<PAGE>
[graphic omitted]
COLONIAL INTERMEDIATE HIGH INCOME FUND SEMIANNUAL REPORT
APRIL 30, 1999
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
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.
<PAGE>
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
