisory or management contract on which a shareholder vote is
required by the 1940 Act, (iii) with respect to termination of the Trust to the
extent and as provided in Section 8.2 hereof, (iv) with respect to any amendment
of the Declaration to the extent and as provided in Section 8.3 hereof, (v) with
respect to any merger, consolidation, or sale of assets to the extent and as
provided in Sections 8.4 and 8.7 hereof, (vi) with respect to any conversion of
the Trust to an "open-end company" to the extent and as provided in Section 8.6
hereof, (vii) to the same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or the Shareholders, and (viii) with respect to such additional
matters relating to the Trust as may be required by the Declaration, the By-
Laws, or any registration of the Trust with the Commission (or any successor
agency) or any other regulator having jurisdiction over the Trust, or as the
Trustees may consider necessary or desirable.
A Shareholder shall be entitled to one vote for each Share owned by such
Shareholder on each matter on which such Shareholder is entitled to vote and
each fractional Share shall be entitled to a proportionate fractional vote.
Shares held in the treasury of the Trust shall not be voted.
Except when a larger vote is required by applicable law or by any provision of
the Declaration or the By-Laws, if any, Shares representing a majority of the
Shares voted in person or by proxy shall decide any questions and a plurality
shall elect a Trustee, provided that abstentions and broker non-votes shall not
be counted as votes cast but shall be counted as being present for purposes of
determining the existence of a quorum.
D-21
There shall be no cumulative voting in the election of Trustees. Until Shares
are issued and during any period when no Shares are outstanding, the Trustees
may exercise all rights of Shareholders and may take any action required by law,
the Declaration or the By-Laws to be taken by Shareholders. The By-Laws may
include further provisions for Shareholder votes and meetings and related
matters.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
The Trustees, in their absolute discretion, may prescribe and shall set forth in
the By-Laws or in a duly adopted vote of the Trustees such bases and times for
determining the per Share net asset value of the Shares or net income, or the
declaration and payment of dividends and distributions, as they may deem
necessary or desirable.
ARTICLE VIII
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
SECTION 8.1. Duration. The Trust shall continue without limitation of time but
subject to the provisions of this Article VIII.
SECTION 8.2. Termination of Trust. (a) The Trust may be terminated at any time
(i) by the affirmative vote of the holders of not less than two-thirds of the
Shares outstanding and entitled to vote at any meeting of Shareholders, or (ii)
by the Trustees by written notice to the Shareholders. Upon the termination of
the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust
and all the powers of the Trustees under the Declaration shall continue
until the affairs of the Trust shall have been wound up, including the
power to fulfill or discharge the contracts of the Trust, collect its
assets, sell, convey, assign, exchange, transfer or otherwise dispose of
all or any part of the remaining Trust Property to one or more Persons at
public or private sale for consideration which may consist in whole or in
part of cash, securities or other property of any kind, discharge or pay
its liabilities, and to do all other acts appropriate to liquidate its
business; and
D-22
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly in
cash and partly in kind, among the Shareholders of the Trust according to
their respective rights.
(b) After termination of the Trust and distribution to the Shareholders of the
Trust as herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth the fact
of such termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder with respect to the Trust, and the
rights and interests of all Shareholders of the Trust shall thereupon cease.
SECTION 8.3. Amendment Procedure. (a) Except as specifically provided herein,
the Trustees may, without any Shareholder vote, amend or otherwise supplement
the Declaration by making an amendment, a Declaration of Trust supplemental
hereto or an amended and restated Declaration. Without limiting the foregoing
power reserved to the Trustees, the Trustees may, without any Shareholder vote,
amend the Declaration to change the name or principal office of the Trust, to
supply any omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or if they deem it necessary or advisable, to
conform the Declaration to the requirements of applicable law, including the
1940 Act and the Internal Revenue Code of 1986, as amended, but the Trustees
shall not be liable for failing to do so. Shareholders shall have the right to
vote on (i) any amendment that would affect their right to vote granted in
Section 6.8; (ii) any amendment to Section 8.3(a) or (b); (iii) any amendment as
may be required by law or by the Trust's registration statement to be approved
by Shareholders; and (iv) any amendment submitted to them by the Trustees.
Except as otherwise provided in Section 8.3(c), any amendment on which
Shareholders have the right to vote shall require a Majority Shareholder Vote of
the Shareholders of the Trust, or the written consent, without a meeting, of the
holders of Shares representing not less than a majority of the voting power of
the Shares of the Trust.
(b) Nothing contained in the Declaration shall permit the amendment of the
Declaration to impair the exemption from personal liability of the Shareholders,
former Shareholders, Trustees, Advisory Trustees, officers, employees and agents
of the Trust or to permit assessments upon Shareholders or former Shareholders.
Notwithstanding anything else herein, any amendment to Section 5.3 shall not
limit the rights to indemnification or insurance provided therein with respect
to actions or omissions of persons entitled to indemnification under such
Section prior to such amendment.
D-23
(c) No amendment may be made which shall amend, alter, change or repeal any of
the provisions of Section 2.2, Section 8.2, this Section 8.3(c), Section 8.4,
Section 8.6 and Section 8.7 unless the amendment effecting such amendment,
alteration, change or repeal shall receive the affirmative vote or consent of
sixty-six and two-thirds percent (66 2/3%) of the Shares outstanding and
entitled to vote. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of Shares otherwise required by law or by the
terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Trust and any national securities
exchange.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders (if
applicable) or by the Trustees as aforesaid or a copy of the Declaration, as
amended, and executed by a majority of the Trustees, shall be conclusive
evidence of such amendment when lodged among the records of the Trust.
SECTION 8.4. Merger, Consolidation and Sale of Assets. Subject to applicable
law and except as otherwise provided in Section 8.5 hereof, the Trust may merge
or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property including its good will, upon such terms and conditions and for
such consideration when and as authorized (a) at any meeting of Shareholders
called for the purpose by the affirmative vote of the holders of not less than
two-thirds of the Shares outstanding and entitled to vote, or (b) by the written
consent, without a meeting, of the holders of not less than two-thirds of such
Shares, provided, however, that if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, the vote or written consent of the
holders of a majority of Shares outstanding and entitled to vote, shall be
sufficient authorization. Any such merger, consolidation, sale, lease or
exchange shall be deemed for all purposes to have been accomplished under and
pursuant to the statutes of The Commonwealth of Massachusetts. Such transactions
may be effected through share-for-share exchanges, transfers or sales of assets,
in-kind redemptions and purchases, exchange offers, or any other method approved
by the Trustees. Nothing contained herein shall be construed as requiring
approval of Shareholders for any sale of assets in the ordinary course of the
business of the Trust, or for any transaction, whether deemed a merger,
consolidation, reorganization or exchange of shares or otherwise, whereby the
Trust issues shares in connection with the acquisition of assets (including
those subject to liabilities) from any other investment company or similar
entity.
SECTION 8.5. Incorporation, Reorganization. The Trustees may, without the vote
or consent of Shareholders, cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction, or any other
trust
D-24
(or series or class of a trust), unit investment trust, partnership, limited
liability company, association or other organization to acquire all or a portion
of the Trust Property or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and transfer such
Trust Property to any such corporation, trust (or series or class of a trust),
partnership, limited liability company, association or organization in exchange
for the shares or securities thereof or otherwise, and to lend money to,
subscribe for the shares or securities of, and enter into any contracts with any
such corporation, trust, partnership, association or organization in which the
Trust holds or is about to acquire shares or any other interest. The Trustees
may also, without the vote or consent of Shareholders, cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust (or series or class of a trust), partnership, association or
other organization if and to the extent permitted by law. The Trustees shall
provide written notice to affected Shareholders of each transaction pursuant to
this Section 8.5. Such transactions may be effected through share-for-share
exchanges, transfers or sales of assets, in-kind redemptions and purchases,
exchange offers, or any other method approved by the Trustees.
SECTION 8.6. Conversion. Notwithstanding any other provision of this
Declaration, the conversion of the Trust from a "closed-end company" to an
"open-end company," as those terms are defined in the 1940 Act, shall require
the affirmative vote or consent of the holders of sixty-six and two-thirds
percent (66 2/3%) of the Shares outstanding and entitled to vote. Such
affirmative vote or consent shall be in addition to the vote or consent of the
holders of the Shares otherwise required by law or by the terms of any class or
series of preferred stock, whether now or hereafter authorized, or any agreement
between the Trust and any national securities exchange.
SECTION 8.7. Certain Transactions. (a) Notwithstanding any other provision of
this Declaration and subject to the exceptions provided in paragraph (d) of this
Section, the types of transactions described in paragraph (c) of this Section
shall require the affirmative vote or consent of the holders of sixty-six and
two-thirds percent (66 2/3%) of the Shares outstanding and entitled to vote,
when a Principal Shareholder (as defined in paragraph (b) of this Section) is a
party to the transaction. Such affirmative vote or consent shall be in addition
to the vote or consent of the Shareholders otherwise required by law or by the
terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Trust and any national securities
exchange.
(b) The term "Principal Shareholder" shall mean any corporation, person or other
entity which is the beneficial owner, directly or indirectly, of more than five
percent (5%) of the outstanding Shares and shall include any affiliate or
associate, as such terms are defined in clause (ii) below, of a Principal
D-25
Shareholder. For the purposes of this Section, in addition to the Shares which a
corporation, person or other entity beneficially owns directly, (a) any
corporation, person or other entity shall be deemed to be the beneficial owner
of any Shares (i) which it has the right to acquire pursuant to any agreement or
upon exercise of conversion rights or warrants, or otherwise (but excluding
share options granted by the Trust) or (ii) which are beneficially owned,
directly or indirectly (including Shares deemed owned through application of
clause (i) above), by any other corporation, person or entity with which its
"affiliate" or "associate" (as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
Shares, or which is its "affiliate" or "associate" as those terms are defined in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934 as in effect on December 1, 1986, and (b) the outstanding Shares
shall include Shares deemed owned through application of clauses (i) and (ii)
above but shall not include any other shares which may be issuable pursuant to
any agreement, or upon exercise of conversion rights or warrants, or otherwise.
(c) This Section shall apply to the following transactions:
(i) the merger or consolidation of the Trust or any subsidiary of the
Trust with or into any Principal Shareholder;
(ii) the issuance of any securities of the Trust to any Principal
Shareholder for cash;
(iii) the sale, lease or exchange of all or any substantial part of
the assets of the Trust to any Principal Shareholder (except assets having
an aggregate fair market value of less than $1,000,000, aggregating for the
purpose of such computation all assets sold, leased or exchanged in any
series of similar transactions within a twelve-month period);
(iv) the sale, lease or exchange to the Trust or any subsidiary
thereof, in exchange for securities of the Trust of any assets of any
Principal Shareholder (except assets having an aggregate fair market value
of less than $1,000,000, aggregating for the purposes of such computation
all assets sold, leased or exchanged in any series of similar transactions
within a twelve-month period).
(d) The provisions of this Section shall not be applicable to (i) any of the
transactions described in paragraph (c) of this Section if the Board of Trustees
of the Trust shall by resolution have approved a memorandum of understanding
with such Principal Shareholder with respect to and substantially consistent
with such transaction, or (ii) any such transaction with any corporation of
which a majority of the outstanding shares of all classes of stock normally
entitled to
D-26
vote in elections of directors is owned of record or beneficially by the Trust
and its subsidiaries.
(e) The Board of Trustees shall have the power and duty to determine for the
purposes of this Section on the basis of information known to the Trust, whether
(i) a corporation, person or entity beneficially owns more than five percent
(5%) of the outstanding Shares, (ii) a corporation, person or entity is an
"affiliate" or "associate" (as defined above) of another, (iii) the assets being
acquired or leased to or by the Trust or any subsidiary thereof, constitute a
substantial part of the assets of the Trust and have an aggregate fair market
value of less than $1,000,000, and (iv) the memorandum of understanding referred
to in paragraph (d) hereof is substantially consistent with the transaction
covered thereby. Any such determination shall be conclusive and binding for all
purposes of this Section.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Filing. The Declaration and any subsequent amendment hereto shall
be filed in the office of the Secretary of The Commonwealth of Massachusetts and
in such other place or places as may be required under the laws of The
Commonwealth of Massachusetts and may also be filed or recorded in such other
places as the Trustees deem appropriate, provided that the failure to so file
shall not invalidate this instrument or any properly authorized amendment
hereto. Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by an officer or Trustee stating that such action was duly taken in
a manner provided herein, and unless such amendment or such certificate sets
forth some other time for the effectiveness of such amendment, such amendment
shall be effective upon its filing. A restated Declaration, integrating into a
single instrument all of the provisions of the Declaration which are then in
effect and operative, may be executed from time to time by a majority of the
Trustees and shall, upon filing with the Secretary of The Commonwealth of
Massachusetts, be conclusive evidence of all amendments contained therein and
may thereafter be referred to in lieu of the original Declaration and the
various amendments thereto.
SECTION 9.2. Governing Law. The Declaration is executed by the Trustees and
delivered in The Commonwealth of Massachusetts and with reference to the laws
thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed 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
D-27
Trust may exercise all powers which are ordinarily exercised by such a trust,
and the absence of a specific reference herein to any such power, privilege, or
action shall not imply that the Trust may not exercise such power or privilege
or take such action.
SECTION 9.3. Principal Office. The principal office of the Trust is 500
Boylston Street, Boston, Massachusetts. The Trustees, without a vote of
Shareholders, may change the principal office of the Trust.
SECTION 9.4. Counterparts. The Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
SECTION 9.5. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, appears to be an officer
or Trustee hereunder, certifying to: (i) the number or identity of Trustees or
Shareholders, (ii) the due authorization of the execution of any instrument or
writing, (iii) the form of any vote passed at a meeting of Trustees or
Shareholders, (iv) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
the Declaration, (v) the form of any By-Laws adopted by or the identity of any
officers elected by the Trustees, or (vi) the existence of any fact or facts
which in any manner relates to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
SECTION 9.6. Provisions in Conflict with Law or Regulations. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company or other provisions
of the Internal Revenue Code of 1986, as amended, or with other applicable laws
and regulations, the conflicting provision shall be deemed never to have
constituted a part of the Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration shall be held invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall attach only to
such provision in such jurisdiction and shall not in any manner affect such
provision in any other jurisdiction or any other provision of the Declaration in
any jurisdiction.
D-28
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the day
and year first written above.
-----------------------------------
Robert E. Butler
As Trustee and Not Individually
-----------------------------------
Lawrence H. Cohn
As Trustee and Not Individually
-----------------------------------
David H. Gunning
As Trustee and Not Individually
-----------------------------------
William R. Gutow
As Trustee and Not Individually
-----------------------------------
Michael Hegarty
As Trustee and Not Individually
-----------------------------------
J. Atwood Ives
As Trustee and Not Individually
-----------------------------------
Robert J. Manning
As Trustee and Not Individually
D-29
-----------------------------------
Lawrence T. Perera
As Trustee and Not Individually
-----------------------------------
Robert C. Pozen
As Trustee and Not Individually
-----------------------------------
J. Dale Sherratt
As Trustee and Not Individually
-----------------------------------
Laurie J. Thomsen
As Trustee and Not Individually
-----------------------------------
Robert W. Uek
As Trustee and Not Individually
D-30
APPENDIX E
NOMINEE INFORMATION
1. BIOGRAPHICAL INFORMATION REGARDING NOMINEES.
Information regarding the Nominees, together with their principal business
occupations during the last five years (their titles may have varied during
that period), is shown below. The address of each Nominee is 500 Boylston
Street, Boston, Massachusetts 02116.
NUMBER OF
PORTFOLIOS
YEAR FIRST IN COLUMBIA
ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX OTHER
POSITION APPOINTED TO DURING TO BE OVERSEEN DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE PAST FIVE YEARS BY NOMINEE HELD(1)
------------------- ---------- ------------ ------------------------- -------------- -------------------------
DISINTERESTED NOMINEES
Robert E. Butler N/A N/A Consultant -- regulatory 7 MFS Funds (99 funds)
(Born 1941) and compliance matters
(since July 2002);
PricewaterhouseCoopers
LLP (professional
services firm), Partner
(November 2000 until June
2002)
Lawrence H. Cohn, M.D. N/A N/A Chief of Cardiac Surgery 7 MFS Funds (99 funds)
(Born 1937) (until 2005), Brigham and
Women's Hospital; Harvard
Medical School, Professor
of Cardiac Surgery;
Physician Director of
Medical Device Technology
for Partners Health Care
E-1
NUMBER OF
PORTFOLIOS
YEAR FIRST IN COLUMBIA
ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX OTHER
POSITION APPOINTED TO DURING TO BE OVERSEEN DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE PAST FIVE YEARS BY NOMINEE HELD(1)
------------------- ---------- ------------ ------------------------- -------------- -------------------------
David H. Gunning N/A N/A Vice Chairman, Cleveland- 7 MFS Funds (99 funds);
(Born 1942) Cliffs Inc. (mining Cleveland-Cliffs Inc.
products and service (mining products and
provider); Portman service provider);
Limited (Mining), Lincoln Electric
Director (since 2005); Holdings, Inc. (welding
Director, Lincoln equipment manufacturer)
Electric Holdings, Inc.
(welding equipment
manufacturer).
William R. Gutow N/A N/A Private investor and real 7 MFS Funds (99 funds)
(Born 1941) estate consultant;
Capitol Entertainment
Management Company (video
franchise), Vice
Chairman; Atlantic Coast
Tan (Tanning salons),
Vice Chairman.
Michael Hegarty N/A N/A Retired; formerly AXA 7 MFS Funds (99 funds)
(Born 1944) Financial (financial
services and insurance),
and President and Chief
Operating Officer (until
May 2001), Vice Chairman
and Chief Operating
Officer; The Equitable
Life Assurance Society
(insurance).
E-2
NUMBER OF
PORTFOLIOS
YEAR FIRST IN COLUMBIA
ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX OTHER
POSITION APPOINTED TO DURING TO BE OVERSEEN DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE PAST FIVE YEARS BY NOMINEE HELD(1)
------------------- ---------- ------------ ------------------------- -------------- -------------------------
J. Atwood Ives N/A N/A Private investor; 7 MFS Funds (99 funds)
(born 1936) formerly Chairman,
Trustee and Chief
Executive Officer,
Eastern Enterprises
(diversified services
company).
Lawrence T. Perera N/A N/A Hemenway & Barnes 7 MFS Funds (99 funds)
(Born 1935) (attorneys), Partner
J. Dale Sherratt N/A N/A Insight Resources, Inc. 7 MFS Funds (99 funds)
(Born 1938) (acquisition planning
specialists), President;
Wellfleet Investments
(investor in health care
companies), Managing
General Partner (since
1993); formerly Chief
Executive Officer (until
May 2001), Cambridge
Nutraceuticals
(professional nutritional
products),
Laurie J. Thomsen N/A N/A Private investor; Prism 7 MFS Funds (99 funds); St.
(Born 1957) Venture Partners (venture Paul Travelers Companies
capital), Co-founder and (commercial property
General Partner (until liability insurance)
June 2004)
E-3
NUMBER OF
PORTFOLIOS
YEAR FIRST IN COLUMBIA
ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX OTHER
POSITION APPOINTED TO DURING TO BE OVERSEEN DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE PAST FIVE YEARS BY NOMINEE HELD(1)
------------------- ---------- ------------ ------------------------- -------------- -------------------------
Robert W. Uek N/A N/A Retired; formerly 7 MFS Funds (99 funds)
(Born 1941) Partner,
PricewaterhouseCoopers
LLP (professional
services firm);
Consultant to investment
company industry.
INTERESTED TRUSTEES
Robert J. Manning N/A N/A Massachusetts Financial 7 MFS Funds (99 funds);
(born 1963)* Services Company, Chief Massachusetts Financial
Executive Officer, Services Company
President, Chief
Investment Officer
E-4
NUMBER OF
PORTFOLIOS
YEAR FIRST IN COLUMBIA
ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX OTHER
POSITION APPOINTED TO DURING TO BE OVERSEEN DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE PAST FIVE YEARS BY NOMINEE HELD(1)
------------------- ---------- ------------ ------------------------- -------------- -------------------------
Robert C. Pozen N/A N/A Massachusetts Financial 7 MFS Funds (99 funds);
(born 1946)* Services Company, Massachusetts Financial
Chairman (since February Services Company; Bell
2004); MIT Sloan School Canada Enterprises
(education), Senior (telecommunications);
Lecturer (since 2006); Medtronic, Inc. (medical
Secretary of Economic technology); Telesat
Affairs, The Commonwealth (satellite
of Massachusetts (January communications)
2002 to December 2002);
formerly Vice Chairman
and President, Fidelity
Investments, Fidelity
Management & Research
Company (investment
adviser).
(1) Directorships or trusteeships of companies required to report to the
Securities and Exchange Commission (i.e., "public companies").
* This individual would be an "interested person" within the meaning of
the 1940 Act, which is the principal federal law governing investment
companies like the Funds, as a result of position with MFS. The address
of MFS is 500 Boylston Street, Boston, Massachusetts 02116.
E-5
2. POSITIONS HELD WITH AFFILIATED PERSONS
If Proposal 1 is approved by shareholders, each of Messrs. Manning and Pozen
would be an "interested person" (as that term is defined in Section 2(a)(19)
of the 1940 Act) of the Funds by reason of his affiliation with MFS. No
other Nominee would be an "interested person" of any Fund.
3. ARRANGEMENTS FOR SELECTION AS NOMINEE
In light of the Sale, the Board determined that nomination of persons who
are more familiar with MFS and with the management and operation of other
funds advised by MFS would facilitate the efficient and effective
representation of shareholder interests. All Nominees were reviewed by the
Board based on the criteria generally employed by the Governance Committee
to review candidates for nomination as trustee.
4. INTERESTS AND RELATIONSHIPS OF DISINTERESTED NOMINEES IN AND WITH AFFILIATED
TRANSACTIONS
In 2004 and 2005, Mr. Butler provided consulting services to the independent
compliance consultant retained by MFS pursuant to its settlement with the
Commission concerning market timing and related matters. The terms of that
settlement required that compensation and expenses related to the
independent compliance consultant be borne exclusively by MFS and,
therefore, MFS paid Mr. Butler for the services he rendered to the
independent compliance consultant. In 2004 and 2005, MFS paid Mr. Butler a
total of $351,119.29.
E-6
APPENDIX F
NOMINEE SHARE OWNERSHIP
The tables below show the dollar range of equity securities of each Fund and the
aggregate dollar range of equity securities of all funds in the Funds' "Family
of Investment Companies" (as defined in Item 22(a)(1)(iv) of Rule 14a-101 under
the Exchange Act) owned by each Nominee as of the Record Date. For purposes of
the tables below, the following symbols are applicable:
N None
A $1 -- $10,000
B $10,001 -- $50,000
C $50,001 -- $100,000
D Over $100,000
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
-------------------------------------------------------------------------------
COLONIAL COLONIAL COLONIAL
CALIFORNIA HIGH COLONIAL COLONIAL INVESTMENT
INSURED INCOME INTERMARKET INTERMEDIATE GRADE COLONIAL
MUNICIPAL MUNICIPAL INCOME HIGH INCOME MUNICIPAL MUNICIPAL
FUND TRUST TRUST I FUND TRUST INCOME TRUST
---------- --------- ----------- ------------ ---------- ------------
Mr. Robert E. Butler N N N N N N
Dr. Lawrence H. Cohn N N N N N N
Mr. David H. Gunning N N N N N N
Mr. William R. Gutow N N N N N N
Mr. Michael Hegarty N N N N N N
Mr. J. Atwood Ives N N N N N N
Mr. Robert J. Manning N N N N N N
Mr. Lawrence T. Perera N N N N N N
Mr. Robert C. Pozen N N N N N N
Mr. J. Dale Sherratt N N N N N N
Ms. Laurie J. Thomsen N N N N N N
Mr. Robert W. Uek N N N N N N
AGGREGATE DOLLAR
RANGE OF EQUITY
SECURITIES IN ALL
FUNDS OVERSEEN BY
TRUSTEE OR NOMINEE
IN FAMILY OF
INVESTMENT
COMPANIES
------------------
Mr. Robert E. Butler N
Dr. Lawrence H. Cohn N
Mr. David H. Gunning N
Mr. William R. Gutow N
Mr. Michael Hegarty N
Mr. J. Atwood Ives N
Mr. Robert J. Manning N
Mr. Lawrence T. Perera N
Mr. Robert C. Pozen N
Mr. J. Dale Sherratt N
Ms. Laurie J. Thomsen N
Mr. Robert W. Uek N
F-1
APPENDIX G
TRUSTEE, NOMINEE AND OFFICER INFORMATION
1. BIOGRAPHICAL INFORMATION REGARDING TRUSTEES, NOMINEES AND EXECUTIVE OFFICERS
OF THE FUNDS.
Information regarding the current trustees and officers of each Fund
(including the nominees set forth in Proposal 4), together with their
principal business occupations during the last five years (their titles may
have varied during that period), is shown below. The address of each
trustee, nominee and officer is One Financial Center, Boston, Massachusetts
02111-2621. If the Closing occurs, each current officer of the Funds has
indicated his or her intention to resign effective at the Closing.
NUMBER OF
PORTFOLIOS
IN COLUMBIA
YEAR FIRST FUND
ELECTED OR PRINCIPAL COMPLEX
POSITION APPOINTED TO OCCUPATION(S) OVERSEEN
NAME AND BIRTH YEAR WITH FUNDS OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE
------------------- --------------------------------- ------------ ---------------------- -----------
DISINTERESTED TRUSTEES
Thomas C. Theobald Trustee and Chairman of the Board 1996 Partner and Senior 75
(Born 1937) Advisor, Chicago
Growth Partners
(private equity
investing) since
September, 2004;
Managing Director,
William Blair Capital
Partners (private
equity investing) from
September, 1994 to
September, 2004.
OTHER DIRECTORSHIPS
NAME AND BIRTH YEAR HELD(2)
------------------- ----------------------
DISINTERESTED TRUSTEES
Thomas C. Theobald Anixter International
(Born 1937) (network support
equipment
distributor); Ventas,
Inc. (real estate
investment trust);
Jones Lang LaSalle
(real estate
management services;
Ambac Financial Group
(financial guaranty
insurance)
G-1
NUMBER OF
PORTFOLIOS
IN COLUMBIA
YEAR FIRST FUND
ELECTED OR COMPLEX
POSITION APPOINTED TO PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE HELD(2)
------------------- ---------- ------------ ------------------------- ----------- -------------------------
Douglas A. Hacker Trustee 1996 Independent business 75 Nash Finch Company (food
(Born 1955) executive since May, distributor); Aircastle
2006; Executive Vice Limited (aircraft
President -- Strategy of leasing)
United Airlines (airline)
from December, 2002 to
May, 2006; President of
UAL Loyalty Services
(airline marketing
company) from September,
2001 to December, 2002;
Executive Vice President
and Chief Financial
Officer of United
Airlines from July, 1999
to September, 2001.
G-2
NUMBER OF
PORTFOLIOS
IN COLUMBIA
YEAR FIRST FUND
ELECTED OR COMPLEX
POSITION APPOINTED TO PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE HELD(2)
------------------- ---------- ------------ ------------------------- ----------- -------------------------
Janet Langford Kelly Trustee 1996 Deputy General 75 None
(Born 1957) Counsel -- Corporate
Legal Services,
ConocoPhillips
(integrated petroleum
company) since August,
2006; Partner, Zelle,
Hofmann, Voelbel, Mason &
Gette LLP (law firm) from
March, 2005 to July,
2006; Adjunct Professor
of Law, Northwestern
University, from
September, 2004 to June,
2006; Director, UAL
Corporation (airline)
from February, 2006 to
July, 2006; Chief
Administrative Officer
and Senior Vice
President, Kmart Holding
Corporation (consumer
goods), from September,
2003 to March, 2004;
Executive Vice
President -- Corporate
Development and
Administration, General
Counsel and Secretary,
Kellogg Company (food
manufacturer), from
September, 1999 to
August, 2003.
Richard W. Lowry Trustee 1995 Private Investor since 75 None
(Born 1936) August, 1987; formerly
Chairman and Chief
Executive Officer, U.S.
Plywood Corporation
(building products
manufacturer).
G-3
NUMBER OF
PORTFOLIOS
IN COLUMBIA
YEAR FIRST FUND
ELECTED OR COMPLEX
POSITION APPOINTED TO PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE HELD(2)
------------------- ---------- ------------ ------------------------- ----------- -------------------------
Charles R. Nelson Trustee 1981 Professor of Economics, 75 None
(Born 1943) University of Washington
since January, 1976; Ford
and Louisa University of
Washington Van Voorhis
Professor of Political
Economy, University of
Washington, since
September, 1993;
Director, Institute for
Economic Research,
University of Washington
from September, 2001 to
June, 2003; Adjunct
Professor of Statistics,
University of Washington
since September, 1980;
Associate Editor, Journal
of Money Credit and
Banking since September,
1993; consultant on
econometric and
statistical matter
s.
John J. Neuhauser Trustee 1985 University Professor, 75 None
(Born 1942) Boston College since
November, 2005; Academic
Vice President and Dean
of Faculties, Boston
College from August,
prior thereto.
Patrick J. Simpson Trustee 2000 Partner, Perkins Coie 75 None
(Born 1944) L.L.P. (law firm).
Thomas E. Stitzel Trustee 1998 Business Consultant since 75 None
(Born 1936) 1999; Chartered Financial
Analyst.
G-4
NUMBER OF
PORTFOLIOS
IN COLUMBIA
YEAR FIRST FUND
ELECTED OR COMPLEX
POSITION APPOINTED TO PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
NAME AND BIRTH YEAR WITH FUNDS OFFICE(1) DURING PAST FIVE YEARS BY TRUSTEE HELD(2)
------------------- ---------- ------------ ------------------------- ----------- -------------------------
Anne-Lee Verville Trustee 1998 Retired since 1997; 75 None
(Born 1945) formerly General Manager,
Global Education
Industry, IBM Corporation
(computer and
technology).
INTERESTED TRUSTEE
William E. Mayer(3) Trustee 1994 Partner, Park Avenue 75 Lee Enterprises (print
(Born 1940) Equity Partners (private media), WR Hambrecht &
equity) since February, Co. (financial service
1999; formerly Dean and provider); Reader's
Professor, College of Digest (publishing).
Business, University of
Maryland.
(1) The date shown is the earliest date on which a trustee was elected or
appointed to the board of a fund in the Columbia Fund Complex.
(2) Directorships or trusteeships of companies required to report to the
Commission (i.e., "public companies").
(3) Mr. Mayer is an "interested person" (as defined in the 1940 Act) of the
Funds by reason of his affiliation with WR Hambrecht + Co., a registered
broker-dealer that may execute portfolio transactions for or engage in
principal transactions with the Funds or other funds or clients advised
by Columbia or its affiliates.
G-5
YEAR FIRST
ELECTED OR
POSITION WITH APPOINTED TO PRINCIPAL OCCUPATION(S)
NAME AND BIRTH YEAR FUNDS OFFICE DURING PAST FIVE YEARS
------------------- ------------------------------ ------------ ------------------------------
OFFICERS
Christopher L. Wilson President 2004 Head of Mutual Funds,
(Born 1957) Columbia, since August, 2004
and Managing Director,
Columbia, since September,
2005; President and Chief
Executive Officer, DCD IXIS
Asset Management Services,
Inc. (investment management),
prior thereto
James R. Bordewick, Jr. Senior Vice President, 2006 Associate General Counsel,
(Born 1959) Secretary and Chief Legal Bank of America since April,
Officer 2005; Senior Vice President
and Associate General Counsel,
MFS Investment management
(investment management) prior
thereto
J. Kevin Connaughton Senior Vice President, Chief 2000 Managing director of the
(Born 1964) Financial Officer and Advisor since February, 1998
Treasurer
Linda J. Wondrack Senior Vice President and 2007 Director (Columbia Management
(Born 1964) Chief Compliance Officer Group LLC and Investment
Product Group Compliance),
Bank of America, since June
2005; Director of Corporate
Compliance and Conflicts
Officer, MFS Investment
Management (investment
management)
G-6
YEAR FIRST
ELECTED OR
POSITION WITH APPOINTED TO PRINCIPAL OCCUPATION(S)
NAME AND BIRTH YEAR FUNDS OFFICE DURING PAST FIVE YEARS
------------------- ------------------------------ ------------ ------------------------------
Michael G. Clarke Chief Accounting Officer and 2004 Director of Fund
(Born 1969) Assistant Treasurer Administration, Columbia,
since January 2006; Managing
Director of Columbia
Management Advisors, LLC
September, 2004 to December,
2005; Vice President Fund
Administration, Columbia,
June, 2002 to September, 2004.
Vice President Product
Strategy and Development,
Columbia, prior thereto.
Stephen T. Welsh Vice President 1996 President, Columbia Management
(Born 1957) Services, Inc., since July,
2004; Senior Vice President
and Controller, Columbia
Management Services, Inc.
prior thereto.
Jeffrey R. Coleman Deputy Treasurer 2004 Director of Fund
(Born 1969) Administration, Columbia,
since January, 2006; Fund
Controller from October, 2004
to January, 2006; Vice
President of CDC IXIS Asset
Management Services, inc.
(investment management) prior
thereto.
G-7
YEAR FIRST
ELECTED OR
POSITION WITH APPOINTED TO PRINCIPAL OCCUPATION(S)
NAME AND BIRTH YEAR FUNDS OFFICE DURING PAST FIVE YEARS
------------------- ------------------------------ ------------ ------------------------------
Joseph F. DiMaria Deputy Treasurer 2004 Director of Fund
(Born 1968) Administration, Columbia,
since January, 2006; Head of
Tax/Compliance and Assistant
Treasurer, Columbia, from
November, 2004 to December,
2005; Director of Trustee
Administration (Sarbanes-
Oxley, Columbia) from May,
2003 to October, 2004; Senior
Audit Management,
PricewaterhouseCoopers
(independent registered public
accounting firm) prior
thereto.
Ty S. Edwards Deputy Treasurer 2004 Director of Fund
(Born 1966) Administration, Columbia,
since January, 2006; Vice
President of the Adviser from
July, 2002 to December, 2005;
Assistant Vice President and
Director, State Street
Corporation (financial
services), prior thereto.
Kathryn Dwyer-Thompson Assistant Treasurer 2006 Vice President, Mutual Fund
(Born 1967) Accounting Oversight of the
Advisor since December 2004;
Vice President, State Street
Corporation, prior thereto
Marybeth C. Pilat Assistant Treasurer 2006 Vice President, Mutual Fund
(Born 1968) Valuation of the Advisor since
January 2006; Vice President,
Mutual Fund Accounting
oversight of the Advisor prior
to January 2006.
G-8
YEAR FIRST
ELECTED OR
POSITION WITH APPOINTED TO PRINCIPAL OCCUPATION(S)
NAME AND BIRTH YEAR FUNDS OFFICE DURING PAST FIVE YEARS
------------------- ------------------------------ ------------ ------------------------------
Philip N. Prefontaine Assistant Treasurer 2006 Vice President, Trustee
(Born 1948) Reporting of the Advisor since
September 2003; Manager,
Investors Bank & Trust Company
(financial services), from
December 2002 to September
2003; Audit Senior, Deloitte &
Touche, LLP (independent
registered public accounting
firm) prior thereto.
Barry S. Vallan Controller 2006 Vice President-Fund Treasury
(Born 1969) of the Advisor since October,
2004,; Vice President-Trustee
Reporting, Columbia, from
April, 2002 to October, 2004;
Management Consultant,
PricewaterhouseCoopers
(independent registered public
account firm), prior thereto.
Peter T. Fariel Assistant Secretary 2006 Associate General Counsel,
(born 1957) Bank of America since April,
2005; Partner, Goodwin Procter
LLP (law firm) prior to April,
2005.
G-9
YEAR FIRST
ELECTED OR
POSITION WITH APPOINTED TO PRINCIPAL OCCUPATION(S)
NAME AND BIRTH YEAR FUNDS OFFICE DURING PAST FIVE YEARS
------------------- ------------------------------ ------------ ------------------------------
Julie B. Lyman Assistant Secretary 2007 Assistant General Counsel,
(Born 1970) Bank of America since October
2006; Associate, Kirkpatrick &
Lockhart Nicholas Graham LLP
(law firm), from April 2004 to
October 2006; Counsel &
Assistant Vice President, CDC
IXIS Asset Management
Services, Inc. (investment
management) prior thereto.
Ryan C. Larrenaga Assistant Secretary 2005 Assistant General Counsel,
(Born 1970) Bank of America since March,
2005; Associate, Ropes & Gray
LLP (law firm), prior
thereto.
Julian Quero Assistant Treasurer 2003 Senior Compliance Manager,
(Born 1967) Columbia, since April, 2002;
Assistant Vice President of
Taxes and Distributions,
Columbia, prior thereto.
G-10
2. POSITIONS HELD WITH AFFILIATED PERSONS
With the exception of Mr. Mayer, no trustee of the Funds and no nominee set
forth in Proposal 4 is an "interested person" (as that term is defined in
Section 2(a)(19) of the 1940 Act) of any Fund. Officers of the Funds hold
the positions with affiliated persons of the Funds set forth in the
preceding table.
3. ARRANGEMENTS FOR SELECTION AS TRUSTEE, NOMINEE OR OFFICER
All nominees set forth in Proposal 4 were reviewed by the Board based on the
criteria generally employed by the Governance Committee to review candidates
for nomination as trustee. There exist no arrangements or understandings
between any such nominee and any other person pursuant to which any such
nominee was selected as a nominee. There also exist no arrangements or
understandings between any trustee or officer of the Funds and any other
person pursuant to which any such trustee or officer was selected as a
trustee or officer, respectively.
G-11
APPENDIX H
TRUSTEE COMPENSATION
The table below sets forth the compensation during the fiscal year ended
November 30, 2006 of each trustee from each Fund for serving as trustee, and the
aggregate compensation during the calendar year ended December 31, 2006 of each
trustee from the Fund Complex for serving as trustee. Two-thirds of the
trustees' fees are allocated among the funds within the Fund Complex that are
supervised by the trustees of the Funds based on the relative net assets of each
fund. One-third of such fees is divided equally among the funds within the Fund
Complex that are supervised by the trustees of the Funds.
AGGREGATE COMPENSATION FROM:
---------------------------------------------------------------------------- PENSION OR
COLONIAL COLONIAL COLONIAL RETIREMENT
CALIFORNIA HIGH COLONIAL COLONIAL INVESTMENT COLONIAL BENEFITS
INSURED INCOME INTERMARKET INTERMEDIATE GRADE MUNICIPAL ACCRUED AS
MUNICIPAL MUNICIPAL INCOME HIGH INCOME MUNICIPAL INCOME PART OF FUND
FUND TRUST TRUST FUND TRUST TRUST EXPENSES(1)
---------- --------- ----------- ------------ ---------- --------- ------------
DISINTERESTED TRUSTEES
Douglas A. Hacker $1,055 $1,858 $1,283 $1,175 $1,471 $1,642 N/A
Janet Langford Kelly $ 857 $1,828 $1,265 $1,158 $1,448 $1,616 N/A
Richard W. Lowry(2) $ 882 $1,554 $1,072 $ 982 $1,229 $1,373 N/A
Charles R. Nelson $ 977 $1,719 $1,189 $1,088 $1,361 $1,520 N/A
John J. Neuhauser(2) $ 934 $1,641 $1,137 $1,041 $1,300 $1,451 N/A
Patrick J. Simpson(3) $ 994 $1,746 $1,209 $1,107 $1,384 $1,544 N/A
Thomas E. Stitzel(4) $1,009 $1,776 $1,227 $1,124 $1,406 $1,570 N/A
Thomas C. Theobald(5) $1,486 $2,614 $1,809 $1,656 $2,070 $2,311 N/A
Anne-Lee Verville(6) $1,009 $1,776 $1,227 $1,124 $1,406 $1,570 N/A
Richard L. Woolworth(7) $ 621 $1,122 $ 747 $ 683 $ 875 $ 985 N/A
INTERESTED TRUSTEE
William E. Mayer(2) $ 976 $1,725 $1,185 $1,085 $1,363 $1,523 N/A
TOTAL
COMPENSATION
FROM THE FUND
COMPLEX PAID
TO THE
TRUSTEES
-------------
DISINTERESTED TRUSTEES
Douglas A. Hacker $199,000
Janet Langford Kelly $194,500
Richard W. Lowry(2) $223,500
Charles R. Nelson $183,000
John J. Neuhauser(2) $223,000
Patrick J. Simpson(3) $186,000
Thomas E. Stitzel(4) $191,500
Thomas C. Theobald(5) $274,500
Anne-Lee Verville(6) $191,500
Richard L. Woolworth(7) $103,250
INTERESTED TRUSTEE
William E. Mayer(2) $193,500
(1) The Funds do not provide pension or retirement plan benefits to the
trustees.
H-1
(2) Total Compensation figures for Messrs. Lowry, Mayer and Neuhauser
include trustee fees paid to them by Liberty All-Star Equity Fund and
Liberty All-Star Growth Fund, Inc. prior to December 15, 2006, at which
time those funds ceased to be part of the Columbia Fund Complex.
(3) During the indicated periods, Mr. Simpson deferred all of his
compensation from funds in the Fund complex pursuant to the deferred
compensation plan. At December 31, 2006, the value of Mr. Simpson's
account under that plan was $511,995.
(4) During the indicated periods, Mr. Stitzel deferred $435, $760, $531,
$486, $604 and $673 from Colonial California Insured Municipal Fund,
Colonial High Income Municipal Trust, Colonial Intermarket Income
Trust, Colonial Intermediate High Income Fund, Colonial Investment
Grade Municipal Trust and Colonial Municipal Income Trust,
respectively, and in the calendar year ended December 31, 2006 $116,500
of his total compensation from the Columbia Fund Complex, pursuant to
the deferred compensation plan. At December 31, 2006, the value of Mr.
Stitzel's account under that plan was $128,397.
(5) During the indicated periods, Mr. Theobald deferred 68% of his
compensation from the funds in the Fund Complex pursuant to the
deferred compensation plan. At December 31, 2006, the value of Mr.
Theobald's account under that plan was $584,565.
(6) At December 31, 2006, the value of Ms. Verville's account under the
deferred compensation plan was $792,952.
(7) Mr. Woolworth served as a trustee of the Funds until August 4, 2006.
H-2
APPENDIX I
TRUSTEE AND NOMINEE SHARE OWNERSHIP
The tables below show the dollar range of equity securities of each Fund and the
aggregate dollar range of equity securities of all funds in the Funds' "Family
of Investment Companies" (as defined in Item 22(a)(1)(iv) of Rule 14a-101 under
the Exchange Act) owned by each trustee and each nominee set forth in Proposal 4
as of the Record Date. For purposes of the tables below, the following symbols
are applicable:
N None
A $1 -- $10,000
B $10,001 -- $50,000
C $50,001 -- $100,000
D Over $100,000
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
----------------------------------------------------------------------------
COLONIAL COLONIAL COLONIAL
CALIFORNIA HIGH COLONIAL COLONIAL INVESTMENT COLONIAL
INSURED INCOME INTERMARKET INTERMEDIATE GRADE MUNICIPAL
MUNICIPAL MUNICIPAL INCOME HIGH MUNICIPAL INCOME
FUND TRUST TRUST I INCOME FUND TRUST TRUST
---------- --------- ----------- ------------ ---------- ---------
DISINTERESTED TRUSTEES
Douglas A. Hacker N N N N N N
Janet Langford Kelly N N N N N N
Richard W. Lowry N N N N N N
Charles R. Nelson N N N N N N
John J. Neuhauser N N N N N N
Patrick J. Simpson N N N N N N
Thomas E. Stitzel N N N N N N
Thomas C. Theobald N N N N N N
Anne-Lee Verville N N N N N N
INTERESTED TRUSTEE
William E. Mayer N N N N N N
AGGREGATE DOLLAR
RANGE OF EQUITY
SECURITIES IN ALL
FUNDS OVERSEEN BY
TRUSTEE OR NOMINEE
IN FAMILY OF
INVESTMENT
COMPANIES
------------------
DISINTERESTED TRUSTEES
Douglas A. Hacker D
Janet Langford Kelly D
Richard W. Lowry D
Charles R. Nelson D
John J. Neuhauser D
Patrick J. Simpson D
Thomas E. Stitzel D
Thomas C. Theobald D
Anne-Lee Verville D
INTERESTED TRUSTEE
William E. Mayer C
I-1
(BAR CODE)
COLONIAL CALIFORNIA INSURED
MUNICIPAL FUND
(BAR CODE) C123456789
000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
(BAR CODE) 000000000.000000 ext 000000000.000000 ext
MR A SAMPLE ELECTRONIC VOTING INSTRUCTIONS
DESIGNATION (IF ANY)
ADD 1 YOU CAN VOTE BY INTERNET OR TELEPHONE!
ADD 2 AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!
ADD 3
ADD 4 Instead of mailing your proxy, you may choose one of the two
ADD 5 voting methods outlined below to vote your proxy.
ADD 6
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED
BY 1:00 P.M., EASTERN TIME, ON JUNE 22, 2007.
(GRAPHIC VOTE BY INTERNET
OF
PC) - Log on to the Internet and go to
WWW.INVESTORVOTE.COM
- Follow the steps outlined on the secured
website.
(GRAPHIC VOTE BY TELEPHONE
OF
TELEPHONE) - Call toll free 1-800-652-VOTE (8683) within
the United States, Canada & Puerto Rico any
time on a touch tone telephone. There is NO
CHARGE to you for the call.
- Follow the instructions provided by the
recorded message.
Using a BLACK INK pen, mark your votes with an X as shown
in this example. Please do not write outside the designated [X]
areas.
====================================================================================================================================
ANNUAL MEETING PROXY CARD COMMON 123456 C0123456789 12345
====================================================================================================================================
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
A PROPOSALS -- THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 AND FOR ALL THE NOMINEES LISTED.
FOR AGAINST ABSTAIN
--- ------- -------
1. To approve a new advisory agreement with Massachusetts [ ] [ ] [ ]
Financial Services Company, Inc.
2. To approve an amended and restated Declaration of Trust. [ ] [ ] [ ]
3. Election of ten Trustees:
01 - Robert E. Butler 02 - Lawrence H. Cohn 03 - David H. Gunning 04 - William R. Gutow 05 - Michael Hegarty
06 - Robert J. Manning 07 - Lawrence T. Perera 08 - Robert C. Pozen 09 - J. Dale Sherratt 10 - Robert W. Uek
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03 04 05 06 07 08 09 10
--- --- --- --- --- --- --- --- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
4. Election of three Trustees:
01 - John J. Neuhauser 02 - Thomas C. Theobald 03 - Anne-Lee Verville
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03
--- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
B AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign in corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by authorized person.
Date (mm/dd/yyyy) -- Please print date Signature 1 -- Please keep signature Signature 2 -- Please keep signature
below. within the box. within the box.
/ /
-------------- ------------ -------------- ------------------------------------------ ------------------------------------------
(BAR CODE) C 1234567890 JNT MR A SAMPLE (THIS AREA IS SET UP TO
ACCOMMODATE 140 CHARACTERS) MR A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND MR A
SAMPLE AND MR A SAMPLE AND MR A SAMPLE
1 UPX 0130411 AND MR A SAMPLE AND MR A SAMPLE AND
00PYGE
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
PROXY -- COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
==========================================================================================================================
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
California Insured Municipal Fund (the "Fund"), to be held in Boston, Massachusetts on Friday, June 22, 2007, and at any
adjournments and postponements thereof, all of the common shares of the Fund that the undersigned would be entitled to vote if
personally present, as stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(Items to be voted appear on reverse side.)
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A AND B OF THIS CARD.
(BAR CODE)
COLONIAL HIGH INCOME
MUNICIPAL TRUST
(BAR CODE) C123456789
000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
(BAR CODE) 000000000.000000 ext 000000000.000000 ext
MR A SAMPLE ELECTRONIC VOTING INSTRUCTIONS
DESIGNATION (IF ANY)
ADD 1 YOU CAN VOTE BY INTERNET OR TELEPHONE!
ADD 2 AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!
ADD 3
ADD 4 Instead of mailing your proxy, you may choose one of the two
ADD 5 voting methods outlined below to vote your proxy.
ADD 6
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED
BY 1:00 P.M., EASTERN TIME, ON JUNE 22, 2007.
(GRAPHIC VOTE BY INTERNET
OF
PC) - Log on to the Internet and go to
WWW.INVESTORVOTE.COM
- Follow the steps outlined on the secured
website.
(GRAPHIC VOTE BY TELEPHONE
OF
TELEPHONE) - Call toll free 1-800-652-VOTE (8683) within
the United States, Canada & Puerto Rico any
time on a touch tone telephone. There is NO
CHARGE to you for the call.
- Follow the instructions provided by the
recorded message.
Using a BLACK INK pen, mark your votes with an X as shown
in this example. Please do not write outside the designated [X]
areas.
====================================================================================================================================
ANNUAL MEETING PROXY CARD COMMON 123456 C0123456789 12345
====================================================================================================================================
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
A PROPOSALS -- THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 AND FOR ALL THE NOMINEES LISTED.
FOR AGAINST ABSTAIN
--- ------- -------
1. To approve a new advisory agreement with Massachusetts [ ] [ ] [ ]
Financial Services Company, Inc.
2. To approve an amended and restated Declaration of Trust. [ ] [ ] [ ]
3. Election of ten Trustees:
01 - Robert E. Butler 02 - Lawrence H. Cohn 03 - David H. Gunning 04 - William R. Gutow 05 - Michael Hegarty
06 - Robert J. Manning 07 - Lawrence T. Perera 08 - Robert C. Pozen 09 - J. Dale Sherratt 10 - Robert W. Uek
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03 04 05 06 07 08 09 10
--- --- --- --- --- --- --- --- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
4. Election of three Trustees:
01 - William E. Mayer 02 - Charles R. Nelson 03 - Thomas C. Theobald
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03
--- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
B AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign in corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by authorized person.
Date (mm/dd/yyyy) -- Please print date Signature 1 -- Please keep signature Signature 2 -- Please keep signature
below. within the box. within the box.
/ /
-------------- ------------ -------------- ------------------------------------------ ------------------------------------------
(BAR CODE) C 1234567890 JNT MR A SAMPLE (THIS AREA IS SET UP TO
ACCOMMODATE 140 CHARACTERS) MR A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND MR A
SAMPLE AND MR A SAMPLE AND MR A SAMPLE
1 UPX 0130421 AND MR A SAMPLE AND MR A SAMPLE AND
00Q4HB
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
PROXY -- COLONIAL HIGH INCOME MUNICIPAL TRUST
==========================================================================================================================
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
High Income Municipal Trust (the "Fund"), to be held in Boston, Massachusetts on Friday, June 22, 2007, and at any adjournments and
postponements thereof, all of the common shares of the Fund that the undersigned would be entitled to vote if personally present, as
stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(Items to be voted appear on reverse side.)
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A AND B OF THIS CARD.
(BAR CODE)
COLONIAL INTERMARKET INCOME TRUST I
(BAR CODE) C123456789
000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
(BAR CODE) 000000000.000000 ext 000000000.000000 ext
MR A SAMPLE ELECTRONIC VOTING INSTRUCTIONS
DESIGNATION (IF ANY)
ADD 1 YOU CAN VOTE BY INTERNET OR TELEPHONE!
ADD 2 AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!
ADD 3
ADD 4 Instead of mailing your proxy, you may choose one of the two
ADD 5 voting methods outlined below to vote your proxy.
ADD 6
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED
BY 1:00 P.M., EASTERN TIME, ON JUNE 22, 2007.
(GRAPHIC VOTE BY INTERNET
OF
PC) - Log on to the Internet and go to
WWW.INVESTORVOTE.COM
- Follow the steps outlined on the secured
website.
(GRAPHIC VOTE BY TELEPHONE
OF
TELEPHONE) - Call toll free 1-800-652-VOTE (8683) within
the United States, Canada & Puerto Rico any
time on a touch tone telephone. There is NO
CHARGE to you for the call.
- Follow the instructions provided by the
recorded message.
Using a BLACK INK pen, mark your votes with an X as shown
in this example. Please do not write outside the designated [X]
areas.
====================================================================================================================================
ANNUAL MEETING PROXY CARD 123456 C0123456789 12345
====================================================================================================================================
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
A PROPOSALS -- THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 AND FOR ALL THE NOMINEES LISTED.
FOR AGAINST ABSTAIN
--- ------- -------
1. To approve a new advisory agreement with Massachusetts [ ] [ ] [ ]
Financial Services Company, Inc.
2. To approve an amended and restated Declaration of Trust. [ ] [ ] [ ]
3. Election of twelve Trustees:
01 - Robert E. Butler 02 - Lawrence H. Cohn 03 - David H. Gunning 04 - William R. Gutow 05 - Michael Hegarty
06 - J. Atwood Ives 07 - Robert J. Manning 08 - Lawrence T. Perera 09 - Robert C. Pozen 10 - J. Dale Sherratt
11 - Laurie J. Thomsen 12 - Robert W. Uek
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03 04 05 06 07 08 09 10 11 12
--- --- --- --- --- --- --- --- --- --- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
4. Election of three Trustees:
01 - John J. Neuhauser 02 - Thomas C. Theobald 03 - Anne-Lee Verville
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03
--- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
B AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign in corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by authorized person.
Date (mm/dd/yyyy) -- Please print date Signature 1 -- Please keep signature Signature 2 -- Please keep signature
below. within the box. within the box.
/ /
-------------- ------------ -------------- ------------------------------------------ ------------------------------------------
(BAR CODE) C 1234567890 JNT MR A SAMPLE (THIS AREA IS SET UP TO
ACCOMMODATE 140 CHARACTERS) MR A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND MR A
SAMPLE AND MR A SAMPLE AND MR A SAMPLE
1 UPX 0130441 AND MR A SAMPLE AND MR A SAMPLE AND
00Q4FD
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
PROXY -- COLONIAL INTERMARKET INCOME TRUST I
==========================================================================================================================
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
InterMarket Income Trust I (the "Fund"), to be held in Boston, Massachusetts on Friday, June 22, 2007, and at any adjournments and
postponements thereof, all of the shares of the Fund that the undersigned would be entitled to vote if personally present, as stated
on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(Items to be voted appear on reverse side.)
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A AND B OF THIS CARD.
(BAR CODE)
COLONIAL INTERMEDIATE
HIGH INCOME FUND
(BAR CODE) C123456789
000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
(Bar Code) 000000000.000000 ext 000000000.000000 ext
MR A SAMPLE ELECTRONIC VOTING INSTRUCTIONS
DESIGNATION (IF ANY)
ADD 1 YOU CAN VOTE BY INTERNET OR TELEPHONE!
ADD 2 AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!
ADD 3
ADD 4 Instead of mailing your proxy, you may choose one of the two
ADD 5 voting methods outlined below to vote your proxy.
ADD 6
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED
BY 1:00 P.M., EASTERN TIME, ON JUNE 22, 2007.
(GRAPHIC VOTE BY INTERNET
OF
PC) - Log on to the Internet and go to
WWW.INVESTORVOTE.COM
- Follow the steps outlined on the secured
website.
(GRAPHIC VOTE BY TELEPHONE
OF
TELEPHONE) - Call toll free 1-800-652-VOTE (8683) within
the United States, Canada & Puerto Rico any
time on a touch tone telephone. There is NO
CHARGE to you for the call.
- Follow the instructions provided by the
recorded message.
Using a BLACK INK pen, mark your votes with an X as shown
in this example. Please do not write outside the designated [X]
areas.
====================================================================================================================================
ANNUAL MEETING PROXY CARD 123456 C0123456789 12345
====================================================================================================================================
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
A PROPOSALS -- THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 AND FOR ALL THE NOMINEES LISTED.
FOR AGAINST ABSTAIN
--- ------- -------
1. To approve a new advisory agreement with Massachusetts [ ] [ ] [ ]
Financial Services Company, Inc.
2. To approve an amended and restated Declaration of Trust. [ ] [ ] [ ]
3. Election of ten Trustees:
01 - Robert E. Butler 02 - Lawrence H. Cohn 03 - David H. Gunning 04 - William R. Gutow 05 - Michael Hegarty
06 - J. Atwood Ives 07 - Robert J. Manning 08 - Lawrence T. Perera 09 - Robert C. Pozen 10 - J. Dale Sherratt
11 - Laurie J. Thomsen 12 - Robert W. Uek
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03 04 05 06 07 08 09 10 11 12
--- --- --- --- --- --- --- --- --- --- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
4. Election of four Trustees:
01 - Patrick J. Simpson 02 - Thomas E. Sitzel 03 - Thomas C. Theobald 04 - Anne-Lee Verville
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03 04
--- --- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
B AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign in corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by authorized person.
Date (mm/dd/yyyy) -- Please print date Signature 1 -- Please keep signature Signature 2 -- Please keep signature
below. within the box. within the box.
/ /
-------------- ------------ -------------- ------------------------------------------ ------------------------------------------
(Bar Code) C 1234567890 JNT MR A SAMPLE (THIS AREA IS SET UP TO
ACCOMMODATE 140 CHARACTERS) MR A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND MR A
SAMPLE AND MR A SAMPLE AND MR A SAMPLE
1 UPX 0130451 AND MR A SAMPLE AND MR A SAMPLE AND
00Q4EC
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
PROXY -- COLONIAL INTERMEDIATE HIGH INCOME FUND
==========================================================================================================================
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
Intermediate High Income Fund (the "Fund"), to be held in Boston, Massachusetts on Friday, June 22, 2007, and at any adjournments
and postponements thereof, all of the shares of the Fund that the undersigned would be entitled to vote if personally present, as
stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(Items to be voted appear on reverse side.)
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A AND B OF THIS CARD.
(BAR CODE)
COLONIAL INVESTMENT
GRADE MUNICIPAL TRUST
(BAR CODE) C123456789
000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
(BAR CODE) 000000000.000000 ext 000000000.000000 ext
MR A SAMPLE ELECTRONIC VOTING INSTRUCTIONS
DESIGNATION (IF ANY)
ADD 1 YOU CAN VOTE BY INTERNET OR TELEPHONE!
ADD 2 AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!
ADD 3
ADD 4 Instead of mailing your proxy, you may choose one of the two
ADD 5 voting methods outlined below to vote your proxy.
ADD 6
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED
BY 1:00 P.M., EASTERN TIME, ON JUNE 22, 2007.
(GRAPHIC VOTE BY INTERNET
OF
PC) - Log on to the Internet and go to
WWW.INVESTORVOTE.COM
- Follow the steps outlined on the secured
website.
(GRAPHIC VOTE BY TELEPHONE
OF
TELEPHONE) - Call toll free 1-800-652-VOTE (8683) within
the United States, Canada & Puerto Rico any
time on a touch tone telephone. There is NO
CHARGE to you for the call.
- Follow the instructions provided by the
recorded message.
Using a BLACK INK pen, mark your votes with an X as shown
in this example. Please do not write outside the designated [X]
areas.
====================================================================================================================================
ANNUAL MEETING PROXY CARD COMMON 123456 C0123456789 12345
====================================================================================================================================
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
A PROPOSALS -- THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 AND FOR ALL THE NOMINEES LISTED.
FOR AGAINST ABSTAIN
--- ------- -------
1. To approve a new advisory agreement with Massachusetts [ ] [ ] [ ]
Financial Services Company, Inc.
2. To approve an amended and restated Declaration of Trust. [ ] [ ] [ ]
3. Election of ten Trustees:
01 - Robert E. Butler 02 - Lawrence H. Cohn 03 - David H. Gunning 04 - William R. Gutow 05 - Michael Hegarty
06 - Robert J. Manning 07 - Lawrence T. Perera 08 - Robert C. Pozen 09 - J. Dale Sherratt 10 - Robert W. Uek
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03 04 05 06 07 08 09 10
--- --- --- --- --- --- --- --- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
4. Election of three Trustees:
01 - William E. Mayer 02 - John J. Neuhauser 03 - Thomas C. Theobald
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03
--- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
B AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign in corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by authorized person.
Date (mm/dd/yyyy) -- Please print date Signature 1 -- Please keep signature Signature 2 -- Please keep signature
below. within the box. within the box.
/ /
-------------- ------------ -------------- ------------------------------------------ ------------------------------------------
(BAR CODE) C 1234567890 JNT MR A SAMPLE (THIS AREA IS SET UP TO
ACCOMMODATE 140 CHARACTERS) MR A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND MR A
SAMPLE AND MR A SAMPLE AND MR A SAMPLE
1 UPX 0130461 AND MR A SAMPLE AND MR A SAMPLE AND
00Q4BB
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
PROXY -- COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
==========================================================================================================================
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
Investment Grade Municipal Trust (the "Fund"), to be held in Boston, Massachusetts on Friday, June 22, 2007, and at any adjournments
and postponements thereof, all of the common shares of the Fund that the undersigned would be entitled to vote if personally
present, as stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(Items to be voted appear on reverse side.)
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A AND B OF THIS CARD.
(BAR CODE)
COLONIAL MUNICIPAL INCOME TRUST
(BAR CODE) C123456789
000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
(BAR CODE) 000000000.000000 ext 000000000.000000 ext
MR A SAMPLE ELECTRONIC VOTING INSTRUCTIONS
DESIGNATION (IF ANY)
ADD 1 YOU CAN VOTE BY INTERNET OR TELEPHONE!
ADD 2 AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK!
ADD 3
ADD 4 Instead of mailing your proxy, you may choose one of the two
ADD 5 voting methods outlined below to vote your proxy.
ADD 6
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
PROXIES SUBMITTED BY THE INTERNET OR TELEPHONE MUST BE RECEIVED
BY 1:00 P.M., EASTERN TIME, ON JUNE 22, 2007.
(GRAPHIC VOTE BY INTERNET
OF
PC) - Log on to the Internet and go to
WWW.INVESTORVOTE.COM
- Follow the steps outlined on the secured
website.
(GRAPHIC VOTE BY TELEPHONE
OF
TELEPHONE) - Call toll free 1-800-652-VOTE (8683) within
the United States, Canada & Puerto Rico any
time on a touch tone telephone. There is NO
CHARGE to you for the call.
- Follow the instructions provided by the
recorded message.
Using a BLACK INK pen, mark your votes with an X as shown
in this example. Please do not write outside the designated [X]
areas.
====================================================================================================================================
ANNUAL MEETING PROXY CARD COMMON 123456 C0123456789 12345
====================================================================================================================================
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
------------------------------------------------------------------------------------------------------------------------------------
A PROPOSALS -- THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 AND FOR ALL THE NOMINEES LISTED.
FOR AGAINST ABSTAIN
--- ------- -------
1. To approve a new advisory agreement with Massachusetts [ ] [ ] [ ]
Financial Services Company, Inc.
2. To approve an amended and restated Declaration of Trust. [ ] [ ] [ ]
3. Election of ten Trustees:
01 - Robert E. Butler 02 - Lawrence H. Cohn 03 - David H. Gunning 04 - William R. Gutow 05 - Michael Hegarty
06 - Robert J. Manning 07 - Lawrence T. Perera 08 - Robert C. Pozen 09 - J. Dale Sherratt 10 - Robert W. Uek
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03 04 05 06 07 08 09 10
--- --- --- --- --- --- --- --- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
4. Election of three Trustees:
01 - Richard W. Lowry 02 - John J. Neuhauser 02 - Thomas C. Theobald
[ ] MARK HERE TO VOTE FOR ALL [ ] MARK HERE TO WITHHOLD VOTE FROM ALL
NOMINEES NOMINEES
01 02 03
--- --- ---
[ ] FOR ALL EXCEPT - To withhold a vote for [ ] [ ] [ ]
one or more nominees, mark the box to the
left and the corresponding numbered
box(es) to the right.
B AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign in corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by authorized person.
Date (mm/dd/yyyy) -- Please print date Signature 1 -- Please keep signature Signature 2 -- Please keep signature
below. within the box. within the box.
/ /
-------------- ------------ -------------- ------------------------------------------ ------------------------------------------
(BAR CODE) C 1234567890 JNT MR A SAMPLE (THIS AREA IS SET UP TO
ACCOMMODATE 140 CHARACTERS) MR A SAMPLE
AND MR A SAMPLE AND MR A SAMPLE AND MR A
SAMPLE AND MR A SAMPLE AND MR A SAMPLE
1 UPX 0130471 AND MR A SAMPLE AND MR A SAMPLE AND
00Q48B
-- IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN --
THE ENCLOSED ENVELOPE.
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PROXY -- COLONIAL MUNICIPAL INCOME TRUST
==========================================================================================================================
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
Municipal Income Trust (the "Fund"), to be held in Boston, Massachusetts on Friday, June 22, 2007, and at any adjournments and
postponements thereof, all of the common shares of the Fund that the undersigned would be entitled to vote if personally present, as
stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(Items to be voted appear on reverse side.)
CHANGE OF ADDRESS -- Please print new address below.
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IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A AND B OF THIS CARD.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PROXY COLONIAL CALIFORNIA INSURED MUNICIPAL FUND PROXY
MUNICIPAL AUCTION RATE
CUMULATIVE PREFERRED SHARES
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
California Insured Municipal Fund (the "Fund"), to be held in Boston, Massachusetts, on Friday, June 22, 2007, and at any
adjournments and postponements thereof, all of the preferred shares of the Fund that the undersigned would be entitled to vote if
personally present, stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
------------------------------- --------------------------------
------------------------------- --------------------------------
Please sign exactly as name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
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Signature
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Signature (if held jointly)
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Date CCIM_17694_A
PLEASE VOTE, DATE AND SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
PLEASE MARK VOTES AS IN THIS EXAMPLE: [ ]
FOR AGAINST ABSTAIN
--- ------- -------
1. TO APPROVE A NEW ADVISORY AGREEMENT WITH MASSACHUSETTES FINANCIAL SERVICES COMPANY, [ ] [ ] [ ]
INC.
FOR AGAINST ABSTAIN
--- ------- -------
2. TO APPROVE AN AMENDED AND RESTATED DECLARATION OF TRUST. [ ] [ ] [ ]
3A. TO ELECT TEN TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 Robert E. Butler 02 Lawrence H. Cohn 03 David H. Gunning [ ] [ ] [ ]
04 William R. Gutow 05 Michael Hegarty 06 Robert J. Manning
07 Lawrence T. Perera 08 Robert C. Pozen 09 J. Dale Sherratt
10 Robert W. Uek
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
3B. TO ELECT TWO TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 J. Atwood Ives 02 Laurie J. Thomsen [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
4A. TO ELECT THREE TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 William E. Mayer 02 John J. Neuhauser 03 Thomas C. Theobald [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
4B. TO ELECT TWO TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 Douglas A. Hacker 02 Thomas E. Stitzel [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
CCIM_17694_A
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PROXY COLONIAL HIGH INCOME MUNICIPAL TRUST PROXY
MUNICIPAL AUCTION RATE
CUMULATIVE PREFERRED SHARES
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
High Income Municipal Trust (the "Fund"), to be held in Boston, Massachusetts, on Friday, June 22, 2007, and at any adjournments and
postponements thereof, all of the preferred shares of the Fund that the undersigned would be entitled to vote if personally present,
stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
------------------------------- --------------------------------
------------------------------- --------------------------------
Please sign exactly as name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
------------------------------------------------------------------
Signature
------------------------------------------------------------------
Signature (if held jointly)
------------------------------------------------------------------
Date CHIM_17695_A
PLEASE VOTE, DATE AND SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
COLONIAL HIGH INCOME MUNICIPAL TRUST
PLEASE MARK VOTES AS IN THIS EXAMPLE: [ ]
FOR AGAINST ABSTAIN
--- ------- -------
1. TO APPROVE A NEW ADVISORY AGREEMENT WITH MASSACHUSETTES FINANCIAL SERVICES COMPANY, [ ] [ ] [ ]
INC.
FOR AGAINST ABSTAIN
--- ------- -------
2. TO APPROVE AN AMENDED AND RESTATED DECLARATION OF TRUST. [ ] [ ] [ ]
3A. TO ELECT TEN TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 Robert E. Butler 02 Lawrence H. Cohn 03 David H. Gunning [ ] [ ] [ ]
04 William R. Gutow 05 Michael Hegarty 06 Robert J. Manning
07 Lawrence T. Perera 08 Robert C. Pozen 09 J. Dale Sherratt
10 Robert W. Uek
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
3B. TO ELECT TWO TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 J. Atwood Ives 02 Laurie J. Thomsen [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
4A. TO ELECT THREE TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 William E. Mayer 02 John J. Neuhauser 03 Thomas C. Theobald [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
4B. TO ELECT TWO TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 Douglas A. Hacker 02 Thomas E. Stitzel [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
CHIM_17695_A
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PROXY COLONIAL INVESTMENT GRADE MUNICIPAL TRUST PROXY
MUNICIPAL AUCTION RATE
CUMULATIVE PREFERRED SHARES
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
Investment Grade Municipal Trust (the "Fund"), to be held in Boston, Massachusetts, on Friday, June 22, 2007, and at any
adjournments and postponements thereof, all of the preferred shares of the Fund that the undersigned would be entitled to vote if
personally present, stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
------------------------------- --------------------------------
------------------------------- --------------------------------
Please sign exactly as name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
------------------------------------------------------------------
Signature
------------------------------------------------------------------
Signature (if held jointly)
------------------------------------------------------------------
Date CIGM_17696_A
PLEASE VOTE, DATE AND SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
COLONIAL INVESTMENT GRADE MUNICIPAL TRUST
PLEASE MARK VOTES AS IN THIS EXAMPLE: [ ]
FOR AGAINST ABSTAIN
--- ------- -------
1. TO APPROVE A NEW ADVISORY AGREEMENT WITH MASSACHUSETTES FINANCIAL SERVICES COMPANY, [ ] [ ] [ ]
INC.
FOR AGAINST ABSTAIN
--- ------- -------
2. TO APPROVE AN AMENDED AND RESTATED DECLARATION OF TRUST. [ ] [ ] [ ]
3A. TO ELECT TEN TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 Robert E. Butler 02 Lawrence H. Cohn 03 David H. Gunning [ ] [ ] [ ]
04 William R. Gutow 05 Michael Hegarty 06 Robert J. Manning
07 Lawrence T. Perera 08 Robert C. Pozen 09 J. Dale Sherratt
10 Robert W. Uek
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
3B. TO ELECT TWO TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 J. Atwood Ives 02 Laurie J. Thomsen [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
4A. TO ELECT THREE TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 William E. Mayer 02 John J. Neuhauser 03 Thomas C. Theobald [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
4B. TO ELECT TWO TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 Douglas A. Hacker 02 Thomas E. Stitzel [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
CIGM_17696_A
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PROXY COLONIAL MUNICIPAL INCOME TRUST PROXY
MUNICIPAL AUCTION RATE
CUMULATIVE PREFERRED SHARES
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned shareholder hereby appoints each of James R. Bordewick, Jr., Michael G. Clarke, Peter T. Fariel, Ryan C. Larrenaga,
Julie B. Lyman, J. Kevin Connaughton and Christopher L. Wilson as proxies of the undersigned, with full power of substitution to
each, and hereby authorizes each of them to represent the undersigned and to vote at the Annual Meeting of Shareholders of Colonial
Municipal Income Trust (the "Fund"), to be held in Boston, Massachusetts, on Friday, June 22, 2007, and at any adjournments and
postponements thereof, all of the preferred shares of the Fund that the undersigned would be entitled to vote if personally present,
stated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND, ABSENT DIRECTION, WILL BE VOTED FOR EACH OF THE
NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE. THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE HOLDERS AS TO ANY OTHER
MATTER.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND PROPOSALS SET FORTH ON THE REVERSE SIDE.
------------------------------- --------------------------------
------------------------------- --------------------------------
Please sign exactly as name(s) appear(s) hereon. Joint owners
should each sign personally. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
------------------------------------------------------------------
Signature
------------------------------------------------------------------
Signature (if held jointly)
------------------------------------------------------------------
Date CMI_17693_A
PLEASE VOTE, DATE AND SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
COLONIAL MUNICIPAL INCOME TRUST
PLEASE MARK VOTES AS IN THIS EXAMPLE: [ ]
FOR AGAINST ABSTAIN
--- ------- -------
1. TO APPROVE A NEW ADVISORY AGREEMENT WITH MASSACHUSETTES FINANCIAL SERVICES COMPANY, [ ] [ ] [ ]
INC.
FOR AGAINST ABSTAIN
--- ------- -------
2. TO APPROVE AN AMENDED AND RESTATED DECLARATION OF TRUST. [ ] [ ] [ ]
3A. TO ELECT TEN TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 Robert E. Butler 02 Lawrence H. Cohn 03 David H. Gunning [ ] [ ] [ ]
04 William R. Gutow 05 Michael Hegarty 06 Robert J. Manning
07 Lawrence T. Perera 08 Robert C. Pozen 09 J. Dale Sherratt
10 Robert W. Uek
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
3B. TO ELECT TWO TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 J. Atwood Ives 02 Laurie J. Thomsen [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
4A. TO ELECT THREE TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 William E. Mayer 02 John J. Neuhauser 03 Thomas C. Theobald [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
4B. TO ELECT TWO TRUSTEES: FOR ALL WITHHOLD ALL FOR ALL EXCEPT
------- ------------ --------------
01 Douglas A. Hacker 02 Thomas E. Stitzel [ ] [ ] [ ]
To withhold authority to elect one or more nominees, mark the "FOR ALL EXCEPT" box and
write the number(s) of the nominees(s) for whom you wish to withhold authority on the
line: ____________________________________________________________________________________
CMI_17693_A