1
COLONIAL NEW YORK
INSURED MUNICIPAL FUND
ANNUAL REPORT
NOVEMBER 30, 2000
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President's Message
DEAR SHAREHOLDER:
I am pleased to present to you this annual report for the Colonial New York
Insured Municipal Fund for the 12-month period ended November 30, 2000.
We have seen two distinct cycles in the bond market over the past 12 months.
During the first half of this year, the economy was continuing its rapid growth.
In its efforts to stave off inflation, the Federal Reserve Board raised the
Federal Funds rate. There was an increase in oil prices as a result of the OPEC
arrangement to cut production. In response to these changes, the market was
rather volatile. During the second half of the year, the economic indicators
reflected a slowing of economic growth. Housing starts were at their lowest
levels in two years. Auto manufacturers announced cuts in production. Consumer
spending softened. The bond market stabilized. The municipal market, for the
most part, mirrored the Treasury market and experienced a drop in yields.
Thank you for choosing Colonial New York Insured Municipal Fund and for giving
Liberty Funds the opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
January 11, 2001
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NOT FDIC MAY LOSE VALUE
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INSURED NO BANK GUARANTEE
---------------------------
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
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HIGHLIGHTS
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> FUND OUTPERFORMS BENCHMARK
At the end of its first full year of operation, we are pleased to report
that the Fund outperformed its benchmark index. For the fiscal year that
ended on November 30, 2000, the Fund posted a total return of 11.80% based
on net asset value (NAV), while the return for the Lehman Brothers
Municipal Bond Index was 8.18%.
> FUND SEEKS TO REDUCE TAX CONSEQUENCES
We employed a tax-loss-swap strategy during the first half of this period
in order to capitalize on unrealized losses. Losses occurred when bond
prices went down in response to a rise in interest rates. Under current tax
codes, we are able to take seven years to use the loss to offset any future
realized gains, thus reducing adverse tax consequences to shareholders.
> A STRONG ECONOMY IN NEW YORK
New York City and State are arguably in their best financial and economic
position since the late 1980s. A recent positive development regarding the
state's fiscal condition is the newly enacted state budget which begins to
use accumulated surplus to begin paying down debt; however, given the
magnitude of the state's debt burden, this process will need to continue
over many years before it has a noticeable impact on the state's debt
burden. New York City has made significant economic and financial gains
over the past eight years as strong financial market performance has
propelled strong revenue growth for the city's coffers. While upstate New
York has experienced some economic stabilization in recent years, economic
conditions remain well below historical levels and remain susceptible to
further erosion should the cyclical manufacturing sector come under
pressure.
William C. Loring, Jr.
Brian M. Hartford
-- Co-Portfolio Managers
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or a loss on sale.
Tax-exempt investing offers current tax-free income, but also involves certain
risks. The value of the Fund will be affected by interest rate changes and the
creditworthiness of issues held in the Fund. The municipal bond management team
identifies problems and reacts quickly to market changes.
The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that
tracks the performance of the municipal bond market. Unlike mutual funds,
indexes are not investments and do not incur fees or expenses. It is not
possible to invest in an index.
QUALITY BREAKDOWN AS OF 11/30/00
AAA 2.0%
AA 15.6%
A 4.9%
BBB 3.3%
Non-rated 73.7%
Cash equivalents 0.5%
Quality breakdowns are calculated as a percentage of total investments,
including short-term obligations. Ratings shown in the quality breakdown
represent the highest rating assigned to a particular bond by one of the
following nationally-recognized rating agencies: Standard & Poor's Corporation,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc. Sector
breakdowns are calculated as a percentage of net assets.
Because the Fund is actively managed, there can be no guarantee the Fund will
continue to maintain this quality breakdown or invest in these sectors in the
future.
12-MONTH CUMULATIVE TOTAL RETURNS, FOR THE PERIOD ENDED 11/30/00
NAV 11.80%
---------------------------------------------
Market price 3.58%
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PRICE PER SHARE AS OF 11/30/00
NAV $14.93
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Market price $14.63
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A portion of the Fund's income may be subject to the alternative minimum tax.
The Fund may at times purchase tax-exempt securities at a discount from their
original issue price. Some or all of this discount may be included in the Fund's
ordinary income, and any market discount is taxable when distributed.
TOP INDUSTRY SECTORS 11/30/00
Special Non Property Tax 14.3%
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Education 12.7%
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State Appropriated 9.6%
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Hospital 8.5%
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Airport 8.4%
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Toll Facilities 7.3%
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Water/Sewer 7.0%
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Muni Electric 5.1%
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Local General Obligations 4.7%
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State General Obligations 3.9%
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INVESTMENT PORTFOLIO
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November 30, 2000 (In thousands-New York unless stated)
MUNICIPAL BONDS - 97.7% PAR VALUE
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EDUCATION - 12.7%
EDUCATION
Schenectady Industrial Development Agency,
Union College Project, Series 1999 A,
5.450% 12/01/29 $1,000 $ 983
St. Lawrence County Industrial Development
Agency, St. Lawrence University, Series 1998 A,
5.375% 7/01/18 700 698
State Dormitory Authority:
New York University:
Series 1998 A, 5.750% 07/01/27 1,500 1,579
Series 1999, 6.000% 07/01/28 500 518
Cooper Union, Series 1999, 6.000% 07/01/19 1,000 1,056
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4,834
------
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HEALTHCARE - 12.6%
CONGREGATED HEALTHCARE FACILITY - 1.4%
State Dormitory Authority, Miriam Osborn
Memorial Home, Series 2000 B,
6.875% 07/01/19 300 333
Suffolk County Industrial Development Agency,
Jefferson Ferry, Series 1999 A,
7.200% 11/01/19 200 196
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529
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HOSPITALS - 8.5%
Mount Sinai Health Obligation Group,
Series 2000, 6.500% 07/01/25 200 207
New Island Hospital, Series 1999 B,
5.750% 07/01/19 1,000 1,024
State Dormitory Authority,
Catholic Health Services of Long Island,
Series 1999, 5.500% 07/01/29 1,000 980
Sloan Kettering Cancer Center, Series 1998,
5.500% 07/01/23 1,000 1,021
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3,232
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NURSING HOME - 2.7%
Syracuse Housing Authority, Loretto Rest,
Series 1997 A, 5.700% 08/01/27 1,000 1,007
------
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HOUSING - 3.0%
ASSISTED LIVING/SENIOR - 0.4%
Huntington Housing Authority, Gurwin Jewish
Senior Center, Series 1999, 6.000% 05/01/29 200 171
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SINGLE FAMILY - 2.6%
State Mortgage Agency, Series 1999 8-2,
5.650% 04/01/30 $1,000 $ 983
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OTHER - 1.5%
POOL/BOND BANK
State Environmental Facilities Corp.,
Series 2000, 5.700% 07/15/22 540 552
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OTHER REVENUE - 2.7%
RECREATION
New York City Cultural Trust, American Museum
of Natural History, Series 1997 A,
5.650% 04/01/22 1,000 1,010
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TAX-BACKED - 32.5%
LOCAL GENERAL OBLIGATIONS - 4.7%
New York City:
Series 1998 B, 5.375% 08/01/22 1,000 987
Series 1998 D, 5.250% 08/01/21 500 486
PR Commonwealth of Puerto Rico, Municipal
Finance Agency, Series 1999 A,
10/1/26 5.500% 08/01/23 300 304
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1,777
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SPECIAL NON-PROPERTY TAX - 14.3%
Metropolitan Transportation Authority,
Series 1998 A, 5.250% 07/01/28 (a) 1,000 960
New York City Transitional Finance Authority,
Series 2000 A, 5.750% 08/15/24 1,500 1,532
PR Commonwealth of Puerto Rico:
Highway & Transportation Authority,
Series 1996 Y, 5.500% 07/01/36 1,500 1,502
Public Building Authority, Series 1997 B,
5.000% 07/01/27 1,000 950
VI Virgin Islands Public Finance Authority,
Series 1999, 6.500% 10/01/24 500 518
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5,462
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STATE APPROPRIATED - 9.6%
State Dormitory Authority:
City University of New York, Series 1997 I,
5.125% 07/01/27 1,000 939
State University Dorm Facilities,
Series 1999 C, 5.500% 07/01/29 1,700 1,690
State Urban Development Corp., Series 1999 C,
6.000% 01/01/29 1,000 1,046
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3,675
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See notes to investment portfolio.
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INVESTMENT PORTFOLIO (CONTINUED)
---------------------------------------------
November 30, 2000 (In thousands-New York unless stated)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
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TAX-BACKED (CONTINUED)
STATE GENERAL OBLIGATIONS - 3.9%
PR Commonwealth of Puerto Rico, Series 1997,
5.375% 07/01/25 $ 1,500 $ 1,503
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TRANSPORTATION - 18.2%
AIRPORT - 8.4%
Albany County Airport Authority, Series 1997,
5.500% 12/15/19 1,500 1,482
Niagara Frontier Transportation Authority,
Series 1999 A, 5.625% 04/01/29 1,750 1,732
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3,214
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TOLL FACILITIES - 7.3%
State Thruway Authority, Series 1998 E,
5.000% 01/01/25 1,355 1,255
Triborough Bridge & Tunnel Authority,
Series 1992 Y, 6.125% 01/01/21 1,390 1,531
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2,786
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TRANSPORTATION - 2.5%
New York City Transportation Authority,
Series 1999 A, 5.250% 01/01/29 1,000 959
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UTILITY - 14.5%
INDEPENDENT POWER PRODUCER - 2.4%
New York City Industrial Development Agency,
Brooklyn Navy Yard Partners, Series 1997,
5.650% 10/01/28 300 268
Port Authority of New York & New Jersey,
KIAC Partners, Series 1996 IV,
6.750% 10/01/19 200 205
PR Commonwealth of Puerto Rico, Industrial
Educational, Medical & Environmental
Cogeneration Facilities, AES Project,
Series 2000, 6.625% 06/01/26 250 258
Suffolk County Industrial Development Agency,
Nissequogue Cogen Partners, Series 1998,
5.500% 01/01/23 200 178
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909
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MUNICIPAL ELECTRIC - 5.1%
GM Guam Power Authority, Series 1999 A,
5.250% 10/01/34 1,000 973
Long Island Power Authority, Series 1998 A,
5.250% 12/01/26 1,000 959
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1,932
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WATER & SEWER - 7.0%
Albany Municipal Water Finance Authority,
Series 2000 A, 6.375% 12/01/17 $ 200 $ 220
Buffalo Municipal Water Finance Authority,
Series 1999, 6.000% 07/01/29 1,450 1,523
Clifton Park Water Authority, Series 1999 A,
5.000% 10/01/29 1,000 920
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2,663
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TOTAL MUNICIPAL BONDS 37,198
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(cost of $35,060)(b)
SHORT-TERM OBLIGATIONS - 0.5%
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VARIABLE RATE DEMAND NOTES (c)
New York City Municipal Water Finance
Authority, Series 1995 A,
4.500% 06/15/25 200 200
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TOTAL SHORT-TERM OBLIGATIONS 200
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OTHER ASSETS & LIABILITIES, NET - 1.8% 698
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NET ASSETS - 100% $38,096
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NOTES TO INVESTMENT PORTFOLIO:
(a) This security, or a portion thereof, with a total market value of $960, is
being used to collateralize open futures contracts.
(b) Cost for federal income tax purposes is the same.
(c) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specific dates. This security is payable on
demand and is secured by either letters of credit or other credit support
agreements from banks. The rate listed is as of November 30, 2000.
Short futures contract open on November 30, 2000:
Par Value Unrealized
covered by Expiration depreciation
Type contracts month at 11/30/00
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Municipal Bond $3,900 March $(40)
See notes to investment portfolio.
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STATEMENT OF ASSETS AND LIABILITIES
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November 30, 2000
(In thousands except for per share amount)
ASSETS
Investments at value (cost $35,060) $ 37,198
Short-term obligations 200
--------
37,398
Cash $ 63
Receivable for:
Interest 757
Other 3 823
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Total Assets 38,221
LIABILITIES
Payable for:
Variation margin on futures 22
Distributions -- preferred shares 8
Accrued:
Bookkeeping fee (a)
Transfer agent fee 10
Payable to Advisor 58
Other 27
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Total Liabilities 125
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NET ASSETS $ 38,096
========
COMPOSITION OF NET ASSETS
Auction Preferred shares (1 share issued
and outstanding at $25,000 per share) $ 14,100
Capital paid in -- common shares 22,688
Undistributed net investment income 47
Accumulated net realized loss (837)
Net unrealized appreciation (depreciation) on:
Investments 2,138
Open futures contracts (40)
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$ 38,096
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Net Assets at value for 1,607 common
shares of beneficial interest outstanding $ 23,996
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Net Asset value per common share $ 14.93
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Net Assets at value including undeclared
dividends for 1 preferred share outstanding $ 14,100
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(a) Rounds to less than one.
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STATEMENT OF OPERATIONS
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For the Year Ended November 30, 2000
(In thousands)
INVESTMENT INCOME
Interest $ 2,105
EXPENSES
Transfer agent fee $ 25
Bookkeeping fee 18
Trustees fee 5
Custodian fee 1
Audit fee 24
Legal fee 1
Reports to shareholders 3
Preferred shares remarketing
commissions 33
Other 5
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Total Expenses 115
Fees and expenses waived or
borne by the Advisor (42) 73
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Net Investment Income 2,032
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NET REALIZED & UNREALIZED GAIN (LOSS) ON
PORTFOLIO POSITIONS
Net realized loss on:
Investments (72)
Closed futures contracts (765)
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Net realized loss (837)
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Net change in unrealized appreciation/
depreciation during the period on:
Investments 2,270
Open futures contracts (40)
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Net change in unrealized
appreciation/depreciation 2,230
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Net Gain 1,393
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Increase in Net Assets from Operations $ 3,425
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See notes to financial statements.
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STATEMENT OF CHANGES IN NET ASSETS
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(In thousands)
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
------------ ------------
INCREASE (DECREASE) IN NET ASSETS 2000 1999(a)
Operations:
Net investment income $ 2,032 $ 33
Net realized loss (837) --
Net change in unrealized
appreciation/depreciation 2,230 (132)
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Net Increase (Decrease)
from Operations 3,425 (99)
-------- --------
Distributions:
From net investment income --
common shares (1,484) --
From net investment income --
preferred shares (534) --
-------- --------
1,407 (99)
Fund Share Transactions:
Common share initial offering -- 22,972
Preferred share initial offering 13,813
(net of $287 commission and
offering costs)
Value of distributions reinvested --
common shares 3 --
-------- --------
Net Increase from Fund Share Transactions 13,816 22,972
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Total Increase 15,223 22,873
NET ASSETS
Beginning of period 22,873 --
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End of period (including undistributed
net investment income of $47 and
$33, respectively) $ 38,096 $ 22,873
======== ========
(a) The Fund commenced investment operations on November 19, 1999.
(b) Rounds to less than one.
YEAR ENDED PERIOD ENDED
NOVEMBER 30, NOVEMBER 30,
------------ ------------
NUMBER OF FUND SHARES 2000 1999(a)
Common:
Issued in initial offering -- 1,607
Issued for distributions reinvested (b) --
Outstanding at
Beginning of period 1,607 --
----- -----
End of period 1,607 1,607
----- -----
Preferred:
Issued in initial offering 1 --
Outstanding at
Beginning of period -- --
----- -----
End of period 1 --
----- -----
See notes to financial statements.
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NOTES TO FINANCIAL STATEMENTS
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NOTE 1. ACCOUNTING POLICIES
ORGANIZATION:
Colonial New York Insured Municipal Fund (the Fund), is a Massachusetts business
trust registered under the Investment Company Act of 1940, as amended, as a
nondiversified, closed-end management investment company. The Fund's investment
objective is to provide current income exempt from regular federal income tax
and New York State and City personal income taxes. The Fund authorized an
unlimited number of shares.
On November 19, 1999 the Fund completed the offering of 1,600,000 common shares
at a price of $15.00 per share, raising $22,872,000, net of underwriting and
offering costs.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS:
Debt securities generally are valued by a pricing service based upon market
transactions for normal, institutional-size trading units of similar securities.
When management deems it appropriate, an over-the-counter or exchange bid
quotation is used.
Futures contracts are valued based on the difference between the last sale price
and the opening price of the contract.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (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 and tax-exempt 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; market discount is not accreted. Premium is
amortized against interest income with a corresponding decrease in the cost
basis.
Effective December 1, 2001, the Fund will adopt the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and will be required to
amortize premium and discount on all debt securities. Upon the effective date,
this accounting principle change will not have an impact on total net assets but
will result in a reclassification between cost of securities held and net
unrealized appreciation/depreciation. The Fund currently has not determined the
impact of the adoption of the new accounting policy.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions to common and preferred 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.
Distributions to preferred shareholders are recorded daily and are payable at
the end of each dividend period. Each dividend payment period for the Auction
Preferred Shares (APS) is generally seven days. The applicable dividend rate for
the Auction Preferred Shares on November 30, 2000 was 4.15%. For the year ended
November 30, 2000, the Trust paid dividends to Auction Preferred shareholders
amounting to $533,848 representing an average APS dividend rate of 3.98%.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE:
Colonial Management Associates, Inc. (the Advisor) is the investment advisor of
the Fund and furnishes accounting and other services and office facilities for a
monthly fee equal to 0.65% annually of the Fund's average weekly net assets. For
the period from the commencement of the Fund's operations through January 1,
2001, the Advisor has agreed to waive all of its management fees. For the period
from January 2, 2001 through November 30, 2004, the Advisor has agreed to waive
a portion of its fee so that it will not exceed 0.35% annually.
BOOKKEEPING FEE:
The Advisor provides bookkeeping and pricing services for a monthly fee of
$1,500 for the first $50 million of the Fund's assets, plus a monthly percentage
fee of 0.0233% annually of the next $950 million.
EXPENSE LIMITS:
The Advisor has voluntarily agreed to waive fees and bear certain Fund expenses
to the extent that total expenses (exclusive of management fees, brokerage
commissions, interest, preferred dividends, taxes and extraordinary expenses, if
any) exceed 0.20% annually of the Fund's average net assets. This arrangement
may be modified or terminated by the advisor at any time.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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OTHER:
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PREFERRED SHARE OFFERING
On December 20, 1999, the Fund offered and currently has outstanding 564 Auction
Preferred Shares. The Auction Preferred Shares are redeemable at the option of
the Fund on any dividend payment date at the redemption price of $25,000 per
share, plus an amount equal to any dividends accumulated on a daily basis unpaid
through the redemption date (whether or not such dividends have been declared).
Total proceeds, net of commissions, of $13,959,000, were received upon
completion of the offering.
Costs incurred by the Fund in connection with the offering of the Auction
Preferred Shares totaling $146,366 were recorded as a reduction of capital paid
in excess of par applicable to common shares.
Under the Investment Company Act of 1940, the Fund is required to maintain asset
coverage of at least 200% with respect to the Auction Preferred Shares as of the
last business day of each month in which any Auction Preferred Shares are
outstanding. Additionally, the Fund is required to meet more stringent asset
coverage requirements under the terms of the Auction Preferred Shares and in
accordance with the guidelines prescribed by the rating agencies. Should these
requirements not be met, or should dividends accrued on the Auction Preferred
Shares not be paid, the Fund may be restricted in its ability to declare
dividends to common shareholders or may be required to redeem certain of the
Auction Preferred Shares. At November 30, 2000 there were no such restrictions
on the Fund.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
During the year ended November 30, 2000, purchases and sales of investments,
other than short-term obligations, were $25,098,628 and $11,178,048,
respectively.
Unrealized appreciation (depreciation) at November 30, 2000, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $ 2,143,269
Gross unrealized depreciation (4,866)
-----------
Net unrealized appreciation $ 2,138,403
===========
CAPITAL LOSS CARRYFORWARDS:
At November 30, 2000, capital loss carryforwards available (to the extent
provided in regulations) to offset future realized gains were approximately as
follows:
YEAR OF EXPIRATION CAPITAL LOSS CARRYFORWARD
------------------ -------------------------
2008 $390,000
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 risks arising from geographic concentration in any state.
Certain revenue or tax related events in a state may impair the ability of
certain issuers of municipal securities to pay principal and interest on their
obligations.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
The Fund may invest in municipal and Treasury bond futures contracts and
purchase and write options on futures. The Fund may invest in these instruments
to hedge against the effects of changes in the value of portfolio securities due
to anticipated changes in interest rates and/or market conditions, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund and not for trading
purposes. The use of futures contracts and options involves certain risks, which
include (1) imperfect correlation between the price movement of the instruments
and the underlying securities, (2) inability to close out positions due to
different trading hours, or the temporary absence of a liquid market, for either
the instrument or the underlying securities or (3) an inaccurate prediction by
the Advisor of the future direction of interest rates. Any of these risks may
involve amounts exceeding the amount recognized in the Fund's Statement of
Assets and Liabilities at any given time.
7
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FINANCIAL HIGHLIGHTS
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Selected per share data, total return, ratios and supplemental data throughout
each period are as follows (common shares unless otherwise noted):
PERIOD ENDED
YEAR ENDED NOVEMBER 30,
NOVEMBER 30, 2000 1999(a)
-----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.240 $ 14.33
----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.265(i) 0.021
Offering costs -- common shares -- (0.030)
Commission and offering costs -- preferred shares (0.179) --
Net realized and unrealized gain (loss) 0.860 (0.081)
----------- -----------
Total from Investment Operations 1.946 (0.090)
----------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- common shares (0.924) --
From net investment income -- preferred shares (0.332) --
----------- -----------
Total Distributions Declared to Shareholders (1.256) --
----------- -----------
NET ASSET VALUE, END OF PERIOD $ 14.930 $ 14.240
=========== ===========
Market price per share $ 14.625 $ 15.063
=========== ===========
Total return based on market value (b)(c) 3.58% 0.41%(e)
=========== ===========
RATIOS TO AVERAGE NET ASSETS
Expenses (d) 0.32%(g)(h) 0.20%(f)
Net investment income (d) 6.53%(g) 5.20%(f)
Fees and expenses waived or borne by the Advisor 0.18(g) --
Portfolio turnover 32% 0%(e)
Net assets at end of period (000) -- common shares $ 23,996 $ 22,873
(a) The Fund commenced investment operations on November 19, 1999.
(b) Total return at market value assuming all distributions reinvested and
excluding brokerage commissions.
(c) Had the Advisor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(e) Not annualized.
(f) Annualized.
(g) Ratios reflect net assets available to common shares only; net investment
income ratio also reflects reduction for dividend payments to preferred
shareholders.
(h) Ratio calculated using net assets of the fund equals 0.20%.
(i) The per share net investment income amount does not reflect the period's
reclassifications of differences between book and tax basis net investment
income.
--------------------------------------------------------------------------------
2000 Federal income tax information (unaudited)
100% of the distributions from net investment income will be treated as exempt
income for federal income tax purposes.
--------------------------------------------------------------------------------
See notes to financial statements.
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REPORT OF INDEPENDENT ACCOUNTANTS
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TO THE TRUSTEES AND SHAREHOLDERS OF COLONIAL NEW YORK INSURED MUNICIPAL FUND
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 Insured New York Municipal
Fund (the "Fund"), at November 30, 2000, the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. 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 auditing standards
generally accepted in the United States of America 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, 2000 by correspondence with the custodian and brokers, provides
a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 11, 2001
9
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DIVIDEND REINVESTMENT PLAN
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1. You, BankBoston, NA, will act as Agent for me, and will open an account for
me under the Dividend Reinvestment Plan with the same registration as my shares
of the Fund are currently registered. You will effect the dividend reinvestment
option on my behalf as of the first record date for an income dividend or
capital gain distribution ("distribution"), separately or collectively, after
you receive the authorization duly executed by me.
2. Whenever the Fund declares a distribution payable in the Fund's shares of
beneficial interest ("shares") or cash at the option of the shareholder, I
hereby elect to take such distribution entirely in shares, subject to the terms
of this Plan. If on the valuation date the Fund's net asset value per share is
less than the market price (including estimated brokerage commissions), you
shall on the payable date automatically receive for my account from the Fund
that number of newly-issued shares that the cash otherwise receivable by me
would purchase if the purchase price per share equaled the higher of: (a) net
asset value per share on the valuation date, or (b) 95% of market price (not
including estimated brokerage commission) on the payable date; except if the
market price (not including estimated brokerage commissions) on the payable date
is less than 95% of the net asset value per share on the valuation date, you
shall receive a distribution of cash from the Fund and shall apply the amount of
such distribution to the purchase in the open market of shares of my account,
commencing on the business day after the payable date, subject to the condition
that such purchases must be made at a "discount" during the remainder of the
"buying period." "Discount" is defined as a market price per share (including
estimated brokerage commissions) which is lower than the most recently
determined net asset value per share (as calculated from time to time). "Buying
period" shall mean the period commencing the first business day after the
valuation date and ending at the close of business on the business day preceding
the "ex" date for the next distribution. The valuation date will be the last
business day of the week preceding the week of the payable date.
3. Should the Fund's net asset value per share exceed the market price
(including estimated brokerage commissions) on the valuation date for a
distribution, you shall receive for my account a distribution in cash from the
Fund and shall apply the amount of such distribution on my shares to the
purchase in the open market of shares for my account commencing on the first
business day after the valuation date, subject to the condition that such
purchases must be made at a discount during the buying period.
4. In the event you are instructed to purchase shares in the open market
pursuant to paragraph 2 or 3 hereof, and you are unable for any reason to invest
the full amount of the distribution in shares acquired in open-market purchases
at a discount during the buying period, you will invest the uninvested portion
of such distribution in newly-issued shares at the close of business at the end
of such buying period at the higher of: (a) net asset value determined at such
close, or (b) 95% of the market price (not including estimated brokerage
commissions) at such close.
5. You may not acquire newly-issued shares after the valuation date unless you
have received a legal opinion that registration of such shares is not required
under the Securities Act of 1933, as amended, or unless the shares to be issued
are registered under such an Act.
6. For all purposes of the Plan: (a) the market price of the shares on a
particular date shall be the last sales price on the New York Stock Exchange on
that date, or if there is no sale on such Exchange on that date, then the mean
between the closing bid and asked quotations for such shares on such Exchange on
such date (in either case including or not including estimated brokerage
commissions as provided above) and (b) net asset value per share of the shares
on a particular date shall be as determined by or on behalf of the Fund.
7. Open-market purchases provided for above may be made on any securities
exchange where the shares are traded, in the over-the-counter market or in
negotiated transactions and may be on such terms as to price, delivery and
otherwise as you shall determine. My cash funds held by you uninvested will not
bear interest and it is understood that, in any event, you shall have no
liability in connection with any inability to purchase shares within 30 days
after the initial date of such purchase as herein provided, or with the timing
of any purchases effected. You shall have no responsibility as to the value of
the shares acquired for my account. For the purposes of open-market purchases
with respect to the Plan you may commingle my funds with those of other
shareholders of the Fund for whom you similarly act as Agent, and the average
price (including brokerage commissions) of all shares purchased by you as Agent
shall be the price per share allocated to me in connection therewith.
8. You may hold my shares acquired pursuant to my authorization, together with
the shares of other shareholders of the Fund acquired pursuant to similar
authorizations, in non-certificate form in your name or that of your nominee.
You will forward to me any proxy solicitation material and will vote any shares
so held for me only in accordance with the proxy returned by me to the Fund.
Upon my written request, you will deliver to me, without charge, a certificate
or certificates for the full shares.
9. You will confirm to me each investment made for my account as soon as
practicable but not later than 60 days after the date thereof. Although I may
from time to time have an undivided fractional interest (computed to three
decimal places) in a share, no certificates for a fractional share will be
issued. However, distributions on fractional shares will be credited to my
account. In the event of termination of my account under the Plan, you will sell
such undivided fractional interests at the market value of the shares at the
time of termination and send the net proceeds to me.
10. Any stock dividends or split shares distributed by the Fund on shares held
by you for me will be credited to my account. In the event that the Fund makes
available to its shareholders rights to purchase additional shares or other
securities, the shares held for me under the Plan will be added to other shares
held by me in calculating the number of rights to be issued to me.
10
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DIVIDEND REINVESTMENT PLAN (continued)
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11. Your fee for service described in this Plan will be paid by the Fund. I will
be charged a pro rata share of brokerage commission on all open-market
purchases.
12. I may terminate my account under the Plan by notifying you in writing. Such
termination will be effective immediately if my notice is received by you prior
to the record date of subsequent distributions. The Plan may be terminated by
you or the Fund upon notice in writing mailed to me at least 30 days prior to
any record date for the payment of any distribution of the Fund. Upon any
termination you will cause a certificate or certificates for the full shares
held for me under the Plan and the proceeds from the sales of any fractional
shares to be delivered to me without charge. If I elect by notice to you in
writing in advance of such termination to have you sell part or all of my shares
and remit the proceeds to me, you are authorized to deduct brokerage commission
for this transaction from the proceeds.
If I decide to terminate my account under the Plan, I may request that all my
Plan shares, both full and fractional, be sold. The per share price may fall
during the period between my request for sale and the sale in the open market
which will be made within ten trading days after the Agent receives my request.
The proceeds of the sale less a $2.50 service fee, plus any brokerage commission
will be mailed to me after the settlement of funds from the brokerage firm. The
settlement is three business days after the sale of shares.
13. These Terms and Conditions may be amended or supplemented by you or the Fund
at any time or times but, except when necessary or appropriate to comply with
applicable law or the rules or policies of the Securities and Exchange
Commission or any other regulatory authority, only by mailing to me appropriate
written notice at least 30 days prior to the effective date thereof. The
amendment or supplement shall be deemed to be accepted by me unless, prior to
the effective date thereof, you receive written notice of the termination of my
account under the Plan. Any such amendment may include an appointment by you in
your place and stead of successor Agent under these Terms and Conditions, with
full power and authority to perform all or any of the acts to be performed by
the Agent under these Terms and Conditions. Upon any such appointment of any
Agent for the purpose of receiving distributions, the Fund will be authorized to
pay to such successor Agent, for my account, all distributions payable on shares
held in my name or under the Plan for retention or application by such successor
Agent as provided in these Terms and Conditions.
14. You shall at all times act in good faith and agree to use your best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement and to comply with applicable law, but assume no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by your negligence, bad faith or willful misconduct, or that of your
employees.
15. These Terms and Conditions shall be governed by the laws of the Commonwealth
of Massachusetts.
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15
TRANSFER AGENT
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IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial New York Insured Municipal Fund is:
BankBoston, NA.
100 Federal Street
Boston, MA 02110
1-800-730-6001
The Colonial New York Insured Municipal Fund mails one shareholder report to
each shareholder address. If you would like more than one report, please call
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Colonial New York Insured
Municipal Fund.
16
TRUSTEES
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
Academic Vice President and Dean of Faculties, Boston College (former Dean,
Boston College School of Management)
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
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COLONIAL NEW YORK INSURED MUNICIPAL FUND Annual Report
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IY-02/163E-1200 (1/01) 00/2358