-----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, EIPNgBBMstRQHkg8FFpCQHlkLIFo25Dmcp3JjlqfAnmANQq94Ha4I6D71AIBipVv GewtyBo9mMuJZwIvAI6h1w== 0000950135-01-501832.txt : 20010629 0000950135-01-501832.hdr.sgml : 20010629 ACCESSION NUMBER: 0000950135-01-501832 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010628 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: 1669832 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CNTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 N-30D 1 b39541lfn-30d.txt COLONIAL INTERMEDIATE HIGH INCOME FUND SEMIANNUAL 1 - ------------------------------------------------------------------------- COLONIAL INTERMEDIATE HIGH INCOME FUND SEMIANNUAL REPORT - ------------------------------------------------------------------------- [LOGO] 2 May Lose Value Not FDIC Insured No Bank Guarantee President's Message DEAR SHAREHOLDER: The environment for high-yield bonds remained challenging during the six-month period ended April 30, 2001. A slowing economy ignited recession fears and led to earnings disappointments, credit downgrades, market illiquidity and stock market volatility. In this uncertain and nervous climate, investors favored higher-quality fixed-income securities. Although high-yield bonds have not fared as well as their higher-quality counterparts recently, it is important to keep in mind that high-yield bonds still offer important advantages for investors seeking diversification. High- yield bonds represent a distinct asset class that borrows some of its characteristics from stocks and others from bonds. Investing in high-yield bonds offers high current income and attractive long-term total return potential. One way to achieve a broadly diversified portfolio is to invest in a variety of asset classes, including stocks, investment-grade bonds and high-yield securities. Each of these asset classes may respond differently to changing market and economic climates. By investing across several asset types, you may be able to offset weak performance in one area with holdings in others. On the following pages, you will find commentary on how the economic and market climate of the last six months influenced your fund managers' investment strategies and your fund's performance. Thank you for including the Colonial Intermediate High Income Fund in your investment portfolio. As always, we appreciate the confidence you place in us, and we look forward to helping you achieve your investment goals. Respectfully, [/s/ Stephen E. Gibson] Stephen E. Gibson President June 12, 2001 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 1 -- PORTFOLIO MANAGERS' REPORT TOP CORPORATE ISSUERS AS OF 4/30/01(1) CSC Holdings 3.72% - ------------------------------ Charter Communications 2.05% - ------------------------------ Telewest Communications 1.98% - ------------------------------ FrontierVision 2.14% - ------------------------------ Nextel Communications 1.72% - ------------------------------ (1) Corporate issuers are calculated as a percent of total investments including short-term investments. 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. 6-MONTH DISTRIBUTIONS DECLARED PER SHARE AS OF 4/30/01 $0.314 - ------------------------------ 6-MONTH TOTAL RETURN, ASSUMING REINVESTMENT OF ALL DISTRIBUTIONS NAV -5.59% - ------------------------------ Market price 9.56% - ------------------------------ PRICE PER SHARE ON 4/30/01 NAV $4.27 - ------------------------------ Market price $4.75 - ------------------------------ PERFORMANCE DECLINES IN A QUALITY-CONSCIOUS PERIOD The Colonial Intermediate High Income Fund posted a return of negative 5.59% at net asset value for the six-month period ended April 30, 2001. The fund underperformed its peer group, the Lipper High Current Yield Funds (Leveraged) Index, which returned negative 2.24% for the period. Our bottom-up research analysis continued to indicate that the best long-term return opportunities were in the B-rated sector. We continued to overweight the fund in this area. This proved to be an ineffective strategy during the six-month period, primarily due to economic uncertainty. In this type of climate, investors favored the more defensive BB-rated sector of the high-yield market. Therefore, the fund's focus on securities rated B proved to be a drag on performance, relative to the peer group. The fund also suffered from the continued troubles in the telecommunications sector. For example, the fund's holdings in Level 3 Communications and Winstar Communications, Inc. (1.97% and 0.04% of net assets, respectively, at April 30) negatively influenced performance. Level 3 suffered from the general market concern surrounding long-haul data and fiber optic providers, many of which continued to show negative cash flows. Nevertheless, we believe Level 3 should outlast its competitors, primarily because it has a fully-financed business plan. Unexpected funding issues plagued Winstar, and the company was unable to meet its financial obligations. DEFENSIVE MOVES WERE REWARDED In terms of strategies, anything considered defensive was rewarded during the period, while anything considered non-defensive was punished. We continued to execute our ongoing strategy of conducting thorough credit analysis of individual issues throughout the period. This strategy contributed to our investment in several issues that contributed positively to fund performance, including Magellan Health Services, Premier International Foods, Allied Waste and Kaiser Aluminum (1.49%, 1.72%, 1.74% and 2.28% of net assets, respectively). We did make some defensive sector moves, including increasing the fund's overall weighting in the cable sector. We purchased and added to holdings that our research efforts identified as promising companies, including Adelphia Communications and Charter Communications (1.46% and 2.86% of net assets, respectively). We started the period with cable holdings of 16% of net assets, and we ended the period with a weighting of slightly more 4 2 - -- PORTFOLIO MANAGERS' REPORT (CONTINUED) TOP 5 SECTOR BREAKDOWNS AS OF 4/30/01(1) Telecom/Wireless 10.74% - ------------------------------ Cable-International 9.10% - ------------------------------ General Industrial 7.33% - ------------------------------ Telecom/Wired -- LD, Data, Intl 6.60% - ------------------------------ Cable-North America 5.24% - ------------------------------ (1) 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 US 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. than 20%. The cable sector is considered a defensive area, because of relatively low subscriber loss, strong demand for new services, and fully funded business plans. FUND'S QUALITY STRUCTURE REMAINS INTACT Despite the flight to quality, we remained true to the fund's style -- that is, focusing on the credit-intensive portion of the high-yield market. In fact, we maintained the average quality of the portfolio at mid-single-B, despite a continued decline in quality measures within the high-yield universe. Furthermore, although we focused on lower-credit-quality securities, the fund's default experience remained below the industry average. HISTORY SUGGESTS MARKET MAY BE READY TO RALLY Looking ahead, the high-yield market appears attractive, and we remain optimistic. Although defaults, liquidity concerns and bank tightenings remain negative influences, we believe that most of this bad news is already priced into the market. Yield spreads (or the difference in yield between high-yield securities and Treasury bonds of similar maturities) remain wide, but historically, the market has rallied significantly from these levels. /s/ Scott Ricards /s/ Greg Smalley SCOTT B. RICHARDS and GREG SMALLEY are portfolio co-managers of the Colonial Intermediate High Income Fund. Mr. Richards is a senior vice president of CMA. Mr. Smalley is a vice president of CMA. * Past performance is no guarantee of future results. Investing in high yield bonds involves greater credit risk and other risks not associated with investing in higher-quality bonds. Bond investing also involves interest rate risk, which means that bond prices may change as interest rates increase or decrease. Foreign investments involve market risk, political, accounting and currency risks not associated with other investments. 5 3 -- INVESTMENT PORTFOLIO April 30, 2001 (Unaudited)
CORPORATE FIXED INCOME BONDS & NOTES - 122.9% PAR VALUE - ------------------------------------------------------------ CONSTRUCTION - 0.6% BUILDING CONSTRUCTION - 0.6% Atrium Companies, Inc., 10.500% 05/01/09 $ 575,000 $ 477,250 Morrison Knudsen Corp., 12.000% 07/01/10 (a) 130,000 15,600 ----------- 492,850 ----------- - ------------------------------------------------------------ FINANCE, INSURANCE & REAL ESTATE - 0.9% DEPOSITORY INSTITUTIONS - 0.9% Sovereign Bancorp, Inc., 10.500% 11/15/06 775,000 830,304 ----------- - ------------------------------------------------------------ MANUFACTURING - 37.0% CHEMICALS & ALLIED PRODUCTS - 7.8% Agricultural Minerals Co., LP, 10.750% 09/30/03 430,000 365,500 Huntsman ICI Holdings LLC, (c) 12/31/09 3,075,000 968,625 HydroChem Industrial Services Inc., 10.375% 08/01/07 750,000 585,000 Lyondell Chemical Co., 10.875% 05/01/09 200,000 205,500 PCI Chemicals Canada, Inc., 9.250% 10/15/07 1,250,000 462,500 PMD Group, Inc., 11.000% 02/28/11 (a) 225,000 231,750 Polymer Group, Inc.: 8.750% 03/01/08 500,000 185,000 9.000% 07/01/07 500,000 195,000 Sterling Chemicals, Inc.: 11.750% 08/15/06 1,875,000 318,750 12.375% 07/15/06 1,000,000 780,000 Terra Industries, Inc., 10.500% 06/15/05 1,710,000 1,436,400 Texas Petrochemical Corp., 11.125% 07/01/06 1,275,000 1,083,750 ----------- 6,817,775 ----------- ELECTRONIC & ELECTRICAL EQUIPMENT - 3.1% Amphenol Corp., 9.875% 05/15/07 735,000 771,750 Avist Corp., 9.750% 06/01/08 (a) 225,000 231,188 Flextronics International, Ltd., 9.875% 07/01/10 (a) 615,000 611,925 Gentek, Inc., 11.000% 08/01/09 300,000 298,500
PAR VALUE - ------------------------------------------------------------ TransDigm, Inc., 10.375% 12/01/08 $ 850,000 $ 818,125 ----------- 2,731,488 ----------- FABRICATED METAL - 1.5% Earle M. Jorgensen & Co., 9.500% 04/01/05 920,000 828,000 Euramax International, PLC, 11.250% 10/01/06 750,000 472,500 ----------- 1,300,500 ----------- FOOD & KINDRED PRODUCTS - 1.9% New World Pasta Co., 9.250% 02/15/09 250,000 138,750 Premier International Foods, PLC, 12.000% 09/01/09 1,500,000 1,500,000 ----------- 1,638,750 ----------- FURNITURE & FIXTURES - 0.6% Juno Lighting, Inc., 11.875% 07/01/09 550,000 517,000 ----------- MACHINERY & AGRICULTURAL EQUIPMENT - 0.5% AGCO Corp. 9.500% 05/01/08 (a) 400,000 398,000 ----------- MACHINERY & COMPUTER EQUIPMENT - 0.2% Sequa Corp., 8.875% 04/01/08 200,000 200,500 ----------- MEASURING & ANALYZING INSTRUMENTS - 0.5% Envirosource, Inc., 9.750% 06/15/03 2,000,000 400,000 ----------- MISCELLANEOUS MANUFACTURING - 7.8% Actuant Corp., 13.000% 05/01/09 315,000 315,000 Associated Materials, Inc., 9.250% 03/01/08 500,000 475,000 Blount, Inc., 13.000% 08/01/09 1,300,000 715,000 Eagle-Picher Industries, Inc., 9.375% 03/01/08 505,000 242,400 Flowserve Corp., 12.250% 08/15/10 (a) 555,000 593,850 ISG Resources, Inc., 10.000% 04/15/08 1,000,000 510,000 Koppers Industries, Inc., 9.875% 12/01/07 900,000 877,500 Newcor, Inc., 9.875% 03/01/08 1,170,000 269,100
See notes to financial statements. 6 4 - -- INVESTMENT PORTFOLIO (CONTINUED)
CORPORATE FIXED INCOME BONDS & NOTES (CONTINUED) PAR VALUE - ------------------------------------------------------------ MANUFACTURING (CONTINUED) MISCELLANEOUS MANUFACTURING (CONTINUED) Special Devices, Inc., 11.375% 12/15/08 $1,250,000 $ 400,000 Tekni-Plex, Inc., 12.750% 06/15/10 1,230,000 1,008,600 Thermadyne Holdings Corp., 9.875% 06/01/08 1,700,000 680,000 Werner Holding Co., 10.000% 11/15/07 750,000 720,000 ----------- 6,806,450 ----------- PAPER PRODUCTS - 4.8% Corp Durango SA de CV, 13.125% 08/01/06 525,000 493,500 Gaylord Container Corp., 9.750% 06/15/07 2,000,000 1,360,000 Riverwood International Corp., 10.875% 04/01/08 2,050,000 1,947,500 Stone Container Corp.: 9.250% 02/01/08 140,000 143,500 9.750% 02/01/11 275,000 284,625 ----------- 4,229,125 ----------- PRIMARY METAL - 4.3% Bayou Steel Corp., 9.500% 05/15/08 1,000,000 620,000 Kaiser Aluminum & Chemical Corp.: 10.875% 10/15/06 1,600,000 1,560,000 12.750% 02/01/03 485,000 436,500 Keystone Consolidated Industries, Inc., 9.625% 08/01/07 965,000 144,750 Renco Metals, Inc., 11.500% 07/01/03 500,000 65,000 WCI Steel Inc., 10.000% 12/01/04 1,265,000 860,200 Wheeling-Pittsburgh Corp., 9.250% 11/15/07 2,000,000 60,000 ----------- 3,746,450 ----------- PRINTING & PUBLISHING - 0.6% American Lawyer Media, Inc.: 9.750% 12/15/07 130,000 118,300 stepped coupon, (12.250% 12/15/02) (d) 12/15/08 600,000 384,000 ----------- 502,300 -----------
PAR VALUE - ------------------------------------------------------------ RUBBER & PLASTIC - 0.1% Burke Industries, Inc., 10.000% 08/15/07 $ 535,000 $ 107,000 ----------- STONE, CLAY, GLASS & CONCRETE - 2.1% Anchor Glass Container Corp., 11.250% 04/01/05 500,000 350,000 Owens-Illinois, Inc.: 7.500% 05/15/10 1,500,000 1,192,500 8.100% 05/15/07 400,000 324,000 ----------- 1,866,500 ----------- TEXTILE MILL PRODUCTS - 0.3% Collins & Aikman Products Co., 11.500% 04/15/06 270,000 241,650 ----------- TRANSPORTATION EQUIPMENT - 0.9% BE Aerospace, Inc., 8.875% 05/01/2011 (a) 325,000 328,250 LDM Technologies, Inc., 10.750% 01/15/07 1,250,000 500,000 ----------- 828,250 ----------- - ------------------------------------------------------------ MINING & ENERGY - 6.0% OIL & GAS EXTRACTION - 6.0% Benton Oil & Gas Co.: 9.375% 11/01/07 1,000,000 602,500 11.625% 05/01/03 100,000 71,000 HS Resources, Inc., 9.250% 11/15/06 675,000 695,250 Magnum Hunter Resources, Inc., 10.000% 06/01/07 925,000 928,469 Mariner Energy, Inc., 10.500% 08/01/06 690,000 676,200 Pemex Project Funding Master Trust, 8.500% 02/15/08 (a) 1,050,000 1,034,492 Petsec Energy, Inc., 9.500% 06/15/07 (e) 2,000,000 60,000 Vintage Petroleum, Inc., 9.750% 06/30/09 1,120,000 1,220,800 ----------- 5,288,711 ----------- - ------------------------------------------------------------ SERVICES - 17.4% AMUSEMENT & RECREATION - 6.8% Ameristar Casinos Inc., 10.750% 02/15/09 400,000 408,000 Anchor Gaming, 9.875% 10/15/08 400,000 427,000 Boyd Gaming Corp., 9.500% 07/15/07 650,000 625,625
See notes to financial statements. 7 5 -- INVESTMENT PORTFOLIO (CONTINUED)
CORPORATE FIXED INCOME BONDS & NOTES (CONTINUED) PAR VALUE - ------------------------------------------------------------ SERVICES (CONTINUED) AMUSEMENT & RECREATION (CONTINUED) Hollywood Casino Corp., 11.250% 05/01/07 $1,075,000 $ 1,154,281 Hollywood Casino Shreveport, 13.000% 08/01/06 670,000 721,925 Hollywood Park, Inc., 9.500% 08/01/07 1,000,000 1,000,000 Horseshoe Gaming LLC, 9.375% 06/15/07 750,000 780,000 Penn National Gaming, Inc., 11.125% 03/01/08 (a) 550,000 561,000 Six Flags Inc., 9.500% 02/01/09 (a) 275,000 286,000 ----------- 5,963,831 ----------- BUSINESS SERVICES - 1.4% Interep National Radio Sales, Inc., 10.000% 07/01/08 1,500,000 1,200,000 ----------- HEALTH SERVICES - 5.1% Alliance Imaging, 10.375% 04/15/11 (a) 350,000 355,250 Bio-Rad Laboratories, Inc., 11.625% 02/15/07 600,000 648,000 Dynacare, Inc., 10.750% 01/15/06 480,000 477,600 Insight Health Services Corp., 9.625% 06/15/08 100,000 99,000 Magellan Health Services, Inc., 9.000% 02/15/08 1,390,000 1,299,650 Tenet Healthcare Corp.: 8.625% 01/15/07 1,050,000 1,092,000 9.250% 09/01/10 400,000 454,000 ----------- 4,425,500 ----------- HOTELS, CAMPS & LODGING - 0.9% Mandalay Resort Group, 10.250% 08/01/07 770,000 795,025 ----------- OTHER SERVICES - 3.2% Alliance Laundry Systems, LLC, 9.625% 05/01/08 1,000,000 650,000 Allied Waste North America, Inc., 10.000% 08/01/09 1,475,000 1,519,250 Intertek Finance, PLC., 10.250% 11/01/06 800,000 616,000 ----------- 2,785,250 ----------- - ------------------------------------------------------------
PAR VALUE - ------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 61.0% AIR TRANSPORTATION - 1.8% U.S. Airways, Inc., 10.375% 03/01/13 $1,600,000 $ 1,584,000 ----------- BROADCASTING - 4.8% Allbritton Communications Co., 9.750% 11/30/07 925,000 943,500 Cumulus Media, Inc., 10.375% 07/01/08 225,000 208,125 Emmis Escrow, stepped coupon, (12.500% 03/15/06) (d) 3/15/11 (a) 575,000 323,438 LIN Holding Corp., stepped coupon, (10.000% 03/01/03) (d) 03/01/08 875,000 643,125 SBA Communications Corp., 10.250% 02/01/09 (a) 480,000 477,600 Shop At Home, Inc., 11.000% 04/01/05 500,000 515,000 Sinclair Broadcast Group, Inc., 10.000% 09/30/05 600,000 585,000 TV Azteca SA de CV, 10.500% 02/15/07 495,000 465,300 ----------- 4,161,088 ----------- CABLE - 20.5% Adelphia Communications Corp., 9.875% 03/01/07 25,000 25,250 Cable Satisfaction International, Inc., 12.750% 03/01/10 970,000 679,000 Callahan Nordrhein-Westfalen, 14.000% 07/15/10 (a) 455,000 464,100 Charter Communications Holding LLC: 10.750% 10/01/09 275,000 297,000 11.125% 01/15/11 675,000 729,000 stepped coupon, (9.920% 04/01/04) (d) 04/01/11 2,075,000 1,478,438 Comcast UK Cable Partners Ltd., 11.200% 11/15/07 2,000,000 1,720,000 Diamond Cable Co., stepped coupon, (10.750% 02/15/02) (d) 02/15/07 2,205,000 1,499,400 EchoStar DBS Corp., 9.250% 02/01/06 1,365,000 1,378,650 Ekabel Hessen GmbH & Co.: 14.500% 09/01/10 (a)(b) 175,000 155,313 14.500% 09/01/10 (a) 455,000 455,000
See notes to financial statements. 8 6 - -- INVESTMENT PORTFOLIO (CONTINUED)
CORPORATE FIXED INCOME BONDS & NOTES (CONTINUED) PAR VALUE - ------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES (CONTINUED) CABLE (CONTINUED) FrontierVision Holdings LP, stepped coupon, (11.875% 09/15/01) (d) 09/15/07 $2,575,000 $ 2,613,625 Insight Communications Co., Inc., stepped coupon, (12.250% 02/15/06) (d) 02/15/11 (a) 450,000 252,000 Mediacom LLC, 9.500% 01/15/13 (a) 185,000 179,913 Northland Cable Television, Inc., 10.250% 11/15/07 1,350,000 945,000 NTL, Inc.: 11.500% 10/01/08 485,000 404,975 11.875% 10/01/10 800,000 680,000 Ono Finance, PLC: 13.000% 05/01/09 (a) 750,000 592,500 14.000% 02/15/11 (a) 175,000 154,000 14.000% 07/15/10 (a)(b) 1,130,000 842,415 Telewest Communications PLC: 11.000% 10/01/07 2,400,000 2,319,000 11.250% 11/01/08 100,000 100,000 ----------- 17,964,579 ----------- COMMUNICATIONS - 10.2% Alamosa Delaware, Inc., 12.500% 02/01/11 760,000 748,600 American Cellular Corp., 9.500% 10/15/09 (a) 300,000 291,750 AT&T Wireless Group, 7.875% 03/01/11 (a) 150,000 150,618 Call-Net Enterprises, Inc.: 8.000% 08/15/08 150,000 36,000 9.375% 05/15/09 350,000 103,250 stepped coupon, (10.800% 05/15/04) (d) 05/15/09 2,000,000 360,000 Centennial Cellular Corp., 10.750% 12/15/08 300,000 273,000 Concentric Network Corp., 12.750% 12/15/07 400,000 220,000 Exodus Communications, Inc.: 10.750% 12/15/09 750,000 570,000 11.625% 07/15/10 (a) 700,000 549,500 Grupo Iusacell S.A., 14.250% 12/01/06 650,000 671,125
PAR VALUE - ------------------------------------------------------------ Spectrasite Holdings Inc.: 10.750% 03/15/10 $ 200,000 $ 185,000 12.500% 11/15/10 630,000 620,550 stepped coupon, (11.250% 04/15/04) (d) 04/15/09 2,020,000 1,070,600 Time Warner Telecom LLC: 9.750% 07/15/08 1,250,000 1,237,500 10.125% 02/01/11 250,000 250,000 United Pan-Europe Communications N.V., 11.500% 02/01/10 1,900,000 1,254,000 XM Satellite Radio, Inc., 14.000% 03/15/10 (a) 600,000 330,000 ----------- 8,921,493 ----------- COMMUNICATIONS SERVICES - 1.7% Crown Castle International Corp., 10.750% 08/01/11 250,000 265,625 stepped coupon, (10.375% 05/15/04) (d) 05/15/11 1,400,000 994,000 Ubiquitel Operating UPCS, stepped coupon, (14.000% 04/15/05) (d) 04/15/10 525,000 204,750 ----------- 1,464,375 ----------- ELECTRIC, GAS & SANITARY SERVICES - 0.7% CMS Energy Corp., 9.875% 10/15/07 575,000 606,625 ----------- ELECTRIC SERVICES - 2.5% AES Corp.: 9.375% 09/15/10 350,000 362,250 9.500% 06/01/09 1,215,000 1,263,600 PSEG Energy Holdings Inc., 8.625% 02/15/08 600,000 586,170 ----------- 2,212,020 ----------- MOTOR FREIGHT & WAREHOUSING - 0.6% MTL, Inc., 10.000% 06/15/06 1,000,000 550,000 ----------- TELECOMMUNICATION - 18.2% AirGate PCS, Inc., stepped coupon, (13.500% 10/01/04) (d) 10/01/09 1,109,000 665,400 Carrier1 International SA, 13.250% 02/15/09 750,000 412,500 FLAG Telecom Holdings Ltd.: 11.625% 03/30/10 925,000 721,500 11.625% 03/30/10 (b) 600,000 415,350
See notes to financial statements. 9 7 -- INVESTMENT PORTFOLIO (CONTINUED)
CORPORATE FIXED INCOME BONDS & NOTES (CONTINUED) PAR VALUE - ------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES (CONTINUED) TELECOMMUNICATION (CONTINUED) Global Crossing Ltd.: 9.125% 11/15/06 $1,075,000 $ 1,023,938 9.625% 05/15/08 150,000 142,500 Horizon PCS, Inc., stepped coupon, (14.000% 10/01/05) (d) 10/01/10 665,000 259,350 Hyperion Telecommunications, Inc., 13.000% 04/15/03 500,000 385,000 Jazztel, PLC: 13.250% 12/15/09 (b) 375,000 179,719 14.000% 07/15/10 (b) 350,000 173,950 KPNQwest N.V., 8.875% 02/01/08 (b) 600,000 473,925 Level 3 Communications, Inc.: 10.750% 03/15/08 635,000 366,316 11.000% 03/15/08 1,965,000 1,355,850 McLeodUSA, Inc.: 11.375% 01/01/09 1,175,000 1,036,938 stepped coupon, (10.500% 03/01/02) (d) 03/01/07 65,000 49,725 Metromedia Fiber Network, Inc.: 10.000% 11/15/08 1,300,000 884,000 10.000% 12/15/09 650,000 442,000 Microcell Telecommunications, Inc., stepped coupon, (14.000% 12/01/01) (d) 06/01/06 1,000,000 850,000 Nextel Communications, Inc., 9.375% 11/15/09 250,000 212,500 Nextel International Inc.: 12.750% 08/01/10 1,000,000 660,000 stepped coupon, (13.000% 04/15/02) (d) 04/15/07 500,000 280,000 (12.125% 04/15/03) (d) 04/15/08 665,000 305,900 Nextel Partners, Inc.: 11.000% 03/15/10 500,000 435,000 11.000% 03/15/10 (a) 75,000 65,250 Nextlink Communications, Inc., 10.750% 06/1/09 500,000 245,000 Partner Communications Co., Ltd., 13.000% 08/15/10 630,000 567,000 RCN Corp. stepped coupon, (11.125% 10/15/02) (d) 10/15/07 (e) 750,000 142,500 Rogers Cantel, Inc., 9.750% 06/01/16 1,000,000 990,000
PAR VALUE - ------------------------------------------------------------ TeleCorp PCS, Inc.: 10.625% 07/15/10 $ 200,000 $ 189,000 stepped coupon, (11.625% 04/15/04) (d) 04/15/09 1,445,000 939,250 Tritel PCS, Inc.: 10.375% 01/15/11 (a) 645,000 603,075 stepped coupon, (12.750% 05/15/04) (d) 05/15/09 190,000 123,500 US Unwired, Inc., stepped coupon, (13.375% 11/01/04) (d) 11/01/09 500,000 250,000 Winstar Communications, Inc., 12.500% 04/15/08 2,235,000 33,525 ----------- 15,879,461 ----------- TOTAL CORPORATE FIXED INCOME BONDS & NOTES (cost of $134,067,603) 107,456,850 ----------- PREFERRED STOCKS - 10.8% SHARES VALUE - ------------------------------------------------------------ FINANCE, INSURANCE & REAL ESTATE - 0.2% DEPOSITORY INSTITUTIONS - 0.2% Cal Fed Bancorp, Inc., 9.125%, Series A 8,500 214,115 ----------- - ------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 10.6% BROADCASTING - 0.4% Granite Broadcasting Corp., 12.750% PIK 602 108,332 PriMedia Inc., 9.200%, Series F 3,000 244,500 ----------- 352,832 ----------- CABLE - 6.6% Adelphia Communications Corp., 13.000%, Series B 12,500 1,250,000 CSC Holdings Ltd.: 11.125% PIK 21,421 2,313,444 11.750% PIK 20,424 2,226,191 ----------- 5,789,635 ----------- COMMUNICATIONS - 0.5% Dobson Communications Corp., 12.250% PIK 450 416,707 ----------- TELECOMMUNICATION - 3.1% Global Crossing Ltd., 10.500% PIK 5,000 440,000
See notes to financial statements. 10 8 - -- INVESTMENT PORTFOLIO (CONTINUED)
PREFERRED STOCKS (CONTINUED) SHARES VALUE - ------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES (CONTINUED) TELECOMMUNICATION (CONTINUED) Nextel Communications, Inc.: 11.125% PIK 689 $ 495,906 13.000% PIK 1,554 1,289,815 XO Communications, Inc.: 13.500% PIK 715 114,419 14.000% PIK 26,635 319,616 ----------- 2,659,756 ----------- TOTAL PREFERRED STOCKS (cost of $12,279,822) 9,433,045 ----------- COMMON STOCKS - 0.9% - ------------------------------------------------------------ MINING & ENERGY - 0.2% OIL & GAS EXTRACTION - 0.2% Pioneer Natural Resources Co. 8,153 155,804 ----------- - ------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 0.7% MOTOR FREIGHT & WAREHOUSING - 0.0% St. Johnsbury Trucking Co. (f) 78,710 787 Sun Carriers, Inc. (f) 326,000 -- ----------- 787 ----------- TELCOMMUNICATIONS - 0.7% AirGate PCS, Inc. (g) 1,826 72,302 Nextel Communications, Inc., Class A (g) 6,196 100,685 Price Communications Corp. (g) 23,920 431,038 ----------- 604,025 ----------- TOTAL COMMON STOCKS (cost of $1,673,020) 760,616 ----------- WARRANTS - 0.0% - ------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 0.0% CABLE - 0.0% Cable Satisfaction International, Inc. (expires 3/1/05) 970 970 Ono Finance, PLC (a) (expires 5/31/09) 750 26,250 ----------- 27,220 -----------
SHARES VALUE - ------------------------------------------------------------ TELECOMMUNICATION - 0.0% Carrier1 International SA (expires 2/19/09) 347 $ 11,798 Horizon PCS Inc. (expires 10/1/03) 665 1,663 Jazztel PLC (b) (expires 2/1/10) 350 621 MetroNet Communications Corp. (expires 8/15/07) 250 20,597 UbiquiTel Operating UPCS (expires 4/15/10) 525 10,500 XM Satellite Radio Holdings, Inc. (expires 3/15/10) 600 1,800 ----------- 46,979 ----------- TOTAL WARRANTS (cost of $420,974) 74,199 ----------- TOTAL INVESTMENTS (cost of $148,441,419) (h) 117,724,710 ----------- SHORT-TERM OBLIGATIONS - 5.0% PAR VALUE - ------------------------------------------------------------ Federal Home Loan Mortgage, 4.53% (i) 05/01/01 $2,411,000 2,411,000 Federal National Mortgage Association, 6.47% (i) 06/08/01 2,000,000 1,986,341 ----------- TOTAL SHORT-TERM OBLIGATIONS (cost of $4,397,341) 4,397,341 ----------- FORWARD CURRENCY CONTRACTS - 0.1% 49,084 - ------------------------------------------------------------ OTHER ASSETS & LIABILITIES, NET - (39.7%) (34,710,381) - ------------------------------------------------------------ Net Assets - 100.0% $ 87,460,754 -----------
See notes to financial statements. 11 9 -- INVESTMENT PORTFOLIO (CONTINUED) NOTES TO INVESTMENT PORTFOLIO: (a) 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 April 30, 2001, the value of these securities amounted to $10,560,027 or 12.07% of net assets. (b) This is a foreign security. Par amount is stated in U.S. dollars. (c) Zero coupon bond. (d) Currently zero coupon. Shown parenthetically is the next interest rate to be paid and the date the Fund will be accruing this rate. (e) This issuer is in default of certain debt covenants. Income is not being accrued. (f) Represents fair value as determined in good faith under the direction of the Trustees. (g) Non-income producing security. (h) Cost for federal income tax purposes is the same. (i) Rate represents yield at date of purchase.
Net Unrealized Contracts In Exchange Settlement Depreciation to Deliver For Date (US$) - ------------------------------------------------------------- Eu 420,000 US$ 372,649 5/22/2000 $(4,100) -------
Net Unrealized Contracts In Exchange Settlement Appreciation to Receive For Date (US$) - ------------------------------------------------------------- Eu 3,219,000 US$ 2,856,086 5/22/2000 $52,051 Eu 117,000 US$ 103,779 6/11/2000 $ 1,133 ------- $53,184 -------
ACRONYM NAME - ---------------------- ------------------------------------ PIK Payment-In-Kind
See notes to financial statements. 12 10 - -- STATEMENT OF ASSETS AND LIABILITIES April 30, 2001 (Unaudited) ASSETS Investments at value (cost $148,441,419) $117,724,710 Short-term obligations (cost $4,397,341) 4,397,341 ----------- 122,122,051 Cash $ 325 Foreign currencies (cost $292) 291 Unrealized appreciation on forward currency contracts 53,184 Receivable for: Interest 3,670,678 Investments sold 1,213,700 Fund shares sold 158,688 Dividends 6,898 Other 60,451 5,164,215 ---------- ----------- Total Assets 127,286,266 LIABILITIES Unrealized depreciation on forward currency contracts 4,100 Payable for: Distributions 1,204,508 Interest 1,003,307 Accrued: Management fee 652 Bookkeeping fee 3,347 Custodian fee 1,700 Trustees' fee 2,700 Deferred Trustees' fee 1,034 Other 104,164 Notes payable 37,500,000 ---------- Total Liabilities 39,825,512 ----------- Net assets at value for 20,502,542 shares of beneficial interest outstanding $ 87,460,754 =========== Net asset value per share $ 4.27 =========== COMPOSITION OF NET ASSETS Capital paid in $142,744,609 Overdistributed net investment income (649,196) Accumulated net realized loss (23,951,287) Net unrealized appreciation Investments (30,716,709) Foreign currency transactions 33,337 ----------- $ 87,460,754 ===========
STATEMENT OF OPERATIONS For the Six Months Ended April 30, 2001 (Unaudited) INVESTMENT INCOME Interest $ 7,324,326 Dividends 393,283 ----------- Total Investment Income 7,717,609 ----------- EXPENSES Management fee $ 473,760 Bookkeeping fee 21,192 Trustees' fee 4,163 Custodian fee 3,258 Other 56,393 ---------- Total Operating Expenses 558,766 Interest expense 1,367,942 ---------- Total Expenses 1,926,708 ----------- Net Investment Income 5,790,901 ----------- NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS Net realized loss on Investments (7,962,097) Foreign currency transactions (86,368) ---------- Net Realized Loss (8,048,465) ----------- Net change in unrealized appreciation/depreciation on Investments (2,856,228) Foreign currency transactions 1,001 ---------- Net Change in Unrealized Appreciation/Depreciation (2,855,227) ----------- Net Loss (10,903,692) ----------- Decrease in Net Assets from Operations $ (5,112,791) ===========
See notes to financial statements. 13 11 -- STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED) SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, INCREASE (DECREASE) ------------ ------------ IN NET ASSETS 2001 2000 - ------------------------------------------------------------- OPERATIONS: Net investment income $ 5,790,901 $ 13,542,431 Net realized loss (8,048,465) (10,154,075) Net change in unrealized appreciation/depreciation (2,855,227) (12,156,192) ----------- ----------- Net Decrease from Operations (5,112,791) (8,767,836) ----------- ----------- DISTRIBUTIONS: From net investment income (5,770,927) (14,063,074) In excess of net investment income (649,196) (384,067) ----------- ----------- Total Distributions (6,420,123) (14,447,141) ----------- ----------- FUND SHARE TRANSACTIONS: Value of distributions reinvested 660,723 530,319 ----------- ----------- Net Increase from Fund Share Transactions 660,723 530,319 ----------- ----------- Total Decrease (10,872,191) (22,684,658) NET ASSETS Beginning of period 98,332,945 121,017,603 ----------- ----------- End of period (net of overdistributed net investment income of $649,196 and $19,974, respectively) $ 87,460,754 $ 98,332,945 ----------- -----------
(UNAUDITED) SIX MONTHS ENDED YEAR ENDED APRIL 30, OCTOBER 31, ----------- ----------- NUMBER OF FUND SHARES 2001 2000 - --------------------------------------------------------------- Issued for distributions reinvested 137,149 97,351 ---------- ---------- Outstanding at Beginning of period 20,365,393 20,268,042 ---------- ---------- End of period 20,502,542 20,365,393 ---------- ----------
See notes to financial statements. 14 12 - -- STATEMENT OF CASH FLOWS For the Six Months Ended April 30, 2001 (Unaudited)
INCREASE (DECREASE) IN CASH - ------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net investment income $ 5,790,901 Adjustments to reconcile net investment income to net cash provide by (used in) operating activities Cost of investments purchased (29,628,762) Receipts from investments sold 37,803,343 Sale of short-term investments, net 4,432,328 Net realized loss due to foreign currency translation (43,537) Decrease in dividend and interest receivable 199,297 Increase in other assets (40,847) Decrease in foreign currency 186,818 Net proceeds from forward currency contracts (107,089) Increase in receivable for investments sold (1,213,700) Decrease in payable for investments purchased (270,067) Decrease in accrued expenses (149,968) Net short-term amortization/accretion of income (134,173) Net long-term amortization/accretion of income (976,122) ----------- Net cash provided by operating activities 15,848,422 CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in notes payable (9,800,000) Decrease in interest payable (214,555) Increase in receivable for fund shares sold (158,688) Distributions paid in cash (5,674,989) ----------- Net cash provided from Financing Activities (15,848,232) ----------- Net Increase in Cash 190 CASH: Beginning of the period 135 ----------- End of the period $ 325 =========== Supplemental disclosure of cash flow information: Noncash financing activities not included herein consist of reinvestment of distributions of $660,723.
See notes to financial statements. 15 13 -- NOTES TO FINANCIAL STATEMENTS April 30, 2001 (Unaudited) 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 April 30, 2001. 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 16 14 - -- NOTES TO FINANCIAL STATEMENTS (CONTINUED) April 30, 2001 (Unaudited) 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. 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 six months ended April 30, 2001, purchases and sales of investments, other than short-term obligations, were $29,628,762 and $37,803,343, respectively. Unrealized appreciation (depreciation) at April 30, 2001, based on cost of investments for both financial statement and federal income tax purposes was approximately: - ---------------------------------------------------- Gross unrealized appreciation $ 2,663,217 Gross unrealized depreciation (33,379,926) ------------ Net unrealized depreciation $(30,716,709) ============
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 April 30, 2001, the Fund had four term loans and a revolver loan outstanding with Bank of America Illinois, totaling $37,500,000. These loans are comprised of $13,700,000 term loan which bears interest at 7.74% per 17 15 -- NOTES TO FINANCIAL STATEMENTS (CONTINUED) April 30, 2001 (Unaudited) annum, due June 12, 2003, a $6,900,000 term loan which bears interest at 6.37% per annum, due May 21, 2001, a $9,200,000 term loan which bears interest at 6.26% per annum, due June 29, 2001, and a $7,700,000 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. 18 16 - -- FINANCIAL HIGHLIGHTS Selected per share data, total return, ratios and supplemental data throughout each period are as follows:
(UNAUDITED) SIX MONTHS ENDED APRIL 30, YEARS ENDED OCTOBER 31, ----------- --------------------------------------------------------------- 2001 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, BEGINNING OF PERIOD $ 4.83 $ 5.97 $ 6.20 $ 7.27 $ 6.89 $ 6.62 ------- -------- -------- -------- -------- ------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.28 0.67 0.70 0.70 0.70 0.70 Net realized and unrealized gain (loss) (0.53) (1.10) (0.23) (1.08) 0.38 0.26 ------- -------- -------- -------- -------- ------- Total from Investment Operations (0.25) (0.43) 0.47 (0.38) 1.08 0.96 ------- -------- -------- -------- -------- ------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.28) (0.69) (0.70) (0.69) (0.70) (0.69) ------- -------- -------- -------- -------- ------- In excess of net investment income (0.03) (0.02) -- -- -- -- ------- -------- -------- -------- -------- ------- Total Distributions Declared to Shareholders (0.31) (0.71) (0.70) (0.69) (0.70) (0.69) ------- -------- -------- -------- -------- ------- NET ASSET VALUE, END OF PERIOD $ 4.27 $ 4.83 $ 5.97 $ 6.20 $ 7.27 $ 6.89 ======= ======== ======== ======== ======== ======= Market price per share $ 4.75 $ 4.63 $ 5.63 $ 6.81 $ 7.56 $ 7.13 ======= ======== ======== ======== ======== ======= Total return - based on market value (a) 9.56%(c) (6.12)% (7.89)% (0.74)% 16.97% 14.62% ======= ======== ======== ======== ======== ======= RATIOS TO AVERAGE NET ASSETS Operating Expenses (b) 1.20%(d) 0.92% 0.89% 0.88% 0.89% 0.98% Interest and amortization of deferred debt issuance expenses 2.94%(d) 2.79% 2.48% 2.11% 1.96% 2.07% Total expenses (b) 4.14%(d) 3.71% 3.37% 2.99% 2.85% 3.05% Net investment income (b) 12.44%(d) 11.88% 10.82% 9.70% 9.63% 10.11% Portfolio turnover 24% 42% 44% 69% 92% 92% Net assets at end of period (000) $87,461 $ 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. (c) Not annualized. (d) Annualized. 19 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. Transfer Agent SEMIANNUAL REPORT: COLONIAL INTERMEDIATE HIGH INCOME FUND 20 TRUSTEES DOUGLAS A. HACKER Executive Vice President and Chief Financial Officer of UAL, Inc. (formerly Senior Vice President and Chief Financial Officer of UAL, Inc.) JANET LANGFORD KELLY Executive Vice President-Corporate Development, General Counsel, and Secretary, Kellogg Company (formerly Senior Vice President, Secretary and General Counsel, Sara Lee Corporation) RICHARD W. LOWRY Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood Corporation) SALVATORE MACERA Private Investor (formerly Executive Vice President and Director of Itek Corp. WILLIAM E. MAYER Managing Partner, Park Avenue Equity Partners (formerly Founding Partner, Development Capital LLC; Dean and Professor, College of Business and Management, University of Maryland) CHARLES R. NELSON Van Voorhis Professor, Department of Economics, University of Washington; consultant on econometric and statistical matters (formerly Department Chairman and Director of the Institute for Economic Research) 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 Stein Roe & Farnham Incorporated; Executive Vice President and Chief Administrative Officer of Liberty Funds Group LLC (formerly Vice President of Liberty Mutual Funds, Stein Roe Mutual Funds and All-Star Funds, and Chief Operating Officer, Putnam Mutual Funds) THOMAS E. STITZEL Business Consultant and Chartered Financial Analyst (formerly Professor of Finance, College of Business, Boise State University) THOMAS C. THEOBALD Managing Director, William Blair Capital Partners (formerly Chief Executive Officer and Chairman of the Board of Directors, Continental Bank Corporation) ANNE-LEE VERVILLE Chairman of the Board of Directors, Enesco Group, Inc. and author and speaker on educational systems needs (formerly General Manager, Global Education Industry, and President, Applications Solutions Division, IBM Corporation) - ------------------------------------------------------------------------- COLONIAL INTERMEDIATE HIGH INCOME FUND SEMIANNUAL REPORT - ------------------------------------------------------------------------- 110-03/920F-0401 (06/01) 01/1055 -----END PRIVACY-ENHANCED MESSAGE-----