<PAGE>
COLONIAL
INTERMEDIATE
HIGH INCOME
FUND
ANNUAL REPORT
OCTOBER 31, 1995
<PAGE>
COLONIAL INTERMEDIATE HIGH INCOME FUND
HIGHLIGHTS
NOVEMBER 1, 1994 - OCTOBER 31, 1995
INVESTMENT OBJECTIVE: Colonial Intermediate High Income Fund seeks to
provide high current income by investing in high yield fixed-income
securities.
THE FUND IS DESIGNED TO OFFER:
- High monthly income potential
- Attractive long-term total return potential
- Broad diversification
PORTFOLIO MANAGER COMMENTARY: "Companies that issue high yield corporate bonds
have recently benefited from improved earnings and low interest rates. Looking
ahead, it appears the economic environment should remain favorable, with the
economy likely to come in for the `soft landing' that has been the Federal
Reserve Board's goal for the past two years."
COLONIAL INTERMEDIATE HIGH INCOME FUND PERFORMANCE
<TABLE>
<S> <C>
Distributions declared per share $ 0.696
12-month total return, assuming
reinvestment of all distributions
- NAV 17.30%
- Market Price 33.00%
Price per share
- NAV $ 6.62
- Market Price $ 6.875
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS TOP FIVE SECTORS
<S> <C> <C>
1. Berg Electronics 1. Manufacturing...................34.5%
2. Young Broadcasting 2. Transportation, Communications,
3. SCI Television Electronics, Gas,
4. Gulf Canada Resources Sanitary Services...............28.1%
5. Agricultural Minerals 3. Services........................19.2%
& Chemical 4. Mining & Energy..................8.3%
5. Retail Trade.....................5.6%
</TABLE>
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO] During the 12 months ended October 31, 1995, high yield bonds provided
investors with above average income and attractive total returns relative to
some other fixed-income securities. This performance reflected the favorable
economic conditions that prevailed throughout the period. Although the economy
was more vigorous during the third quarter of 1995 than it was in either of the
prior two quarters -- industrial production grew at an annual rate of 5.7% --
we still anticipate the "soft landing" that has been the Federal Reserve
Board's goal for the past two years.
High yield corporate bonds benefited from strong earnings growth by
their issuing corporations. These bonds also benefited from a favorable
supply/demand dynamic. As interest rates moved lower, many companies refinanced
their outstanding high yield debt to reduce their debt servicing burdens. Also,
projects that had been delayed because of relatively high interest rates in
recent years were finally begun. The new bonds were easily absorbed by the
market, as investors, faced with declining yields from some other securities,
sought out the more attractive income levels available from high yield bonds.
Although investments in cyclical industries such as paper, chemicals, and steel
helped the Fund during the fiscal year, these were gradually scaled back.
Investments in consumer non-durables -- industries that produce products that
tend to be in demand no matter what the prevailing economic conditions are --
were increased.
Given our expectation that economic growth will remain moderate, the overall
credit quality of the portfolio has been upgraded. We have recently focused on
bonds from the upper tier of the high yield rating spectrum -- bonds rated BB
and B by the major bond rating agencies. These higher quality bonds may help
reduce market risk and support the Fund's performance.
The outlook for the high yield market in the months ahead is favorable,
although earnings growth may not be as dramatic as in 1995. The pace of
economic growth, however, should sustain earnings at respectable levels.
Respectfully,
/s/ John A. McNeice, Jr.
John A. McNeice, Jr.
President
December 11, 1995
3
<PAGE>
INVESTMENT PORTFOLIO
OCTOBER 31, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
BONDS & NOTES(a) - 97.9% PAR VALUE
- ------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS & NOTES - 94.6%
- ------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-DURABLES - 53.6%
APPAREL - 0.0%
Linter Textiles Corp., (b)(c)
13.750% 10/01/00 $2,500 $ 25
------
COMMUNICATIONS & MEDIA - 22.1%
Allbritton Communications Co.,
11.500% 08/15/04 2,000 2,130
Cablevision Systems Corp.,
10.750% 04/01/04 2,000 2,102
Comcast Corp.,
10.625% 07/15/12 1,500 1,635
Continental Cablevision, Inc.,
11.000% 06/01/07 2,000 2,230
MFS Communications Company, Inc.,
stepped coupon,
(9.375% 1/15/99) 01/15/04 (d) 2,000 1,552
Marcus Cable Co., LP,
11.875% 10/01/05 1,000 1,029
Metrocall, Inc.,
10.375% 10/01/07 1,500 1,537
NWCG Holding Corp.,
(e) 06/15/99 2,000 1,345
Nextel Communications, Inc.,
stepped coupon,
(9.750% 8/15/99) 08/15/04 (d) 1,000 508
Rogers Communications, Inc.,
10.875% 04/15/04 2,000 2,065
SCI Television, Inc.,
11.000% 06/30/05 2,500 2,644
Sinclair Broadcast Group, Inc.:
10.000% 12/15/03 1,600 1,644
10.000% 09/30/05 500 514
Winstar Communications Unit
(e) 10/15/05 (f) 1 1,560
Young Broadcasting Corp.,
11.750% 11/15/04 2,500 2,794
-------
25,289
-------
CONSUMER PRODUCTS - 3.2%
Gillett Holdings, Inc.,
12.250% 06/30/02 500 524
</TABLE>
4
<PAGE>
INVESTMENT PORTFOLIO/OCTOBER 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Revlon Consumer Products Corp.:
Series B:
9.375% 04/01/01 $1,000 $ 1,005
10.500% 02/15/03 1,000 1,027
Revlon Worldwide Corp.,
(e) 03/15/98 1,500 1,118
-------
3,674
-------
ENTERTAINMENT & LEISURE - 12.2%
Bally's Grand, Inc.,
Series B,
10.375% 12/15/03 2,000 1,995
Boyd Gaming Corp.,
10.750% 09/01/03 2,000 2,110
Empress River Casino Finance Corp.,
10.750% 04/01/02 1,500 1,515
HMH Properties Inc.,
9.500% 05/15/05 (g) 1,500 1,515
Harrah's Operating, Inc.,
10.875% 04/15/02 1,650 1,803
Showboat, Inc.,
13.000% 08/01/09 1,500 1,650
Stratosphere Corp.,
14.250% 05/15/02 1,500 1,605
Trump Taj Mahal Funding, Inc., PIK,
11.350% 11/15/99 2,030 1,735
-------
13,928
-------
FOOD, BEVERAGE, & TOBACCO - 4.0%
Doskocil Companies Inc.,
9.750% 07/15/00 1,600 1,560
Pilgrim's Pride Corp.,
10.875% 08/01/03 1,500 1,429
Van de Kamps, Inc.
12.000% 09/15/05 (g) 1,500 1,537
-------
4,526
-------
HEALTH CARE - 6.6%
Community Health Systems, Inc.,
10.250% 11/30/03 1,500 1,613
Genesis Health Ventures,
9.750% 06/15/05 1,500 1,571
Integrated Health Services, Inc.,
10.750% 07/15/04 1,000 1,065
Ornda Health Corp.,
12.250% 05/15/02 2,000 2,200
Tenet Healthcare Corp.,
10.125% 03/01/05 1,000 1,075
-------
7,524
-------
</TABLE>
5
<PAGE>
Investment Portfolio/October 31, 1995
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS &
NOTES (A) - CONT. PAR VALUE
- ----------------------------------------------------------------------
RETAIL TRADE - 5.5%
<S> <C> <C>
Dominick's Finer Foods, Inc.,
10.875% 05/01/05 $2,000 $2,105
Pathmark Stores, Inc.:
9.625% 05/01/03 1,000 990
11.625% 06/15/02 2,000 2,080
Thrifty Payless Holdings, Inc.,
11.750% 04/15/03 1,000 1,075
------
6,250
- ----------------------------------------------------------------------
ENERGY - 9.8%
OIL & GAS SERVICES - 3.2%
California Energy Co., Inc.,
9.875% 06/30/03 1,250 1,288
Flores & Rucks,
13,500% 12/01/04 1,000 1,120
Triton Energy Corp.,
(e) 11/01/97 1,500 1,271
------
3,679
------
OIL & NATURAL GAS - 6.6%
Falcon Drilling Co., Inc.,
Series B,
9.750% 01/15/01 1,000 1,015
Gulf Canada Resources Ltd.,
9.250% 01/15/04 2,500 2,512
Mesa Capital Corp.,
12.750% 06/30/98 1,500 1,365
Santa Fe Energy Resources, Inc.,
11.000% 05/15/04 1,500 1,605
TransTexas Gas Corp.,
11.500% 06/15/02 1,000 1,044
------
7,541
------
- ----------------------------------------------------------------------
MANUFACTURING - 24.4%
CHEMICALS - 8.4%
Acetex Corp.
9.750% 10/01/03 (g) 1,500 1,538
Agricultural Minerals Co., LP,
10.750% 09/30/03 2,250 2,385
Applied Extrusion Technologies,Inc.,
11.500% 04/01/02 1,500 1,618
Huntsman Corp.,
11.000% 04/15/04 2,000 2,228
N.L. Industries, Inc.:
stepped coupon,
(13.000% 10/15/98) 10/15/05 (d) 1,000 758
11.750% 10/15/03 1,000 1,063
------
9,585
------
</TABLE>
6
<PAGE>
Investment Portfolio/October 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CONSUMER DURABLES - 4.3%
Aftermarket Technology Corp.,
Series B,
12.000% 08/01/04 $1,000 $1,058
Atlantis Group, Inc.,
11.000% 02/15/03 1,900 1,710
Owens-Illinois, Inc.,
10.500% 06/15/02 2,000 2,100
------
4,868
------
DIVERSIFIED - 3.3%
American Standard Co.,
11.375% 05/15/04 2,000 2,210
Calmar Inc.,
11.500% 08/15/05(g) 1,500 1,541
------
3,751
------
METALS & MINERALS - 3.4%
A.K. Steel Corp.,
10.750% 04/01/04 2,000 2,185
Haynes International, Inc.,
13.500% 08/15/99 2,000 1,240
United Meridian Corp.,
10.375% 10/15/05 500 510
------
3,935
------
PAPER & FOREST PRODUCTS - 5.0%
Repap Wisconsin, Inc.,
9.250% 02/01/02 1,500 1,457
SD Warren Co.,
12.000% 12/15/04 1,000 1,110
Stone Container Corp.,
11.875% 12/01/98 2,000 2,135
Triangle Pacific Corp.,
10.500% 08/01/03 1,000 1,045
------
5,747
- -----------------------------------------------------------------
TECHNOLOGY - 6.3%
ELECTRONICS - 2.5%
Berg Electronics, Inc.,
11.375% 05/01/03 2,560 2,893
------
TELECOMMICATIONS - 3.7%
Heritage Media Corp.,
11.000% 06/15/02 1,000 1,073
Paging Network, Inc.:
8.875% 02/01/06 500 499
11.750% 05/15/02 1,000 1,104
PanAmSat Corp.,
(e) 08/01/03 2,000 1,580
------
4,256
------
</TABLE>
7
<PAGE>
Investment Portfolio/October 31, 1995
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS &
NOTES(a) - CONT. PAR VALUE
- --------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - 0.5%
World Corp., Inc.,
13.875% 08/15/97 $ 539 $ 541
--------
TOTAL CORPORATE FIXED INCOME BONDS & NOTES
(cost of $106,661) 108,012
--------
GOVERNMENT BONDS & NOTES - 3.3%
- --------------------------------------------------------------------
U.S. Treasury Notes 7.750% 01/31/00
(cost of $3,684) 3,456 3,704
--------
TOTAL BONDS & NOTES (COST OF $110,345) 111,716
--------
COMMON STOCKS - 2.1% SHARES
- --------------------------------------------------------------------
Mesa Capital Corp.,(h) 26 109
Specialty Equipment Cos., Inc.(h) 200 2,125
St. Johnsbury Trucking Co.(c)(h) 79 157
Sun Carriers, Inc.(c)(g)(h) 326 3
--------
TOTAL COMMON STOCKS (COST OF $3,122) 2,394
--------
WARRANTS - 0.0%
- --------------------------------------------------------------------
The Southland Corp., (cost of $2) 25 46
--------
TOTAL INVESTMENTS-100% (cost of $113,469)(i) 114,156
--------
SHORT-TERM OBLIGATIONS PAR
- --------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
5.85% 11.01.95(j) $3,938 3,938
--------
OTHER ASSETS & LIABILITIES, NET (24,110)
- --------------------------------------------------------------------
NET ASSETS $ 93,984
========
</TABLE>
8
<PAGE>
Investment Portfolio/October 31, 1995
- -------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) Industry classification percentages are based on total investments.
Total investments represent 121.5% of the Fund's net assets.
(b) This issuer has filed under Chapter 11 of the Federal Bankruptcy Code.
Income is not being accrued.
(c) Represents fair value as determined in good faith under directions of the
Trustees.
(d) Currently zero coupon. Shown parenthetically is the next interest rate to
be paid and the date the Fund will begin accruing this rate.
(e) Zero coupon bond.
(f) Unit represents two senior discount notes and one convertible senior
subordinated discount note.
(g) Security is 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 year end, the
value of these securities amounted to $6,131 or 6.5% of net assets.
(h) Non-income producing.
(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.
9
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C> <C>
(in thousands except for per share amount)
ASSETS
Investments at value (cost $113,469) $ 114,156
Short-term obligations 3,938
---------
118,094
Receivable for:
Interest $ 2,966
Investments sold 2,708
Other 47 5,721
---------- ---------
Total Assets 123,815
LIABILITIES
Payable for:
Investments purchased 1,093
Distributions 824
Interest 501
Accrued:
Deferred Trustees fees 1
Other 12
Notes payable 27,400
----------
Total Liabilities 29,831
---------
NET ASSETS at value for 14,198
shares of beneficial interest outstanding $ 93,984
=========
Net asset value per share $ 6.62
=========
COMPOSITION OF NET ASSETS
Capital paid in $ 128,440
Undistributed net investment income 131
Accumulated net realized loss (35,274)
Net unrealized appreciation 687
---------
$ 93,984
=========
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Interest $ 12,354
EXPENSES
Management fee $ 588
Transfer agent 59
Bookkeeping fee 41
Trustees fee 18
Custodian fee 4
Audit fee 72
Legal fee 19
Reports to shareholders 8
Other 53
----------
Total operating expenses 862
Interest and amortization of deferred
debt issuance expenses 1,758 2,620
---------- ----------
Net Investment Income 9,734
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (2,047)
Net unrealized appreciation during
the period 6,871
----------
Net Gain 4,824
---------
Net Increase in Net Assets From Operations $ 14,558
=========
</TABLE>
See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
& STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
Cash flow Changes in net assets
(cash basis) (accrual basis)
------------ ---------------------
Year ended Year ended
(in thousands) October 31 October 31
------------ ---------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1995 1994
------------ ---------------------
<S> <C> <C> <C>
Operations:
Net investment income (a) $ 8,964 $ 9,734 $ 9,595
Net realized gain (loss) (2,047) 885
Net unrealized appreciation (depreciation) 6,871 8,983
Net decrease in cash from investment activity (b) (1,046)
---------- --------- --------
Net Increase from Operations 7,918 14,558 1,497
Distributions from net investment income (8,078) (9,784) (10,324)
---------- --------- --------
(160) 4,774 (8,827)
Fund share transactions
Value of distributions reinvested 1,691 1,182
---------- --------- --------
Total Increase (Decrease) (160) 6,465 (7,645)
Cash
Beginning of period 160
----------
End of period $ 0
==========
NET ASSETS
Beginning of period 87,519 95,164
--------- --------
End of period (including undistributed net
investment income of $131 and $127, $ 93,984 $ 87,519
respectively) ========= ========
NUMBER OF FUND SHARES
Issued for distributions reinvested 260 178
Outstanding at
Beginning of period 13,938 13,760
--------- --------
End of period 14,198 13,938
========= ========
Notes to statement of cash flows:
a) Reconciliation of net investment income:
Net investment income per books $ 9,734
Net change in assets and liabilities related
to income and expenses, including net
accretion and amortization (770)
----------
Net investment income-cash basis $ 8,964
==========
b) Net decrease in cash from investment
activity
Receipts for investments sold $ 575,737
Cost of investments purchased (576,783)
----------
$ (1,046)
==========
</TABLE>
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
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 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 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, 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 Flow. The cash amount shown in the Statement of Cash Flow
is the amount included in other assets in the Fund's Statement of Assets and
Liabilities and represents cash on hand at its custodian bank account and
does not include any short-term investments at October 31, 1995.
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.
13
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded
on the ex-date.
The 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 carryovers) 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 2. 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 the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the year ended October 31, 1995, purchases and
sales of investments, other than short-term obligations, were $104,110,244
and $108,421,526, respectively, of which $ 19,673,134 and $23,089,499
respectively, were U.S. government securities.
Unrealized appreciation (depreciation) at October 31, 1995, based on cost of
investments for both financial statement and federal income tax purposes
was:
Gross unrealized appreciation $ 5,262,818
Gross unrealized depreciation (4,575,940)
------------
Net unrealized appreciation $ 686,878
============
14
<PAGE>
Notes to Financial Statements/October 31, 1995
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO INFORMATION - CONT.
CAPITAL LOSS CARRYFORWARDS: At October 31, 1995, capital loss
carryforwards available (to the extent provided in regulations) to offset
future realized gains were approximately as follows:
<TABLE>
<CAPTION>
Year of Capital loss
expiration carryforward
---------- ------------
<S> <C>
1998 $ 5,028,000
1999 18,676,000
2000 9,467,000
2003 2,103,000
-----------
$35,274,000
===========
</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 4. SENIOR EXTENDIBLE NOTES
- --------------------------------------------------------------------------------
At October 31, 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.
15
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data outstanding throughout each period are as follows:
<TABLE>
Year ended October 31
---------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period $ 6,280 $ 6,920 $ 6,430 $ 6,290 $ 4,880
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.696 0.693 0.709 0.773 0.800
Net realized and
unrealized gain (loss) 0.340 (0.587) 0.497 0.142 1.385
------- ------- ------- ------- -------
Total from Investment
Operations 1.036 0.106 1.206 0.915 2.185
------- ------- ------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.696) (0.746) (0.716) (0.775) (0.775)
------- ------- ------- ------- -------
Total Distributions
Declared to Shareholders (0.696) (0.746) (0.716) (0.775) (0.775)
------- ------- ------- ------- -------
Net asset value -
End of period $ 6.620 $ 6.280 $ 6.920 $ 6.480 $ 6,290
======= ======= ======= ======= =======
Total return - based on net
asset value (a) 17.80% 1.54% 19.64% 14.99% 49.08%
======= ======= ======= ======= =======
Total return - based on market
value 33.00% (2.80)% 17.89% 17.89% 54.29%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Operating expenses 0.95% (b) 0.97% 1.00% 1.00% 1.38%
Interest and amortization of
deferred debt issuance expense 1.94% 1.91% 2.66% 3.24% 3.80%
Net investment income 10.76% (b) 10.40% 10.62% 11.98% 14.40%
Portfolio turnover 92% 160% 135% 78% 30%
Net assets at end
of period (000) $ 93,984 $87,519 $95,164 $87,149 $83,618
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested.
(b) The benefits derived from custody credits and directed brokerage
arrangements, if any, had no impact on the Fund's gross expense ratio.
- ----------------------------------------------------------------------------
SENIOR SECURITIES OF COLONIAL INTERMEDIATE HIGH INCOME FUND: (UNAUDITED)
<TABLE>
<CAPTION>
Involuntary
Total Asset liquidating Approximate
amount coverage preference market value
Year outstanding per share per unit per unit
- ---- ----------- --------- ------------ ------------
<S> <C> <C> <C> <C>
1995 $27,400,000 297% NA 100
1994 $27,400,000 319% NA 100
1993 $27,400,000 347% NA 100
1992 $27,400,000 318% NA 100
1991 $27,400,000 305% NA 100
1990 $27,400,000 237% NA 100
1989 $37,400,000 288% NA 100
</TABLE>
16
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
THREE MONTHS ENDED
----------------------------------------------------------------------------
OCTOBER 31, 1995 JULY 31, 1995 APRIL 30, 1995 JANUARY 31, 1995
(000) Per share (000) Per share (000) Per share (000) Per share
-------- --------- ------- --------- ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment $3,070 $0.216 $3,148 $0.223 $3,044 $0.217 $ 3,092 $0.221
Net investment income $2,429 $0.175 $2,481 $0.176 $2,389 $0.170 $ 2,435 $0.175
Net realized and
unrealized gain (loss) ($128) ($0.012) $2,147 $0.149 $4,416 $0.317 $(1,611) ($0.114)
Market value per share:
High $7.125 $6.875 $6.625 $6.500
Low $6.750 $6.375 $6.125 $6.500
<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 October 31, 1995 there were 1,639 shareholder accounts.
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES AND THE SHAREHOLDERS OF COLONIAL INTERMEDIATE HIGH INCOME
FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of
operations, of cash flow and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position
of Colonial Intermediate High Income Fund at October 31, 1995, the results
of its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and the
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of portfolio positions at October 31, 1995 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 11, 1995
18
<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
Corp.), the Plan agent, by mail at P.O. Box 1376, Boston, MA 02104 or by phone
at 1-800-331-1710.
19
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20
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21
<PAGE>
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22
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial Intermediate High Income Fund is:
The Shareholder Services Group, Inc.
(Subsidiary of First Data Corp.)
P.O. Box 1376
Boston, MA 02104
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 our
Literature Department at 1-800-248-2828 and additional reports will be sent to
you.
This report has been prepared for shareholders of Colonial Intermediate High
Income Fund.
23
<PAGE>
[LOGO] COLONIAL
MUTUAL FUNDS
Mutual Funds for
Planned Portfolios
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 (formerly Senior Vice President-Operations, The Rockport
Company)
WILLIAM D. IRELAND, JR.
Trustee (formerly Chairman of the Board, Bank of New England-Worcester)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
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 (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
SINCLAIR WEEKS, JR.
Chairman of the Board, Reed & Barton Corporation
COLONIAL INVESTMENT SERVICES, INC. (C)1995
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
IH-02/411B-1095 (12/95)
[LOGO] Printed on recycled paper
