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Previous: DIGITAL RECORDERS INC, 8-K, 1998-08-05 |
Next: STATE OF WISCONSIN INVESTMENT BOARD, SC 13G/A, 1998-08-05 |
<PAGE>
COLONIAL INTERMARKET INCOME TRUST I SEMIANNUAL REPORT
MAY 31, 1998
<PAGE>
COLONIAL INTERMARKET INCOME TRUST I HIGHLIGHTS
DECEMBER 1, 1997 - MAY 31, 1998
INVESTMENT OBJECTIVE: Colonial InterMarket Income Trust I seeks as high a level
of current income and total return as is consistent with prudent risk, by
diversifying investments primarily in U.S. and foreign government and
lower-rated corporate debt securities.
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: "During the past six months, alternating periods
of strong performance by each of the Fund's principal investment sectors
highlighted the benefits of market diversification. The U.S. government market,
the U.S high yield corporate market and international government markets
experienced their strongest performance at different points in time as economic
conditions and investors' expectations varied. The Fund's three-market
composition allowed the portfolio to take advantage of alternating periods of
market strength worldwide, providing shareholders with attractive levels of
income and total return."
- Carl Ericson
COLONIAL INTERMARKET INCOME TRUST I PERFORMANCE
<TABLE>
<CAPTION>
<S> <C>
Distributions declared per share $0.546
Six-month total return, assuming
reinvestment of all distributions
- NAV 5.24%
- Market Price 3.37%
Price per share
- NAV $11.47
- Market Price $10.75
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT BREAKDOWN
SECURITIES BREAKDOWN TOP FIVE FOREIGN COUNTRIES
(as of 5/31/98) (as of 5/31/98)
<S> <C> <C> <C>
1. High yield corporate ..... 44.1% 1. United Kingdom ........... 5.9%
2. U.S. government .......... 23.4% 2. Australia ................ 4.3%
3. Foreign govt. & agency ... 25.7% 3. Mexico ................... 3.0%
4. Other .................... 6.8% 4. Sweden ................... 2.4%
5. Greece ................... 2.1%
</TABLE>
Securities breakdown and country weightings are calculated as a percentage of
total net assets.
Because the Trust is actively managed, there can be no guarantee the Trust will
continue to maintain these country weightings or invest in these sectors in the
future.
2
<PAGE>
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[PHOTO OF STEPHEN E.GIBSON]
In June 1998, Harold Cogger retired as president of Colonial InterMarket Income
Trust's Board of Trustees. I would like to take this opportunity to thank him
for his guidance over the past few years and wish him well. As the new president
of the Fund, I am pleased to present the semiannual report for Colonial
InterMarket Income Trust I for the six months ended May 31, 1998.
During the early part of the period, financial headlines in the U.S. and
elsewhere were dominated by continued economic turmoil in the Pacific Rim. A
currency crisis in southeast Asia generated a negative spillover effect on
financial markets worldwide as investors worried that declining demand and
depressed currencies in Asia would lead to a global decline in economic
activity. However, the well-established U.S. and overseas bond markets that the
Trust invests in are characterized by stable governments with well-established
monetary policies, fundamentally strong economic prospects and good liquidity.
These markets benefited from investors' "flight to quality" during this period
of uncertainty.
Stronger-than-expected economic reports during the first quarter of 1998 moved
interest rates higher. However, by the end of the period, growth settled back to
more modest levels as certain measures of industrial production declined,
reducing investors' fears that the Federal Reserve Board would raise interest
rates to keep the economy in check.
In addition to providing attractive income and growth prospects, the Trust
offers an opportunity to diversify your core portfolio. Asset allocation among
international and U.S. bond market sectors provides both current income and
long-term growth potential. Generally, the three market sectors in which the
Trust invests do not move in conjunction with one another and the Trust's
diversification allows it to be well positioned to take advantage of changing
economic and market conditions. Looking ahead, worldwide growth prospects remain
attractive and may offer opportunities for future gains.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
July 10, 1998
Because market and economic conditions change, there can be no assurance that
the trends described above will continue.
3
<PAGE>
INVESTMENT PORTFOLIO
MAY 31, 1998 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
BONDS & NOTES - 93.2%
- --------------------------------------------------------------------------------------------------------------
CORPORATE FIXED - INCOME BONDS & NOTES - 43.7% PAR VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSTRUCTION - 0.4%
Building Construction
Kevco, Inc.,
10.375% 12/01/07 $ 500 $ 523
------
- --------------------------------------------------------------------------------------------------------------
MANUFACTURING - 19.0%
Chemicals & Allied Products - 3.3%
ClimaChem, Inc.,
10.750% 12/01/07 (a) 500 521
Hydrochem Industrial Services, Inc.,
10.375% 08/01/07 490 507
LaRoche Industries, Inc.,
9.500% 09/15/07 1,000 985
PCI Chemicals Canada, Inc.,
9.250% 10/15/07 (b) 250 248
Sterling Chemicals, Inc.,
11.750% 08/15/06 500 505
Texas Petrochemical Corp.,
11.125% 07/01/06 400 441
Trans-Resources, Inc.,
10.750% 03/15/08 (a) 1,000 1,012
------
4,219
------
ELECTRONIC & ELECTRICAL EQUIPMENT - 0.2%
Amphenol Corp.,
9.875% 05/15/07 250 267
------
FABRICATED METAL - 0.9%
Euramax International, PLC,
11.250% 10/01/06 (c) 1,000 1,085
------
FOOD & KINDRED PRODUCTS - 1.0%
Chiquita Brands International, Inc.,
10.250% 11/01/06 750 810
Windy Hill Pet Food Co.,
9.750% 05/15/07 400 412
------
1,222
------
MACHINERY & COMPUTER EQUIPMENT - 0.7%
IMO Industries, Inc.,
11.750% 05/01/06 750 855
------
</TABLE>
4
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MEASURING & ANALYZING INSTRUMENT - 0.4%
Intertek Finance, PLC,
10.250% 11/01/06 $ 500 $ 530
-------
MISCELLANEOUS MANUFACTURING - 7.1%
AEI Holding Co.,
10.000% 11/15/07 (a) 500 501
American Pacific Corp.,
9.250% 03/01/05 (a) 500 516
Associated Materials, Inc.,
9.250% 03/01/08 500 512
Dade International, Inc.,
11.125% 05/01/06 750 844
Eagle-Picher Industries, Inc.,
9.375% 03/01/08 (a) 875 879
JTM Industries, Inc.,
10.000% 04/15/08 (a) 250 256
Newcor, Inc.,
9.875% 03/01/08 (a) 1,000 1,015
Shop Vac Corp.,
10.625% 09/01/03 1,500 1,644
Tekni-Plex, Inc.,
9.250% 03/01/08 500 500
The Imperial Home Decor Group, Inc.,
11.000% 03/15/08 (a) 750 778
Thermadyne Manufacturing,
9.875% 06/01/08 (a) 750 754
Werner Holdings Co., Inc.,
10.000% 11/15/07 (a) 750 780
------
8,979
------
PAPER PRODUCTS - 1.0%
Riverwood International Corp.,
10.625% 08/01/07 1,000 1,050
Stone Container Corp. Units,
12.250% 04/01/02 (d) 250 257
------
1,307
------
PETROLEUM REFINING - 0.4%
Chiles Offshore,
10.000% 05/01/08 (a) 500 492
------
PRIMARY METAL - 2.2%
Algoma Steel, Inc.,
12.375% 07/15/05 1,000 1,165
Bayou Steel Corp.,
9.500% 05/15/08 (a) 500 496
</TABLE>
5
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CORPORATE FIXED - INCOME BONDS & NOTES - CONT. PAR VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING - CONT.
Primary Metal - Cont.
Insilco Corp.,
10.250% 08/15/07 $ 300 $ 314
Keystone Consolidated Industries, Inc.,
9.625% 08/01/07 500 514
WHX Corp.,
10.500% 04/15/05 (a) 250 258
------
2,747
------
PRINTING & PUBLISHING - 0.4%
American Lawyer Media, Inc.,
9.750% 12/15/07 (a) 450 468
------
RUBBER & PLASTIC - 1.1%
Burke Industries, Inc.,
10.000% 08/15/07 300 306
Portola Packaging, Inc.,
10.750% 10/01/05 1,000 1,050
------
1,356
------
TRANSPORTATION EQUIPMENT - 0.3%
Delco Remy International, Inc.,
10.625% 08/01/06 400 436
------
- -------------------------------------------------------------------------------------------------------------
MINING & ENERGY - 2.0%
OIL & GAS EXTRACTION
Magnum Hunter Resources, Inc.,
10.000% 06/01/07 750 780
Mariner Energy Corp.,
10.500% 08/01/06 1,000 1,028
Petsec Energy, Inc.,
9.500% 06/15/07 750 759
------
2,567
------
- -------------------------------------------------------------------------------------------------------------
RETAIL TRADE - 1.6%
APPAREL & ACCESSORY STORES - 0.4%
Galey & Lord, Inc.,
9.125% 03/01/08 (a) 500 493
------
FOOD STORES - 1.2%
Pathmark Stores, Inc.,
9.625% 05/01/03 1,000 1,015
Richmont Marketing Specialists, Inc.,
10.125% 12/15/07 (a) 500 509
------
1,524
------
</TABLE>
6
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SERVICES - 4.2%
AMUSEMENT & RECREATION - 1.4%
Hollywood Park, Inc.,
9.500% 08/01/07 $ 500 $ 515
Regal Cinemas, Inc.,
9.500% 06/01/08 (a) 1,250 1,253
------
1,768
------
BUSINESS SERVICES - 0.4%
PSINet, Inc.,
10.000% 02/15/05 (a) 500 511
------
HEALTH SERVICES - 1.4%
Conmed Corp.,
9.000% 03/15/08 (a) 500 498
Global Health Sciences, Inc.,
11.000% 05/01/08 (a) 750 735
Hudson Respiratory Care,
9.125% 04/15/08 500 490
------
1,723
------
MOTION PICTURES - 0.4%
United Artists Theatre Co.,
9.750% 04/15/08 (a) 500 500
------
PERSONAL SERVICES - 0.6%
Williams Scotsman, Inc.,
9.875% 06/01/07 750 780
------
- -------------------------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 16.1%
AIR TRANSPORTATION - 1.1%
Continental Airlines, Inc.,
9.500% 12/15/01 325 345
Trans World Airlines, Inc.,
11.375% 03/01/06 (a) 1,000 998
------
1,343
------
BROADCASTING - 1.5%
LIN Holding Corp.,
stepped coupon, (10.000% 03/01/03)
(e) 03/01/08 (a) 500 320
Renaissance Media Group,
stepped coupon, (10.000% 04/15/03)
(e) 04/15/08 875 527
Young Broadcasting Corp.,
10.125% 02/15/05 1,000 1,065
------
1,912
------
</TABLE>
7
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
CORPORATE FIXED - INCOME BONDS & NOTES - CONT. PAR VALUE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - CONT.
CABLE - 2.6%
Comcast UK Cable Partners Ltd.,
stepped coupon, (11.200% 11/15/00)
(e) 11/15/07 (c) $1,250 $1,031
Diamond Cable Co.,
stepped coupon, (10.750% 02/15/02)
(e) 02/15/07 1,000 713
Northland Cable,
10.250% 11/15/07 250 264
Shop at Home, Inc.,
11.000% 04/01/05 500 520
Telewest Communication PLC,
stepped coupon, (11.000% 10/01/00)
(e) 10/01/07 1,000 808
------
3,336
------
COMMUNICATIONS - 1.6%
Amazon Communications, Inc.,
stepped coupon, (10.000% 05/01/03)
(e) 05/01/08 (a) 1,250 738
Onepoint Communications Corp. Units,
14.500% 06/01/08 (a)(f) 1,000 998
Orbital Imaging Corp.,
11.625% 03/01/05 (a) 250 259
------
1,995
------
PIPELINES - 0.2%
Falcon Holding Group, L.P.,
stepped coupon, (9.285% 04/15/03)
(e) 04/15/10 (a) 500 311
------
SANITARY SERVICES - 0.6%
Allied Waste Industries, Inc.,
stepped coupon, (11.300% 06/01/02)
(e) 06/01/07 1,000 733
------
TELECOMMUNICATION - 8.5%
Clearnet Communications, Inc.,
stepped coupon, (14.750% 12/15/00)
(e) 12/15/05 750 624
Esprit Telecom Group, PLC,
11.500% 12/15/07 500 535
GST Telecom/GST Network Funding, Inc.,
stepped coupon, (10.500% 05/01/03)
(e) 05/0(a)8 1,000 600
</TABLE>
8
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hyperion Telecommunications, Inc.,
stepped coupon, (13.000% 04/15/01)
(e) 04/15/08 (a) $ 1,000 $ 745
Intermedia Communications, Inc.,
stepped coupon, (11.250% 07/15/02)
(e) 07/15/07 1,000 735
IXC Communications, Inc.,
9.000% 04/15/08 (a) 500 499
Level 3 Communications, Inc.,
9.125% 05/01/08 (a) 1,500 1,455
McLeod USA, Inc.,
8.375% 03/15/08 (a) 500 504
Metrocall, Inc.,
9.750% 11/01/07 750 755
MetroNet Communications Corp.,
12.000% 08/15/07 (a) 250 291
NEXTLINK Communications, Inc.,
stepped coupon, ( 9.450% 04/15/03)
(e) 04/15/08 (a) 500 306
Nextel Communications, Inc.,
stepped coupon, ( 9.950% 02/15/03)
(e) 02/15/08 (a) 1,000 635
Nextel International, Inc.,
stepped coupon, (12.125% 04/15/03)
(e) 04/15/08 (a) 625 373
RCN Corp.,
stepped coupon, (11.125% 10/15/02)
(e) 10/15/07 750 493
Sprint Spectrum L.P.,
stepped coupon, (12.500% 08/15/01)
(e) 08/15/06 1,000 843
Teligent, Inc.,
11.500% 12/01/07 750 765
Verio, Inc.,
10.375% 04/01/05 (a) 500 520
-------
10,678
-------
- -------------------------------------------------------------------------------------------------------------------
WHOLESALE TRADE - 0.4%
NONDURABLE GOODS
AmeriServ Food Co.,
10.125% 07/15/07 500 520
-------
TOTAL CORPORATE FIXED-INCOME
BONDS & NOTES (cost of $51,220) 55,180
-------
</TABLE>
9
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT & AGENCY
OBLIGATIONS - 25.7% CURRENCY PAR VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Argentina Global Bonds,
11.375% 01/30/17 (g) $ 1,110 $ 1,188
Hellenic Republic:
8.600% 03/26/08 GD 370,000 1,279
8.900% 03/21/04 GD 400,000 1,331
Kingdom of Denmark,
8.000% 03/15/06 DK 7,350 1,284
Mexican Global Bonds:
9.750% 02/06/01 (h) 1,415 1,485
11.375% 09/15/16 (h) 1,430 1,635
Ministry Finance Russia Government Bonds:
9.375% 03/31/05 (a)(i)DM 2,500 1,316
10.000% 06/26/07 (j) 1,300 1,149
Republic of Argentina,
11.250% 04/10/06 (k) DM 1,200 759
Republic of Brazil,
10.125% 05/15/27 (l) 2,560 2,320
Republic of Poland (Brady):
Past Due Interest, stepped coupon,
(5.000% 10/27/98) 4.000% 10/27/14 (m) 1,600 1,448
6.688% 10/27/24 (n) 800 789
Swedish Government Bonds:
10.250% 05/05/03 SK 1,800 283
13.000% 06/15/01 SK 17,900 2,804
Treasury Corp. of Victoria,
12.500% 10/15/03 A$ 1,079 895
United Kingdom Treasury:
9.000% 08/06/12 UK 980 2,100
9.500% 04/18/05 UK 1,210 2,374
10.000% 09/08/03 UK 1,530 2,944
United Mexican States,
10.375% 01/29/03 (h) 980 613
Western Australia Treasury Corp.:
8.000% 10/15/07 A$ 2,229 1,625
10.000% 07/15/05 A$ 3,635 2,863
-------
TOTAL FOREIGN GOVERNMENT & AGENCY 32,484
OBLIGATIONS (cost of $34,879) -------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 23.4%
- -------------------------------------------------------------------------------------------------------------------
Government National Mortgage Association:
9.000% 2016 1,531 1,656
10.500% 2015 - 2020 170 190
11.000% 2018 - 2019 1,047 1,192
-------
3,038
-------
</TABLE>
10
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury Bonds:
8.750% 05/15/17 (o) $ 890 $ 1,178
11.625% 11/15/04 (o) 13,502 17,812
12.000% 08/15/13 (o) 3,194 4,707
--------
23,697
--------
U.S. Treasury Notes,
11.875% 11/15/03 2,220 2,859
--------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (cost of $29,013) 29,594
--------
CORPORATE CONVERTIBLE BONDS - 0.4%
- -------------------------------------------------------------------------------------------------------------------
MINING & ENERGY - 0.4%
OIL & GAS EXTRACTION
HS Resources, Inc.,
(cost of $398) 9.250% 11/15/06 400 409
--------
TOTAL BONDS & NOTES (cost of $115,510) 117,667
--------
PREFERRED STOCKS - 3.1% SHARES
- -------------------------------------------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 0.2%
DEPOSITORY INSTITUTIONS
California Federal Bancorp Corp.,
9.125%, Series A 9 230
-------
- -------------------------------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 2.9%
BROADCASTING - 0.3%
PRIMEDIA, Inc., 9.200% 3 303
--------
CABLE - 1.2%
EchoStar Communications Corp., 12.125% (p) 300
Time Warner, Inc.,
10.250%, Series M 1 1,253
--------
1,553
--------
COMMUNICATIONS - 1.4%
Nextel Communications, Inc.:
11.125%, PIK 1 527
13.000%, PIK 1 1,230
--------
1,757
--------
TOTAL PREFERRED STOCKS (cost of $3,636) 3,843
--------
</TABLE>
11
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
WARRANTS - 0.0% (q)(r) SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.0%
COMMUNICATIONS - 0.0%
Clearnet Communications, Inc.,
(expires 09/15/05) 2 $ 25
Orbital Imaging Corp., (a)
(expires 03/01/01) (p) 11
--------
36
--------
TELECOMMUNICATION - 0.0%
MetroNet Communications Corp., (a)
(expires 08/15/07) (p) 12
--------
TOTAL WARRANTS (cost of $27) 48
--------
COMMON STOCKS - 0.0%
- -------------------------------------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 0.0%
MOTOR FREIGHT & WAREHOUSING
St. Johnsbury Trucking Co. (q)(r) 16 (p)
Sun Carriers, Inc. (q)(r) 65 1
--------
1
--------
TOTAL COMMON STOCKS (cost of $180) 1
--------
TOTAL INVESTMENTS - 96.3% (cost of $119,353)(s) 121,559
--------
SHORT-TERM OBLIGATIONS - 2.6% PAR
- -------------------------------------------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp., dated 05/29/98, due 06/01/98
at 5.580%, collateralized by U.S. Treasury notes and bills with various
maturities to 2027, market value
$3,469 (repurchase proceeds $3,327) $ 3,325 3,325
--------
FORWARD CURRENCY CONTRACTS - 0.2% (t) 185
- -------------------------------------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.9% 1,187
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS - 100% $126,256
========
</TABLE>
12
<PAGE>
Investment Portfolio/May 31, 1998
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Securities 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 May 31,
1998, the value of these securities amounted to $24,116 or 19.1% of net
assets.
(b) This is a Canadian security. Par amount is stated in U.S. dollars.
(c) This is a British security. Par amount is stated in U.S. dollars.
(d) Each unit consists of a 10.750% bond and a 1.500% supplemental interest
certificate.
(e) Currently zero coupon. Shown parenthetically is the interest rate to be
paid and the date the Fund will begin accruing this rate.
(f) Each unit consists of one warrant to buy 0.635 shares of common stock at
$0.01/share.
(g) This is an Argentinean security. Par amount is stated in U.S. dollars.
(h) This is a Mexican security. Par amount is stated in U.S. dollars.
(i) This is a Russian security. Par amount is stated in Deutschemarks.
(j) This is a Russian security. Par amount is stated in U.S. dollars.
(k) This is an Argentinean security. Par amount is stated in Deutschemarks.
(l) This is a Brazilian security. Par amount is stated in U.S. dollars.
(m) This is a Polish security. Shown parenthetically is the interest rate to
be paid and the date the Fund will begin accruing this rate. Par amount
is stated in U.S. dollars.
(n) This is a Polish security. Par amount is stated in U.S. dollars.
(o) These securities, or a portion thereof, with a total market value of
$16,835 are being used to collateralize the forward currency contracts
shown below.
(p) Rounds to less than one.
(q) Non-income producing.
(r) Represents fair value as determined in good faith under the direction of
the Trustees.
(s) Cost for federal income tax purposes is $119,558.
(t) As of May 31, 1998, the Fund had entered into the following forward
currency contracts:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Contracts In Exchange Settlement (Depreciation)
to Deliver For Date (U.S.$)
---------- --- ---- -------
<S> <C> <C> <C>
US$ 5,382 A$ 8,641 06/11/98 $ 107
UK 3,439 US$ 5,604 06/23/98 150
US$ 1,659 SK 13,013 07/09/98 (26)
SK 6,500 US$ 829 07/09/98 (21)
DK 6,250 US$ 920 07/14/98 (1)
US$ 920 DK 6,250 07/14/98 (24)
-----
$ 185
=====
</TABLE>
13
<PAGE>
Investment Portfolio/May 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Summary of Securities by
Country/Currency Currency Value % of Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 86,711 71.3
United Kingdom UK 9,534 7.9
Australia A$ 5,383 4.4
Mexico 3,733 3.1
Sweden SK 3,087 2.5
Greece GD 2,610 2.2
Russia 2,465 2.0
Brazil 2,320 1.9
Poland 2,237 1.8
Argentina 1,947 1.6
Denmark DK 1,284 1.1
Canada 248 0.2
-------- -----
$121,559 100.0
======== =====
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------- -----
PIK Payment-In-Kind
DM Deutschemarks
See notes to financial statements.
14
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
MAY 31, 1998 (UNAUDITED)
(in thousands except for per share amount)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments at value (cost $119,353) $ 121,559
Short-term obligations 3,325
----------
124,884
Receivable for:
Interest $ 2,108
Investments sold 638
Unrealized appreciation on forward
currency contracts 185
Other 2 2,933
-------- ----------
Total Assets 127,817
LIABILITIES
Payable for:
Distributions 859
Investments purchased 634
Accrued:
Deferred Trustees fees 3
Other 65
--------
Total Liabilities 1,561
----------
NET ASSETS at value for 11,009
shares of beneficial interest outstanding $ 126,256
==========
Net asset value per share $ 11.47
==========
COMPOSITION OF NET ASSETS
Capital paid in $ 122,282
Undistributed net investment income 251
Accumulated net realized gain 1,337
Net unrealized appreciation on:
Investments 2,206
Foreign currency transactions 180
----------
$ 126,256
==========
</TABLE>
See notes to financial statements.
15
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 5,514
Dividends 195
--------
5,709
EXPENSES
Management fee $ 475
Transfer agent 24
Bookkeeping fee 18
Trustees fee 8
Custodian fee 15
Audit fee 20
Legal fee 3
Reports to shareholders 4
Other 31 598
------- --------
Net Investment Income 5,111
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain on:
Investments 1,643
Foreign currency transactions 609
-------
Net Realized Gain 2,252
Net unrealized appreciation (depreciation)
during the period on:
Investments (1,155)
Foreign currency transactions 47
-------
Net Unrealized Depreciation (1,108)
--------
Net Gain 1,144
--------
Increase in Net Assets from Operations $ 6,255
========
</TABLE>
See notes to financial statements.
16
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months
ended Year ended
(in thousands) May 31 November 30
------ -----------
INCREASE IN NET ASSETS 1998 1997
<S> <C> <C>
Operations:
Net investment income $ 5,111 $ 10,074
Net realized gain 2,252 2,029
Net unrealized depreciation (1,108) (2,173)
--------- ---------
Net Increase from Operations 6,255 9,930
Distributions:
From net investment income (5,102) (10,754)
From net realized gains (908) --
--------- ---------
Total Increase (Decrease) 245 (824)
--------- ---------
NET ASSETS
Beginning of period 126,011 126,835
--------- ---------
End of period (including undistributed and net
of overdistributed net investment income of
$251 and $70, respectively) $ 126,256 $ 126,011
========= =========
NUMBER OF FUND SHARES
Outstanding at end of period 11,009 11,009
========= ========
</TABLE>
See notes to financial statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (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, 1998, 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 as
high a level of current income and total return as is consistent with prudent
risk, by diversifying investments primarily in U.S. and foreign government and
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 that are 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.
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 for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
18
<PAGE>
Notes to Financial Statements/May 31, 1998
- --------------------------------------------------------------------------------
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (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. 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.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency transactions includes gains (losses) arising from the
fluctuation in exchange rates 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,
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.
19
<PAGE>
Notes to Financial Statements/May 31, 1998
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
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 and 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 nonreclaimable 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.
20
<PAGE>
Notes to Financial Statements/May 31, 1998
- --------------------------------------------------------------------------------
NOTE 4. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the six months ended May 31, 1998, purchases and
sales of investments, other than short-term obligations, were $68,833,087 and
$66,836,184, respectively, of which none and $439,313 respectively, were U.S.
government securities.
Unrealized appreciation (depreciation) at May 31, 1998, based on cost of
investments for federal income tax purposes was:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 3,322,328
Gross unrealized depreciation (1,321,598)
------------
Net unrealized appreciation $ 2,000,730
===========
</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
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.
NOTE 5. RESULTS OF ANNUAL SHAREHOLDER MEETING (UNAUDITED)
- --------------------------------------------------------------------------------
On May 27, 1998, the Annual Meeting of Shareholders of the Fund was held to
elect two Trustees and to ratify the selection of Price Waterhouse LLP as
independent accountants for the fiscal year ending November 30, 1998. On March
2, 1998, the record date for the Meeting, the Fund had outstanding 11,009,000
shares of beneficial interest. The votes cast at the Meeting were as follows:
<TABLE>
<CAPTION>
Election of two Trustees: AUTHORITY BROKER
FOR WITHHELD NON-VOTES
--- -------- ---------
<S> <C> <C> <C>
Richard W. Lowry 9,207,682 175,715 0
William E. Mayer 9,211,735 171,662 0
</TABLE>
The Board of Trustees also consists of Robert J. Birnbaum, Thomas Bleasdale,
Lora S. Collins, James E. Grinnell, James L. Moody, Jr., John J. Neuhauser
and Robert L. Sullivan.
Ratification of the selection of Price Waterhouse LLP as independent
accountants:
<TABLE>
<S> <C> <C>
FOR: 9,209,777 shares of beneficial interest
being a majority of the shares
represented at the Meeting
AGAINST: 26,576 shares of beneficial interest
ABSTAIN: 147,044 shares of beneficial interest
BROKER NON-VOTES: 0 shares of beneficial interest
</TABLE>
21
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data
throughout each period are as follows:
<TABLE>
<CAPTION>
(Unaudited)
Six months Year ended
ended May 31 November 30
------------ ---------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 11.450 $ 11.520 $ 11.270
------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.492 0.911 1.003
Net realized and
unrealized gain (loss) 0.074 (0.004) 0.242
------------ ------------ ------------
Total from Investment
Operations 0.566 0.907 1.245
------------ ------------ ------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.463) (0.977) (0.995)
From net realized gains (0.083) -- --
------------ ------------ ------------
Total Distributions
Declared to Shareholders (0.546) (0.977) (0.995)
------------ ------------ ------------
Net asset value -
End of period $ 11.470 $ 11.450 $ 11.520
============ =========== =============
Market price per share -
End of period $ 10.750 $ 10.940 $ 10.630
============ ============ ============
Total return - based on
net asset value (a) 5.24%(c) 8.71% 11.94%
============ ============ ============
Total return - based on
market value (b) 3.37%(c) 12.62% 8.30%
============ ============ ============
RATIOS TO AVERAGE NET ASSETS
Expenses 0.94%(d)(e) 0.96%(d) 0.95%(d)
Net investment income 8.08%(d)(e) 8.06%(d) 8.33%(d)
Portfolio turnover 54% (c) 154% 117%
Net assets at end
of period (000) $ 126,256 $ 126,011 $ 126,835
</TABLE>
(a) Total return at net asset value assuming all distributions reinvested.
(b) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(c) Not annualized.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact. Prior years' ratios are net of benefits
received, if any.
(e) Annualized.
- -------------------------------------------------------------------------------
The Fund paid a gain distribution in December 1997 of which 18.69% was derived
from 28% rate gains and 81.31% was derived from 20% rate gains.
- -------------------------------------------------------------------------------
22
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
<CAPTION>
Year ended November 30
----------------------------------------------------------------
1995 1994 1993
<S> <C> <C>
$ 10.410 $ 12.010 $ 11.220
---------- ---------- ----------
0.986 0.980 1.093
0.822 (1.271) 0.777
---------- ---------- ----------
1.808 (0.291) 1.870
---------- ---------- ----------
(0.948) (0.970) (1.080)
-- (0.339) --
---------- ---------- ----------
(0.948) (1.309) (1.080)
---------- ---------- ----------
$ 11.270 $ 10.410 $ 12.010
========== ========== ==========
$ 10.750 $ 10.000 $ 11.880
========== ========== ==========
18.46% (2.67)% 17.19%
========= ========== ==========
17.67% (5.42)% 16.87%
========= ========== ==========
0.97%(d) 0.98% 1.02%
8.73%(d) 8.84% 9.27%
77% 99% 179%
$ 124,097 $ 114,568 $ 132,272
</TABLE>
23
<PAGE>
DIVIDEND REINVESTMENT PLAN
As a shareholder in the Fund you are eligible to participate in the 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 will be mailed by check directly to the record holder by the
dividend paying agent.
If the market price of Fund 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. However, if the market
price of 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. The aggregate market value
of the shares may constitute taxable income to shareholders for federal income
tax purposes.
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.
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 30 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.
24
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
25
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
26
<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
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial InterMarket Income
Trust I.
27
<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 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)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (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
ROBERT L. SULLIVAN
Retired Partner, KPMG Peat Marwick 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)
CI-03/452F-0598 M (7/98) 98/676
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