-----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, QyTDrWeNE6KhKh6tXxPtZyCK/6RSxqfIOXX2MIX04PcTpqJBhZw85tZN9rUaYpmM k5+ZHYW9nuBnk23a1Q+HmA== 0000950156-99-000447.txt : 19990702 0000950156-99-000447.hdr.sgml : 19990702 ACCESSION NUMBER: 0000950156-99-000447 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990430 FILED AS OF DATE: 19990701 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: 99657494 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CNTR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 N-30D 1 COLONIAL INTERMEDIATE HIGH INCOME - 4/30/99 [graphic omitted] COLONIAL INTERMEDIATE HIGH INCOME FUND SEMIANNUAL REPORT APRIL 30, 1999 COLONIAL INTERMEDIATE HIGH INCOME FUND HIGHLIGHTS NOVEMBER 1, 1998 - APRIL 30,1999 INVESTMENT OBJECTIVE: Colonial Intermediate High Income Fund seeks high current income and total return by investing primarily in lower-rated corporate debt securities. THE FUND IS DESIGNED TO OFFER: |X| High monthly income potential |X| Attractive long-term total return potential |X| Broad diversification PORTFOLIO MANAGER COMMENTARY: "Overall, the Fund achieved strong performance during the six-month period. Our biggest gains were in telecommunications, cable, energy and steel. Particularly in the first quarter of 1999, consolidation in the cable sector helped boost performance. Comcast (1.37% of total net assets) is one holding that benefited from this trend. Bonds in the energy sector also rallied strongly in response to a substantial runup in oil and natural gas prices. Going forward, we believe the U.S. economy will remain strong, certainly for the near term. Strong economic growth, combined with favorable demand for high-yield bonds, should enable high-yield bonds to offer attractive yields relative to U.S. Treasurys." -Carl Ericson COLONIAL INTERMEDIATE HIGH INCOME FUND PERFORMANCE Six-month distributions declared per share $0.361 - -------------------------------------------------------------------------------- NAV MARKET PRICE - -------------------------------------------------------------------------------- Six-month total return, assuming reinvestment of all distributions 13.27% 0.79% Price per share on 4/30/99 $6.65 $6.50 TOP CORPORATE ISSUERS(1) TOP FIVE SECTORS(1) - ------------------------------------ ------------------------------------ 1. NTL, Inc. 4.1% 1. Manufacturing 15.9% 2. Adelphia Communication 2.8% 2. Telecommunications 15.9% 3. CSC Holdings, Inc. 2.7% 3. Cable 11.6% 4. Nextel Comm 2.7% 4. Metals 8.2% 5. Riverwood International 2.2% 5. Services 7.6% (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 or invest in these sectors in the future. Industry sectors in the following financial statements are based upon the standard industrial classifications (SIC) published by the U.S. Office of Management and Budget. The sector classifications used on this page are based upon Colonial's defined criteria as used in the investment process. PRESIDENT'S MESSAGE TO FUND SHAREHOLDERS [Photo of Stephen E. Gibson] I'm pleased to present the semiannual report for Colonial Intermediate High Income Fund for the six-month period ending April 30, 1999. The high-yield market was in a period of transition over the past six months. The "flight to quality" during the fall of 1998 had a residual effect on high-yield bond prices through the final months of 1998. Lingering concerns about the global economy and the ability of U.S. companies to maintain earnings hampered the performance of high-yield bonds. However, in early 1999, a visibly strong U.S. economy reduced investors' concerns about overseas events and the direction of the U.S. economy. As a result, investor sentiment toward high-yield bonds shifted in a positive direction, driving prices upward during February, March and April. Colonial's philosophy in managing high-yield investments has continued to serve investors well. By maintaining a well-diversified portfolio, performing diligent credit research, and avoiding emerging-market debt, the Fund seeks to reduce risk and increase reward potential for shareholders. For the six-month period ending April 30, 1999, the Fund performed in the top half of its peer group.(1) As always, we thank you for choosing Colonial Intermediate High Income Fund and for giving us the opportunity to serve your investment needs. Respectfully, /s/ Stephen E. Gibson Stephen E. Gibson President June 15, 1999 (1) Source: Lipper, Inc. Lipper rankings are based on the Lipper High Current Yield Funds (Leveraged) category. The Fund's ranking for the six-month period is in the 2nd quartile (rated 11 out of 26 funds), in the 1st quartile for the one-year period (rated 3 out of 21 funds), in the 1st quartile for the five-year period (rated 3 out of 17 funds) and in the 3rd quartile for the 10-year period (rated 9 out of 13 funds). Rankings do not include any sales charges. Past performance cannot guarantee future results. Because economic and market conditions change frequently, there can be no assurance that the trends described herein will continue or come to pass. INVESTMENT PORTFOLIO APRIL 30, 1999 (UNAUDITED, IN THOUSANDS) CORPORATE FIXED INCOME BONDS & NOTES (a) - 93.7% PAR VALUE - ------------------------------------------------------------------------------ CONSTRUCTION - 0.2% BUILDING CONSTRUCTION Nortek, Inc., 8.875% 08/01/08 (b) $ 300 $ 310 -------- .............................................................................. MANUFACTURING - 36.6% CHEMICALS & ALLIED PRODUCTS - 4.4% ClimaChem, Inc., 10.750% 12/01/07 500 491 General Chemical Industries, Inc., 10.625% 05/01/09 (b) 750 767 Huntsman Corp., 9.500% 07/01/07 (b) 500 490 HydroChem Industrial Services, Inc., 10.375% 08/01/07 490 431 PCI Chemicals Canada, Inc., 9.250% 10/15/07 1,000 800 Sterling Chemicals, Inc., 11.750% 08/15/06 1,500 1,410 Texas Petrochemical Corp., 11.125% 07/01/06 2,000 1,740 Trans Resources, Inc., 10.750% 03/15/08 1,000 990 stepped coupon, (12.000% 03/01/03) (c) 03/15/08 1,000 515 -------- 7,634 -------- ELECTRONIC & ELECTRICAL EQUIPMENT - 0.7% Amphenol Corp., 9.875% 05/15/07 1,225 1,277 -------- FABRICATED METAL - 2.4% Earle M. Jorgensen & Co., 9.500% 04/01/05 1,500 1,395 Euramax International, PLC, 11.250% 10/01/06 1,500 1,590 US Can Corp., 10.125% 10/15/06 1,000 1,065 -------- 4,050 -------- FOOD & KINDRED PRODUCTS - 1.6% Chattem, Inc., 8.875% 04/01/08 1,000 1,013 Chiquita Brands International, Inc., 10.250% 11/01/06 1,000 1,057 New World Pasta Co., 9.250% 02/15/09 (b) 250 254 Pilgrim's Pride Corp., 10.875% 08/01/03 450 463 -------- 2,787 -------- MACHINERY & COMPUTER EQUIPMENT - 0.8% IMO Industries, Inc., 11.750% 05/01/06 1,370 1,438 -------- MEASURING & ANALYZING INSTRUMENTS - 0.7% Envirosource, Inc., 9.750% 06/15/03 2,000 1,200 -------- MISCELLANEOUS MANUFACTURING - 8.7% Alliance Laundry Systems L.L.C., 9.625% 05/01/08 (b) 1,000 950 Associated Materials, Inc., 9.250% 03/01/08 500 510 Eagle-Picher Industries, Inc., 9.375% 03/01/08 2,000 1,970 ISG Resources, Inc., 10.000% 04/15/08 1,000 1,023 Moll Industries, Inc., 10.500% 07/01/08 1,500 1,313 Newcor, Inc., 9.875% 03/01/08 1,270 1,197 Shop Vac Corp., 10.625% 09/01/03 1,000 1,087 Simmons Co., 10.250% 03/15/09 (b) 750 784 Special Devices, Inc., 11.375% 12/15/08 (b) 1,000 1,015 Tokheim Corp., 11.375% 08/01/08 (b) 1,000 1,005 Tekni-Plex, Inc., 9.250% 03/01/08 1,500 1,537 Thermadyne Holdings Corp., 9.875% 06/01/08 2,000 1,910 Werner Holding Co., 10.000% 11/15/07 750 767 -------- 15,068 -------- PAPER PRODUCTS - 5.8% Gaylord Container Corp., 9.750% 06/15/07 2,000 1,940 Repap New Brunswick, Inc., 10.625% 04/15/05 3,500 2,914 Riverwood International Corp.: 10.625% 08/01/07 500 522 10.875% 04/01/08 3,500 3,439 Stone Container Corp., 12.250% 04/01/02 1,250 1,256 -------- 10,071 -------- PRIMARY METAL - 6.2% Algoma Steel, Inc., 12.375% 07/15/05 500 502 Bayou Steel Corp., 9.500% 05/15/08 1,000 997 Kaiser Aluminum & Chemcial Corp., 10.875% 10/15/06 2,000 2,080 Keystone Consolidated Industries, Inc., 9.625% 08/01/07 1,500 1,478 Northwestern Steel and Wire Co., 9.500% 06/15/01 1,000 680 Renco Metals, Inc., 11.500% 07/01/03 500 521 WCI Steel Inc., 10.000% 12/01/04 2,250 2,351 Wheeling-Pittsburgh Corp., 9.250% 11/15/07 2,000 2,000 -------- 10,609 -------- PRINTING & PUBLISHING - 1.6% American Lawyer Media, Inc., 9.750% 12/15/07 2,000 2,075 stepped coupon, (12.250% 12/15/02) (c) 12/15/08 1,000 660 -------- 2,735 -------- RUBBER & PLASTIC - 0.9% Burke Industries, Inc., 10.000% 08/15/07 2,000 1,600 -------- STONE, CLAY, GLASS & CONCRETE - 0.3% Anchor Glass Container Corp., 11.250% 04/01/05 500 526 -------- TEXTILE MILL PRODUCTS - 0.1% Collins & Aikman Products Co., 10.000% 01/15/07 100 104 -------- TRANSPORTATION EQUIPMENT - 2.4% Dura Operating Corp., 9.000% 05/01/09 (b) 500 509 Johnstown America Industries, Inc., 11.750% 08/15/05 1,000 1,085 LDM Technologies, Inc., 10.750% 01/15/07 2,500 2,587 -------- 4,181 -------- .............................................................................. MINING & ENERGY - 6.5% COAL MINING - 0.6% AEI Resources, Inc., 10.500% 12/15/05 1,000 1,015 -------- OIL & GAS EXTRACTION - 4.7% Belden & Blake Corp., 9.875% 06/15/07 1,700 1,292 HS Resources, Inc., 9.250% 11/15/06 1,500 1,515 Magnum Hunter Resources, Inc., 10.000% 06/01/07 750 683 Mariner Energy, Inc., 10.500% 08/01/06 1,500 1,350 Ocean Energy, Inc., 10.375% 10/15/05 1,610 1,727 Petsec Energy, Inc., 9.500% 06/15/07 2,000 1,020 Pride Petroleum Services, Inc., 9.375% 05/01/07 500 497 -------- 8,084 -------- OIL & GAS FIELD SERVICES - 1.2% Chile Offshore Corp., 10.000% 05/01/08 1,500 1,125 Pool Energy Services Co., 8.625% 04/01/08 500 505 RBF Finance Corp., 11.000% 03/15/06 (b) 500 525 -------- 2,155 -------- .............................................................................. RETAIL TRADE - 3.7% FOOD STORES - 2.9% Pathmark Stores, Inc., 9.625% 05/01/03 3,000 3,086 Richmont Marketing Specialists, Inc., 10.125% 12/15/07 (b) 1,000 860 Star Markets Co., 13.000% 11/01/04 1,000 1,093 -------- 5,039 -------- MISCELLANEOUS RETAIL - 0.8% MTS, Inc., 9.375% 05/01/05 1,500 1,372 -------- .............................................................................. SERVICES - 7.9% AMUSEMENT & RECREATION - 3.0% Coast Hotels and Casino, Inc., 9.500% 04/01/09 (b) 1,000 1,023 Hollywood Park, Inc., 9.500% 08/01/07 1,000 1,045 Horseshoe Gaming, L.L.C., 9.375% 06/15/07 1,000 1,040 Regal Cinemas, Inc., 9.500% 06/01/08 2,000 1,990 -------- 5,098 -------- BUSINESS SERVICES - 2.1% Interep National Radio Sales, Inc., 10.000% 07/01/08 1,500 1,560 Loral Space and Communications Ltd., 9.500% 01/15/06 (b) 500 485 PSINet, Inc., 10.000% 02/15/05 1,500 1,583 -------- 3,628 -------- HOTELS, CAMPS & LODGING - 1.2% Eldorado Resorts L.L.C., 10.500% 08/15/06 2,005 2,105 -------- OTHER SERVICES - 1.2% Borg-Warner Security Corp., 9.625% 03/15/07 1,500 1,515 Intertek Finance, PLC, 10.250% 11/01/06 500 488 -------- 2,003 -------- PERSONAL SERVICES - 0.4% Williams Scotsman, Inc., 9.875% 06/01/07 750 778 -------- .............................................................................. TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 38.2% AIR TRANSPORTATION - 1.6% Trans World Airlines, Inc., 11.375% 03/01/06 1,000 480 U.S. Air, Inc., 10.375% 03/01/13 2,000 2,210 -------- 2,690 -------- BROADCASTING - 3.7% Allbritton Communications Co., 9.750% 11/30/07 2,000 2,140 Fox Family Worldwide, Inc., 9.250% 11/01/07 1,000 972 LIN Holdings Corp., stepped coupon, (10.000% 03/01/03) (c) 03/01/08 2,500 1,738 Young Broadcasting Corp., 11.750% 11/15/04 1,500 1,609 -------- 6,459 -------- CABLE - 12.0% Avalon Cable Holdings L.L.C.: 9.375% 12/01/08 (b) 250 265 stepped coupon, (11.875% 12/01/03) (c) 12/01/08 (b) 2,000 1,355 Adelphia Communications Corp., 9.875% 03/01/07 3,500 3,868 Charter Communications Holdings, L.L.C., stepped coupon, (9.920% 04/01/04) (c) 04/01/11 (b) 1,500 992 Century Communications Corp., (d) 01/15/08 615 292 Comcast UK Cable Partners Ltd., stepped coupon, (11.200% 11/15/00) (c) 11/15/07 2,000 1,840 Diamond Cable Co., stepped coupon, (10.750% 02/15/02) (c) 02/15/07 3,000 2,426 Echostar Communications Corp., 9.250% 02/01/06 (b) 2,000 2,090 FrontierVision Holdings L.P., stepped coupon, (11.875% 09/15/01) (c) 09/15/07 2,000 1,765 Northland Cable Television, Inc., 10.250% 11/15/07 2,250 2,430 Renaissance Media Group, stepped coupon, (10.000% 04/15/03) (c) 04/15/08 875 630 Shop At Home, Inc., 11.000% 04/01/05 500 525 Telewest Communication PLC, stepped coupon, (11.000% 10/01/00) (c) 10/01/07 2,500 2,231 -------- 20,709 -------- COMMUNICATIONS - 3.5% Call-Net Enterprises, Inc., 8.000% 08/15/08 1,000 990 Centennial Cellular Corp., 10.750% 12/15/08 (b) 1,000 1,085 Microcell Telecommunications, Inc., stepped coupon, (14.000% 12/01/01) (c) 06/01/06 1,000 840 OnePoint Communications Corp., 14.500% 06/01/08 (b) 1,000 510 Price Communications Wireless, Inc., PIK, 11.250% 08/15/08 1,035 1,061 Spectrasite Holdings, Inc., stepped coupon, (11.250% 04/15/04) (c) 04/15/09 (b) 850 495 Time Warner Telecom L.L.C., 9.750% 07/15/08 1,000 1,090 -------- 6,071 -------- MOTOR FREIGHT & WAREHOUSING - 0.3% MTL, Inc., 10.000% 06/15/06 500 495 -------- TELECOMMUNICATION - 17.1% Arch Escrow Corp., 13.750% 04/15/08 (b) 1,000 950 Arch Communication Group, Inc., 12.750% 07/01/07 1,000 900 Carrier1 International, Unit, 13.250% 02/15/09 (b)(e) 750 780 Clearnet Communications, Inc., stepped coupon, (14.750% 12/15/00) (c) 12/15/05 1,750 1,645 Hyperion Telecommunications, Inc., stepped coupon, (13.000% 04/15/01) (c) 04/15/03 (b) 1,000 838 Intermedia Communications of Florida, Inc., stepped coupon, (12.500% 05/15/01) (c) 05/15/06 1,000 863 Level 3 Communications, Inc., 9.125% 05/01/08 1,000 1,020 Loral Space & Communications Ltd., 11.250% 01/15/07 1,500 1,380 Metromedia Fiber Network, 10.000% 11/15/08 (b) 1,000 1,080 McLeodUSA, Inc., stepped coupon, (10.500% 03/01/02) (c) 03/01/07 2,000 1,613 MetroNet Communications Corp., 12.000% 08/15/07 250 300 Metrocall, Inc., 10.375% 10/01/07 1,000 873 11.000% 09/15/08 (b) 1,000 875 NTL, Inc.: stepped coupon, (9.750% 04/01/03) 2,750 1,966 (c) 04/01/08 11.500% 10/01/08 (b) 1,000 1,127 Nextel Communications, Inc.: stepped coupon, (9.750% 10/31/02) (c) 10/31/07 1,000 770 stepped coupon, (9.950% 02/15/03) (c) 02/15/08 2,000 1,525 Nextel International, Inc., stepped coupon, (12.125% 04/15/03) (c) 04/15/08 625 342 Price Communications Wireless, Inc., 9.125% 12/15/06 2,000 2,110 RCN Corp., stepped coupon, (11.125% 10/15/02) (c) 10/15/07 1,750 1,221 Rhythms Netconnections, 12.750% 04/15/09 500 497 Rogers Cantel, Inc., 9.750% 06/01/16 2,000 2,300 Sprint Spectrum L.P., stepped coupon, (12.500% 08/15/01) (c) 08/15/06 1,500 1,357 Telecorp PCS, Inc., stepped coupon, (11.625% 04/15/04) (c) 04/15/09 (b) 1,750 984 Verio, Inc.: 10.375% 04/01/05 500 534 11.250% 12/01/08 (b) 500 561 Viatel, Inc., 11.500% 03/15/09 (b) 1,000 1,065 -------- 29,476 -------- .............................................................................. WHOLESALE TRADE - 0.6% NONDURABLE GOODS Revlon Consumer Products Corp., 9.000% 11/01/06 1,000 1,013 -------- TOTAL CORPORATE FIXED INCOME BONDS & NOTES (cost of $164,950) 161,780 -------- PREFERRED STOCKS - 6.2% SHARES - ------------------------------------------------------------------------------ FINANCE, INSURANCE & REAL ESTATE - 0.2% DEPOSITORY INSTITUTIONS Cal Fed Bancorp, Inc., 9.125%, Series A 9 228 -------- ............................................................................... TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 6.0% BROADCASTING - 0.2% PriMedia Inc., 9.200% 3 303 -------- CABLE - 3.5% Adelphia Communications Corp., 13.000% 10 1,155 CSC Holdings Limited: 11.125% PIK 18 2,059 11.175% PIK 24 2,828 -------- 6,042 -------- ELECTRIC SERVICES - 0.3% Nextlink Communications, Inc., 14.000% PIK 10 563 -------- TELECOMMUNICATION - 2.0% Concentric Network Corp., 13.000% PIK 1 599 Global Crossing Ltd., 10.500% PIK 8 870 Nextel Communications, Inc.: 11.125% PIK 1 618 13.000% PIK 1 1,419 -------- 3,506 -------- TOTAL PREFERRED STOCKS (cost of $10,046) 10,642 -------- COMMON STOCKS - 0.1% - ------------------------------------------------------------------------------ MINING & ENERGY - 0.0% OIL & GAS EXTRACTION Pioneer Natural Resources Co. 8 95 -------- TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 0.1% MOTOR FREIGHT & WAREHOUSING - 0.0% St. Johnsbury Trucking Co. (f)(g) 79 1 Sun Carriers, Inc. (f)(g) 326 3 -------- 4 -------- TELECOMMUNICATION - 0.1% Nextel Communications, Inc. Class A (f) 3 127 -------- TOTAL COMMON STOCKS (cost of $1,301) 226 -------- WARRANTS - 0.0% - ------------------------------------------------------------------------------ TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES COMMUNICATIONS OnePoint Communications Corp. (b) 1 1 TELECOMMUNICATION MetroNet Communications, Inc. (b) (h) 19 -------- TOTAL WARRANTS (cost of $2) 20 -------- TOTAL INVESTMENTS - 100% (cost of $176,299) (i) 172,668 -------- SHORT-TERM OBLIGATIONS PAR - ------------------------------------------------------------------------------ Federal Home Loan Mortgage Co., 4.820% 05/03/99 (j) $ 2,388 2,387 Federal National Mortgage Association, 5.210% 06/25/99 (j) 4,215 4,182 -------- TOTAL SHORT-TERM OBLIGATIONS 6,569 ----------- OTHER ASSETS & LIABILITIES, NET (45,298) - ------------------------------------------------------------------------------ NET ASSETS $133,939 ======== NOTES TO INVESTMENT PORTFOLIO: - ------------------------------------------------------------------------------ (a) Industry classification percentages are based on total investments. Total investments represents 128.9% 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 April 30, 1999, the value of these securities amounted to $24,049 or 18.0% 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) Zero coupon bond. (e) Each unit consists of one senior discount note and one warrant to purchase common stock. (f) Non-income producing. (g) Represents fair value as determined in good faith under the direction of the Trustees. (h) Rounds to less than one. (i) Cost for federal income tax purposes is the same. (j) Rate represents yield at date of purchase. Acronym Name ------------ --------------- PIK Payment-In-Kind See notes to financial statements. STATEMENT OF ASSETS & LIABILITIES APRIL 30, 1999 (UNAUDITED) (in thousands except for per share amount) ASSETS Investments at value (cost $176,299) $ 172,668 Short-term obligations 6,569 --------- 179,237 Cash $ 1 Receivable for: Interest 3,948 Investments sold 474 Dividends 7 Other 9 4,439 -------- --------- Total Assets 183,676 LIABILITIES Payable for: Distributions 1,149 Interest 1,190 Accrued: Deferred Trustees fees 3 Other 95 Notes payable 47,300 -------- Total Liabilities 49,737 --------- NET ASSETS at value for 20,155 shares of beneficial interest outstanding $ 133,939 ========= Net asset value per share $ 6.65 ========= COMPOSITION OF NET ASSETS Capital paid in $ 167,166 Undistributed net investment income 590 Accumulated net realized loss (30,186) Net unrealized depreciation (3,631) --------- $ 133,939 ========= See notes to financial statements. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED) (in thousands) INVESTMENT INCOME Interest $ 8,718 Dividends 477 ---------- 9,195 EXPENSES Management fee $ 430 Transfer agent 29 Bookkeeping fee 28 Trustees fee 10 Custodian fee 2 Audit fee 26 Legal fee 2 Reports to shareholders 7 Other 49 -------- Total operating expenses 583 Interest expense 1,640 2,223 -------- ---------- Net Investment Income 6,972 ---------- NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS Net realized loss (1,389) Change in net unrealized appreciation during the period 10,736 --------- Net Gain 9,347 ---------- Increase in Net Assets from Operations $ 16,319 ========== See notes to financial statements. STATEMENT OF CHANGES IN NET ASSETS (Unaudited) Six months Year ended ended (in thousands) April 30 October 31 ----------- ---------- INCREASE (DECREASE) IN NET ASSETS 1999 1998 Operations: Net investment income $ 6,972 $ 11,572 Net realized gain (loss) (1,389) 1,756 Net unrealized appreciation (depreciation) 10,736 (19,132) -------- -------- Net Increase (Decrease) from Operations 16,319 (5,804) Distributions from net investment income (6,885) (11,513) Distributions from net realized gains (372) - -------- -------- 9,062 (17,317) Fund share transactions Receipts for shares issued in rights offering - 32,310 Value of distributions reinvested 397 1,713 -------- -------- Net Increase from Fund Share Transactions 397 34,023 -------- -------- Total Increase 9,459 16,706 NET ASSETS Beginning of period 124,480 107,774 -------- -------- End of period (including undistributed net investment income of $590 and $503, respectively) $133,939 $124,480 -------- -------- NUMBER OF FUND SHARES Shares issued in rights offering - 5,010 Issued for distributions reinvested 88 239 Outstanding at Beginning of period 20,067 14,818 -------- -------- End of period 20,155 20,067 ======== ======== See notes to financial statements. STATEMENT OF CASH FLOWS (Unaudited) Six months ended (in thousands) April 30 ----------------------- INCREASE (DECREASE) IN NET ASSETS 1999 ----------------------- Operations: Net investment income (a) $ 5,140 Net decrease in cash from investment activity (b) 1,535 --------- Net decrease from Operations 6,675 Distributions from net investment income and realized gains (6,678) ---------- (3) Cash Beginning of period 4 --------- End of period $ 1 ========= Notes to statement of cash flows: (a) Reconciliation of net investment income: Net investment income per books $ 6,972 Net change in assets and liabilities related to income and expenses, including net accretion and amortization (1,832) --------- Net investment income-cash basis $ 5,140 --------- (b) Net increase in cash from investment activity Receipts for investments sold $ 382,071 Cost of investments purchased (380,536) --------- $ 1,535 ========= See notes to financial statements. NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED) NOTE 1. INTERIM FINANCIAL STATEMENTS ............................................................................... In the opinion of management of Colonial Intermediate High Income Fund (the Fund), the accompanying financial statements contain all normal and recurring adjustments necessary for the fair presentation of the financial position of the Fund at April 30, 1999, and the results of its operations, the changes in its net assets and the financial highlights for the six months then ended. NOTE 2. ACCOUNTING POLICIES ............................................................................... ORGANIZATION: 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. 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, 1999. 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 a 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. OTHER: Corporate actions 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 3. 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 $27,000 per year plus 0.035% 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 the Fund's assets. NOTE 4. PORTFOLIO INFORMATION ............................................................................... INVESTMENT ACTIVITY: During the six months ended April 30, 1999, purchases and sales of investments, other than short-term obligations, were $47,372,048 and $45,194,610 respectively. Unrealized appreciation (depreciation) at April 30, 1999, based on cost of investments for both financial statement and federal income tax purposes was: Gross unrealized appreciation $ 5,452,847 Gross unrealized depreciation (9,084,099) ----------- Net unrealized depreciation $(3,631,252) =========== Capital loss carryforwards: At October 31, 1998, capital loss carryforwards available (to the extent provided in regulations) to offset future realized gains were approximately as follows: Year of Capital loss expiration carryforward --------- ------------- 1999 $ 16,856,000 2000 9,467,000 2003 2,102,000 ------------- $ 28,425,000 ============= 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: The Fund may focus its investments in certain industries, sub- jecting it to greater risk than a fund that is more diversified. NOTE 5. LOAN AGREEMENT ............................................................................... At April 30, 1999, the Fund had four term loans outstanding with Bank of America Illinois, totaling $47,300,000. A $27,400,000 term loan which bears interest at 7.33% per annum, due June 14, 1999, a $6,900,000 term loan which bears interest at 6.37% per annum, due May 19, 2001, a $9,200,000 term loan which bears interest at 6.26% per annum, due June 29, 2001, and a $3,800,000 revolving loan which bears interest at 6.29375% per annum, due June 30, 1999. The Fund is required to maintain certain asset coverage with respect to the loans. NOTE 6. RIGHTS OFFERING ............................................................................... In a rights offering commencing May 26, 1998, shareholders exercised rights to purchase 5,010,532 shares at $6.50 per share for proceeds, net of expenses, of approximately $32,000,000. NOTE 7. RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED) ............................................................................... On April 28, 1999, the Annual Meeting of Shareholders of the Fund was held to elect a Board of Trustees and to ratify the selection of Pricewaterhouse Coopers LLP as independent accountants for the fiscal year ending October 31, 1999. On February 1, 1999, the record date for the Meeting, the Fund had outstanding 20,125,968 shares of beneficial interest. The votes cast at the Meeting were as follows: AUTHORITY FOR WITHHELD --- -------- To elect a Board of Trustees: Tom Bleasdale 17,871,797 700,582 John V. Carberry 17,873,631 698,748 Lora S. Collins 17,875,197 697,182 Salvatore Macera 17,875,197 697,182 John J. Neuhauser 17,873,631 698,748 Thomas E. Stitzel 17,875,197 697,182 Anne-Lee Verville 17,873,631 698,748 The Board of Trustees also consists of Robert J. Birnbaum, James E. Grinnell, Richard W. Lowry, William E. Mayer, James L. Moody, and Robert L. Sullivan. To ratify the selection of PricewaterhouseCoopers LLP for the fiscal year ending October 31, 1999: FOR AGAINST ABSTAIN --- ------- ------- 17,918,488 484,595 169,296 FINANCIAL HIGHLIGHTS Selected per share data, total return, ratios and supplemental data throughout each period are as follows: (Unaudited) Six months ended April 30 Year ended October 31 ----------- --------------------- 1999 1998 1997 Net asset value - Beginning of period $ 6.200 $ 7.270 $ 6.890 ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.346 0.699 0.699 Net realized and unrealized gain (loss) 0.465 (1.077) 0.383 ------- ------- ------- Total from Investment Operations 0.811 (0.378) 1.082 ------- ------- ------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.342) (0.692) (0.702) From net realized gains (0.019) - - ------- ------- ------- Total Distributions Declared to Shareholders (0.361) (0.692) (0.702) ------- ------- ------- Net asset value - End of period $ 6.650 $ 6.200 $ 7.270 ======= ======= ======= Market price per share $ 6.500 $ 6.812 $ 7.562 ======= ======= ======= Total return - based on market value (a) 13.27% (b) (0.74%) 16.97% ======= ======= ======= RATIOS TO AVERAGE NET ASSETS Operating expenses (c) 0.88% (d) 0.88% 0.89% Interest and amortization of deferred debt issuance expenses 2.48% (d) 2.11% 1.96% Total expenses 3.36% (d) 2.99% 2.85% Net investment income (c) 10.54% (d) 9.70% 9.63% Portfolio turnover 28% (b) 69% 92% Net assets at end of period (000) $ 133,939 $ 124,480 $ 107,774 (a) Total return at market value assuming all distributions reinvested and excluding brokerage commissions. (b) Not annualized. (c) The benefits derived from custody credits and directed brokerage arrangements had an impact of 0.01% and $0.001 per share in 1997 only. (d) Annualized. FINANCIAL HIGHLIGHTS - CONT. Selected per share data, total return, ratios and supplemental data throughout each period are as follows: Year ended October 31 ----------------------------------- 1996 1995 1994 Net asset value - Beginning of period $ 6.620 $ 6.280 $ 6.920 ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.699 0.696 0.693 Net realized and unrealized gain (loss) 0.258 0.340 (0.587) ------- ------- ------- Total from Investment Operations 0.957 1.036 0.106 ------- ------- ------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.687) (0.696) (0.746) ------- ------- ------- Net asset value - End of period $ 6.890 $ 6.620 $ 6.280 ======= ======= ======= Market price per share $ 7.125 $ 6.875 $ 5.750 ======= ======= ======= Total return - based on market value (a) 14.62% 33.00% (2.80)% ======= ======= ======= RATIOS TO AVERAGE NET ASSETS Operating expenses (b) 0.98% 0.95% 0.97% Interest and amortization of deferred debt issuance expenses 2.07% 1.94% 1.91% Total expenses 3.05% 2.89% 2.88% Net investment income (b) 10.11% 10.76% 10.40% Portfolio turnover 92% 92% 160% Net assets at end of period (000) $99,925 $93,984 $87,519 (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. ----------------------------------------------------------------------------- SENIOR SECURITIES OF COLONIAL INTERMEDIATE HIGH INCOME FUND: (UNAUDITED) Involuntary Total Asset liquidating Approximate amount coverage preference market value Year outstanding per share per unit per unit ---- ----------- --------- -------- -------- 1999 $47,300,000 283% NA 100 1998 $47,300,000 263% NA 100 1997 $27,400,000 393% NA 100 1996 $27,400,000 365% NA 100 1995 $27,400,000 343% NA 100 1994 $27,400,000 319% NA 100 DIVIDEND REINVESTMENT PLAN As a shareholder in the Fund you are eligible to participate in the Dividend Reinvestment Plan. The Fund generally distributes net investment income monthly and capital gains annually. Under the Fund's Dividend Reinvestment Plan (the "Plan") all distributions will be reinvested automatically in additional shares of the Fund, unless the shareholder elects to receive cash or the shares are held in broker or nominee name and a reinvestment service is not provided by the broker or nominee. All cash distributions will be mailed by check directly to the record holder by the dividend paying agent. If the market price of the shares on the distribution payment date is equal to or greater than the net asset value, Plan participants will be issued shares at the higher of net asset value or 95% of the market price. The aggregate market value of the shares may constitute income to shareholders for federal income tax purposes. However, if the market price of the shares is less than the net asset value, shares will be bought as soon as practicable (but no more than 30 days after the distribution, except as may be required to comply with federal securities laws) in the open market for the accounts of Plan participants. If, during this purchase period, the market price surpasses the net asset value, the average per share price paid may exceed the net asset value of the shares, resulting in the acquisition of fewer shares than if the distribution had been in newly-issued shares. All Plan accounts receive written confirmations of all transactions. Shares purchased under the Plan are held in uncertificated form. Each shareholder's proxy includes shares purchased pursuant to the Plan. The automatic reinvestment of distributions does not relieve participants of any income tax payable on the distributions. Fees and expenses of the Plan other than brokerage charges will be paid by the Fund. No brokerage charges are incurred on shares issued directly by the Fund. Participants will bear a pro-rata share of brokerage charges incurred on open market purchases. A Plan participant may terminate his or her participation by written notice to the Plan agent. The Plan may be amended or terminated on 30 days written notice to the Plan participants. All correspondence concerning the Plan should be directed to First Data Investor Services Group, Inc., the Plan agent, by mail at P.O. Box 8030, Boston, MA 02266-8030 or by phone at 1-800-331-1710. THIS PAGE INTENTIONALLY LEFT BLANK 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 Colonial Intermediate High Income 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. TRUSTEES ROBERT J. BIRNBAUM Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and Chief Operating Officer, New York Stock Exchange, Inc.; President, American Stock Exchange Inc.) TOM BLEASDALE Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank & Trust Company) JOHN V. CARBERRY Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing Director, Salomon Brothers) 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, Development Capital, LLC (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 Dean, Boston College School of Management THOMAS E. STITZEL Professor of Finance, College of Business, Boise State University; Business Consultant and Author ROBERT L. SULLIVAN Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi Consulting Ltd. and Principal and International Practice Director, Management Consulting, Peat Marwick Main & Co.) ANNE-LEE VERVILLE Consultant (formerly General Manager, Global Education Industry, and President, Applications Solutions Division, IBM Corporation) IH-03/152H-0499 (6/99) 99/711 -----END PRIVACY-ENHANCED MESSAGE-----