<PAGE>
LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
Dear Shareholder:
Following is Colonial Intermediate High Income Fund's semiannual report for
the six months ended April 30, 1995. During the period, the Fund continued
to meet its objective of providing high current income by investing primarily
in high yield, high risk corporate bonds.
<TABLE>
<S> <C>
FUND PERFORMANCE (11/1/94 - 4/30/95)
Distributions declared per share $0.348
- --------------------------------------------------------------------------------
Annualized distribution rate on
4/30/95 based on NAV 10.74%
- --------------------------------------------------------------------------------
Six-month total return based on
NAV, assuming reinvestment
of all distributions 9.03%
- --------------------------------------------------------------------------------
Six-month total return based on
market price, assuming reinvestment
of all distributions 19.42%
- --------------------------------------------------------------------------------
Net asset value per share on 4/30/95 $6.48
- --------------------------------------------------------------------------------
Market price per share on 4/30/95 $6.50
- --------------------------------------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
Through much of 1994, investors were concerned that the U.S. economy's
vigorous growth would reignite inflation. However, it appears that the
Federal Reserve Board's monetary policy has reduced growth and kept inflation
under control.
Fixed-income markets were affected by interest rate volatility during
the first part of the semiannual period. This had the biggest impact on U.S.
government securities, which are especially sensitive to interest rate
fluctuations. Higher rates also had a negative impact on corporate high yield
bonds. However, U.S. interest rates peaked in mid-November, and were moving
lower by the beginning of 1995. Lower rates, combined with favorable earnings
reports during the first quarter of 1995, helped high yield corporate
securities make up much of the ground that had been lost in preceding months.
INVESTMENT STRATEGY
The average rating of the securities in the portfolio ranged between B
and B+ during the semiannual period. This relatively high quality portfolio
supported the Fund's total return.
In anticipation of slower economic growth, management reduced
investments in some cyclical industries, including forest products, metals &
mining, and automotive. The Fund was overweighted in the energy sector, and
benefited from an improvement in oil prices. Consumer non-durables products
for which demand remains fairly constant no matter what the prevailing
economic conditions were also emphasized. These investments may provide added
stability in a down market.
[PHOTO]
John A. McNeice, Jr.
President
During the period, the Fund owned CABLEVISION SYSTEMS, a leading
provider of cable television services with operations in six states; REVLON,
one of the country's largest manufacturers of cosmetics; and PILGRIM'S PRIDE, a
major processor and packager of chicken products.
The Fund continued to use leverage to enhance the flow of income to
shareholders. Fixed-rate debt has been issued to institutional investors, with
the proceeds invested in additional high yield bonds.
With investments repositioned to noncyclical industries, the Fund is
well positioned for a slowdown in the economy, including the expected soft
landing. In this scenario, which the Federal Reserve Board has been working to
achieve for more than a year, inflation will remain under control while the
economy continues to grow.
Sincerely,
/s/ John A. McNeice, Jr.
John A. McNeice, Jr.
President
June 10, 1995
<PAGE>
INVESTMENT PORTFOLIO (UNAUDITED, IN THOUSANDS) APRIL 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE BONDS &
NOTES - 97.2% (a) PAR VALUE
- ------------------------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - 3.1%
Building construction - 1.7%
USG Corp.,
9.250% 09/15/01.......................... $ 2,000 $ 1,980
--------
Special trade contractors - 1.4%
Overhead Door, Inc.,
12.250% 02/01/00.......................... 1,500 1,545
- ------------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 1.9%
FINANCIAL SERVICES
Comdata Network, Inc.,
12.500% 12/15/99.......................... 2,000 2,160
- ------------------------------------------------------------------------------------
MANUFACTURING - 40.9%
CHEMICALS - 6.4%
Agricultural Minerals Co., LP,
10.750% 09/30/03.......................... 2,250 2,334
Huntsman Corp.,
11.000% 04/15/04.......................... 2,000 2,167
Revlon Consumer Products Corp.,
Series B:
9.375% 04/01/01.......................... 1,000 955
10.500% 02/15/03.......................... 1,000 963
Revlon Worldwide,
(b) 03/15/98.......................... 1,500 956
--------
7,375
--------
ELECTRONIC & ELECTRICAL EQUIPMENT - 3.6%
Berg Electric Inc.,
11.375% 05/01/03.......................... 2,000 2,090
Exide Corp.:
10.000% 04/15/05.......................... 500 509
10.750% 12/15/02.......................... 1,500 1,564
--------
4,163
--------
FABRICATED METAL - 1.1%
Haynes International, Inc.,
13.500% 08/15/99.......................... 2,000 1,300
--------
FOOD & KINDRED PRODUCTS - 2.1%
Pilgrim's Pride Corp.,
10.875% 08/01/03.......................... 1,500 1,380
Specialty Foods, Inc.,
10.250% 08/15/01.......................... 1,000 990
--------
2,370
--------
LUMBER & WOOD PRODUCTS - 1.0%
Triangle Pacific Corp.,
10.500% 08/01/03.......................... 1,000 1,000
--------
MISCELLANEOUS MANUFACTURING - 4.5%
American Standard Co.,
11.375% 05/15/04.......................... $ 2,000 $ 2,185
Eagle Industries, Inc., stepped coupon,
(10.500% 07/15/98) 07/15/03............................ 2,000 1,380
SPX, Inc.,
11.750% 06/01/02.......................... 1,500 1,598
--------
5,163
--------
PAPER PRODUCTS - 6.9%
Repap Wisconsin, Inc.,
9.250% 02/01/02........................... 1,500 1,448
Riverwood International Corp.,
11.250% 06/15/02........................... 2,000 2,145
SD Warren Co.,
12.000% 12/15/04........................... 2,000 2,160
Stone Container Corp.,
11.875% 12/01/98........................... 2,000 2,143
--------
7,896
--------
PETROLEUM REFINING - 2.7%
Flores & Rucks, Inc.,
13.500% 12/01/04........................... 1,500 1,635
Wainoco Oil Corp,
12.000% 08/01/02........................... 1,500 1,511
--------
3,146
--------
PRIMARY METAL - 3.6%
A.K. Steel Corp.,
10.750% 04/01/04........................... 2,000 2,090
M. Jorgensen Earle Co.,
10.750% 03/01/00........................... 500 484
Ucar Global Enterprises,
12.000% 01/15/05........................... 1,000 1,077
Weirton Steel Corp.,
11.500% 03/01/98........................... 500 515
--------
4,166
--------
PRINTING & PUBLISHING - 2.6%
American Media Operations,
11.625% 11/15/04........................... 1,000 1,065
Atlantis Group, Inc.,
11.000% 02/15/03........................... 1,900 1,919
--------
2,984
--------
STONE, CLAY, GLASS & CONCRETE - 2.3%
Owens-Illinois Inc.:
10.500% 06/15/02........................... 2,000 2,050
11.000% 12/01/03........................... 500 541
--------
2,591
--------
</TABLE>
See notes to investment portfolio.
2
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE BONDS &
NOTES (a) - CONT. PAR VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C>
TEXTILE MILL PRODUCTS - 0.8%
Consoltex Group, Inc., Series B,
11.000% 10/01/03........................... $ 1,000 $ 900
Linter Textiles Corp.,
13.750% 10/01/00(d)(e)..................... 2,500 25
-------
925
-------
TRANSPORTATION EQUIPMENT - 3.3%
Aftermarket Technology Corp.,
12.000% 08/01/04........................... 1,000 1,060
Roadmaster Industries, Inc.,
11.750% 07/15/02........................... 1,500 1,444
Venture Holdings Trust Co.,
9.750% 04/01/04........................... 1,500 1,297
-------
3,801
- --------------------------------------------------------------------------------------
MINING & ENERGY - 8.4%
CRUDE PETROLEUM & NATURAL GAS - 1.0%
Triton Energy Corp.,
(b) 11/01/97........................... 1,500 1,196
-------
OIL & GAS EXTRACTION - 7.4%
Falcon Drilling Co., Inc., Series B,
9.750% 01/15/01........................... 1,000 955
Gulf Canada Resources Ltd.,
9.250% 01/15/04........................... 2,500 2,400
Mesa Capital Corp., stepped coupon,
(12.750% 06/30/95) 06/30/98 (c)......................... 1,500 1,440
Santa Fe Energy Resources, Inc.,
11.000% 05/15/04........................... 2,000 2,095
TransTexas Gas Corp.,
10.500% 09/01/00........................... 1,500 1,582
-------
8,472
- --------------------------------------------------------------------------------------
RETAIL TRADE - 3.6%
FOOD STORES - 2.7%
Pathmark Stores, Inc.:
9.625% 05/01/03........................... 1,000 960
11.625% 06/15/02........................... 2,000 2,060
-------
3,020
-------
MISCELLANEOUS RETAIL - 0.9%
Thrifty Payless Holdings, Inc.,
11.750% 04/15/03........................... 1,000 1,060
- --------------------------------------------------------------------------------------
SERVICES - 18.2%
AMUSEMENT & RECREATION - 6.2%
Bally's Grand, Inc., Series B,
10.375% 12/15/03........................... 2,000 1,940
Boyd Gaming Corp.,
10.750% 09/01/03........................... 1,000 1,005
Empress River Casino Finance Corp.,
10.750% 04/01/02........................... 1,500 1,493
Players International, Inc.,
10.875% 04/15/05........................... $ 1,500 $ 1,511
Trump Taj Mahal Funding, Inc., PIK,
11.350% 11/15/99........................... 1,515 1,075
-------
7,024
-------
HEALTH SERVICES - 7.9%
Community Health Systems, Inc.,
10.250% 11/30/03........................... 1,500 1,545
Healthtrust, Inc.,
10.750% 05/01/02........................... 1,500 1,650
Hillhaven Corp.,
10.125% 09/01/01........................... 1,500 1,556
Integrated Health Services, Inc.,
10.750% 07/15/04........................... 1,000 1,052
National Medical Enterprises,
10.125% 03/01/05........................... 1,000 1,042
Ornda Health Corp.,
12.250% 05/15/02........................... 2,000 2,180
-------
9,025
-------
HOTELS, CAMPS & LODGING - 4.1%
Embassy Suites, Inc.,
10.875% 04/15/02........................... 1,650 1,774
Host Marriott Hospitality, Inc.,
11.000% 05/01/07........................... 3,000 3,049
-------
4,823
- --------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS
& SANITARY SERVICES - 19.9%
AIR TRANSPORTATION - 0.5%
World Corp., Inc.,
13.875% 08/15/97........................... 539 527
-------
COMMUNICATIONS - 18.2%
Allbritton Communications Co.,
11.500% 08/15/04........................... 2,000 2,060
Cablevision Industries Corp.,
10.750% 01/30/02........................... 2,000 2,130
Cablevision Systems Corp.,
10.750% 04/01/04........................... 2,000 2,080
Continental Cablevision, Inc.,
11.000% 06/01/07........................... 2,000 2,180
MFS Communications Co., Inc.,
stepped coupon, (9.375% 01/15/99) 01/15/04(c)............ 3,000 1,980
Paging Network, Inc.:
8.875% 02/01/06........................... 500 443
11.750% 05/15/02........................... 1,000 1,045
Rogers Communications, Inc.,
10.875% 04/15/04........................... 2,000 2,045
SCI Television, Inc.,
11.000% 06/30/05........................... 2,500 2,600
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE BONDS &
NOTES (a) - CONT. PAR VALUE
- ---------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS
& SANITARY SERVICES - CONT.
COMMUNICATIONS - CONT.
Sinclair Broadcast Group, Inc.,
10.000% 12/15/03........................... $ 1,600 $ 1,552
Young Broadcasting, Inc.,
11.750% 11/15/04........................... 2,500 2,694
--------
20,809
--------
MOTOR FREIGHT & WAREHOUSING - 1.2%
Trism, Inc.,
10.750% 12/15/00........................... 1,500 1,444
- ---------------------------------------------------------------------------------------
WHOLESALE TRADE - 1.2%
DURABLE GOODS
Waxman Industries, Inc.,
12.250% 09/01/98........................... 1,500 1,410
- ---------------------------------------------------------------------------------------
Total corporate bonds & notes (cost $112,074) 111,375
- ---------------------------------------------------------------------------------------
COMMON STOCKS - 2.7% SHARES
- ---------------------------------------------------------------------------------------
MANUFACTURING - 2.2%
MACHINERY & COMPUTER EQUIPMENT
Specialty Equipment Cos, Inc. (f)......................... 200 2,475
- ---------------------------------------------------------------------------------------
MINING & ENERGY - 0.1%
OIL & GAS EXTRACTION
Mesa Capital Corp., (f)................................... 26 148
- ---------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.4%
MOTOR FREIGHT & WAREHOUSING
St. Johnsbury Trucking Co. (e) (f)........................ 79 472
Sun Carriers, Inc.(e)(f).................................. 326 3
--------
475
- ---------------------------------------------------------------------------------------
Total common stocks (cost $3,122) 3,098
- ---------------------------------------------------------------------------------------
WARRANTS (f) - 0.1%
- ---------------------------------------------------------------------------------------
RETAIL TRADE
FOOD STORES
The Southland Corp.,
expires 03/05/96 (cost $2).............................. 25 62
- ---------------------------------------------------------------------------------------
Total investments - 100.0% (cost $115,198)(g) 114,535
- ---------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS PAR
Federal Farm Credit Bank,
5.860% 05/03/95........................... $ 1,005 1,005
Federal Home Loan Mortgage Corp.,
5.850% 05/01/95........................... 910 910
Federal National Mortgage Association,
5.880% 05/05/95........................... 550 549
- ---------------------------------------------------------------------------------------
Total short-term obligations 2,464
- ---------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET (26,050)
- ---------------------------------------------------------------------------------------
NET ASSETS $ 90,949
- ---------------------------------------------------------------------------------------
<FN>
Notes to investment portfolio:
(a) Industry classification percentages are based
on total investments. Total investments
represent 125.9% of the Fund's net assets.
(b) Zero coupon bond.
(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 has filed under Chapter 11 of
the Federal Bankruptcy Code. Income is
not being accrued.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Acronym Name
------- ----
PIK Payment-In-Kind
</TABLE>
4
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
April 30, 1995
(in thousands except for per share amount)
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $115,198)................................ $ 114,535
Short-term obligations ............................................. 2,464
----------
116,999
Cash................................................... $ 1
Interest receivable ................................... 3,169
Other.................................................. 73 3,243
-------- ----------
Total assets............................................... 120,242
LIABILITIES
Payable for:
Distributions....................................... 815
Investments purchased............................... 511
Interest............................................ 501
Accrued:
Deferred Trustees fees.............................. 30
Other............................................... 36
Notes payable.................................... 27,400
--------
Total liabilities......................................... 29,293
----------
NET ASSETS at value for 14,044
shares of beneficial interest outstanding....................... $ 90,949
==========
Net asset value per share.......................................... $ 6.48
==========
COMPOSITION OF NET ASSETS
Capital paid in................................................. $ 127,417
Undistributed net investment income............................. 113
Accumulated net realized loss................................... (35,918)
Net unrealized depreciation..................................... (663)
----------
$ 90,949
==========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS (UNAUDITED)
Six months ended April 30, 1995
(in thousands)
- -------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest........................................ $ 6,136
EXPENSES
Management fee...................... $ 284
Transfer agent...................... 38
Bookkeeping fee..................... 20
Trustees fees....................... 6
Custodian fee....................... 1
Audit fee........................... 35
Legal fee........................... 4
Reports to shareholders............. 5
Other............................... 40
--------
Total operating expenses......... 433
Interest and amortization of
deferred debt issuance
expenses......................... 879 1,312
-------- ----------
Net investment income................... 4,824
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized loss................... (2,717)
Net unrealized appreciation
during the period................ 5,521
--------
Net gain................................ 2,804
---------
Net increase in net assets from
operations.................................... $ 7,628
=========
</TABLE>
See notes to financial statements.
5
<PAGE>
FINANCIAL STATEMENTS -CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Cash flows Changes in net assets
(cash basis) (accrual basis)
------------ ---------------------------
(unaudited) (unaudited)
Six months Six months Year
ended ended ended
April 30 April 30 October 31
------------ ------------ ------------
1995 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income (see note a).................................... $ 4,269 $ 4,824 $ 9,595
Net realized gain (loss).............................................. (2,717) 885
Net unrealized appreciation (depreciation)............................ 5,521 (8,983)
Net decrease in cash from investment activity (see note b)............ (236)
--------- --------- -----------
Net increase from operations.................................... 4,033 7,628 1,497
Distributions from net investment income................................ (4,192) (4,866) (10,324)
--------- --------- -----------
(159) 2,762 (8,827)
Fund share transactions
Value of distributions reinvested.................................... 668 1,182
--------- --------- -----------
Total increase (decrease).............................. (159) 3,430 (7,645)
Cash
Beginning of period.................................................. 160
---------
End of period........................................................ $ 1
=========
NET ASSETS
Beginning of period................................................................. 87,519 95,164
End of period (including undistributed net investment --------- -----------
income of $113 and $127, respectively)............................................ $ 90,949 $ 87,519
========= ===========
NUMBER OF FUND SHARES
Issued for distributions reinvested................................................. 106 178
Outstanding at
Beginning of period............................................................. 13,938 13,760
--------- -----------
End of period................................................................... 14,044 13,938
========= ===========
Notes to statement of cash flows:
a) Reconciliation of net investment income:
Net investment income per books.................................... $ 4,824
Net change in assets and liabilities related
to income and expenses, including net
accretion and amortization...................................... (555)
---------
Net investment income-cash basis................................... $ 4,269
=========
b) Net decrease in cash from investment
activity:
Receipts for investment sold.............. $ 104,216
Cost of investments purchased.......... 104,452
-------------
$ (236)
=============
</TABLE>
See notes to financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (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, 1995, 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
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 may issue an unlimited number of
shares. The following significant accounting policies are consistently
followed by the Fund in the preparation of its financial statements and
conform to generally accepted accounting principles.
- --------------------------------------------------------------------------------
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 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 which cannot be valued as set forth above are valued
at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased or sold.
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Colonial Management Associates, Inc. (the Adviser) is the investment
adviser 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 Adviser 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 Adviser.
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 4. PORTFOLIO INFORMATION
During the six months ended April 30, 1995, purchases and sales of
investments, other than short-term obligations, were $53,638,030 and
$55,276,880, respectively.
<TABLE>
Unrealized appreciation (depreciation) at April 30, 1995, based on cost
of investments for both financial statement and federal income tax purposes
was:
<S> <C>
Gross unrealized appreciation................... $ 4,277,116
Gross unrealized depreciation................... (4,940,010)
-----------
Net unrealized depreciation.................. $ (662,894)
</TABLE> -----------
- --------------------------------------------------------------------------------
CAPITAL LOSS CARRYFORWARDS
<TABLE>
At October 31, 1994, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately
as follows:
<CAPTION>
Year of Capital loss
expiration carryforward
---------- ------------
<S> <C>
1998 $ 5,028,000
1999 18,676,000
2000 9,467,000
------------
$ 33,171,000
</TABLE> ------------
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, subjecting it
to greater risk than a fund that is more diversified.
- --------------------------------------------------------------------------------
NOTE 5. SENIOR EXTENDIBLE NOTES
At April 30, 1995, the Fund had $27,400,000 principal amount of notes
outstanding at 6.21% per annum, due July 15, 1998. The Fund is required to
maintain certain asset coverage with respect to the notes.
- --------------------------------------------------------------------------------
NOTE 6. RESULTS OF SPECIAL SHAREHOLDERS MEETING
On February 15, 1995, a special meeting of shareholders was held and a
new Management Agreement between the Trust and Colonial Management Associates,
Inc. was approved that became effective upon the completion of the merger of
The Colonial Group, Inc. and Apple Merger Corporation, a subsidiary of Liberty
Financial Companies, Inc., on March 24, 1995. Out of the shares of beneficial
interest outstanding on December 9, 1994, 10,909,569 voted for the new
Management Agreement, 217,996 voted against and 283,165 abstained. Of the
shares of beneficial interest outstanding that abstained 189,847 represented
broker non-votes.
- --------------------------------------------------------------------------------
NOTE 7. RESULTS OF ANNUAL SHAREHOLDER MEETING
On April 28, 1995, the Annual Meeting of Shareholders was held to elect
five Trustees and to ratify the selection of Price Waterhouse LLP as
independent accountants for the fiscal year ending October 31, 1995. On
February 1, 1995, the record date of the Meeting,
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS - continued
- --------------------------------------------------------------------------------
13,964,797 shares of beneficial interest outstanding. The votes cast at the
Meeting were as follows:
<TABLE>
Election of five Trustees:
<CAPTION>
FOR AGAINST
--- -------
<S> <C> <C>
Robert J. Birnbaum 11,795,384 189,026
James E. Grinnell 11,796,927 187,483
Richard W. Lowry 11,796,927 187,483
William E. Mayer 11,802,452 181,958
Robert L. Sullivan 11,799,452 184,958
</TABLE>
The Board of Trustees also consists of Tom Bleasdale, Lora S. Collins, William
D. Ireland, Jr., John A. McNiece, Jr., James L. Moody, Jr., John J. Neuhauser,
George L. Shinn and Sinclair Weeks, Jr.
<TABLE>
Ratification of the selection of Price Waterhouse LLP as independent
accountants:
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
11,750,228 83,025 151,157
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout each period.
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
APRIL 30 YEAR ENDED OCTOBER 31
----------- -------------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period .............. $ 6.280 $ 6.920 $ 6.430 $ 6.290 $ 4.880 $ 8.260
-------- -------- ------- ------- ------- -------
Income/loss from investment operations:
Net investment income............................. 0.345 0.693 0.709 0.773 0.800 1.072
Net realized and unrealized gain (loss)
on investments.................................. 0.203 (0.587) 0.497 0.142 1.385 (3.332)
-------- -------- ------- ------- ------- -------
Total from investment operations.............. 0.548 0.106 1.206 0.915 2.185 (1.630)
-------- -------- ------- ------- ------- -------
Less distributions declared to shareholders:
From net investment income........................ (0.348) (0.746) (0.716) (0.775) (0.775) (1.106)
From capital paid in.............................. -- -- -- -- -- (0.014)(a)
-------- -------- ------- ------- ------- -------
Total distributions declared to shareholders.. (0.348) (0.746) (0.716) (0.775) (0.775) (1.120)
-------- -------- ------- ------- ------- -------
Net asset value - End of period..................... $ 6.480 $ 6.280 $ 6.920 $ 6.430 $ 6.290 $ 4.880
======== ======== ======= ======= ======= =======
Total return based on net asset value (b)........... 9.03%(c) 1.54% 19.64% 14.99% 49.08% (29.49)%
======== ======== ======= ======= ======= =======
Total return based on market value.................. 19.42%(c) (2.80)% 17.89% 17.39% 54.29% (27.10)%
======== ======== ======= ======= ======= =======
Ratios to average net assets
Operating expenses................................ 0.99%(d) 0.97% 1.00% 1.00% 1.38% 1.31%
Interest and amortization of deferred debt
issuance expenses............................... 2.01%(d) 1.91% 2.66% 3.24% 3.80% 4.23%
Write-off of unamortized debt issuance expenses
and loss from retirement of debt................ -- -- -- -- -- 0.15%
======== ======== ======= ======= ======= =======
Total expenses................................ 3.00%(d) 2.88% 3.66% 4.24% 5.18% 5.69%
======== ======== ======= ======= ======= =======
Net investment income............................. 11.04%(d) 10.40% 10.62% 11.98% 14.40% 15.86%
Portfolio turnover.................................. 97% (d) 160% 135% 78% 30% 12%
Net assets at end of period (000)................... $90,949 $87,519 $95,164 $87,149 $83,613 $64,872
<FN>
(a) Because of differences between book and tax basis accounting, there was no
return of capital for federal income tax purposes.
(b) Total return at net asset value assuming all distributions reinvested.
(c) Not annualized.
(d) Annualized.
</TABLE>
10
<PAGE>
<TABLE>
Senior securities of Colonial Intermediate High Income Fund:
<CAPTION>
INVOLUNTARY
TOTAL NET ASSET LIQUIDATING APPROXIMATE
AMOUNT COVERAGE PREFERENCE MARKET VALUE
YEAR OUTSTANDING PER SHARE PER UNIT PER UNIT
---- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C>
1989........... $37,400,000 288% NA 100
1990........... $27,400,000 237% NA 100
1991........... $27,400,000 305% NA 100
1992........... $27,400,000 318% NA 100
1993........... $27,400,000 347% NA 100
1994........... $27,400,000 319% NA 100
1995........... $27,400,000 332% NA 100
</TABLE>
<TABLE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED
------------------------------------------
APRIL 30, 1995 JANUARY 31, 1995
------------------ -------------------
(000) PER SHARE (000) PER SHARE
------- --------- ------- ----------
<S> <C> <C> <C> <C>
Total investment income.......................................................... $3,044 $0.217 $ 3,092 $ 0.221
Net investment income............................................................ $2,389 $0.170 $ 2,435 $ 0.175
Net realized and
unrealized gain (loss)......................................................... $4,415 $0.317 $(1,611) $(0.114)
Market value per share:
High........................................................................... $6.625 $ 6.500
Low............................................................................ $6.125 $ 5.500
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
OCTOBER 31, 1994 JULY 31, 1994 APRIL 30, 1994 JANUARY 31, 1994
-------------------- ------------------ ----------------- -----------------
(000) PER SHARE (000) PER SHARE (000) PER SHARE (000) PER SHARE
------- ---------- ------- ---------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income.......... $ 3,026 $ 0.217 $ 3,080 $ 0.222 $ 3,043 $ 0.220 $3,095 $0.224
Net investment income............ $ 2,359 $ 0.169 $ 2,424 $ 0.176 $ 2,382 $ 0.172 $2,430 $0.176
Net realized and
unrealized gain (loss)......... $(1,867) $(0.136) $(1,370) $(0.101) $(7,261) $(0.525) $2,400 $0.175
Market value per share:
High........................... $ 6.750 $ 6.875 $ 7.125 $7.125
Low............................ $ 5.625 $ 6.250 $ 6.375 $6.625
</TABLE>
At April 30, 1995, there were 1,740 shareholder accounts.
11
<PAGE>
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 by check
mailed 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 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. If net asset value exceeds the market price, shares will
be bought as soon as practicable (but no more that 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 the market price
surpasses the net asset value before such purchasing is completed, 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 90 days
written notice to the Plan participants. All correspondence concerning the
Plan should be directed to the Shareholder Services Group, Inc. (subsidiary of
First Data Corporation, Corp.), the Plan agent by mail at P.O. Box 1376,
Boston, MA 02104 or by phone at 1-800-331-1710.
- --------------------------------------------------------------------------------
[Graphic of city buildings] ABOUT OUR COVER...
The symbol on the cover of this Report represents
the Fund's primary investment focus on corporate
bonds.
- --------------------------------------------------------------------------------
Colonial Intermediate High Income Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
TRANSFER AGENT, REGISTRAR AND
DIVIDEND DISBURSING AGENT
The Shareholder Services Group, Inc.
(Subsidiary of First Data Corporation Corp.)
P.O. Box 1376
Boston, MA 02104
12
<PAGE>
TRUSTEES
- --------------------------------------------------------------------------------
ROBERT J. BIRNBAUM
Trustee (formerly Special Counsel, Dechert, Price & Rhoads;
President and Chief Operating Officer, New York Stock Exchange, Inc.)
TOM BLEASDALE
Trustee (formerly Chairman of the Board and Chief Executive
Officer, Shore Bank & Trust Company)
LORA S. COLLINS
Attorney, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
JAMES E. GRINNELL
Private Investor
WILLIAM D. IRELAND, JR.
Trustee
RICHARD W. LOWRY
Private Investor
WILLIAM E. MAYER
Dean, College of Business and Management, University of Maryland
(formerly Dean, Simon Graduate School of Business, University of Rochester;
Chairman and Chief Executive Officer, C.S. First Boston Merchant Bank; and
President and Chief Executive Officer, The First Boston Corporation)
JOHN A. MCNEICE, JR.
Chairman of the Board and Director, The Colonial Group, Inc. and
Colonial Management Associates, Inc. (formerly Chief Executive Officer,
The Colonial Group, Inc. and Colonial Management Associates, Inc.)
JAMES L. MOODY, JR.
Chairman of the Board, Hannaford Bros. Co. (formerly Chief Executive Officer,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
GEORGE L. SHINN
Financial Consultant (formerly Chairman, Chief Executive Officer and
Consultant, The First Boston Corporation)
ROBERT L. SULLIVAN
Management Consultant
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
13
<PAGE>
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14
<PAGE>
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15
<PAGE>
[LOGO] COLONIAL
MUTUAL FUNDS
[GRAPHIC OF CITY BUILDINGS]
COLONIAL
INTERMEDIATE HIGH
INCOME FUND
- ----------------------------------------
SEMIANNUAL REPORT
APRIL 30, 1995
[LOGO] COLONIAL
MUTUAL FUNDS
[RECYCLE LOGO] Printed on recycled paper.
1H-03/984A-0495
COLONIAL INVESTMENT SERVICES, INC. (Copywrite) 1995
