DEF 14A 1 CMIT PROXY COLONIAL MUNICIPAL INCOME TRUST One Financial Center, Boston, Massachusetts 02111 (617) 426-3750 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 28, 1995 Dear Fellow Shareholder: The Annual Meeting of Shareholders (Meeting) of Colonial Municipal Income Trust (Fund) will be held at the offices of Colonial Management Associates, Inc. (Adviser), One Financial Center, Boston, Massachusetts, on Friday, April 28, 1995, at 10:00 A.M., Eastern time, to: 1. Elect seven Trustees; 2. Ratify or reject the selection of independent accountants; and 3. Transact such other business as may properly come before the Meeting or any adjournment thereof. By order of the Trustees, Arthur O. Stern, Secretary March 24, 1995 NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IF A QUORUM IS NOT PRESENT AT THE MEETING, ADDITIONAL EXPENSES WILL BE INCURRED TO SOLICIT ADDITIONAL PROXIES. TO AVOID THESE COSTS TO YOUR FUND, PLEASE VOTE, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE IMMEDIATELY. IT-85/760A-0395 PROXY STATEMENT General Information March 24, 1995 The enclosed proxy, which was first mailed on March 24, 1995, is solicited by the Trustees for use at the Meeting. All properly executed proxies received in time for the Meeting will be voted as specified in the proxy or, if no specification is made, in favor of each proposal referred to in the Proxy Statement. The proxy may be revoked prior to its exercise by a later dated proxy, by written revocation received by the Secretary or by voting in person. Solicitation may be made by mail, telephone, telegraph, telecopy and personal interviews. Authorization to execute proxies may be obtained by telephonically or electronically transmitted instructions. The cost of solicitation will be paid by the Fund. Thirty percent of the shares outstanding and entitled to vote constitutes a quorum and must be present in person or represented by proxy for business to be transacted at the Meeting. On February 1, 1995, the Fund had outstanding 27,346,098 shares of beneficial interest. Shareholders of record at the close of business on February 1, 1995 will have one vote for each share held. As of February 1, 1995, Cede & Co., P.O. Box 20, Bowling Green Station, New York, New York 10004 owned of record 66.42% of the Fund's outstanding shares. Votes cast by proxy or in person will be counted by persons appointed by the Fund to act as election tellers for the Meeting. The tellers will count the total number of votes cast "for" approval of the proposals for purposes of determining whether sufficient affirmative votes have been cast. Where a shareholder withholds authority or abstains, or the proxy reflects a "broker non-vote" (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) the shares will be counted as present and entitled to vote on the matter for purposes of determining the presence of a quorum. With respect to the election of Trustees and ratification of independent accountants, withheld authority, abstentions and broker non-votes have no effect on the outcome of the voting. Further information concerning the Fund is contained in its most recent Annual Report to shareholders, which is obtainable free of charge by writing the Adviser at One Financial Center, Boston, MA 02110 or by calling 1-800-248-2828. 1. Election of Seven Trustees. Messrs. Birnbaum, Grinnell, Ireland, Lowry, Mayer, Shinn and Sullivan (who have each agreed to serve) are proposed for election as Trustees of the Fund each to serve three years or until a successor is elected. Messrs. Ireland, Mayer, Shinn and Sullivan currently serve as Trustees. Messrs. Birnbaum, Grinnell and Lowry are proposed to be added to the Board. The election of each of Messrs. Birnbaum, Grinnell and Lowry is conditioned on (1) the closing of the Merger described below (Merger) of The Colonial Group, Inc. (TCG), parent company of the Adviser, with a subsidiary of Liberty Financial Companies, Inc. (Liberty Financial) (currently scheduled to occur on or about March 24, 1995) and (ii) their nomination by the current Trustees at a meeting scheduled for April 21, 1995. The Board of Trustees currently consists of Ms. Collins and Messrs. Bleasdale, Ireland, Mayer, McNeice, Moody, Neuhauser, Shinn, Sullivan and Weeks. The Board is currently divided into the following three classes, each with a three year term expiring in the year indicated (assuming the persons listed above, other than Messrs. Birnbaum, Grinnell and Lowry, are elected at the Meeting): 1996 1997 1998 Mr. Bleasdale Ms. Collins Mr. Ireland Mr. McNeice Mr. Neuhauser Mr. Mayer Mr. Moody Mr. Weeks Mr. Shinn Mr. Sullivan The years in which Messrs. Birnbaum's, Grinnell's and Lowry's terms will expire will be determined by the current Trustees at their April meeting. The following table sets forth certain information about the current Trustees and about Messrs. Birnbaum, Grinnell and Lowry: Shares Beneficially Owned and Percent of Nominee Name Principal Occupation (1) Fund at Age Trustee since and Directorships February 1, 1995(2) Robert J. Birnbaum Retired January, 1994; ---- (67) Special Counsel, Dechert Price & Rhoads (September, 1988 to December, 1993); President and Chief Operating Officer, New York Stock Exchange (May, 1985 to June, 1988); Trustee, Liberty Financial Trust. Tom Bleasdale Retired (formerly Chairman ---- (64) 1992 of the Board and Chief Executive Officer, Shore Bank & Trust Company). Director or Trustee: Colonial Funds (3), Stok, Inc. Lora S. Collins Attorney, Kramer, Levin, ---- (59) 1992 Naftalis, Nessen, Kamin & Frankel (law). Trustee: Colonial Funds (3). James E. Grinnell Private Investor (since ---- (65) November, 1988); Senior Vice President-Operations, The Rockport Company, importer and distributor of shoes (May, 1986 to November, 1988); Trustee, Liberty Financial Trust. William D. Ireland, Retired (formerly Chairman ---- Jr. of the Board, Bank of New (71) 1987 England--Worcester). Director or Trustee: Colonial Funds (3). Richard W. Lowry Private Investor (August, ---- (58) 1987 to present); Chairman and Chief Executive Officer, U.S. Plywood Corporation, manufacturer and distributor of wood products (August, 1985 to August, 1987); Trustee, Liberty Financial Trust. William E. Mayer* Dean of the College of ---- (54) 1994 Business and Management, University of Maryland (formerly Dean of the Simon Graduate School of Business, University of Rochester; Chairman and Chief Executive Officer, C.S. First Boston Merchant Bank; and President and Chief Executive Officer, The First Boston Corporation). Director or Trustee: Colonial Funds (3), Hambrecht & Quist Incorporated, American Medical Inc., Chart House Enterprises and Riverwood International Corp. John A. McNeice, Chairman of the Board, Chief ---- Jr.* Executive Officer and (62) 1987 Director of the Adviser: Chairman of the Board and Director of TCG: Trustee: Colonial Funds (3). James L. Moody, Jr. Chairman of the Board, ---- (63) 1987 Hannaford Bros. Co. (food distributor) (formerly Chief Executive Officer, Hannaford Bros. Co.). Director or Trustee: Colonial Funds (3), Penobscot Shoe Co., Sobeys Inc., Hills Stores Company, Inc., UNUM Corporation, IDEXX Laboratories. John J. Neuhauser Dean of the School of ---- (51) 1987 Management, Boston College. Director or Trustee: Colonial Funds (3), Hyde Athletic Industries, Inc. George L. Shinn Financial Consultant ---- (72) 1992 (formerly Chairman, Chief Executive Officer and Consultant, The First Boston Corporation). Trustee or Director: Colonial Funds (3), The New York Times Co., Phelps Dodge Corp., Robert L. Sullivan Management Consultant. ---- (67) 1989 Trustee: Colonial Funds (3). Sinclair Weeks, Jr. Chairman of the Board, Reed ---- (71) 1992 & Barton Corporation. Director or Trustee: Colonial Funds (3), Commonwealth Energy Systems. * Mr. McNeice is an "interested person," as defined by the Investment Company Act of 1940 (1940 Act) because of his affiliation with TCG and the Adviser. Mr. Mayer is an "interested person" because of his affiliation with Hambrecht & Quist Incorporated (a registered broker dealer). (1) Except as otherwise noted, each individual has held the office indicated or other offices in the same company for the last five years. (2) On February 1, 1995, the Trustees and officers of the Fund beneficially owned less than 1% of the then outstanding shares of the Fund. (3) Colonial Funds include: Colonial Trust I, Colonial Trust II, Colonial Trust III, Colonial Trust IV, Colonial Trust V, Colonial Trust VI, Colonial High Income Municipal Trust, Colonial InterMarket Income Trust I, Colonial Intermediate High Income Fund, Colonial Investment Grade Municipal Trust and Colonial Municipal Income Trust. The following table sets forth certain information about the executive officers of the Fund. Name Age Executive Principal Occupation (4) Officer Since John A. McNeice, Jr. President and Trustee of the 62 1987 Fund: Chairman of the Board, Chief Executive Officer and Director of the Adviser: Chairman of the Board and Director of TCG: President and Trustee of Colonial Funds (5). Harold W. Cogger Vice President of the Fund: 59 1993 President and Director of the Adviser (formerly Executive Vice President): President, Chief Executive Officer and Director of TCG: Vice President of Colonial Funds (5). Davey S. Scoon Vice President of the Fund 48 1993 (formerly Treasurer): Executive Vice President and Director of the Adviser (formerly Senior Vice President and Treasurer): Executive Vice President and Chief Operating Officer of TCG (formerly Vice President - Finance and Administration and Treasurer): Vice President of Colonial Funds (formerly Treasurer) (5). Richard A. Silver Treasurer and Chief Financial 48 1993 Officer of the Fund (formerly Controller): Senior Vice President, Director, Treasurer and Chief Financial Officer of the Adviser: Treasurer and Chief Financial Officer of TCG (formerly Assistant Treasurer): Treasurer and Chief Financial Officer of Colonial Funds (5). Peter L. Lydecker Controller of the Fund 41 1993 (formerly Assistant Controller): Vice President of Adviser (formerly Assistant Vice President): Controller of Colonial Funds (formerly Assistant Controller) (5). (4) Except as otherwise noted, each individual has held the office indicated or other offices in the same company for the last five years. (5) Colonial Funds include: Colonial Trust I, Colonial Trust II, Colonial Trust III, Colonial Trust IV, Colonial Trust V, Colonial Trust VI, 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. Certain officers and Trustees of the Fund also hold positions with the other Colonial Funds for which the Adviser acts as investment adviser. Trustees Meetings and Committees During the fiscal year ended November 30, 1994, the Board held seven meetings. The current Trustees received the following compensation from the Fund for the fiscal year ended November 30, 1994 and from the Colonial Funds for the calendar year ended December 31, 1994 for serving as Trustees: Aggregate Compen- Pension or sation Retirement Estimated Total Compensation From Benefits Annual From Fund Fund for Accrued As Benefits Fund Complex the fiscal Part of Upon For the Calendar year ended Fund Retirement year ended Trustee 11/30/94 Expense Retirement 12/31/94 (b) Tom Bleasdale $1,944 (a) $0 $0 $101,000 Lora S. Collins 1,804 0 0 95,000 William D. Ireland, Jr. 2,094 0 0 110,000 William E. Mayer 1,750 0 0 89,752 John A. McNeice, Jr. 0 0 0 0 James L. Moody, Jr. 1,880 0 0 109,000 John J. 1,908 0 0 95,000 Neuhauser George L. Shinn 1,974 0 0 112,000 Robert L. 2,017 0 0 104,561 Sullivan Sinclair Weeks, Jr. 2,090 0 0 116,000 (a) Includes $938 payable as deferred compensation. (b) The Colonial Funds Complex consists of 31 open-end and 5 closed-end management investment company portfolios advised by the Adviser. The following table sets forth the amount of compensation paid to Messrs. Birnbaum, Grinnell and Lowry in their capacities as Trustees of the Liberty All-Star Equity Fund, The Charles Allmon Trust, Inc., Liberty Financial Trust and LFC Utilities Trust (together, Liberty Funds) for service during the calendar year ended December 31, 1994: Aggregate Compen- Pension or sation Retirement From Fund Benefits Estimated Total Compensation for the Accrued As Annual From Liberty Funds fiscal Part of Benefits For the calendar year ended Fund Upon year ended Trustee 11/30/94 Expense Retirement 12/31/94 (c) Robert J. $0 $0 $0 $ 0 Birnbaum James E. 0 0 0 31,032 Grinnell Richard W. 0 0 0 31,282 Lowry (c) The Liberty Funds consist of 5 open-end and 2 closed-end mangement investment company portfolios, each of which is advised by Stein Roe & Farnham Incorporated, an indirect wholly-owned subsidiary of Liberty Financial. The Audit Committee of the Colonial Funds, consisting of Messrs. Bleasdale, Ireland, Moody, Shinn, Sullivan and Weeks, met twice during the fiscal year ended November 30, 1994. The Committee recommends to the Trustees the independent accountants to serve as auditors, reviews with the independent accountants the results of the auditing engagement and the internal accounting procedures and controls, and considers the independence of the independent accountants, the range of their audit services and their fees. The Compensation Committee of the Colonial Funds, consisting of Ms. Collins and Messrs. Neuhauser, Sullivan and Weeks, met once during the fiscal year ended November 30, 1994. The Committee reviews compensation of the Trustees. The Nominating Committee of the Colonial Funds, consisting of Messrs. Bleasdale, Ireland, Moody and Weeks, met once during the fiscal year ended November 30, 1994. The Committee in its sole discretion recommends to the Trustees nominees for Trustee and for appointments to various committees. The Committee will consider candidates for Trustee recommended by shareholders. Written recommendations with supporting information should be directed to the Committee in care of the Fund. During the fiscal year ended November 30, 1994, each of the current Trustees, attended more than 75% of the meetings of the Board and the committees of which such Trustee is a member. If any of the nominees listed above become unavailable for election, the enclosed proxy will be voted for a substitute candidate in the discretion of the proxy holder(s). If the conditions set forth on page 3 are not fulfilled, the enclosed proxy will not be voted for the election of Messrs. Birnbaum, Grinnell and Lowry. Required Vote A plurality of the votes cast at the Meeting, if a quorum is represented, is required for the election of each Trustee. Description of the Adviser. The Adviser is a wholly-owned subsidary of TCG. On October 12, 1994, TCG, Liberty Financial Companies, Inc. and Apple Merger Corporation (Merger Subsidiary), a wholly-owned subsidary of Liberty Financial, entered into an Agreement and Plan of Merger, which was amended and restated as of February 8, 1995 (Merger Agreement). Pursuant to the Merger Agreement, TCG, subject to the satisfaction of certain conditions (including, among others, adoption and approval of the Merger Agreement by the stockholders of TCG and receipt of approvals of new Management Agreements by the shareholders of 90% of the Colonial Funds and the other registered investment companies for which TCG or its subsidiaries, including the Adviser, acts as an investment adviser, as measured by net assets), or in certain cases, waiver of conditions, will merge with Merger Subsidiary with TCG being the surviving corporation (Surviving Corporation). Over 90% of the Colonial Funds' shareholders approved the new Management Agreements at the Special Meetings of Shareholders held on February 15, 1995. The Surviving Corporation will remain a wholly-owned subsidary of Liberty Financial. Current TCG stockholders will become stockholders of Liberty Financial unless they elect to receive cash in exchange for their stock. After the Merger, the Adviser will be a wholly-owned subsidiary of the Surviving Corporation. The Merger, together with certain other matters contemplated by the Merger Agreement, constitute the Transaction. Liberty Financial is currently an indirect subsidiary of Liberty Mutual Insurance Company (Liberty Mutual). Liberty Financial is a diversified and integrated asset management organization which provides insurance and investment products to individuals and institutions. Its principal executive offices are located at 600 Atlantic Avenue, 24th Floor, Boston, Massachusetts 02210. After the closing of the Transaction (Closing), the only stockholders of Liberty Financial other than Liberty Mutual will be those TCG stockholders who receive Liberty Financial stock in the Merger. Liberty Mutual is a Massachusetts- chartered mutual property and casualty insurance company with over $20.6 billion in assets and $3.5 billion in surplus at December 31, 1994. The principal business activities of Liberty Mutual's subsidiaries other than Liberty Financial are property- casulty insurance, insurance services and life insurance (including group life and health insurance products) marketed through its own sales force. Its principal executive offices are located at 175 Berkeley Street, Boston, Massachusetts 02117. John A. McNeice, Jr., who is President and a Trustee of the Colonial Funds, presently holds 1,464,000 shares of TCG Class A Common Stock, representing 20.24% of the Class A Common Stock of TCG, and 98,437 shares of TCG Class B Common Stock, representing 50.94% of its outstanding Class B Stock. Because of his stock ownership, he is considered to be a controlling person of TCG and of the Adviser, which is a wholly-owned subsidiary of TCG. After the Closing, Mr. McNeice will no longer be a controlling person of the Adviser. In connection with the Merger, unless holders of TCG Common Stock (Common Stock) elect otherwise, each share of Common Stock will be converted into the right to receive one share of Liberty Financial Common Stock (New Common Stock). Alternatively, a TCG stockholder may elect, with respect to all or some of his or her shares, to convert such holder's Common Stock into either, but not both, of (i) the right to receive $40.00 in cash per share of Common Stock or (ii) the right to receive .77 shares of Series A Convertible Preferred Stock of Liberty Financial (New Preferred Stock) per share of Common Stock. Notwithstanding these alternatives, the aggregate cash paid to TCG stockholders will be limited to $100 million and the total amount of New Preferred Stock issued to stockholders will be limited to 1,040,000 shares. If such limits are reached, the number of shares of Common Stock subject to elections to receive cash or New Preferred Stock, as the case may be, will be reduced ratably based on the number of shares elected to be so treated by each stockholder. As of November 30, 1994, there were 7,166,646 shares of Class A Common Stock and 193,217 shares of Class B Common Stock outstanding. 2. Ratification of Independent Accountants. Price Waterhouse LLP was selected as independent accountants for the Fund for the fiscal year ending November 30, 1995, by unanimous vote of the Trustees, subject to ratification or rejection by the shareholders. Neither Price Waterhouse LLP nor any of its partners has any direct or material indirect financial interest in the Fund. Price Waterhouse LLP also acts as independent accountants for the Adviser and affiliated companies. A representative of Price Waterhouse LLP will be available at the Meeting to respond to appropriate questions and make a statement (if the representative desires), if requested by a shareholder in writing at least five days before the Meeting. Required Vote Ratification requires the affirmative vote of a majority of the shares of the Fund voted at the Meeting. 3. Other Matters and Discretion of Attorneys Named in the Proxy At this date only the business mentioned in Items 1 and 2 of the Notice of the Meeting is contemplated to be presented. If any procedural or other matters properly come before the Meeting, the enclosed proxy shall be voted in accordance with the best judgment of the proxy holder(s). The Meeting is called to be held at the same time as the meeting of shareholders of Colonial Intermediate High Income Fund. It is anticipated that such meetings will be held simultaneously. In the event that any Fund shareholder at the Meeting objects to the holding of a simultaneous meeting and moves for an adjournment of the meetings so that the Meeting of the Fund may be held separately, the persons named as proxies will vote in favor of such an adjournment. If a quorum of shareholders (thirty percent of the shares entitled to vote at the Meeting) is not represented at the Meeting or at any adjournment thereof, or, even though a quorum is so represented, if sufficient votes in favor of the Items set forth in the Notice of the Meeting are not received by April 28, 1995, the persons named as proxies may propose one or more adjournments of the Meeting for a period or periods of not more than ninety days in the aggregate and further solicitation of proxies may be made. Any such adjournment may be effected by a majority of the votes properly cast in person or by proxy on the question at the session of the Meeting to be adjourned. The persons named as proxies will vote in favor of such adjournment those proxies which they are entitled to vote in favor of the Items set forth in the Notice of the Meeting. They will vote against any such adjournment those proxies required to be voted against any of such Items. Date for Receipt of Shareholder Proposals Proposals of shareholders which are intended to be considered for inclusion in the Fund's proxy statement relating to the 1996 Annual Meeting of Shareholders of the Fund must be received by the Fund at One Financial Center, Boston, Massachusetts, 02111 on or before December 8, 1995. Shareholders are urged to vote, sign and mail their proxies immediately. COLONIAL MUNICIPAL INCOME TRUST Proxy This Proxy is Solicited on Behalf of the Trustees. The undersigned shareholder hereby appoints Michael H. Koonce, John A. McNeice, Jr. and Arthur O. Stern, and each of them, proxies of the undersigned, with power of substitution, to vote at the Annual Meeting of Shareholders of Colonial Municipal Income Trust (Trust), to be held at Boston, Massachusetts, on Friday April 28, 1995, and at any adjournments, as follows on the reverse side of this card. PLEASE MARK VOTES AS IN THIS EXAMPLE 1. ELECTION OF SEVEN TRUSTEES. (Item 1 of the Notice) FOR WITHHOLD FOR ALL EXCEPT --- -------- -------------- Robert J. James E. William D. Ireland, Richard W. Birnbaum Grinnell Jr. Lowry William E. Robert L. George L. Shinn Mayer Sullivan (INSTRUCTION: To withhold authority to vote for any individual nominee, mark the "For All Except" box and strike a line through that nominee's name in the list above.) 2. PROPOSAL TO RATIFY THE SELECTION OF INDEPENDENT ACCOUNTANTS. (Item 2 of the Notice) FOR AGAINST ABSTAIN 3. IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. This proxy, when properly executed, will be voted in the manner directed above and, absent direction, will be voted for Items 1 and 2 listed above. Please sign exactly as name appears to the left. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If signing for a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. Dated:------------------------, 1995 ------------------------------- Signature ------------------------------- Signature if held jointly PLEASE VOTE, DATE, AND SIGN ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. Please sign exactly as your name appears on the books of the Trust. Joint owners should each sign personally personally. Trustees and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title.