<PAGE>
LETTER FROM THE PRESIDENT
Dear Shareholder:
Following is Colonial InterMarket Income Trust's semiannual report for the
six months ended May 31, 1995. Your Fund is designed to provide investors with
a high level of current income. The Fund pursues its objective by investing in
three sectors of the bond market -- U.S. government, high yield corporate, and
foreign government bonds.
FUND PERFORMANCE (11/30/94 - 5/31/95)
<TABLE>
<S> <C>
Distributions declared per share $0.476
- -------------------------------------------------------------------------------
Annualized distribution rate on 5/31/95 based on NAV 8.47%
- -------------------------------------------------------------------------------
Six-month total return based on NAV, assuming
reinvestment of all distributions 11.09%
- -------------------------------------------------------------------------------
Six-month total return based on 5/31/95 closing NYSE
market price, assuming reinvestment of all distributions 8.63%
- -------------------------------------------------------------------------------
Net asset value per share on 5/31/95 $11.05
- -------------------------------------------------------------------------------
NYSE market price per share on 5/31/95 $10.375
- -------------------------------------------------------------------------------
</TABLE>
ECONOMIC/MARKET OVERVIEW
It appears that the U.S. economy may be coming in for the "soft landing"
that has been the Federal Reserve Board's goal for the last two years.
Annualized gross domestic product (GDP) for the first three months of 1995 was
2.8%, down significantly from the annualized GDP of 5.1% for the final quarter
of 1994. Among other factors, this reflects a slowdown in consumer spending
and residential construction. This weakness in the U.S. economy, which
translated into lower interest rates, had a favorable impact on U.S. government
and corporate high-yield securities.
U.S. GOVERNMENT MARKET
A dramatic recovery in the U.S. government bond market reflected a general
decline in interest rates, but especially in long- term rates. The yield for
the 30-year Treasury bond, which peaked near the beginning of the semiannual
period at 8.00%, had dropped to 6.65% by the end of the period. In part, the
decline in interest rates reflected investor confidence that the U.S. economy
would slow to a more sustainable rate of growth.
[PHOTO]
John A. McNeice, Jr.
President
HIGH YIELD U.S. CORPORATE MARKET
High yield corporate bonds have also benefited from declining interest
rates in the United States. Lower interest rates mean lower debt-service
expenses. At the same time, revenues and cash flows are increasing for many of
the companies that issue these bonds. Although high yield corporate remained
the largest sector in the portfolio, investments were reduced from 43.4% to
40.2% of total investments. This reflected a reduction in some cyclical
holdings, including steel and forest products.
INTERNATIONAL MARKET
Foreign government bonds encountered more turbulence than their U.S.
counterparts. In Mexico, the weakness of the fixed-income market reflected the
devaluation of the peso in early 1995. The impact of this development on the
Fund was negligible, as Mexican investments had been sold prior to the peso's
decline. The Fund's exposure to some other higher-yielding markets, including
Spain, was also reduced. This adjustment reduced the Fund's sensitivity to
economic volatility in these markets. As investments in emerging markets were
pared back, greater emphasis was placed on developed countries, primarily those
of Northern Europe. Among these were Finland, which has become attractive
because of deficit reduction and a strong export market.
The Fund's distribution was reduced in April, from $0.08 to $0.078 per
share. This reflected the further reduction of the Fund's exposure to some of
the higher yielding foreign markets, and also declining interest rates in the
United States. We will continue to monitor the distribution rate closely and
make adjustments as necessary.
As expected, interest rates have moved lower during 1995. Although there
may be periods of consolidation when rates move slightly higher, we believe the
overall interest rate trend will remain favorable for fixed-income investments.
Sincerely,
/s/ John A. McNeice, Jr.
- ------------------------
John A. McNeice, Jr.
President
July 15, 1995
<PAGE>
INVESTMENT PORTFOLIO (UNAUDITED, IN THOUSANDS) MAY 31, 1995
<TABLE>
<CAPTION>
CURRENCY
BONDS & NOTES (A) - 96.4% ABBREV. PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE FIXED-INCOME BONDS & NOTES - 40.1%
- -------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 2.2%
FINANCIAL SERVICES - 1.4%
Comdata Network, Inc.:
12.500% 12/15/99 $ 1,000 $1,091
13.250% 12/15/02 $ 500 552
------
1,643
INSURANCE CARRIERS - 0.8% ------
Reliance Group Holdings, Inc.,
9.000% 11/15/00 $ 1,000 980
- -------------------------------------------------------------------------------
MANUFACTURING - 15.2%
CHEMICALS - 0.9%
Huntsman Corp.,
11.000% 04/15/04 $ 1,000 1,107
------
ELECTRONIC & ELECTRICAL EQUIPMENT - 2.7%
Amphenol Corp.,
12.750% 12/15/02 $ 1,550 1,773
Exide Corp.:
10.000% 04/15/05 $ 500 512
10.750% 12/15/02 $ 1,000 1,057
------
3,342
------
FOOD & KINDRED PRODUCTS - 1.7%
Gillett Holdings, Inc.,
12.250% 06/30/02 $ 1,000 1,045
Specialty Foods, Inc.,
10.250% 08/15/01 $ 1,000 990
------
2,035
------
MACHINERY & COMPUTER EQUIPMENT - 0.9%
SPX, Inc.,
11.750% 06/01/02 $ 1,000 1,065
------
MISCELLANEOUS MANUFACTURING - 0.4%
American Standard Co.,
11.375% 05/15/04 $ 500 555
------
PAPER PRODUCTS - 3.5%
Gaylord Container Corp.,
11.500% 05/15/01 $ 1,250 1,331
Riverwood International Corp.,
11.250% 06/15/02 $ 1,000 1,100
Stone Container Corp.:
11.500% 10/01/04 $ 750 803
11.875% 12/01/98 $ 1,000 1,078
------
4,312
------
PRIMARY METAL - 2.7%
Inland Steel Co.,
12.000% 12/01/98 $ 1,000 1,090
Magma Copper Co.,
12.000% 12/15/01 $ 1,000 1,105
Ucar Global Enterprises
12.000% 01/15/05 $ 1,000 1,085
------
3,280
------
PRINTING & PUBLISHING - 0.9%
K-III Communications Corp.,
10.625% 05/01/02 $ 1,000 $1,050
------
TEXTILE MILL PRODUCTS - 0.9%
Fieldcrest Cannon, Inc.,
11.250% 06/15/04 $ 1,000 1,045
------
TRANSPORTATION EQUIPMENT - 0.6%
Roadmaster Industries, Inc.,
11.750% 07/15/02 $ 750 728
- -------------------------------------------------------------------------------
MINING & ENERGY - 6.3%
METAL MINING - 1.2%
Freeport McMoRan, Inc.,
8.750% 02/15/04 $ 1,500 1,451
------
OIL & GAS EXTRACTION - 5.1%
Gulf Canada Resources Ltd.,
9.250% 01/15/04 $ 1,500 1,485
Mesa Capital Corp.,
(b) 06/30/98 $ 1,500 1,447
Nuevo Energy Co.,
12.500% 06/15/02 $ 2,000 2,150
OPI International, Inc.,
12.875% 07/15/02 $ 1,000 1,110
------
6,192
- -------------------------------------------------------------------------------
RETAIL TRADE - 1.4%
FOOD STORES - 1.4%
Homeland Stores, Inc.,
11.750% 03/01/99 $ 1,000 780
Pathmark Stores, Inc.,
9.625% 05/01/03 $ 1,000 970
------
1,750
- -------------------------------------------------------------------------------
SERVICES - 7.2%
AMUSEMENT & RECREATION - 2.6%
Bally's Grand, Inc., Series B,
10.375% 12/15/03 $ 1,000 975
Falcon Holdings Group, PIK,
11.000% 09/15/03 $ 1,233 1,134
Grand Casino Resorts, Inc.,
12.500% 02/01/00 $ 1,000 1,080
------
3,189
------
HEALTH SERVICES - 2.5%
HealthSouth Rehabilitation Corp.,
9.500% 04/01/01 $ 750 767
Healthtrust, Inc.,
10.250% 04/15/04 $ 1,000 1,155
Ornda Health Corp.,
12.250% 05/15/02 $ 1,000 1,100
------
3,022
</TABLE>
See notes to investment portfolio.
2
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
<TABLE>
<CAPTION>
CURRENCY
BONDS & NOTES (A) - CONT. ABBREV. PAR VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
SERVICES - CONT.
HOTELS, CAMPS & LODGING - 1.7%
Embassy Suites, Inc.,
10.875% 04/15/02 $ 1,000 $ 1,090
Host Marriott Hospitality, Inc.,
9.500% 05/15/05 $ 1,000 980
--------
2,070
--------
MOTION PICTURES - 0.4%
Plitt Theatres, Inc.,
10.875% 06/15/04 500 495
- -------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 7.8%
AIR TRANSPORTATION - 0.7%
World Corp.,
13.875% 08/15/97 $ 812 810
--------
COMMUNICATIONS - 5.3%
Allbritton Communications Co.,
11.500% 08/15/04 $ 1,500 1,575
Cablevision Systems Co.,
10.750% 04/01/04 $ 1,500 1,575
Heritage Media Corp.,
11.000% 06/15/02 $ 750 799
Jones Intercable, Inc.,
11.500% 07/15/04 $ 1,000 1,100
Mobilemedia Communications, Inc.,
stepped coupon, (10.500%
12/01/98) 12/1/03 (c) $ 750 488
NWCG Holding Corp.,
(b) 06/15/99 $ 1,400 868
--------
6,405
--------
GAS SERVICES - 1.8%
Midland Funding Corp.:
10.330% 07/23/02 $ 1,191 1,227
13.250% 07/23/06 $ 1,000 1,027
--------
2,254
- -------------------------------------------------------------------------------
Total corporate fixed-income
bonds & notes (cost $50,165) 48,780
- -------------------------------------------------------------------------------
FOREIGN GOVERMENT & AGENCY OBLIGATIONS - 30.7%
- -------------------------------------------------------------------------------
Republic of Argentina,
5.000%(d) 03/31/23 AP 6,500 3,250
Government of Finland Bond:
9.500% 03/15/04 FM 17,000 4,149
11.000% 01/15/99 FM 8,000 2,050
Kingdom of Denmark:
8.000% 05/15/03 DK 25,250 4,562
9.000% 11/15/00 DK 44,465 8,527
Treasury Corp of Victoria:
12.000% 09/22/01 A$ 5,083 4,203
12.500% 07/15/00 A$ 4,838 4,024
United Kingdom Treasury,
9.750% 08/27/02 UK 3,749 6,564
- -------------------------------------------------------------------------------
Total foreign government
& agency obligations (cost $31,427) 37,329
- -------------------------------------------------------------------------------
U.S. GOVERNMENT &
AGENCY OBLIGATIONS - 25.6%
- -------------------------------------------------------------------------------
Government National Mortgage Association:
Maturities
Coupon from/to
------ ---------
11.000% 2018-2019 $ 6,284 6,790
--------
U.S. Treasury bonds:
11.625% 11/15/04 $ 5,191 7,113
12.000% 08/15/13 $ 9,404 13,827
--------
20,940
--------
U.S. Treasury notes,
11.875% 11/15/03 $ 2,494 3,391
- -------------------------------------------------------------------------------
Total U.S. government
& agency obligations (cost $31,331) 31,121
- -------------------------------------------------------------------------------
Total bonds & notes (cost $112,923) 117,230
- -------------------------------------------------------------------------------
COMMON STOCKS - 0.5% SHARES
- -------------------------------------------------------------------------------
Mesa, Inc. (e) 19 101
National Convenience Stores, Inc. (e) 41 423
St. Johnsbury Trucking Co. (e)(f) 16 94
Sun Carriers, Inc. (e)(f) 65 1
Thermadyne Holdings Corp. (e) 1 18
- -------------------------------------------------------------------------------
Total common stocks (cost $1,065) 637
- -------------------------------------------------------------------------------
WARRANTS (D) - 0.0%
- -------------------------------------------------------------------------------
National Convenience Stores, Inc.
(expires 3/09/98)(cost $79) 23 23
- -------------------------------------------------------------------------------
Total investments - 94.9%
(cost $114,067) (g) 117,890
- -------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 0.3% PAR
- -------------------------------------------------------------------------------
Repurchase agreement with Bankers
Trust Securities Corp., dated 5/31/95
due 6/01/95 at 6.150%, collateralized
by U.S. Treasury notes with various
maturities to 1999, market value $416
(repurchase proceeds $365) $ 365 365
- -------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 2.8% 3,365
- -------------------------------------------------------------------------------
NET ASSETS - 100.0% $121,620
- -------------------------------------------------------------------------------
</TABLE>
See notes to investment portfolio.
3
<PAGE>
INVESTMENT PORTFOLIO - CONTINUED
Notes to investment portfolio:
(a) Par of each bond or note is shown in its local currency, according to the
abbreviations shown below. Value of all securities is shown in U.S.
dollars.
(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) The interest rate shown is the average rate over the life of the security.
(e) Non-income producing.
(f) The value of this security represents fair value as determined in good faith
under the direction of the Trustees.
(g) Cost for federal income tax purposes is the same.
SUMMARY OF SECURITIES BY CURRENCY
<TABLE>
<CAPTION>
% of total
Currency securities
Country abbrev. Value at value
- ------- -------- ----- ----------
<S> <C> <C> <C>
United States $ $ 80,561 68.3
Denmark DK 13,089 11.1
Australia A$ 8,227 6.9
United Kingdom UK 6,564 5.6
Finland FM 6,199 5.3
Argentina AP 3,250 2.8
-------- -----
$117,890 100.0
======== =====
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
<TABLE>
<CAPTION>
Acronym Name
- ------- ----
<S> <C>
PIK Payment-In-Kind
</TABLE>
See notes to financial statements.
4
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
May 31, 1995
(in thousands except for per share amount)
- ----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments at value (cost $114,067)............................ $117,890
Short-term obligations ......................................... 365
--------
118,255
Receivable for:
Interest........................................... $ 3,090
Investments sold................................... 1,129
Other................................................. 24 4,243
-------- --------
Total assets........................................... 122,498
LIABILITIES
Payable for distributions............................. 858
Accrued Deferred Trustees fees........................ 20
--------
Total liabilities...................................... 878
--------
Net assets at value for 11,009
shares of beneficial interest outstanding.................... $121,620
========
Net asset value per share....................................... $ 11.05
========
COMPOSITION OF NET ASSETS
Capital paid in.............................................. $122,290
Overdistributed net investment income........................ (24)
Accumulated net realized loss................................ (4,487)
Net unrealized appreciation on:
Investments............................................... 3,823
Foreign currency transactions............................. 18
--------
$121,620
========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS (UNAUDITED)
Six months ended May 31, 1995
(in thousands)
- ----------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest........................................................ $ 5,799
--------
EXPENSES
Management fee........................................ 437
Transfer agent........................................ 29
Bookkeeping fee....................................... 17
Trustees fees......................................... 7
Custodian fee......................................... 15
Audit fee............................................. 23
Legal fee............................................. 4
Reports to shareholders............................... 3
Other................................................. 24 559
-------- --------
Net investment income.............................. 5,240
--------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized loss on:
Investments........................................ (1,745)
Foreign currency transactions...................... (34)
--------
Net realized loss........................................ (1,779)
Net unrealized appreciation
during the period on:
Investments................................. 8,813
Foreign currency transactions............... 18
--------
Net unrealized appreciation................................. 8,831
--------
Net gain........................................... 7,052
--------
Net increase in net assets from
operations................................................... $ 12,292
========
</TABLE>
See notes to financial statements.
5
<PAGE>
FINANCIAL STATEMENTS - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Six months Year
ended ended
May 31 November 30
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income......................................................................... $ 5,240 $ 10,791
Net realized loss ............................................................................ (1,779) (2,851)
Net unrealized appreciation (depreciation).................................................... 8,831 (11,235)
-------- --------
Net increase (decrease) from operations................................................ 12,292 (3,295)
Distributions
From net investment income.................................................................... (5,240) (10,675)
From net realized gains....................................................................... ---- (3,734)
-------- --------
Total increase (decrease).............................................................. 7,052 (17,704)
NET ASSETS
Beginning of period........................................................................... 114,568 132,272
-------- --------
End of period (net of overdistributed net investment income and including undistributed
net investment income of $24 and $155, respectively)........................................ $121,620 $114,568
======== ========
NUMBER OF FUND SHARES
Outstanding at end of period.................................................................. 11,009 11,009
======== ========
</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 Intermarket Income Trust I (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 May 31, 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.
Options are valued at the last reported sale price, or in the absence of a
sale, the mean between the last quoted bid and asking price.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
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.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSACTIONS
The Fund has adopted Statement of Position 93-4, Foreign Currency
Accounting and Financial Statement Presentation for Investment Companies.
Accordingly, net realized and unrealized gain (loss) on foreign currency trans-
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
actions includes the fluctuation in exchange rates on gains and losses between
trade and settlement dates on securities transactions, gains and losses arising
from the disposition of foreign currency, and currency gains and losses between
the accrual and payment dates on dividend and interest income and foreign
withholding taxes.
The Fund does not distinguish that portion of gains and losses on
investments which is due to changes in foreign exchange rates from that which is
due to changes in market prices of the investments. Such fluctuations are
included with the net realized and unrealized gains and losses from investments.
- --------------------------------------------------------------------------------
FORWARD CURRENCY CONTRACTS
The Fund may enter into forward currency contracts to purchase or sell
foreign currencies at predetermined exchange rates in connection with the
settlement of purchases and sales of securities. The Fund may also enter into
forward currency contracts to hedge certain other foreign currency denominated
assets. The contracts are used to minimize the exposure to foreign exchange rate
fluctuations during the period between trade and settlement date of the
contracts. All contracts are marked-to-market daily, resulting in unrealized
gains or losses which become realized at the time the forward currency contracts
are closed or mature. Realized and unrealized gains (losses) arising from such
transactions are included in net realized and unrealized gains (losses) on
foreign currency transactions. Forward currency contracts do not eliminate
fluctuations in the prices of the Fund's portfolio securities. While the maximum
potential loss from such contracts is the aggregate face value in U.S. dollars
at the time the contract was opened, the actual exposure is typically limited to
the change in value of the contract (in U.S. dollars) over the period it remains
open. Risks may also arise if counterparties fail to perform their obligations
under the contracts.
- --------------------------------------------------------------------------------
OTHER
Corporate actions are recorded on the ex-date (except for certain foreign
securities which are recorded as soon after the ex-date as the Fund becomes
aware of such) net of nonrebatable tax withholdings. Where a high level of
uncertainty as to collection exists, income on securities is recorded net of all
tax withholdings with any rebates recorded when received.
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 Adviser) is the investment
adviser of the Fund and furnishes accounting and other services and office
facilities for a monthly fee equal to 0.75% annually of the Fund's average
weekly net assets.
- --------------------------------------------------------------------------------
BOOKKEEPING FEE
The Adviser provides bookkeeping and pricing services for $18,000 per year
plus 0.0233% 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.
- --------------------------------------------------------------------------------
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE 4. PORTFOLIO INFORMATION
During the six months ended May 31, 1995 purchases and sales of
investments, other than short-term obligations, were $20,095,030 and
$19,466,271, respectively, of which $474,549 and $2,304,196, respectively, were
U.S. government securities.
Unrealized appreciation (depreciation) at May 31, 1995, based on cost of
investments for both financial statement and federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation................................... $ 6,191,576
Gross unrealized depreciation................................... (2,368,906)
-----------
Net unrealized appreciation.................................. $ 3,822,670
===========
</TABLE>
- --------------------------------------------------------------------------------
OTHER
There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of currency exchange or
other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
- --------------------------------------------------------------------------------
NOTE 5. RESULTS OF SPECIAL SHAREHOLDERS MEETING
On February 15, 1995, a special meeting of shareholders was held and a new
Management Agreement between the Fund 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, 8,098,446 voted for the new Management
Agreement, 86,792 voted against and 192,906 abstained. Of the shares of
beneficial interest outstanding that abstained 54,450 represented broker
non-votes.
- --------------------------------------------------------------------------------
NOTE 6. RESULTS OF ANNUAL SHAREHOLDER MEETING
On May 31, 1995, the Annual Meeting of Shareholders was held to elect six
Trustees and to ratify the selection of Price Waterhouse LLP as independent
accountants for the fiscal year ending November 30, 1995. On March 6, 1995, the
record date of the Meeting, the Fund had outstanding 11,009,000 shares of
beneficial interest. The votes cast at the Meeting were as follows:
Election of six Trustees:
<TABLE>
<CAPTION>
FOR AGAINST
--- -------
<S> <C> <C>
Robert J. Birnbaum 6,297,410 101,672
James E. Grinnell 6,297,410 101,672
William D. Ireland, Jr. 6,297,410 101,672
Richard W. Lowry 6,297,410 101,672
William E. Mayer 6,297,410 101,672
John A. McNeice, Jr. 6,297,410 101,672
</TABLE>
The Board of Trustees also consists of Tom Bleasdale, Lora S. Collins, James L.
Moody, Jr., John J. Neuhauser, George L. Shinn, Robert L. Sullivan and Sinclair
Weeks, Jr.
Ratification of the selection of Price Waterhouse LLP as independent
accountants:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
6,238,778 36,361 123,943
- ------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout each period.
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
MAY 31 YEAR ENDED NOVEMBER 30
------------ ---------------------------------------------------------
1995 1994 1993 1992 1991 1990
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of period.................. $ 10.410 $ 12.010 $ 11.220 $ 11.330 $ 10.640 $ 11.260
-------- -------- -------- -------- -------- --------
Income/loss from investment operations:
Net investment income .............................. 0.476 0.980 1.093 1.152 1.229 1.285
Net realized and unrealized gain (loss)
on investments................................... 0.640 (1.271) 0.777 (0.132) 0.696 (0.555)
-------- -------- -------- -------- -------- --------
Total from investment operations.............. 1.116 (0.291) 1.870 1.020 1.925 0.730
-------- -------- -------- -------- -------- --------
Less distributions declared to shareholders:
From net investment income ......................... (0.476) (0.970) (1.080) (1.130) (1.229) (1.346)
From net realized gains............................. -- (0.339) -- -- (0.006) (0.004)
-------- -------- -------- -------- -------- --------
Total distributions declared to shareholders.. (0.476) (1.309) (1.080) (1.130) (1.235) (1.350)
-------- -------- -------- -------- -------- --------
Net asset value - End of period........................ $ 11.050 $ 10.410 $ 12.010 $ 11.220 $ 11.330 $ 10.640
-------- -------- -------- -------- -------- --------
Total return based on net asset value (a).............. 11.09%(b) (2.67)% 17.19% 9.23% 19.45% 8.12%
======== ======== ======== ======== ======== ========
Total return based on market value .................... 8.63%(b) 5.42% 16.87% 11.57% 28.24% (5.25)%
======== ======== ======== ======== ======== ========
Ratios to average net assets
Expenses ........................................... 0.96%(c) 0.98% 1.02% 1.04% 1.07% 1.11%
Net investment income .............................. 9.02%(c) 8.84% 9.27% 10.08% 11.23% 11.88%
Portfolio turnover..................................... 35%(c) 99% 179% 129% 109% 153%
Net assets at end of period (000)...................... $121,620 $114,568 $132,272 $123,560 $124,778 $117,083
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested.
(b) Not annualized.
(c) Annualized.
10
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
-------------------------------------------
MAY 31, 1995 FEBRUARY 28, 1995
------------------- -------------------
(000) PER SHARE (000) PER SHARE
------- --------- ------ ---------
<S> <C> <C> <C> <C>
Total investment income............................................... $ 2,896 $ 0.263 $2,903 $ 0.264
Net investment income................................................. $ 2,616 $ 0.238 $2,624 $ 0.238
Net realized and
unrealized gain.................................................... $ 5,377 $ 0.488 $1,675 $ 0.152
Market value per share:
High............................................................ $10.500 $10.750
Low............................................................. $10.000 $10.000
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------------------
NOVEMBER 30, 1994 AUGUST 31, 1994 MAY 31, 1994 FEBRUARY 28, 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 $ 2,935 $ 0.267 $ 2,967 $ 0.269 $ 2,953 $ 0.268 $3,125 $ 0.284
Net investment income...... $ 2,662 $ 0.242 $ 2,674 $ 0.243 $ 2,651 $ 0.241 $2,804 $ 0.254
Net realized and
unrealized loss......... $(3,779) $(0.341) $(1,715) $(0.155) $(8,402) $(0.758) $ (190) $(0.017)
Market value per share:
High................. $11.000 $11.375 $11.875 $12.500
Low.................. $ 9.000 $10.250 $10.000 $11.625
</TABLE>
At May 31, 1995 there were 2,328 shareholder accounts.
11
<PAGE>
DIVIDEND REINVESTMENT PLAN (UNAUDITED)
The Trust generally distributes net investment income and net short-term
capital gains monthly and net long-term capital gains annually. Under the
Trust's Dividend Reinvestment Plan (the "Plan") all distributions are
reinvested automatically in additional shares of the Trust, 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 are by check and are mailed directly to the record holder by
the dividend paying agent.
Shares issued under the Plan are purchased in the open market for the
participants' accounts commencing five business days before the payment date
for each distribution. Shares are credited to each account based on the
average price paid including brokerage commissions. All Plan accounts receive
monthly written confirmations of all transactions. Shares purchased under the
Plan ordinarily are held in uncertificated form, although each participant has
the right to receive certificates for whole shares owned by the participant.
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. Participants may recognize capital
gain or ordinary income for federal income tax purposes in an amount equal to
the market value of shares received under the Plan.
There is no charge to Plan participants for reinvesting distributions. Fees
and expenses of the Plan other than brokerage charges are paid by the Trust.
Participants bear a pro-rata share of brokerage charges incurred on open market
purchases of shares issued under the Plan.
A shareholder may elect not to participate or terminate his or her
participation in the Plan by written notice to the Plan administrator. Such
notice must be received by the Plan administrator before the dividend record
date in order to be effective with respect to that dividend. The Plan may be
amended or terminated on 90 days' written notice to the Plan participants.
Upon withdrawal by any participant or any termination of the Plan, certificates
for whole shares will be issued and cash payments will be made for any
fractional shares. All correspondence concerning the Plan, including requests
for additional information, should be directed to State Street Bank and Trust
Company, the Trust's dividend disbursing agent and administrator of the Plan,
at P.O. Box 8200, Boston, Massachusetts 02266-8200.
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 (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
13
<PAGE>
- --------------------------------------------------------------------------------
ABOUT OUR COVER...
[GRAPHIC]
The symbol on the cover of this Report represents the Fund's primary investment
focus on U.S. government securities, U.S. corporate bonds and foreign
government bonds. Since February 28, 1994, the Fund has had additional
flexibility in its selection of foreign government securities.
- --------------------------------------------------------------------------------
Colonial InterMarket Income Trust I 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
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
1-800-426-5523
14
<PAGE>
LEFT BLANK INTENTIONALLY
15
<PAGE>
[LOGO]
COLONIAL
MUTUAL FUNDS
[GRAPHIC]
COLONIAL
INTERMARKET
INCOME TRUST I
- --------------------------------------------
SEMIANNUAL REPORT
MAY 31, 1995
[LOGO]
COLONIAL
MUTUAL FUNDS
[LOGO] Printed on recycled paper.
CI-03/062B-0595
COLONIAL INVESTMENT SERVICES, INC. (C)1995
