[Front cover]
[Background photo of newspaper, writing instrument and
calculator with paper tape]
- -----------------------------------------------------
COLONIAL INTERMARKET INCOME TRUST I Semiannual report
- -----------------------------------------------------
May 31, 1999
<PAGE>
- --------------------------------------------------------------------------------
COLONIAL INTERMARKET INCOME TRUST I HIGHLIGHTS
DECEMBER 1, 1998 - MAY 31, 1999
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.
Portfolio Manager Commentary: "As global economic conditions strengthened and
interest rates rose during the past six months, high quality U.S. Treasury and
developed foreign government security values declined significantly. Although
the Trust had relatively large positions in these sectors, falling prices were
partially offset by strong gains in lower-quality U.S. corporate and emerging
market bonds. These bonds benefited from expectations of stronger economies
around the world, once again highlighting the advantage of diversification.
Throughout the period, we made opportunistic purchases to take advantage of
changing economic and market conditions."
-- Laura Ostrander
<TABLE>
<CAPTION>
Colonial InterMarket Income Trust I Performance
<S> <C>
Six-month distributions declared per share $0.460
- --------------------------------------------------------------------------------
Six-month total return, assuming
reinvestment of all distributions
[checkmark] NAV 0.23%
[checkmark] Market Price (4.68)%
- --------------------------------------------------------------------------------
Price per share on 5/31/99
[checkmark] NAV $10.68
[checkmark] Market Price $9.63
</TABLE>
Securities Breakdown
(as of 5/31/99)
......................................
1. High yield corporate......... 40.2%
2. U.S. govt. & agency.......... 27.4%
3.Foreign govt. & agency........ 26.1%
4. Other......................... 6.3%
Government Breakdown
Top Five Foreign Countries
(as of 5/31/99)
...................................
1.United Kingdom.............. 4.1%
2.Greece...................... 3.5%
3.Australia................... 2.6%
4. Mexico..................... 2.1%
5. Brazil......................2.0%
Securities and government breakdowns 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 securities
sectors in the future.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
[Photo of: Stephen E. Gibson]
During the six-months ended May 31, 1999, the bond market experienced
considerable volatility. In early December 1998, continued fears of a global
recession resulted in a "flight to quality" that benefited bond performance.
Treasury securities, considered the safest bond investments, were the top U.S.
bond performers. By the end of May 1999, several events reversed this trend.
Global economies stabilized, and strong U.S. economic growth in the last quarter
of 1998 and the first quarter of 1999 renewed investors' inflation fears. Bond
prices declined, and interest rates rose in the U.S. as well as internationally,
limiting bond market returns.
Although the investment environment was challenging, the Trust's diversification
acted to cushion some of the negative effects of dramatic market swings. The
Trust's three market sectors -- U.S. government bonds, foreign government bonds
and U.S. high-yield corporate bonds -- typically do not rise and fall in sync
with one another. As a result, the Trust's structure has provided shareholders
with a stabilizing effect during periods of market uncertainty, as well as
current income and long-term appreciation potential.
While past performance cannot guarantee future results, for the six-month period
ending May 31, 1999, Colonial InterMarket Income Trust I had a total return of
positive 0.23% versus its Lipper peer group average of negative 0.48%.(1)
As always, we thank you for choosing Colonial InterMarket Income Trust I and for
giving us the opportunity to serve your investment needs.
Respectfully,
[Signature of Stephen E. Gibson]
Stephen E. Gibson
President
July 12, 1999
(1)Source: Lipper, Inc. Lipper averages are based on the Lipper General Bond
category of 14 funds. For the one-year period, the Fund had a return of 1.77%
vs. the Lipper average of 0.73%. For the three-year period, the Fund had an
average annual total return of 8.27% vs. the Lipper average of 7.45%. For the
five-year period, the Fund had a return of 9.12% vs. the Lipper average of
8.08%. Neither the Fund's returns nor the Lipper averages include sales
charges or commissions. Past performance cannot guarantee future results.
Because economic and market conditions change frequently, there can be no
assurance that the trends described herein will continue or come to pass.
- --------------------------------------------------------------------------------
3
<PAGE>
INVESTMENT PORTFOLIO
MAY 31, 1999 (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
BONDS & NOTES - 93.7%
- --------------------------------------------------------------------------------
CORPORATE FIXED INCOME BONDS & NOTES - 40.2% PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSTRUCTION - 0.5%
Building Construction
Nortek, Inc.,
8.875% 8/1/2008 (a) $ 550 $ 550
------
- --------------------------------------------------------------------------------
MANUFACTURING - 14.5%
Chemicals & Allied Products - 2.8%
ClimaChem, Inc.,
10.750% 12/1/2007 500 485
HydroChem Industrial Services, Inc.,
10.375% 8/1/2007 490 436
LaRoche Industries, Inc.,
9.500% 9/15/2007 500 365
PCI Chemicals Canada, Inc.,
9.250% 10/15/2007 (b) 250 210
Sterling Chemicals, Inc.,
11.750% 8/15/2006 500 472
Texas Petrochemical Corp.,
11.125% 7/1/2006 400 364
Trans Resources, Inc.,
10.750% 3/15/2008 1,000 975
------
3,307
------
Electronic & Electrical Equipment - 0.2%
Amphenol Corp.,
9.875% 5/15/2007 250 259
------
Fabricated Metal - 0.9%
Euramax International, PLC,
11.250% 10/01/2006 (c) 1,000 1,040
------
Food & Kindred Products - 1.1%
Chattem, Inc.,
8.875% 4/1/2008 500 498
Chiquita Brands International, Inc.,
10.250% 11/1/2006 750 778
------
1,276
------
Machinery & Computer Equipment - 0.6%
IMO Industries, Inc.,
11.750% 5/1/2006 750 773
------
</TABLE>
4
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Miscellaneous Manufacturing - 3.9%
Eagle-Picher Industries, Inc.,
9.375% 3/1/2008 $ 875 $ 849
ISG Resources, Inc.,
10.000% 4/15/2008 250 256
Newcor, Inc.,
9.875% 3/1/2008 1,000 940
Tekni-Plex, Inc.,
9.250% 3/1/2008 500 492
Thermadyne Holdings Corp.,
9.875% 6/1/2008 850 799
Tokheim Corp.,
11.375% 8/1/2008 (a) 1,000 984
Werner Holdings Co., Inc.,
10.000% 11/15/2007 250 252
------
4,572
------
Paper Products - 1.4%
Repap New Brunswick, Inc.,
10.625% 4/15/2005 750 630
Riverwood International Corp.,
10.625% 8/1/2007 1,000 1,030
------
1,660
------
Primary Metals - 2.4%
Bayou Steel Corp.,
9.500% 5/15/2008 500 496
Keystone Consolidated Industries, Inc.,
9.625% 8/1/2007 500 485
WCI Steel, Inc.,
10.000% 12/1/2004 1,000 1,030
WHX Corp.,
10.500% 4/15/2005 750 750
------
2,761
------
Printing & Publishing - 0.4%
American Lawyer Media, Inc.,
9.750% 12/15/2007 450 458
------
Rubber & Plastic - 0.2%
Burke Industries, Inc.,
10.000% 8/15/2007 300 219
------
Transportation Equipment - 0.6%
LDM Technologies, Inc.,
10.750% 1/15/2007 750 773
------
</TABLE>
5
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE FIXED INCOME BONDS & NOTES - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MINING & ENERGY - 2.8%
Coal Mining - 0.4%
AEI Resources, Inc.,
10.500% 12/15/2005 (a) $ 500 $ 495
------
Oil & Gas Extraction - 2.0%
HS Resources, Inc.,
9.250% 11/15/2006 400 396
Magnum Hunter Resources, Inc.,
10.000% 6/1/2007 750 679
Mariner Energy Inc.,
10.500% 8/1/2006 1,000 885
Petsec Energy, Inc.,
9.500% 6/15/2007 750 397
------
2,357
------
Oil & Gas Field Services - 0.4%
Chiles Offshore Corp.,
10.000% 5/1/2008 500 405
------
- --------------------------------------------------------------------------------
RETAIL TRADE - 1.8%
Food Stores
Pathmark Stores, Inc.:
9.625% 5/1/2003 1,000 1,020
stepped coupon, (10.750% 11/01/99)
(d) 11/1/2003 750 739
Richmont Marketing Specialists, Inc.,
10.125% 12/15/2007 (a) 500 425
------
2,184
------
- --------------------------------------------------------------------------------
SERVICES - 4.3%
Amusement & Recreation - 2.1%
Coast Hotels & Casino, Inc.,
9.500% 4/1/2009 (a) 1,500 1,455
Hollywood Casino Corp.,
11.250% 5/1/2007 (a) 500 499
Regal Cinemas, Inc.,
9.500% 6/1/2008 500 476
------
2,430
------
Business Services - 0.4%
PSINet, Inc.,
10.000% 2/15/2005 500 502
------
Hotels, Camps & Lodging - 1.4%
CapRock Communications Corp.,
11.500% 5/1/2009 (a) 750 733
</TABLE>
6
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Isle of Capri Casinos, Inc.,
8.750% 4/15/2009 (a) $ 1000 $ 940
------
1,673
------
Other Services - 0.4%
Intertek Finance, PLC,
10.250% 11/1/2006 500 485
------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION,
ELECTRIC, GAS & SANITARY SERVICES - 15.4%
Air Transportation - 0.4%
Trans World Airlines, Inc.,
11.375% 3/1/2006 1,000 500
------
Broadcasting - 1.4%
LIN Holdings Corp.,
stepped coupon, (10.000% 03/01/03)
(d) 03/01/08 1,000 650
Young Broadcasting Corp.,
10.125% 2/15/2005 1,000 1,040
------
1,690
------
Cable - 7.0%
Adelphia Communications Corp.,
9.875% 3/1/2007 750 791
Charter Communication Holdings L.L.C.,
stepped coupon, (9.920% 04/01/04)
(d) 4/1/2001 2,000 1,235
Comcast UK Cable Partners Ltd.,
stepped coupon, (11.200% 11/15/00)
(d) 11/15/2007 1,250 1,119
Diamond Cable Co.,
stepped coupon, (10.750% 02/15/02)
(d) 2/15/2007 1,000 775
Echostar Communications Corp.,
9.250% 2/1/2006 (a) 2,000 2,010
Northland Cable Television, Inc.,
10.250% 11/15/2007 250 264
Renaissance Media Group,
stepped coupon, (10.000% 04/15/03)
(d) 04/15/08 875 613
Shop At Home, Inc.,
11.000% 4/1/2005 500 510
Telewest Communication, PLC,
stepped coupon, (11.000% 10/01/00)
(d) 10/01/07 (c) 1,000 885
------
8,202
------
</TABLE>
7
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORPORATE FIXED INCOME BONDS & NOTES - CONT. PAR VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION, COMMUNICATION,
ELECTRIC, GAS & SANITARY SERVICES - CONT.
Communications - 1.4%
Call-Net Enterprises, Inc.,
stepped coupon, (10.800% 05/15/04)
(d) 5/15/2009 $ 500 $ 280
Nextlink Communications, Inc.,
10.750% 6/1/2009 300 300
Price Communications Wireless, Inc., PIK,
11.250% 8/15/2008 530 552
Time Warner Telecom L.L.C.,
9.750% 7/15/2008 500 520
------
1,652
------
Motor Freight & Warehousing - 0.2%
MTL, Inc.,
10.000% 6/15/2006 250 246
------
Telecommunications - 5.0%
Arch Communication Group, Inc.,
12.750% 7/1/2007 250 205
Clearnet Communications, Inc.,
stepped coupon, (14.750% 12/15/00)
(d) 12/15/2005 750 690
Hyperion Telecommunications, Inc.,
stepped coupon, (13.000% 04/15/01)
(d) 4/15/2003 (a) 500 417
McLeodUSA, Inc.,
stepped coupon, (10.500% 03/01/02)
(d) 3/1/2007 500 380
Metrocall, Inc.,
9.750% 11/1/2007 750 570
NTL, Inc.,
stepped coupon, (9.750% 04/15/04)
(d) 4/15/2009 (c) 1,000 921
Price Communications Wireless,
9.125% 12/15/2006 750 780
RCN Corp.,
stepped coupon, (11.125% 10/15/02)
(d) 10/15/2007 750 489
Sprint Spectrum L.P.,
stepped coupon, (12.500% 08/15/01)
(d) 8/15/2006 500 452
Telecorp PCS, Inc.,
stepped coupon, (11.625% 04/15/04)
(d) 4/15/2009 (a) 750 386
</TABLE>
8
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Verio, Inc.,
11.250% 12/1/2008 (a) $ 506 $ 534
------
5,824
------
................................................................................
WHOLESALE TRADE - 0.9%
Nondurable Goods
Revlon Consumer Products Corp.,
9.000% 11/1/2006 1,000 1,005
------
TOTAL CORPORATE FIXED INCOME
BONDS & NOTES (cost of $48,455) 47,298
------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 27.4%
- --------------------------------------------------------------------------------
Government National Mortgage Association:
9.000% 2016 1,092 1,173
10.500% 2015-2020 92 101
11.000% 2018-2019 724 807
------
2,081
------
U.S. Treasury Bonds:
8.750% 5/15/2017 3,125 4,011
11.625% 11/15/2004 (e) 12,602 16,007
12.000% 8/15/2013 (e) 4,952 7,028
------
27,046
------
U.S. Treasury Notes:
8.875% 2/15/2019 1,265 1,659
11.875% 11/15/2003 1,159 1,433
------
3,092
------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (cost of $33,135) 32,219
------
<CAPTION>
FOREIGN GOVERNMENT &
AGENCY OBLIGATIONS - 26.1% CURRENCY
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina Global Bonds,
11.375% 1/30/2017 (f) 1,235 1,078
Dresdner Funding Trust II,
5.790% 6/30/2011 (a) Eu 500 525
Government of France,
8.500% 10/25/2008 Eu 939 1,306
Government of Mexico,
11.375% 9/15/2016 (g) 2,375 2,488
Government of New Zealand,
8.000% 11/15/2006 NZ 3,276 1,943
Hellenic Republic:
8.600% 3/26/2008 GD 346,000 1,303
8.800% 6/19/2007 GD 190,000 714
8.900% 3/21/2004 GD 571,000 2,050
</TABLE>
9
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOREIGN GOVERNMENT &
AGENCY OBLIGATIONS - CONT. CURRENCY PAR VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Kingdom of Norway:
6.750% 1/15/2007 NK $ 3,970 $ 553
9.500% 10/31/2002 NK 7,680 1,102
Kingdom of Sweden,
10.250% 5/5/2003 SK 10,800 1,551
Republic of Argentina,
11.250% 4/10/2006 (h) DM 1,200 691
Republic of Brazil,
10.125% 5/15/2027 (i) 3,220 2,336
Republic of Bulgaria (Brady),
5.875% 7/28/2011 (j) 2,250 1,429
Republic of Colombia,
8.375% 2/15/2027 (k) 685 493
Republic of Panama,
8.875% 9/30/2027 (l) 1,290 1,134
Republic of Venezuela,
9.250% 9/15/2027 (m) 1,800 1,172
Russian Federation,
11.000% 7/24/2018 (n) 1,300 564
United Kingdom Treasury:
9.000% 7/12/2011 KB 410 895
10.000% 2/26/2001 KB 645 1,117
10.000% 9/8/2003 KB 1,500 2,844
United Mexican States,
10.375% 1/29/2003 (o) DM 980 571
Western Australia Treasury Corp.,
10.000% 7/15/2005 A$ 3,571 2,791
------
TOTAL FOREIGN GOVERNMENT & AGENCY
OBLIGATIONS (cost of $32,771) 30,650
------
<CAPTION>
PREFERRED STOCKS - 2.5% SHARES
- -------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE, INSURANCE & REAL ESTATE - 0.2%
Depository Institutions
California Federal Bancorp, Corp.,
9.125%, Series A 9 228
------
- -------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION,
ELECTRIC, GAS & SANITARY SERVICES - 2.3%
Broadcasting - 0.2%
PriMedia Inc., 9.200% 3 299
------
Telecommunication - 2.1%
Concentric Network Corp., 1 546
13.500%, PIK
</TABLE>
10
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Nextel Communications, Inc.:
11.125%, PIK 1 $ 555
--------
13.000%, PIK 1 1,320
--------
2,421
--------
TOTAL PREFERRED STOCKS (cost of $2,877) 2,948
--------
WARRANTS (p)(q) - 0.0%
- -------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION,
ELECTRIC, GAS & SANITARY SERVICES - 0.0%
Communications - 0.0%
Clearnet Communications, Inc.,
(expires 09/15/05) 2 20
--------
Telecommunications - 0.0%
MetroNet Communications Corp.,
(expires 08/15/07) (a) (r) 20
--------
TOTAL WARRANTS (cost of $15) 40
--------
COMMON STOCKS (q) - 0.0%
- -------------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION,
ELECTRIC, GAS & SANITARY SERVICES - 0.0%
Motor, Freight & Warehousing
St. Johnsbury Trucking Co., 16 (r)
Sun Carriers, Inc., 65 1
--------
TOTAL COMMON STOCKS (cost of $180) 1
--------
TOTAL INVESTMENTS (cost of $117,433)(s) 113,156
--------
<CAPTION>
SHORT-TERM OBLIGATIONS - 2.8% PAR
- -------------------------------------------------------------------------------------
<S> <C> <C>
Repurchase agreement with ABN AMRO Chicago Corp.,
dated 05/28/99, due 06/01/99 at 5.200%, collateralized by
U.S. Treasury notes with various maturities to 2004,
market value $3,346 (repurchase proceeds $3,289) $3,287 3,287
--------
FORWARD CURRENCY CONTRACTS (t) - 0.1% 102
- -------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES - 0.9% 1,018
- -------------------------------------------------------------------------------------
NET ASSETS - 100.0% $117,563
--------
</TABLE>
11
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At May 31, 1999,
the value of these securities amounted to $9,973 or 8.5% 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) Currently zero coupon. Shown parenthetically is the next interest rate to be
paid and the date the Trust will begin accruing this rate.
(e) These securities, or a portion thereof, with a total market value of $12,764
are being used to collateralize the forward currency contracts shown below.
(f) This is an Argentinean security. Par amount is stated in U.S. dollars.
(g) This is a Mexican security. Par amount is stated in U.S. dollars.
(h) This is an Argentinean security. Par amount is stated in German
Deutschemarks.
(i) is a Brazilian security. Par amount is stated in U.S. dollars.
(j) This is a Bulgarian security. Par amount is stated in U.S. dollars.
(k) This is a Colombian security. Par amount is stated in U.S. dollars.
(l) This is a Panamanian security. Par amount is stated in U.S. dollars.
(m) This is a Venezuelan security. Par amount is stated in U.S. dollars.
(n) This is a Russian security. Par amount is stated in U.S. dollars.
(o) This is a Mexican security. Par amount is stated in German Deutschemarks.
(p) Non-income producing.
(q) Represents fair value as determined in good faith under the direction of the
Trustees.
(r) Rounds to less than one.
(s) Cost for federal income tax purposes is $117,654.
(t) As of May 31, 1999, the Trust had entered into the following forward
currency exchange contracts:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Contracts In Exchange Settlement (Depreciation)
to Deliver For Date (U.S$)
- ---------------- --------------- ---------- --------------
<S> <C> <C> <C>
A$ 2,069 US$ 1,346 06/22/1999 $ (4)
SK 13,270 US$ 1,594 06/30/1999 48
KB 2,785 US$ 4,489 06/09/1999 37
NZ 3,730 US$ 2,019 06/09/1999 21
----
$102
-----
</TABLE>
12
<PAGE>
Investment Portfolio/May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Summary of Securities
by Country/Currency Currency Value % of Total
- ----------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 79,975 70.7
United Kingdom KB 7,702 6.8
Greece GD 4,067 3.6
Mexico 3,059 2.7
Australia A$ 2,791 2.5
Brazil 2,336 2.1
New Zealand NZ 1,943 1.7
Argentina Ar 1,769 1.5
Norway NK 1,655 1.5
Sweden SK 1,551 1.4
Bulgaria 1,429 1.3
France Eu 1,306 1.1
Venezuela 1,172 1.0
Panama 1,134 1.0
Russia 564 0.5
Colombia 493 0.4
Canada C$ 210 0.2
-------- ----------
$113,156 100.0
-------- ----------
</TABLE>
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------- ----
PIK Payment-In-Kind
DM German Deutschemarks
Eu euro
See notes to financial statements.
13
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
MAY 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except for per share amount)
<S> <C> <C>
ASSETS
Investments at value (cost $117,433) $ 113,156
Short-term obligations 3,287
----------
116,443
Unrealized appreciation on forward
currency contracts $ 106
Receivable for:
Interest 2,132
Other 5 2,243
------- ----------
Total Assets 118,686
LIABILITIES
Unrealized depreciation on forward
currency contracts 4
Payable for:
Investments purchased 300
Distributions 815
Accrued:
Deferred Trustees fees 4
Other
-------
Total Liabilities 1,123
----------
NET ASSETS at value for 11,009
shares of beneficial interest outstanding $ 117,563
----------
Net asset value per share $ 10.68
----------
+COMPOSITION OF NET ASSETS
Capital paid in $ 122,282
Undistributed net investment income 24
Accumulated net realized loss (561)
Net unrealized appreciation (depreciation) on:
Investments (4,277)
Foreign currency transactions 95
----------
$ 117,563
----------
</TABLE>
See notes to financial statements.
14
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $ 5,402
Dividends 166
----------
5,568
EXPENSES
Management fee $ 451
Transfer agent 23
Bookkeeping fee 17
Trustees fee 6
Custodian fee 10
Audit fee 18
Legal fee 3
Reports to shareholders 6
Other 27 561
------- ----------
Net Investment Income 5,007
----------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments (532)
Foreign currency transactions 163
-------
Net Realized Loss (369)
Net change in unrealized depreciation
during the period on:
Investments (4,478)
Foreign currency transactions (23)
-------
Net Unrealized Depreciation (4,501)
----------
Net Loss (4,870)
----------
Increase in Net Assets from Operations $ 137
----------
</TABLE>
See notes to financial statements.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six months
ended Year ended
(in thousands) May 31 November 30
---------------- ---------------
INCREASE (DECREASE) IN NET ASSETS 1999 1998
<S> <C> <C>
Operations:
Net investment income $ 5,007 $ 10,231
Net realized gain (loss) (369) 585
Net unrealized depreciation (4,501) (3,175)
---------------- ---------------
Net Increase from Operations 137 7,641
Distributions:
From net investment income (5,064) (10,230)
In excess of net investment income - (26)
From net realized gains - (305)
In excess of net realized gains - (601)
---------------- ---------------
Total Decrease (4,927) (3,521)
---------------- ---------------
NET ASSETS
122,490 126,011
---------------- ---------------
End of period (including undistributed
net investment income of $24 and $81,
respectively) $ 117,563 $ 122,490
---------------- ---------------
NUMBER OF TRUST SHARES
Outstanding at end of period 11,009 11,009
---------------- ----------------
</TABLE>
See notes to financial statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
................................................................................
In the opinion of management of Colonial InterMarket Income Trust I (the Trust),
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, 1999, and the results of its operations, the changes in its net
assets and the financial highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
................................................................................
Organization: The Trust is a Massachusetts business trust, registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end,
management investment company. The Trust'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 Trust 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 Trust 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.
17
<PAGE>
Notes to Financial Statements/May 31, 1999
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
................................................................................
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 Trust 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 Trust to subsequently invest at less advantageous prices.
Federal income taxes: Consistent with the Trust'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 Trust'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 Trust 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 Trust 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.
18
<PAGE>
Notes to Financial Statements/May 31, 1999
- --------------------------------------------------------------------------------
The Trust 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 Trust'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 Trust 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 Trust'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 Trust. The Trust may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
................................................................................
Management fee: Colonial Management Associates, Inc. (the Advisor) is the
investment Advisor of the Trust and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.75% annually of the Trust's
average weekly net assets.
Bookkeeping fee: The Advisor provides bookkeeping and pricing services for
$18,000 per year plus 0.0233% of the Trust's average net assets over $50
million.
Other: The Trust pays no compensation to its officers, all of whom are employees
of the Advisor.
The Trust'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 Trust's assets.
19
<PAGE>
Notes to Financial Statements/May 31, 1999
- --------------------------------------------------------------------------------
NOTE 4. PORTFOLIO INFORMATION
................................................................................
Investment activity: During the six months ended May 31, 1999, purchases and
sales of investments, other than short-term obligations, were $34,920,973.44 and
$38,476,341.44, respectively, of which $1,803,532.81 and $4,422,761.24
respectively, were U.S. government securities.
Unrealized appreciation (depreciation) at May 31, 1999, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $1,724,957
Gross unrealized depreciation (6,223,093)
-------------
Net unrealized depreciation $(4,498,136)
-------------
Capital loss carryforwards: At November 30, 1998, capital loss carryforwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
------------- -------------
2006 $ 58,000
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
Other: 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 26, 1999, the Annual Meeting of Shareholders of the Trust was held to
elect eight Trustees, to approve an Amended and Restated Management Agreement
providing for a change in the method of calculating the fee payable to the
Advisor and to ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending November 30, 1999. The Meeting was
adjourned to June 16, 1999 in connection with the approval of an Amended and
Restated Management Agreement providing for a change in the method of
calculating the fee payable to the Advisor. On March 1, 1999, the record date
for the Meeting, the Trust had outstanding 11,009,000 shares of beneficial
interest. The votes cast at these Meetings were as follows:
20
<PAGE>
Notes to Financial Statements/May 31, 1999
- --------------------------------------------------------------------------------
1. Election of eight Trustees:
AUTHORITY
FOR WITHHELD
--- --------
Robert Birnbaum 8,866,914 165,693
John V. Carberry 8,877,858 154,748
James E. Grinnell 8,878,121 154,486
Salvatore Macera 8,876,377 156,230
James L. Moody, Jr. 8,878,682 153,925
Robert L. Sullivan 8,875,609 156,998
Thomas E. Stitzel 8,878,391 154,215
Ann-Lee Verville 8,875,618 156,989
The Board of Trustees also consists of Tom Bleasdale, Lora S. Collins, Richard
L. Lowry, William E. Mayer and John J. Neuhauser.
2. To approve an Amended and Restated Management Agreement providing for a
change in the mehtod of calculating the fee payable to the Advisor.
FOR: 4,705,400 shares of beneficial interest
being a majority of the shares
represented at the Meeting
AGAINST: 578,580 shares of beneficial interest
ABSTAIN: 294,844 shares of beneficial interest
BROKER NON-VOTES: 1,378,618
3. Ratification of the selection of PricewaterhouseCoopers LLP:
FOR: 8,842,347 shares of beneficial interest
being a majority of the shares
represented at the Meeting
AGAINST: 52,830 shares of beneficial interest
ABSTAIN: 137,429 shares of beneficial interest
BROKER NON-VOTES: 0
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
ended
May 31 Year ended November 30
---------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
Net asset value -
Beginning of period $ 11.130 $ 11.450 $ 11.520
----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.455 0.945 0.911
Net realized and
unrealized (loss) (0.445) (0.251) (0.004)
----------- ----------- -----------
Total from Investment
Operations 0.010 0.694 0.907
----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.460) (0.930) (0.977)
In excess of net investment income - (0.002) -
From net realized gains (0.028) -
In excess of net realized gains (0.054) -
----------- ----------- -----------
Total Distributions
Declared to Shareholders (0.460) (1.014) (0.977)
----------- ----------- -----------
Net asset value -
End of period $ 10.680 $11.130 $ 11.450
----------- ----------- -----------
Market price per share -
End of period $ 9.625 $10.562 $ 10.940
----------- ----------- -----------
Total return - based on
net asset value (a) 0.23% 6.85% 8.71%
----------- ----------- -----------
Total return - based on
market value (b) (4.68%) 6.26% 12.62%
----------- ----------- -----------
RATIOS TO AVERAGE NET ASSETS
Expenses (c) 0.93% (d) 0.93% 0.96%
Net investment income (c) 8.32% (d) 8.22% 8.06%
Portfolio turnover 30% 99% 154%
Net assets at end
of period (000) $ 117,563 $ 122,490 $ 126,011
</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) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(d) Annualized.
1998 Federal Tax Information (unaudited)
An average of 25% of the Fund's investments, as of the end of each quarter, were
in direct obligations of the U.S. Treasury.
Approximately 25% of the Fund's distributions (18% of gross income) were derived
from interest on direct investments in U.S. Treasury bonds, notes, and bills.
22
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
<CAPTION>
Year ended November 30
- -------------------------------------------------
1996 1995 1994
<S> <C> <C>
$ 11.270 $ 10.410 $ 12.010
- ----------- ----------- -----------
1.003 0.986 0.980
0.242 0.822 (1.271)
- ----------- ----------- -----------
1.245 1.808 (0.291)
- ----------- ----------- -----------
(0.995) (0.948) (0.970)
-- -- (0.339)
- ----------- ----------- -----------
(0.995) (0.948) (1.309)
- ----------- ----------- -----------
$ 11.520 $ 11.270 $ 10.410
- ----------- ------------ -----------
$ 10.630 $ 10.750 $ 10.000
- ----------- ----------- -----------
11.94% 18.46% (2.67)%
- ----------- ----------- -----------
8.30% 17.67% (5.42)%
- ----------- ----------- -----------
0.95% 0.97% 0.98%
8.33% 8.73% 8.84%
117% 77% 99%
$ 126,835 $ 124,097 $ 114,568
</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 Trust 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>
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25
<PAGE>
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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 V. CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
CI-03/300H-0599 (7/99) 99/809
- --------------------------------------------------------------------------------
