<PAGE>
[COLONIAL LOGO]
COLONIAL
INTERMARKET
INCOME
TRUST I
Annual Report November 30, 1995
<PAGE>
COLONIAL INTERMARKET INCOME TRUST I HIGHLIGHTS
DECEMBER 1, 1994 - NOVEMBER 30, 1995
Investment Objective: Colonial InterMarket Income Trust I seeks to maximize
current income through investments in three sectors of the bond market -- U.S.
government, corporate high yield, and foreign government.
The Fund is Designed to Offer:
- Potential for higher, more consistent income
- Diversification to help reduce risk and improve price stability
- Monthly distributions to help meet your financial needs
Portfolio Manager Commentary: "In the United States and in many foreign
countries, the prevailing economic trend during 1995 was toward lower interest
rates and moderate inflation. This had a favorable impact on the performance of
U.S. government, corporate high yield, and foreign government bonds."
Colonial InterMarket Income Trust I Performance
<TABLE>
<S> <C>
Distributions declared per share $0.948
12-month total return, assuming
reinvestment of all distributions
- - NAV 18.46%
- - Market Price 17.67%
Price per share
- - NAV $11.27
- - Market Price $10.75
</TABLE>
<TABLE>
<CAPTION>
SECTOR BREAKDOWN TOP FIVE FOREIGN COUNTRIES
<S> <C> <C>
1. U.S. government .......... 22.3% 1. Denmark
2. Foreign government ....... 35.8% 2. Australia
3. High yield corporate ..... 37.5% 3. United Kingdom
4. Other .................... 4.4% 4. Finland
5. Argentina
</TABLE>
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF JOHN A. McNEICE, JR. IN UPPER LEFT HAND CORNER]
Colonial InterMarket Income Trust's performance during the 12 months ended
November 30, 1995, demonstrated the validity of its tri-sector investment
strategy. At various times, all three sectors of the bond market in which the
Fund invests contributed to the Fund's positive performance.
The strong rally in the U.S. government sector was primarily driven by declining
interest rates. These bonds received an additional boost in the second half of
the year as the dollar strengthened versus many global currencies, leading to a
surge in demand for U.S. government securities from foreign investors.
Foreign government bonds lagged their U.S. counterparts early in 1995. However,
many of the world's economies have begun to slow, this is reflected in declining
interest and inflation rates. To take advantage of this development, we
increased our foreign position from 28.6% of net assets on November 30, 1994, to
35.8% of net assets at the end of the fiscal year. The Scandinavian countries,
including Denmark and Finland, were especially attractive. These countries have
been successful at improving their foreign trade imbalances and keeping
inflation under control.
Although we continued to reduce our position in corporate high yield bonds, this
remained the largest sector in the portfolio. As interest rates declined, the
relatively high yields available in this sector made these bonds more attractive
to investors and prices increased along with demand. We took advantage of higher
prices by taking profits on some of the more cyclical holdings in the portfolio
and focusing on noncyclical industries, including cable television, health care
and gaming.
We believe the trend toward declining interest rates and low inflation will
continue in 1996. This should have a positive impact on all three sectors of the
bond market in which the Fund invests.
Respectfully,
/s/John A. McNeice, Jr.
- -----------------------
John A. McNeice, Jr.
President
January 12, 1996
3
<PAGE>
INVESTMENT PORTFOLIO
NOVEMBER 30, 1995 (IN THOUSANDS)
<TABLE>
<CAPTION>
CURRENCY
BONDS & NOTES - 95.6% ABBREV. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE FIXED-INCOME BONDS & NOTES - 37.5%
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 1.4%
FINANCIAL SERVICES
Comdata Network, Inc.:
12.500% 12/15/99 $ 1,000 $1,135
13.250% 12/15/02 $ 500 596
------
1,731
------
MANUFACTURING - 12.3%
CHEMICALS - 0.9%
Huntsman Corp.,
11.000% 04/15/04 $ 1,000 1,114
- --------------------------------------------------------------------------------
ELECTRONIC & ELECTRICAL EQUIPMENT - 1.4%
Amphenol Corp.,
12.750% 12/15/02 $ 1,550 1,744
------
FOOD & KINDRED PRODUCTS - 1.9%
Gillett Holdings, Inc.,
12.250% 06/30/02 $ 744 779
Van De Kamps, Inc., (a)
12.000% 09/15/05 $ 1,500 1,541
------
2,320
------
MISCELLANEOUS MANUFACTURING - 0.4%
American Standard Co.,
11.375% 05/15/04 $ 500 552
PAPER PRODUCTS - 3.3%
Gaylord Container Corp.,
11.500% 05/15/01 $ 1,250 1,287
Repap Wisconsin, Inc.,
9.875% 05/01/06 $ 1,000 955
Stone Container Corp.:
10.750% 10/01/02 $ 750 767
11.875% 12/01/98 $ 1,000 1,048
------
4,057
------
PRIMARY METAL - 2.7%
A.K. Steel Corp.,
10.750% 04/01/04 $ 1,500 1,652
Magma Copper Co.,
12.000% 12/15/01 $ 1,000 1,097
</TABLE>
4
<PAGE>
INVESTMENT PORTFOLIO/NOVEMBER 30, 1995
<TABLE>
<CAPTION>
BONDS & NOTES - 95.6% CURRENCY PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE FIXED-INCOME BONDS & NOTES - 37.5%
- --------------------------------------------------------------------------------
Ucar Global Enterprises,
12.000% 01/15/05 $ 535 $ 606
------
3,355
------
PRINTING & PUBLISHING - 0.9%
K-III Communications Corp.,
10.625% 05/01/02 $ 1,000 1,063
------
RUBBER & PLASTIC - 0.8%
Portola Packaging, Inc.,
10.750% 10/01/05 $ 1,000 1,030
------
MINING & ENERGY - 3.3%
OIL & GAS EXTRACTION
Gulf Canada Resources Ltd.,
9.250% 01/15/04 $ 1,500 1,517
Mesa Capital Corp.,
12.750% 06/30/98 $ 500 452
Nuevo Energy Co.,
12.500% 06/15/02 $ 2,000 2,175
------
4,144
- --------------------------------------------------------------------------------
RETAIL TRADE - 0.7%
FOOD STORES
Pathmark Stores, Inc.,
9.625% 05/01/03 $ 1,000 931
- --------------------------------------------------------------------------------
SERVICES - 7.8%
AMUSEMENT & RECREATION - 4.2%
Bally's Grand, Inc., Series B,
10.375% 12/15/03 $ 1,000 1,002
Boyd Gaming Corp.,
10.750% 09/01/03 $ 1,000 1,055
Falcon Holdings, PIK,
11.000% 09/15/03 $ 1,301 1,244
Grand Casinos, Inc.,
10.125% 12/01/03 $ 750 765
Harrah's Operating, Inc.,
10.875% 04/15/02 $ 1,000 1,070
------
5,136
------
HEALTH SERVICES - 2.8%
GranCare, Inc.,
9.375% 09/15/05 $ 1,600 1,604
HealthSouth Rehabilitation
Corp.,
9.500% 04/01/01 $ 750 797
</TABLE>
5
<PAGE>
INVESTMENT PORTFOLIO/NOVEMBER 30, 1995
<TABLE>
<CAPTION>
BONDS & NOTES - 95.6% CURRENCY PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE FIXED-INCOME BONDS & NOTES - 37.5%
- --------------------------------------------------------------------------------
SERVICES - CONT.
HEALTH SERVICES - CONT.
ORNDA Health Corp.,
12.250% 05/15/02 $ 1,000 $ 1,102
-------
$ 3,503
-------
HOTELS, CAMPS & LODGING - 0.8%
HMH Properties, Inc., (a)
9.500% 05/15/05 $ 1,000 1,005
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 12.0%
AIR TRANSPORTATION - 0.7%
World Corp., Inc.,
13.875% 08/15/97 $ 812 818
COMMUNICATIONS - 9.4%
Allbritton Communications Co.,
11.500% 08/15/04 $ 1,500 1,567
Cablevision Systems Corp.,
10.750% 04/01/04 $ 1,500 1,577
Comcast UK Cable Partners Ltd., (b)
(c) 11/15/07 $ 1,250 719
Heritage Media Corp.,
11.000% 06/15/02 $ 750 799
Jones Intercable, Inc.,
11.500% 07/15/04 $ 1,000 1,105
Metrocall, Inc.,
10.375% 10/01/07 $ 500 515
Mobilemedia Communications, Inc.,
stepped coupon, (d)
(10.500% 12/01/98) 12/01/03 $ 750 562
Mobilemedia Corp.,
9.375% 11/01/07 $ 500 504
NWCG Holding Corp.,
(c) 06/15/99 $ 1,400 934
Sinclair Broadcast Group, Inc.,
10.000% 09/30/05 $ 750 767
Telewest Communication PLC, (b)
(c) 10/01/07 $ 2,750 1,599
Young Broadcasting Corp.,
10.125% 02/15/05 $ 1,000 1,055
-------
11,703
GAS SERVICES - 1.9%
California Energy Co., Inc.,
9.875% 06/30/03 $ 1,250 1,294
Midland Funding Corp.,
13.250% 07/23/06 $ 1,000 1,056
-------
2,350
-------
</TABLE>
6
<PAGE>
INVESTMENT PORTFOLIO/NOVEMBER 30, 1995
<TABLE>
<CAPTION>
BONDS & NOTES - 95.6% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE FIXED-INCOME BONDS & NOTES - 37.5%
- --------------------------------------------------------------------------------
TOTAL CORPORATE FIXED-INCOME
BONDS & NOTES (cost of $49,776) $46,556
=======
</TABLE>
<TABLE>
<CAPTION>
FOREIGN GOVERNMENT & AGENCY
OBLIGATIONS - 35.8% CURRENCY PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Argentina Par Brady, stepped coupon,
(5.250% 4/01/96) 5.000% 03/31/23 AR 5,100 2,678
Government of Finland Bond:
9.500% 03/15/04 FN 17,000 4,485
10.000% 09/15/01 FN 8,000 2,150
Kingdom of Denmark,
8.000% 05/15/03 DK 74,629 14,030
Republic of Poland (Brady),
Past Due Interest, stepped coupon,
(4.000% 11/01/96) 3.750% 10/27/14 PL 4,000 2,575
Republic of South Africa,
12.000% 02/28/05 SA 10,000 2,378
Treasury Corp. of Victoria,
12.000% 09/22/01 A$ 7,891 6,925
United Kingdom Treasury,
10.000% 09/08/03 UK 3,855 6,807
Western Australia Treasury,
12.000% 08/01/01 A$ 2,638 2,312
------
TOTAL FOREIGN GOVERNMENT & AGENCY
OBLIGATIONS (cost of $37,279) 44,340
======
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 22.3%
- -------------------------------------------------------------------------------
Maturities
Coup From/To
------ -------
<S> <C> <C> <C> <C>
Government National Mortgage Association:
9.000% 2016 $ 2,750 2,919
10.500% 2015-2020 $ 604 672
11.000% 2018-2019 $ 2,284 2,574
6,165
------
U.S. Treasury Bonds:
11.625% 11/15/04 $ 3,385 4,747
12.000% 08/15/13 $ 9,404 14,291
U.S. Treasury Notes,
11.875% 11/15/03 $ 1,800 2,493
------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (cost of $27,191) 27,696
======
</TABLE>
7
<PAGE>
INVESTMENT PORTFOLIO/NOVEMBER 30, 1995
<TABLE>
<CAPTION>
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 22.3%
- -------------------------------------------------------------------------------
<S> <C> <C>
Maturities
Coupon From/To
------ -------
TOTAL BONDS & NOTES (cost of $114,246) $118,592
========
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS - 1.0% SHARES
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 0.0%
MACHINERY & COMPUTER EQUIPMENT
Thermadyne Holdings Corp. (e) 1 21
-------
MINING & ENERGY - 0.1%
OIL & GAS EXTRACTION
Mesa, Inc. (e) 19 63
-------
RETAIL TRADE - 0.9%
FOOD STORES
National Convenience Stores, Inc. (e) 41 1,108
-------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.0%
MOTOR FREIGHT & WAREHOUSING
St. Johnsbury Trucking Co. (e)(f) 16 31
Sun Carriers, Inc.(a)(e)(f) 65 1
-------
32
-------
TOTAL COMMON STOCKS (cost of $1,065 ) 1,224
WARRANTS (e) - 0.1%
National Convenience Stores, Inc.,
(expires 3/09/98) (cost of $79) 23 203
-------
TOTAL INVESTMENTS - 96.7%
(cost of $115,390)(g) 120,019
-------
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM OBLIGATIONS - 0.5% PAR
- --------------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with Bankers Trust
Securities Corp., dated 11/30/95, due 12/01/95
at 5.900%, collateralized by U.S. Treasury
notes with various maturities to 1997, market
value $574 (repurchase proceeds $563)
$563 563
- -----------------------------------------------------------------------------
FORWARD CURRENCY CONTRACTS - 0.0% (h) (6)
- -----------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 2.8% 3,521
- -----------------------------------------------------------------------------
NET ASSETS - 100% $124,097
=============================================================================
</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
- ------------------------------
(a) Securities exempt from
registration under Rule 144A of the Securities Act of 1993. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers. At November 30, 1995, the value of these
securities amounted to $2,546 or 2.1% of net assets.
(b) This is a British security. Par amount is stated in U.S. dollars.
(c) Zero coupon bond.
8
<PAGE>
Investment Portfolio/November 30, 1995
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO - CONT. :
- --------------------------------------------------------------------------------
(d) Currently zero coupon. Shown parenthetically is the interest rate to be
paid and the date the Fund will begin accruing this rate.
(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.
(h) As of November 30, 1995, the Fund had entered into the following forward
currency exchange contracts:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Contracts In Exchange Settlement (Depreciation)
to Deliver For Date (U.S. $)
- -------------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C>
DK 20,609 USD 3,679 1/4/96 $ (2)
UK 1,131 USD 1,729 1/4/96 (2)
UK 1,131 USD 1,730 1/4/96 (2)
------
$ (6)
</TABLE>
<TABLE>
<CAPTION>
Summary of Securities by
Currency Currency Value % of Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ $ 75,679 63.1
Denmark DK 14,030 11.7
Australia A$ 9,237 7.7
United Kingdom UK 6,807 5.7
Finland FN 6,635 5.5
Argentina AR 2,678 2.2
Poland PL 2,575 2.1
South Africa SA 2,378 2.0
-------- -----
$120,019 100.0
======== =====
</TABLE>
Certain securities are listed by country of underlying exposure but may
trade predominantly on other exchanges.
Acronym Name
------- ----
[S] [C]
PIK Payment-In-Kind
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
NOVEMBER 30, 1995
(in thousands except for per share amount)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $115,390)................. $120,019
Short-term obligations............................... 563
--------
120,582
Cash................................................. $ 254
Receivable for:
Interest........................................... 3,017
Investments sold................................... 1,407
Other................................................ 21 4,699
------ --------
Total Assets 125,281
LIABILITIES
Unrealized depreciation on forward
currency contracts.................................. 6
Payable for:
Distributions...................................... 880
Investments purchased.............................. 254
Accrued:
Deferred Trustees fees............................. 2
Other.............................................. 42
------
Total Liabilities........................... 1,184
========
NET ASSETS at value for 11,009
shares of beneficial interest outstanding.......... $124,097
========
Net asset value per share............................ $ 11.27
========
COMPOSITION OF NET ASSETS
Capital paid in.................................... $122,290
Undistributed net investment income................ 571
Accumulated net realized loss...................... (3,382)
Net unrealized appreciation (depreciation) on:
Investments...................................... 4,629
Foreign currency transactions.................... (11)
--------
$124,097
========
</TABLE>
See notes to financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
(in thousands)
<TABLE>
- -----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest ..................................................... $11,573
-------
EXPENSES
Management fee ............................................... $ 895
Transfer agent ............................................... 46
Bookkeeping fee .............................................. 34
Trustees fee ................................................. 17
Custodian fee ................................................ 32
Audit fee .................................................... 47
Legal fee .................................................... 10
Reports to shareholders ...................................... 12
Other ........................................................ 67
------ -------
Total expenses .......................................... 1,160
-------
Net Investment Income 10,413
-------
NET REALIZED & UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments ................................................ 90
Foreign currency transactions .............................. (147)
------
Net Realized Loss (57)
Net unrealized appreciation (depreciation)
during the period on:
Investments .......................................... 9,619
Foreign currency transactions ........................ (11)
------
Net Unrealized Appreciation .............................. 9,608
-------
Net Gain ......................................... 9,551
-------
Net Increase in Net Assets from Operations ................... $19,964
=======
</TABLE>
See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Year ended
November 30
---------------------
1995 1994
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 10,413 $ 10,791
Net realized loss (57) (2,851)
Net unrealized appreciation (depreciation) 9,608 (11,235)
-------- --------
Net Increase (decrease) from operations 19,964 (3,295)
Distributions:
From net investment income (10,435) (10,675)
From net realized gains --- (3,734)
-------- --------
Total Increase (decrease) 9,529 (17,704)
NET ASSETS
Beginning of period 114,568 132,272
-------- --------
End of period (including undistributed net investment
income of $571 and $155, respectively) $124,097 $114,568
======== ========
NUMBER OF FUND SHARES
Outstanding at end of period 11,009 11,009
======== ========
</TABLE>
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Intermarket Income Trust I (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.
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, 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.
- --------------------------------------------------------------------------------
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/NOVEMBER 30, 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.
- --------------------------------------------------------------------------------
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 gains (losses) on foreign currency
transactions include the fluctuation in exchange rates on gains (losses)
between trade and settlement dates on securities transactions, gains (losses)
arising from the disposition of foreign currency and currency gains (losses)
between the accrual and payment dates on dividends and interest income and
foreign withholding taxes.
The Fund does not distinguish that portion of gains (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 (losses) on 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, 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 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.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS/NOVEMBER 30, 1995
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 0.75% 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 the Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY:
During the year ended November 30, 1995, purchases and sales of
investments, other than short-term obligations, were $89,095,635 and
$87,832,588, respectively, of which $9,179,771 and $8,993,631, respectively,
were U.S. government securities.
Unrealized appreciation (depreciation) at November 30, 1995, based on
cost of investments for both financial statement and federal income tax
purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 6,010,229
Gross unrealized depreciation (1,381,505)
-----------
Net unrealized appreciation $ 4,628,724
===========
</TABLE>
At November 30, 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>
2002 $ 2,887,000
2003 529,000
-----------
$ 3,416,000
===========
</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:
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
the imposition of 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.
15
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period are as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30
-------------------------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of period .................. $10.410 $ 12.010 $ 11.220 $ 11.330 $ 10.640
------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. 0.986 0.980 1.093 1.152 1.229
Net realized and
unrealized gain (loss) ............... 0.822 (1.271) 0.777 (0.132) 0.696
------- -------- -------- -------- --------
Total from investment
operations ........................ 1.808 (0.291) 1.870 1.020 1.925
------- -------- -------- -------- --------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income ............ (0.948) (0.970) (1.080) (1.130) (1.229)
From net realized gains ............... -- (0.339) -- -- (0.006)
------- -------- -------- -------- --------
Total distributions
declared to shareholders ............. (0.948) (1.309) (1.080) (1.130) (1.235)
------- -------- -------- -------- --------
Net asset value - End of period ......... $11.270 $ 10.410 $ 12.010 $ 11.220 $ 11.330
======= ======== ======== ======== ========
Market Price per share -
End of period ........................ $10.750 $ 10.000 $ 11.875 $ 11.125 $ 11.000
======= ======== ======== ======== ========
Total return - based on
market value (a) ..................... 17.67% (5.42)% 16.87% 11.57% 28.24%
======= ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses .............................. 0.97(b) 0.98%(b) 1.02% 1.04% 1.07%
Net investment income ................. 8.73(b) 8.84%(b) 9.27% 10.08% 11.23%
Portfolio turnover ...................... 77% 99% 179% 129% 109%
Net assets at end of period (000) ....... $124,097 $114,568 $132,272 $123,560 $124,778
</TABLE>
(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. Prior year ratios are net of benefits received,
if any.
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES AND SHAREHOLDERS OF COLONIAL INTERMARKET
INCOME TRUST I
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Intermarket Income Trust I
at November 30, 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 November 30, 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
January 12, 1996
17
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------------------------
NOVEMBER 30, 1995 AUGUST 31, 1995 MAY 31, 1995 FEBRUARY 28, 1995
(000) PER SHARE (000) PER SHARE (000) PER SHARE (000) PER SHARE
-------- --------- --------- --------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income ..... $2,867 $ 0.260 $2,907 $ 0.264 $2,896 $ 0.263 $2,903 $ 0.264
Net investment income ....... $2,557 $ 0.242 $2,615 $ 0.248 $2,616 $ 0.248 $2,625 $ 0.248
Net realized and
unrealized gain (loss) .... $2,712 $ 0.233 $ (201) $(0.017) $5,377 $ 0.462 $1,675 $ 0.144
Market value per share:
High ...................... $10.875 $10.750 $10.750 $10.750
Low ....................... $10.125 $ 9.875 $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 November 30, 1995 there were 2,188 shareholder accounts.
18
<PAGE>
DIVIDEND REINVESTMENT PLAN
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 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
gains 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 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.
19
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22
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial InterMarket Income Trust I is:
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
1-800-426-5523
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.
This report has been prepared for shareholders of Colonial InterMarket Income
Trust I.
This Fund may purchase foreign currencies on a spot or forward basis in
conjunction with its investments in foreign securities and to hedge against
fluctuation in foreign currencies. The precise matching of foreign currency
exchange transactions and portfolio securities will not generally be possible
since the future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities and it is
impossible to forecast with precision the change in market value of portfolio
securities. Currency hedging does not eliminate fluctuations in the underlying
prices of the securities, but rater establishes a rate of exchange at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in value of
such currency.
23
<PAGE>
[COLONIAL LOGO]
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)
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)1996
One Financial Center, Boston, Massachusetts 02111-2621, 617-426-3750
CI-02/579B-1195 (1/96)
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