-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TIpN/LeDQY3qgOhAr/ZXl4b2ejuxgedc3kEQRHA/g7QPf6ftZWo1cI9HJf52S3Yk 0XXt8LxroQg8StCUcUqf7g== 0000950135-01-000314.txt : 20010209 0000950135-01-000314.hdr.sgml : 20010209 ACCESSION NUMBER: 0000950135-01-000314 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20010208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLONIAL INTERMEDIATE HIGH INCOME FUND CENTRAL INDEX KEY: 0000833021 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05567 FILM NUMBER: 1528621 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CNTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 N-30D 1 b37548cin-30d.txt COLONIAL INTERMEDIATE HIGH INCOME FUND 1 - ---------------------------------------------------------- COLONIAL INTERMEDIATE HIGH INCOME FUND ANNUAL REPORT - ---------------------------------------------------------- OCTOBER 31, 2000 2 President's Letter DEAR SHAREHOLDER: The following pages contain the annual report for Colonial Intermediate High Income Fund. This report contains valuable information about the Fund's performance for the 12-month period ended October 31, 2000, as well as top holdings, sector breakdowns, and distributions declared. I encourage you to take a few minutes and read the information provided. The last 12 months proved to be a very difficult period for the high-yield sector of the bond market. Spreads on yields of lower-grade bonds widened considerably compared to those of higher-grade U.S. Treasury Bonds. The environment was reflected in the return for Colonial Intermediate High Income Fund. Still, the Fund sought to take advantage of investment opportunities across a broad spectrum of bonds in the high- yield marketplace. The following report provides you with more specific information about your Fund's performance and investment strategy during the period. Thank you for choosing Colonial Intermediate High Income Fund and for allowing us the opportunity to serve your investment needs. Sincerely, /s/ Stephen E. Gibson Stephen E. Gibson President December 15, 2000 - --------------------------- NOT FDIC MAY LOSE VALUE ----------------- INSURED NO BANK GUARANTEE - --------------------------- Past performance is not indicative of future results. Because economic and market trends change frequently, there can be no assurance that the trends described in this report will continue or come to pass. 3 - -------------------------------------------------------------------------------- HIGHLIGHTS - -------------------------------------------------------------------------------- > A DIFFICULT PERIOD FOR BOND INVESTORS For the period ended October 31, 2000, the Fund generated a return of negative 7.64% based on net asset value (NAV). A number of factors combined to create a challenging year for the Fund. Among the issues confronting investors in the high-yield market were: - Credit concerns -- the number of defaults among issuers of lower-grade bonds increased during the year, which had a damaging effect on the rest of the market. Default experienced by the Fund was significantly below the market average. - Trading Liquidity -- lower capital invested by high yield traders challenged the markets' ability to effectively trade bonds. - Mutual fund redemptions -- retail investors liquidated their high yield bond holdings throughout the year. This increased selling pressure, and yield spreads on these bonds widened compared to other parts of the market. > FUND FOCUSES ON CREDIT QUALITY Given the rather volatile nature of the high-yield market, it became critical to focus on defensive sectors and on specific bonds demonstrating fundamental operating strength. These bonds tend to weather the storm of difficult markets better than lower-quality bonds. We placed particular emphasis on sectors such as cable, telecommunications and energy, where issuers appeared to be well-positioned in the current economic environment. > A MORE PROMISING OUTLOOK We believe the market has become quite attractive for high-yield bonds, as they appear to offer real value compared to other sectors of the fixed-income market. Spreads are currently at historic high levels and investors appear well compensated for the risks inherent in the current environment. We continue to focus on bonds of issuers with solid underlying asset value, strong cash flows and good sources of financing. In doing so, the Fund should be well-positioned for the year ahead. COLONIAL INTERMEDIATE HIGH INCOME FUND VS. LIPPER HIGH CURRENT YIELD FUNDS (LEVERAGED) CATEGORY AVERAGE 10/31/99 - 10/31/00 [BAR GRAPH] Colonial Intermediate High Income Fund (7.64)% Lipper High Current Yield Funds (Leveraged) Category Average (6.36)%
Lipper, Inc., a widely respected data provider, calculates an average total return for mutual funds with similar investment objectives. High-yield investing offers the potential for high income and attractive total returns, but also involves certain risks. These include credit risks associated with lower-rated bonds, changes in interest rates, and certain risks associated with foreign investments. Past performance cannot predict future results. Returns and value of an investment will vary resulting in a gain or loss on sale. All results shown assume reinvestment of distributions. Returns are computed at net asset value. TOP CORPORATE ISSUERS AS OF 10/31/00(1) Adelphia Communications 3.4% - --------------------------------------- CSC Holdings 3.3% - --------------------------------------- NTL 3.2% - --------------------------------------- Nextel Communications 2.5% - --------------------------------------- Tenet Healthcare 1.7% - ---------------------------------------
TOP 5 SECTOR BREAKDOWNS AS OF 10/31/00(1) Telecom/Wireless 9.6% - --------------------------------------- General Industry 9.2% - --------------------------------------- Telecom/Wired 8.4% - --------------------------------------- Cable-International 7.5% - --------------------------------------- Hotel/Restaurant/Gaming 6.6%
(1) Corporate issuers are calculated as a percent of total investments including short-term investments. Sectors are calculated as a percent of total portfolio adjusted for leverage. Because the Fund is actively managed, there can be no guarantee the Fund will continue to hold securities of these issuers in these sectors in the future. Industry sectors in the following financial statements are based upon the standard industrial classifications (SIC) as published by the U.S. Office of Management and Budget. The sector classifications used on this page are based upon the Advisor's defined criteria as used in the investment process. 12-MONTH DISTRIBUTIONS DECLARED PER SHARE AS OF 10/31/00 1 Year $0.712 - --------------------------------------- 12-MONTH TOTAL RETURNS, ASSUMING REINVESTMENT OF ALL DISTRIBUTIONS NAV (7.64)% - --------------------------------------- Market Price (6.12)% - --------------------------------------- PRICE PER SHARE ON 10/31/00 NAV $4.830 - --------------------------------------- Market Price $4.625 - --------------------------------------- 1 4 - --------------------------------------- INVESTMENT PORTFOLIO - --------------------------------------- October 31, 2000 (In thousands)
CORPORATE FIXED INCOME BONDS & NOTES - 90.8%(a) PAR VALUE - ------------------------------------------------------------------------ CONSTRUCTION - 1.1% BUILDING CONSTRUCTION Atrium Cos., Inc., 10.500% 5/1/09 $ 575 $ 500 Morrison Knudsen, 11.000% 7/1/10 (b) 1,205 1,024 ------ 1,524 ------ - ------------------------------------------------------------------------ FINANCE, INSURANCE & REAL ESTATE - 1.6% DEPOSITORY INSTITUTIONS - 0.5% Sovereign Bancorp, Inc., 10.500% 11/15/06 625 634 ------ FINANCIAL SERVICES - 1.1% Ono Finance, PLC: 13.000% 5/1/09 (b) 750 578 14.000% 7/15/10 (b) 1,130 960 ------ 1,538 ------ - ------------------------------------------------------------------------ MANUFACTURING - 27.7% CHEMICALS & ALLIED PRODUCTS - 5.0% Agricultural Minerals Co., LP, 10.750% 9/30/03 430 279 CP Kelco, 11.875% 9/15/10 (b) (d) 425 359 Huntsman ICI Holdings LLC, (j) 12/31/09 3,075 922 HydroChem Industrial Services Inc., 10.375% 8/1/07 750 540 Lyondell Chemical Co.: 9.625% 5/1/07 300 291 10.875% 5/1/09 200 192 PCI Chemicals Canada, Inc., 9.250% 10/15/07 1,150 402 Pioneer Americas Acquisition Corp., 9.250% 6/15/07 100 36 Polymer Group, Inc.: 8.750% 3/1/08 500 357 9.000% 7/1/07 500 362 Sterling Chemicals, Inc., 11.750% 8/15/06 1,875 1,059 Terra Industries, Inc., 10.500% 6/15/05 1,710 1,094 Texas Petrochemical Corp., 11.125% 7/1/06 1,275 1,045 ------ 6,938 ------ ELECTRONIC & ELECTRICAL EQUIPMENT - 2.1% Amphenol Corp., 9.875% 5/15/07 $ 735 $ 735 Ekabel Hessen, 14.500% 9/1/10 (b) 335 315 Flextronics International, Ltd, 9.875% 7/1/10 (b) 615 615 Gentek, Inc., 11.000% 8/1/09 500 499 TransDigm, Inc., 10.375% 12/1/08 850 782 ------ 2,946 ------ FABRICATED METAL - 1.8% Earle M. Jorgensen & Co., 9.500% 4/1/05 1,500 1,275 Euramax International, PLC, 11.250% 10/1/06 1,500 1,245 ------ 2,520 ------ FOOD & KINDRED PRODUCTS - 0.9% New World Pasta Co., 9.250% 2/15/09 250 112 Premier International Foods, PLC, 12.000% 9/1/09 1,500 1,170 ------ 1,282 ------ FURNITURE & FIXTURES - 0.3% Juno Lighting, Inc., 11.875% 7/1/09 450 385 ------ MACHINERY & COMPUTER EQUIPMENT - 0.8% IMO Industries, Inc., 11.750% 5/1/06 1,145 1,134 ------ MEASURING & ANALYZING INSTRUMENTS - 0.5% Envirosource, Inc., 9.750% 6/15/03 2,000 700 ------ MISCELLANEOUS MANUFACTURING - 6.4% Actuant Corp., 13.000% 5/1/09 260 252 Associated Materials, Inc., 9.250% 3/1/08 500 475 Blount, Inc., 13.000% 8/1/09 1,300 1,092 Eagle-Picher Industries, Inc., 9.375% 3/1/08 505 422 Flowserve Corp., 12.250% 8/15/10 (b) 555 569 ISG Resources, Inc., 10.000% 4/15/08 1,000 760
See notes to investment portfolio. 2 5 - ------------------------------------- INVESTMENT PORTFOLIO (CONTINUED) - -------------------------------------
CORPORATE FIXED INCOME BONDS & NOTES (CONTINUED) PAR VALUE - ------------------------------------------------------------------------ MISCELLANEOUS MANUFACTURING (CONTINUED) Koppers Industries, Inc., 9.875% 12/1/07 $ 800 $ 756 Newcor, Inc., 9.875% 3/1/08 1,170 445 Owens-Illinois, Inc., 7.500% 5/15/10 1,500 1,012 Special Devices, Inc., 11.375% 12/15/08 1,250 312 Tekni-Plex, Inc., 12.750% 6/15/10 615 553 Terex Corp., 8.875% 4/1/08 250 217 Thermadyne Holdings Corp., 9.875% 6/1/08 1,700 1,224 Werner Holding Co., 10.000% 11/15/07 750 714 ------ 8,803 ------ PAPER PRODUCTS - 3.9% Gaylord Container Corp., 9.750% 6/15/07 2,000 1,340 Repap New Brunswick, Inc., 10.625% 4/15/05 450 463 Riverwood International Corp.: 10.625% 8/1/07 500 490 10.875% 4/1/08 2,050 1,850 Stone Container Corp., 12.250% 4/1/02 1,250 1,250 ------ 5,393 ------ PETROLEUM REFINING - 0.5% Benton Oil & Gas Co.: 9.375% 11/1/07 1,000 600 11.625% 5/1/03 100 70 ------ 670 ------ PRIMARY METAL - 3.3% Algoma Steel, Inc., 12.375% 7/15/05 500 280 Bayou Steel Corp., 9.500% 5/15/08 1,000 590 Kaiser Aluminum & Chemical Corp.: 10.875% 10/15/06 1,600 1,360 12.750% 2/1/03 470 352 Keystone Consolidated Industries, Inc., 9.625% 8/1/07 965 618 Renco Metals, Inc., 11.500% 7/1/03 500 190 WCI Steel, Inc., 10.000% 12/1/04 $1,265 $1,050 Wheeling-Pittsburgh Corp., 9.250% 11/15/07 2,000 160 ------ 4,600 ------ PRINTING & PUBLISHING - 0.7% American Lawyer Media, Inc.: 9.750% 12/15/07 130 116 stepped coupon, (12.250% 12/15/02) (c) 12/15/08 600 372 Cable Satisfaction International, Inc., 12.750% 3/1/10 500 445 ------ 933 ------ RUBBER & PLASTIC - 0.1% Burke Industries, Inc., 10.000% 8/15/07 535 171 ------ STONE, CLAY, GLASS & CONCRETE - 0.5% Anchor Glass Container Corp., 11.250% 4/1/05 500 375 Owens-Illinois, Inc., 8.100% 5/15/07 400 288 ------ 663 ------ TEXTILE MILL PRODUCTS - 0.3% Collins & Aikman Products Co., 10.000% 1/15/07 450 441 ------ TRANSPORTATION EQUIPMENT - 0.6% LDM Technologies, Inc., 10.750% 1/15/07 1,250 812 ------ - ----------------------------------------------------------------------- MINING & ENERGY - 5.4% COAL MINING - 0.1% AEI Resources, Inc., 10.500% 12/15/05 1,050 94 ------ GOLD & SILVER MINING - 0.3% Callahan Nordrhein-Westf, 14.000% 7/15/10 455 439 ------ OIL & GAS EXTRACTION - 4.7% Belden & Blake Corp., 9.875% 6/15/07 870 731 HS Resources, Inc., 9.250% 11/15/06 675 675 Magnum Hunter Resources, Inc., 10.000% 6/1/07 925 916 Mariner Energy, Inc., 10.500% 8/1/06 1,140 1,083
See notes to investment portfolio. 3 6 - ------------------------------------- INVESTMENT PORTFOLIO (CONTINUED) - -------------------------------------
CORPORATE FIXED INCOME BONDS & NOTES (CONTINUED) PAR VALUE - ------------------------------------------------------------------------ OIL & GAS EXTRACTION (CONTINUED) Ocean Energy, Inc., 8.875% 7/15/07 $1,050 $1,060 Petsec Energy, Inc., 9.500% 6/15/07 (d) 2,000 1,140 Vintage Petroleum, Inc., 9.750% 6/30/09 850 892 ------ 6,497 ------ OIL & GAS FIELD SERVICES - 0.3% RBF Finance Corp., 11.000% 3/15/06 325 373 ------ - -------------------------------------------------------------------------------- RETAIL TRADE - 0.2% FOOD STORES Richmont Marketing Specialist, Inc., 10.125% 12/15/07 1,000 250 ------ - -------------------------------------------------------------------------------- SERVICES - 12.8% AMUSEMENT & RECREATION - 4.6% Anchor Gaming, 9.875% 10/15/08 400 404 Boyd Gaming Corp., 9.500% 7/15/07 650 598 Coast Hotels & Casinos, Inc., 9.500% 4/1/09 1,000 985 Hollywood Casino Corp., 11.250% 5/1/07 1,150 1,205 Hollywood Casino Shreveport, 13.000% 8/1/06 500 536 Hollywood Park, Inc., 9.500% 8/1/07 1,000 1,030 Horseshoe Gaming LLC, 9.375% 6/15/07 750 751 Mohegan Tribal Gaming Authority, 8.750% 1/1/09 785 767 ------ 6,276 ------ BUSINESS SERVICES - 0.9% Interep National Radio Sales, Inc., 10.000% 7/1/08 1,500 1,275 ------ HEALTH SERVICES - 2.8% Bio-Rad Labs, 11.625% 2/15/07 600 618 Dynacare, Inc., 10.750% 1/15/06 120 115 Insight Health Services Corp., 9.625% 6/15/08 100 90 Magellan Health Services, 9.000% 2/15/08 $1,010 $ 646 Tenet Healthcare Corp., 8.625% 1/15/07 2,450 2,438 ------ 3,907 ------ HOTELS, CAMPS & LODGING - 2.4% Eldorado Resorts LLC, 10.500% 8/15/06 2,005 1,985 Mandalay Resort Group, 10.250% 8/1/07 100 102 MGM Mirage, 8.500% 9/15/10 1,200 1,189 ------ 3,276 ------ OTHER SERVICES - 2.1% Alliance Laundry Systems LLC, 9.625% 5/1/08 1,000 810 Allied Waste North America, Inc., 10.000% 8/1/09 1,925 1,665 Intertek Finance, PLC, 10.250% 11/1/06 800 360 ------ 2,835 ------ - -------------------------------------------------------------------------------- TRANSPORTATION, COMMUNICATION, ELECTRIC GAS & SANITARY SERVICES - 42.0% AIR TRANSPORTATION - 1.1% U.S. Airways, Inc., 10.375% 3/1/13 1,600 1,476 ------ BROADCASTING - 3.9% Allbritton Communications Co., 9.750% 11/30/07 925 893 Cumulus Media, Inc., 10.375% 7/1/08 225 178 Fox Family Worldwide, Inc., 9.250% 11/1/07 365 347 Lin Holding Corp., stepped coupon, (10.000% 3/1/3) (c) 3/1/08 1,500 1,065 Sinclair Broadcast Group, Inc.: 9.000% 7/15/07 100 90 10.000% 9/30/05 1,400 1,326 Young Broadcasting Corp., 11.750% 11/15/04 1,500 1,530 ------ 5,429 ------
See notes to investment portfolio. 4 7 - ------------------------------------- INVESTMENT PORTFOLIO (CONTINUED) - -------------------------------------
CORPORATE FIXED INCOME BONDS & NOTES (CONTINUED) PAR VALUE - -------------------------------------------------------------------------- CABLE - 11.4% Adelphia Communications Corp., 9.875% 3/1/07 $ 2,015 $ 1,819 Charter Communications Holding LLC, stepped coupon, (9.920% 04/01/04) (c) 4/1/11 2,075 1,214 Comcast UK Cable Partners Ltd., stepped coupon, (11.200% 11/15/00) (c) 11/15/07 2,000 1,820 Diamond Cable Co., stepped coupon, (10.750% 02/15/02) (c) 2/15/07 2,205 1,588 EchoStar DBS Corp., 9.250% 2/1/06 2,350 2,315 FrontierVision Holdings LP, stepped coupon, (11.875% 09/15/01) (c) 9/15/07 2,575 2,189 Northland Cable Television, Inc., 10.250% 11/15/07 1,350 985 NTL, Inc.: 10.000% 2/15/07 500 442 11.875% 10/1/10 800 760 Shop At Home, Inc., 11.000% 4/1/05 500 490 Telewest Communication, PLC, stepped coupon, (11.000% 10/01/00) (c) 10/1/07 2,500 2,150 ------- 15,772 ------- COMMUNICATIONS - 5.1% Call-Net Enterprises, Inc.: 8.000% 8/15/08 150 65 9.375% 5/15/09 350 151 stepped coupon, (10.800% 05/15/04) (c) 5/15/09 2,000 500 Centennial Cellular Corp., 10.750% 12/15/08 850 825 Exodus Communications, Inc.: 10.750% 12/15/09 750 668 11.625% 7/15/10 (b) 700 644 Spectrasite Holdings, Inc.: 10.750% 3/15/10 200 185 stepped coupon, (11.250% 04/15/04) (c) 4/15/09 2,020 1,040 Tele1 Europe BV, 11.875% 12/1/09 200 143 Time Warner Telecom LLC, 9.750% 7/15/08 1,250 1,100 United Pan-Europe Communications N.V., 11.500% 2/1/10 $ 1,650 $ 1,254 XM Satellite Radio, Inc., 14.000% 3/15/10 (b) 600 408 ------- 6,983 ------- COMMUNICATIONS SERVICES - 1.0% Crown Castle International Corp.: 10.750% 8/1/11 250 257 stepped coupon, (10.375% 05/15/04) (c) 5/15/11 1,400 882 Ubiquitel Operating UPCS, stepped coupon, (14.000% 04/15/05) (c) 4/15/10 525 236 ------- 1,375 ------- ELECTRIC, GAS & SANITARY SERVICES - 0.2% CMS Energy, 9.875% 10/15/07 225 227 ------- ELECTRIC SERVICES - 1.5% AES Corp.: 9.375% 9/15/10 350 348 9.500% 6/1/09 1,650 1,675 ------- 2,023 ------- MOTOR FREIGHT & WAREHOUSING - 0.5% MTL, Inc., 10.000% 6/15/06 1,000 690 ------- TELECOMMUNICATION - 17.3% Adelphia Business Solutions, stepped coupon, (13.000% 04/15/01) (c) 4/15/03 (b) 500 385 AirGate PCS, Inc., stepped coupon, (13.500% 10/01/04) (c) 10/1/09 1,109 632 Arch Communication Group, Inc., 12.750% 7/1/07 1,000 590 Carrier1 International SA, 13.250% 2/15/09 750 578 Clearnet Communications, Inc., stepped coupon, (14.750% 12/15/00) (c) 12/15/05 1,000 1,060 Covad Communications Group, Inc., 12.000% 2/15/10 325 175 Flag Telecom Holdings LTD.: 11.625% 3/30/10 350 294 11.625% 3/30/10 (b) 600 428 Global Crossing, Ltd.: 9.125% 11/15/06 1,325 1,262 9.625% 5/15/08 150 144
See notes to investment portfolio. 5 8 - ------------------------------------- INVESTMENT PORTFOLIO (CONTINUED) - -------------------------------------
CORPORATE FIXED INCOME BONDS & NOTES (CONTINUED) PAR VALUE - ------------------------------------------------------------------------------ TELECOMMUNICATION (CONTINUED) Horizon PCS, Inc., stepped coupon, (14.000% 10/01/05) (c) 10/1/10 (b) $ 665 $ 319 Jazztel, PLC: 13.250% 12/15/09 (e) 375 228 14.000% 7/15/10 (e) 200 129 Level 3 Communications, Inc.: 11.000% 3/15/08 805 733 10.750% 3/15/08 635 464 McLeodUSA, Inc.: 8.375% 3/15/08 250 221 stepped coupon, (10.500% 03/01/02) (c) 3/1/07 (d) 500 410 Metrocall, Inc., 10.375% 10/1/07 735 309 Metromedia Fiber Network, Inc.: 10.000% 11/15/08 1,300 1,157 10.000% 12/15/09 650 585 Microcell Telecommunications, Inc., stepped coupon, (14.000% 12/01/01) (c) 6/1/06 1,000 963 Nextel Communications, Inc., 9.375% 11/15/09 1,300 1,261 Nextel International, Inc., 12.750% 8/1/10 (b) 1,500 1,365 stepped coupon, (12.125% 04/15/03) (c) 4/15/08 (d) 665 399 Nextel Partners, Inc.,: 11.000% 3/15/10 500 498 11.000% 3/15/10 (b) 75 75 Nextlink Communications, Inc., 10.750% 6/1/09 500 440 Partner Communications, 13.000% 8/15/10 630 535 RCN Corp., stepped coupon, (11.125% 10/15/02) (c) 10/15/07 (d) 750 368 Rhythms NetConnections, Inc., 12.750% 4/15/09 500 240 Rogers Cantel, Inc., 9.750% 6/1/16 1,500 1,605 Telecorp PCS, Inc.: 10.625% 7/15/10 250 248 stepped coupon, (11.625% 4/15/4) (c) 4/15/09 2,200 1,414 Viatel, Inc., 11.500% 3/15/09 1,000 520 Williams Communications Group, Inc.: 10.875% 10/1/09 $ 1,630 $ 1,386 11.700% 8/1/08 670 590 Winstar Communications Unit, 12.750% 4/15/10 750 540 Winstar Equipment Corp., 12.500% 4/15/08 850 625 Worldwide Fiber, Inc., 12.000% 8/1/09 850 672 -------- 23,847 -------- TOTAL CORPORATE FIXED INCOME BONDS & NOTES (cost of $151,347) 125,131 --------
PREFERRED STOCK - 8.4% SHARES - ------------------------------------------------------------------------------ FINANCE, INSURANCE & REAL ESTATE - 0.1% DEPOSITORY INSTITUTIONS Cal Fed Bancorp, Inc., 9.125%, Series A 9 196 ----- - ------------------------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 8.3% BROADCASTING - 0.6% Granite Broadcasting Corp., 12.750% PIK 1 504 PriMedia, Inc., 9.200% 3 265 ----- 769 ----- CABLE - 4.1% Adelphia Communications Corp., 13.000% 10 950 CSC Holdings Ltd.: 11.125% PIK 20 2,235 11.750% PIK 23 2,514 ----- 5,699 ----- COMMUNICATIONS - 0.3% Dobson Communications Corp., 12.250% PIK 374 ----- TELECOMMUNICATION - 3.3% Global Crossing Ltd., 10.500% PIK 8 743 Nextel Communications, Inc.: 11.125% PIK 1 601 13.000% PIK 1 1,508 XO Communications, Inc.: 13.500% PIK 1 502 14.000% 25 1,144 ----- 4,498 -----
See notes to investment portfolio. 6 9 - --------------------------------------- INVESTMENT PORTFOLIO (CONTINUED) - --------------------------------------- TOTAL PREFERRED STOCKS (cost of $12,484) 11,536 ------
COMMON STOCKS - 0.7% SHARES VALUE - -------------------------------------------------------------------------- RETAIL TRADE - 0.0% FOOD STORES Pathmark Stores, Inc. (i) $ (i) ------- - -------------------------------------------------------------------------- MINING & ENERGY - 0.1% OIL & GAS EXTRACTION Pioneer Natural Resources Co. 8 106 ------- - -------------------------------------------------------------------------- TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 0.6% CABLE - 0.0% Cable Satisfaction International, Inc., 1 1 ------- MOTOR FREIGHT & WAREHOUSING - 0.0% St. Johnsbury Trucking Co. (f) 79 1 Sun Carriers, Inc. (f) 326 (i) ------- 1 ------- TELCOMMUNICATIONS - 0.6% AirGate PCS, Inc. (d) 2 71 Nextel Communications, Inc. Class A (d) 6 238 Price Communications Corp. (d) 24 517 ------- 826 ------- TOTAL COMMON STOCKS (cost of $1,673) 934 ------- WARRANTS - 0.1% - -------------------------------------------------------------------------- FINANCE, INSURANCE, & REAL ESTATE - 0.0% FINANCE Ono Finance, PLC (b) 1 53 ------- (expires 5/31/09) - -------------------------------------------------------------------------- TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 0.1% TELECOMMUNICATION Carrier1 International (i) 44 (expires 2/19/09) MetroNet Communications Corp. (i) 21 (expires 8/15/07) (b) UbiquiTel Operating UPCS 1 13 (expires 4/15/10) XM Satellite Radio Holdings, Inc. 1 84 ------- (expires 8/15/10) 162 ------- TOTAL WARRANTS (cost of $172) 215 ------- TOTAL INVESTMENTS - 100.0% (cost of $165,676) (g) 137,816 -------
SHORT TERM OBLIGATIONS PAR VALUE - -------------------------------------------------------------------------- Federal Farm Credit Bank, 6.450% 11/1/00 (h) $ 4,644 $ 4,644 Federal National Mortgage Association, 6.470% 6/8/01 (h) 2,000 1,921 -------- TOTAL SHORT-TERM OBLIGATIONS (cost of $6,566) 6,565 -------- FORWARD CURRENCY CONTRACTS 39 - -------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET (46,087) - -------------------------------------------------------------------------- Net Assets $ 98,333 --------
NOTES TO INVESTMENT PORTFOLIO: (a) Percentages are based on total investments. Total investments represents 140.2% of the Fund's net assets. (b) Securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 2000, the value of these securities amounted to $8,118 or 8.26% of net assets. (c) Currently zero coupon. Shown parenthetically is the next interest rate to be paid and the date the Fund will begin accruing this rate. (d) This issuer is in default of certain debt convenants. Income is not being accrued. (e) This is a British security. Par amount is stated in U.S. dollars. (f) Represents fair value as determined in good faith under the direction of the Trustees. (g) Cost for federal income tax purposes is $165,757. (h) Rate represents yield at date of purchase. (i) Rounds to less than one. (j) Zero coupon bond.
Net Unrealized Contracts In Exchange Settlement Appreciation to Deliver For Date (US$) - --------------------------------------------------------------------- Eu 202,000 US$ 171,687 11/20/2000 $2 --------------
Net Unrealized Contracts In Exchange Settlement Appreciation to Receive For Date (US$) - --------------------------------------------------------------------- Eu 3,334,000 US$ 2,833,681 11/20/2000 $37 --------------
ACRONYM NAME - ------- ---- PIK Payment-In-Kind See notes to investment portfolio. 7 10 - ----------------------------------------- STATEMENT OF ASSETS AND LIABILITIES - ----------------------------------------- October 31, 2000 (In thousands except for per share amounts) ASSETS Investments at value (cost $165,676) $ 137,816 Short-term obligations (cost $6,566) 6,565 --------- 144,381 Foreign currencies (cost $187) $ 187 Unrealized appreciation on forward currency contracts 39 Receivable for: Interest 3,870 Dividends 7 Other 19 4,122 --------- --------- Total Assets 148,503 LIABILITIES Payable for: Interest 1,218 Distributions 1,120 Investments purchased 270 Accrued: Management fee 87 Bookkeeping fee 4 Transfer agent fee 2 Deferred Trustees' fees 4 Other 165 Notes payable 47,300 --------- Total Liabilities 50,170 --------- Net assets at value for 20,365 shares of beneficial interest outstanding $ 98,333 ========= Net asset value per share $ 4.83 ========= COMPOSITION OF NET ASSETS Capital paid in $ 142,083 Overdistributed net investment income (20) Accumulated net realized loss (15,902) Net unrealized appreciation/depreciation on: Investments (27,860) Foreign currency transactions 32 --------- $ 98,333 =========
- ----------------------------------------- STATEMENT OF OPERATIONS - ----------------------------------------- For the Year Ended October 31, 2000 (In thousands) INVESTMENT INCOME Interest $ 16,407 Dividends 1,361 -------- 17,768 -------- EXPENSES Management fee $ 807 Bookkeeping fee 49 Transfer agent fee 44 Trustees fee 11 Custodian fee 6 Audit fee 31 Legal fee 18 Registration fee 34 Reports to shareholders 25 Other 23 -------- Total operating expenses 1,048 Interest expense 3,178 -------- Total expenses 4,226 -------- Net Investment Income 13,542 -------- NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS Net realized gain (loss) on Investments (10,483) Foreign currency transactions 329 ------- Net Realized Loss (10,154) -------- Net change in unrealized appreciation/depreciation on: Investments (12,188) Foreign currency transactions 32 ------- Net Change in Unrealized Appreciation/Depreciation (12,156) -------- Net Loss (22,310) -------- Decrease in Net Assets from Operations $ (8,768) ========
See notes to financial statements. 8 11 - ---------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - ---------------------------------------- (In thousands)
YEARS ENDED OCTOBER 31, ----------------------------- INCREASE (DECREASE) IN NET ASSETS 2000 1999 - ---------------------------------------------------------------------------- OPERATIONS: Net investment income $ 13,542 $ 14,068 Net realized loss (10,154) (3,133) Net change in unrealized appreciation/depreciation (12,156) (1,305) --------- --------- Net Increase (Decrease) from Operations (8,768) 9,630 DISTRIBUTIONS: From net investment income (14,063) (14,199) In excess of net investment income (384) --------- --------- (23,215) (4,569) FUND SHARE TRANSACTIONS Value of distributions reinvested 530 1,107 --------- --------- Net Increase from Fund Share Transactions 530 1,107 --------- --------- Total Decrease (22,685) (3,462) NET ASSETS Beginning of period 121,018 124,480 --------- --------- End of period (net of overdistributed and including undistributed net investment income of $384 and $521, respectively) $ 98,333 $ 121,018 --------- ---------
YEARS ENDED OCTOBER 31, ---------------------- NUMBER OF FUND SHARES 2000 1999 - ------------------------------------------------------------------- Issued for distributions reinvested 97 201 Outstanding at Beginning of period 20,268 20,067 ------ ------ End of period 20,365 20,268 ------ ------
See notes to financial statements. 9 12 - ------------------------------------ STATEMENT OF CASH FLOWS - ------------------------------------ (In thousands)
YEAR ENDED OCTOBER 31, ----------- INCREASE (DECREASE) IN CASH 2000 - --------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net investment income $ 13,542 Adjustments to reconcile net investment income to net cash provided by (used in) operating activities: Cost of investments purchased (64,440) Receipts from invesments sold 65,751 Sales of short-term investments, net 913 Decrease in dividend and interest receivable 231 Decrease in receivable for investments sold 1,325 Increase in other assets (9) Increase in foreign currency (187) Increase in payable for investments purchased 270 Increase in accrued expenses 116 Decrease in interest payable (179) Decrease in distributions payable (55) Net short-term amortization/accretion of income 324 Net long-term amortization/accretion of income (3,687) -------- Net cash provided by operating activities 13,915 CASH FLOWS FROM FINANCING ACTIVITIES: Distributions paid in cash (13,917) -------- Net Decrease In Cash (2) CASH: Beginning of the year 2 -------- End of the year $ -- ========
Supplemental disclosure of cash flow information: Noncash financing activities not included herein consist of reinvestment of distributions of $530. See notes to financial statements. 10 13 - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- October 31, 2000 NOTE 1. ACCOUNTING POLICIES ORGANIZATION: Colonial Intermediate High Income Fund (the Fund) is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Fund's investment objective is to seek high current income and total return by investing primarily in lower-rated corporate debt securities. The Fund authorized an unlimited number of shares. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION AND TRANSACTIONS: Debt securities generally are valued by a pricing service based upon market transactions for normal, institutional-size trading units of similar securities. When management deems it appropriate, an over-the-counter or exchange bid quotation is used. Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the day, at current quoted bid prices. Forward currency contracts are valued based on the weighted value of the exchange traded contracts with similar durations. Short-term obligations with a maturity of 60 days or less are valued at amortized cost. Portfolio positions for which market quotations are not readily available are valued at fair value under procedures approved by the Trustees. Security transactions are accounted for on the date the securities are purchased, sold or mature. Cost is determined and gains and losses are based upon the specific identification method for both financial statement and federal income tax purposes. The Fund may trade securities on other than normal settlement terms. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. STATEMENT OF CASH FLOWS: Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows is the amount included in the Fund's Statement of Assets and Liabilities and represents cash on hand at its custodian bank account and does not include any short-term investments at October 31, 2000. FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a regulated investment company and to distribute all of its taxable income, no federal income tax has been accrued. INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the accrual basis. Original issue discount is accreted to interest income over the life of the security with a corresponding increase in the cost basis; premium and market discount are not amortized or accreted. The value of additional securities received as an interest payment is recorded as income and as the cost basis of such securities. DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the ex-date. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on foreign currency transactions includes the gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends and interest income and foreign withholding taxes. The Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) from investments. FORWARD CURRENCY CONTRACTS The Trust may enter into forward currency contracts to purchase or sell foreign currencies or predetermined exchange rates in connection with the settlement of purchases and sales of securities. The Trust may also enter into forward currency contracts to hedge certain other foreign currency denominated assets. The contracts are used to minimize the exposure to foreign exchange rate fluctuations during the period between trade and settlement date of the contracts. All contracts are marked-to-market daily, resulting in unrealized gains and losses which become realized at the time the forward currency contracts are closed or mature. Realized and unrealized gains (losses) arising from such transactions are included in net realized and unrealized gains (losses) on foreign currency transactions. Forward currency contracts do not eliminate fluctuations in the prices of the Trust's portfolio securities. While the maximum potential loss from such contracts is the aggregate face value in U.S. dollars at the time the contract was opened, exposure is typically limited to the change in value of the contract (in U.S. dollars) over the period it remains open. Risks may also arise if counterparties fail to perform their obligations under the contracts. 11 14 - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- OTHER: Corporate actions and dividend income are recorded on the ex-date. The Fund's custodian takes possession through the federal book-entry system of securities collateralizing repurchase agreements. Collateral is marked-to-market daily to ensure that the market value of the underlying assets remains sufficient to protect the Fund. The Fund may experience costs and delays in liquidating the collateral if the issuer defaults or enters bankruptcy. NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES MANAGEMENT FEE: Colonial Management Associates, Inc. (the Advisor) is the investment advisor of the Fund and furnishes accounting and other services and office facilities for a monthly fee equal to 0.65% annually of the Fund's average weekly net assets. BOOKKEEPING FEE: The Advisor provides bookkeeping and pricing services for a monthly fee equal to $27,000 annually plus 0.035% annually of the Fund's average net assets over $50 million. OTHER: The Fund pays no compensation to its officers, all of whom are employees of the Advisor. The Fund's Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Fund's assets. NOTE 3. PORTFOLIO INFORMATION INVESTMENT ACTIVITY: During the year ended October 31, 2000, purchases and sales of investments, other than short-term obligations, were $64,440,155 and $65,751,249 respectively. Unrealized appreciation (depreciation) at October 31, 2000, based on cost of investments for both financial statement and federal income tax purposes was approximately: - -------------------------------------------------------------------------------- Gross unrealized appreciation $ 1,339,555 Gross unrealized depreciation (29,280,532) ------------ Net unrealized depreciation $(27,940,977) ============
CAPITAL LOSS CARRYFORWARDS: At October 31, 2000, capital loss carryforwards available (to the extent provided in regulations) to offset future realized gains were as follows:
YEAR OF CAPITAL LOSS EXPIRATION CARRYFORWARD - ---------------------------------------------------------------------------- 2003 2,103,000 2007 3,282,000 2008 10,438,000 ----------- $15,823,000
=========== Expired capital loss carryforwards, if any, are recorded as a reduction of capital paid in. To the extent loss carryforwards are used to offset any future realized gains, it is unlikely that such gains would be distributed since they may be taxable to shareholders as ordinary income. OTHER: There are certain additional risks involved when investing in foreign securities that are not inherent with investments in domestic securities. These risks may involve foreign currency exchange rate fluctuations, adverse political and economic developments and the possible prevention of currency exchange or the imposition of other foreign governmental laws or restrictions. The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. NOTE 4. LOAN AGREEMENT At October 31, 2000, the Fund had four term loans and a revolver loan outstanding with Bank of America Illinois, totaling $47,300,000. These loans are comprised of $13,700,000 term loan which bears interest at 7.74% per annum, due June 12, 2003, a $6,900,000 term loan which bears interest at 6.37% per annum, due May 21, 2001, a $3,800,000 revolving loan which bears interest at 7.675% per annum, due June 26, 2001, a $9,200,000 term loan which bears interest at 6.26% per annum, due June 29, 2001, and a $13,700,000 term loan which bears interest at 6.84% per annum, due June 13, 2002. The Fund is required to maintain certain asset coverage with respect to the loans. 12 15 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected per share data, total return, ratios and supplemental data throughout each period are as follows:
YEARS ENDED OCTOBER 31, ---------------------------------------------------------------------- 2000 1999 1998 1997 1996 - ---------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 5.970 $ 6.200 $ 7.270 $ 6.890 $ 6.620 -------- -------- -------- -------- -------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.667 0.705 0.699 0.699(b) 0.699 Net realized and unrealized gain (loss) (1.095) (0.231) (1.077) 0.383 0.258 -------- -------- -------- -------- -------- Total from Investment Operations (0.428) 0.474 (0.378) 1.082 0.957 -------- -------- -------- -------- -------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.693) (0.704) (0.692) (0.702) (0.687) In excess of net investment income (0.019) -- -- -- -- Total Distributions Declared to Shareholders (0.712) (0.704) (0.692) (0.702) (0.687) -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 4.830 $ 5.970 $ 6.200 $ 7.270 $ 6.890 ======== ======== ======== ======== ======== Market price per share $ 4.625 $ 5.625 $ 6.812 $ 7.562 $ 7.125 ======== ======== ======== ======== ======== Total return - based on market value (a) (6.12)% (7.89)% (0.74)% 16.97% 14.62% ======== ======== ======== ======== ======== RATIOS TO AVERAGE NET ASSETS Operating expenses (b) 0.92% 0.89% 0.88% 0.89% 0.98% Interest and amortization of deferred debt issuance expenses 2.79% 2.48% 2.11% 1.96% 2.07% Total expenses 3.71% 3.37% 2.99% 2.85% 3.05% Net investment income (b) 11.88% 10.82% 9.70% 9.63% 10.11% Portfolio turnover 42% 44% 69% 92% 92% Net assets at end of period (000) $ 98,333 $121,018 $124,480 $107,774 $ 99,925
(a) Total return at market value assuming all distributions reinvested and excluding brokerage commissions. (b) The benefits derived from custody credits and directed brokerage arrangements had no impact. 13 16 - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- TO THE TRUSTEES AND THE SHAREHOLDERS OF: COLONIAL INTERMEDIATE HIGH INCOME FUND In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations, of cash flows and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Colonial Intermediate High Income Fund at October 31, 2000, the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and the financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of portfolio positions at October 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts December 13, 2000 14 17 This page left intentionally blank. 18 This page left intentionally blank. 19 TRANSFER AGENT - -------------------------------------------------------------------------------- IMPORTANT INFORMATION ABOUT THIS REPORT The Transfer Agent for Colonial Intermediate High Income Fund is: First Data Investor Services Group, Inc. P.O. Box 8030 Boston, MA 02266-8030 1-800-331-1710 The Fund mails one shareholder report to each shareholder address. If you would like more than one report, please call 1-800-426-3750 and additional reports will be sent to you. This report has been prepared for shareholders of Colonial Intermediate High Income Fund. ANNUAL REPORT: COLONIAL INTERMEDIATE HIGH INCOME FUND 20 TRUSTEES TOM BLEASDALE Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank & Trust Company) LORA S. COLLINS Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel) JAMES E. GRINNELL Private Investor (formerly Senior Vice President-Operations,The Rockport Company) RICHARD W. LOWRY Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood Corporation) SALVATORE MACERA Private Investor (formerly Executive Vice President of Itek Corp. and President of Itek Optical & Electronic Industries, Inc.) WILLIAM E. MAYER Partner, Park Avenue Equity Partners (formerly Dean, College of Business and Management, University of Maryland; Dean, Simon Graduate School of Business, University of Rochester; Chairman and Chief Executive Officer, CS First Boston Merchant Bank; and President and Chief Executive Officer,The First Boston Corporation) JAMES L. MOODY, JR. Retired (formerly Chairman of the Board, Chief Executive Officer and Director, Hannaford Bros. Co.) JOHN J. NEUHAUSER Academic Vice President and Dean of Faculties, Boston College (formerly Dean, Boston College School of Management) JOSEPH R. PALOMBO Chief Operations Officer, Mutual Funds, Liberty Financial Companies, Inc., Executive Vice President and Director of Colonial Management Associates, Inc. and Executive Vice President and Chief Administrative Officer of Liberty Funds Group LLC (formerly Vice President of Liberty Funds Group - Boston and ChiefOperating Officer,PutnamMutualFunds) THOMAS E. STITZEL Business Consultant and Chartered Financial Analyst (formerly Professor of Finance, College of Business, Boise State University) ANNE-LEE VERVILLE Consultant (formerly General Manager, Global Education Industry, and President, Applications Solutions Division, IBM Corporation) - -------------------------------------------------------------------------------- COLONIAL INTERMEDIATE HIGH INCOME FUND ANNUAL REPORT - -------------------------------------------------------------------------------- 110-02/889D-1100 (12/00) 00/2197 -----END PRIVACY-ENHANCED MESSAGE-----