1
[PHOTO OF BRIDGE]
COLONIAL NEW YORK INSURED
MUNICIPAL FUND
SEMIANNUAL REPORT
MAY 31, 2001
2
President's Letter
DEAR SHAREHOLDER,
In the six months ended May 31, 2001 the fixed-income market was a mirror image
of the year preceding it. Aggressive tightening by the Fed early in 2000 began
to take effect, bringing rising interest rates and falling long-term rates to a
screeching halt. This pattern then reversed, creating exactly the opposite
situation in the first months of 2001.
Just before year-end, the Federal Reserve Board (the Fed) announced the first of
five interest rate cuts during the period, totaling 250 basis points, or 2.5%.
The Fed's aggressive easing sparked fears of inflation, which is of particular
concern to longer-term issues. In order to lure investors, long-term bonds
offered higher interest rates to reassure potential buyers that the yield on the
bonds would outpace inflation. Consequently, while short-term rates fell
throughout the first months of 2001, the long end of the yield curve suffered in
contrast to the dramatic gains of December and early January.
In the following pages, you'll find out how your fund's managers reacted to the
changes of 2001, and how they have positioned the fund based on their market
outlook. As always, we 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
July 12, 2001
As economic and market conditions change frequently, there can be no assurance
that the trends described in this report will continue or come to pass.
May Lose Value
Not FDIC
Insured
No Bank Guarantee
3
HIGHLIGHTS
PRICE PER SHARE AS OF 5/31/01 ($)
Net asset value 15.46
------------------------------
Market price 14.52
------------------------------
SIX-MONTH TOTAL RETURN (%)
Net asset value 6.53
------------------------------
Market price 2.11
------------------------------
DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/1/00-5/31/01 ($)
0.421
------------------------------
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 10 INDUSTRY SECTORS 5/31/01 (%)
Special non-property
tax 14.4
------------------------------
Education 12.7
------------------------------
State appropriated 9.7
------------------------------
Airport 8.5
------------------------------
Hospitals 8.0
------------------------------
Toll facilities 7.4
------------------------------
Water & sewer 7.0
------------------------------
Municipal electric 5.1
------------------------------
Local general
obligations 4.7
------------------------------
State general
obligations 3.9
------------------------------
- FUND POSTS STRONG GAINS EARLY IN THE PERIOD
Colonial New York Insured Municipal Fund outperformed both its Lipper peer
group and benchmark index for the six months ended May 31, 2001. Though the
fund reported a gain of 6.53% for the period (based on NAV), much of the
gain recorded during the period took place in December, when falling long-
term interest rates boosted performance. This growth began to slow in 2001,
when the fund's NAV fell in response to rising long-term interest rates.
- FUND MAINTAINS LONGER DURATION
During the period, we maintained a longer average maturity than that of our
peers, believing that long-term rates would continue to fall. As the
dramatic drop in long-term rates seen in December and January reversed
itself, the fund was unable to sustain the strong gains posted early in the
period. As the yield curve steepened in the last four months of the period,
our overweighting at the long end hurt us. Long-term, we expect further
easing by the Fed, continued slowing both in the labor market and in
corporate earnings, and a much slower rate of inflation than the market
seems to expect. Taken together, our outlook paints a favorable picture for
long-term bonds, and we intend to maintain our longer duration.
- NEW YORK STATE ECONOMY CONTINUES TO BE STRONG
Heavily dependent on Manhattan and Long Island, where the securities
industry has a powerful presence, New York City's fortunes typically rise
and fall with the market. However, reasonable diversification has helped
the state to weather current market doldrums, including heavy and light
industry, agriculture, and a strong tech concentration in the city of
Rochester. Although certain geographic areas within the state have not
benefited from a strong economy and have fallen into financial disrepair,
the state of New York overall enjoys a healthy, growing economy. Barring a
recession (where the market's strong influence on New York City would
likely come into play) we feel that the state of New York is well
positioned to weather the slowing national economy.
William C. Loring, Jr.
Brian M. Hartford, CFA
-- Co-Portfolio Managers
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or 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. Single-state municipal
bond funds pose additional risks due to limited geographical diversification.
SIX-MONTH TOTAL RETURN AS OF 5/31/01(%)
[BAR CHART]
COLONIAL NEW YORK INSURED MUNICIPAL FUND LEHMAN BROTHERS MUNICIPAL BOND INDEX
---------------------------------------- ------------------------------------
6.53 4.73
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 directly in an index. Lipper Inc., a widely respected data
provider in the industry, calculates an average total return for mutual funds
with similar investment objectives as the fund.
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INVESTMENT PORTFOLIO
May 31, 2001 (New York unless otherwise
stated)
(Unaudited)
MUNICIPAL BONDS - 97.6% PAR VALUE
--------------------------------------------------------------
EDUCATION - 12.7%
EDUCATION - 12.7%
Schenectady Industrial Development
Agency, Union College, Series 1999
A,
5.450% 12/1/29 $1,000,000 $ 1,012,280
St. Lawrence County Industrial
Development Agency, St. Lawrence
University, Series 1998 A,
5.375% 7/1/18 700,000 712,803
State Dormitory Authority: New York
University, Series 1998 A,
5.750% 7/1/27 1,500,000 1,628,970
Pratt Institute, Series 1999,
6.000% 7/1/28 500,000 529,930
Cooper Union, Series 1999,
6.000% 7/1/19 1,000,000 1,078,710
-----------
4,962,693
-----------
--------------------------------------------------------------
HEALTHCARE - 12.1%
CONGREGATED HEALTHCARE
FACILITY - 1.4%
State Dormitory Authority, Miriam
Osborne Memorial Home, Series 2000
B,
6.875% 7/1/19 300,000 329,541
Suffolk County Industrial
Development Agency, Jefferson
Ferry, Series 1999 A,
7.200% 11/1/19 200,000 203,250
-----------
532,791
-----------
HOSPITALS - 8.0%
State Dormitory Authority: Catholic
Health Services of Long Island,
Series 1999,
5.500% 7/1/29 1,000,000 1,013,080
New Island Hospital, Series 1999 B,
5.750% 7/1/19 1,000,000 1,051,260
Sloan Kettering Cancer Center,
Series 1998,
5.500% 7/1/23 1,000,000 1,051,230
-----------
3,115,570
-----------
NURSING HOME - 2.7%
Syracuse Housing Authority, Loretto
Rest, Series 1997 A,
5.700% 8/1/27 1,000,000 1,034,450
-----------
--------------------------------------------------------------
HOUSING - 3.0%
ASSISTED LIVING/SENIOR - 0.4%
Huntington Housing Authority, Gurwin
Jewish Senior Center, Series 1999,
6.000% 5/1/29 200,000 168,500
-----------
PAR VALUE
--------------------------------------------------------------
SINGLE FAMILY - 2.6%
State Mortgage Agency, Series 1999
8-2,
5.650% 4/1/30 $1,000,000 $ 1,012,770
-----------
--------------------------------------------------------------
OTHER - 1.5%
POOL/BOND BANK - 1.5%
State Environmental Facilities
Corp., Series 2000,
5.700% 7/15/22 540,000 566,741
-----------
--------------------------------------------------------------
OTHER REVENUE - 2.7%
RECREATION - 2.7%
New York City Cultural Trust,
American Museum of Natural
History, Series 1997 A,
5.650% 4/1/22 1,000,000 1,032,990
-----------
--------------------------------------------------------------
TAX-BACKED - 32.7%
LOCAL GENERAL OBLIGATIONS - 4.7%
New York City, Series 1998 B,
5.375% 8/1/22 1,000,000 1,010,120
Series 1998 D,
5.250% 8/1/21 500,000 500,950
PR Commonwealth of Puerto Rico
Municipal Finance Agency, Series
1999 A,
5.500% 8/1/23 300,000 309,645
-----------
1,820,715
-----------
SPECIAL NON-PROPERTY TAX - 14.4%
Metropolitan Transportation
Authority, Series 1998 A,
5.250% 7/1/28 (a) 1,000,000 1,004,610
New York City Transitional Finance
Authority, Series 2000 A,
5.750% 8/15/24 1,500,000 1,578,630
PR Commonwealth of Puerto Rico
Highway & Transportation
Authority, Series 1996 Y,
5.500% 7/1/36 1,500,000 1,528,155
Public Building Authority, Series
1997 B,
5.000% 7/1/27 1,000,000 979,260
VI Virgin Islands Public Finance
Authority, Series 1999, 6.500%
10/1/24 500,000 535,705
-----------
5,626,360
-----------
See notes to financial statements.
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INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2001 (New York unless otherwise
stated)
(Unaudited)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
--------------------------------------------------------------
TAX-BACKED (CONTINUED)
STATE APPROPRIATED - 9.7%
State Dormitory Authority:
City University of New York,
Series 1997 I,
5.125% 7/1/27 $1,000,000 $ 974,680
State University Dorm Facilities,
Series 1999 C,
5.500% 7/1/29 1,700,000 1,732,861
State Urban Development Corp.,
Series 1999 C,
6.000% 1/1/29 1,000,000 1,067,610
-----------
3,775,151
-----------
STATE GENERAL OBLIGATIONS - 3.9%
PR Commonwealth of Puerto Rico,
Series 1997,
5.375% 7/1/25 1,500,000 1,519,710
-----------
--------------------------------------------------------------
TRANSPORTATION - 18.4%
AIRPORT - 8.5%
Albany County Airport Authority,
Series 1997,
5.500% 12/15/19 1,500,000 1,529,640
Niagara Frontier Transportation
Authority, Series 1999 A,
5.625% 4/1/29 1,750,000 1,786,278
-----------
3,315,918
-----------
TOLL FACILITIES - 7.4%
State Thruway Authority, Series 1998
E,
5.000% 1/1/25 1,355,000 1,298,822
Triborough Bridge & Tunnel
Authority, Series 1992 Y, 6.125%
1/1/21 1,390,000 1,574,397
-----------
2,873,219
-----------
TRANSPORTATION - 2.5%
New York City Transportation
Authority, Series 1999 A,
5.250% 1/1/29 1,000,000 991,310
-----------
--------------------------------------------------------------
UTILITY - 14.5%
INDEPENDENT POWER PRODUCER - 2.4%
New York City Industrial Finance
Agency, Brooklyn Navy Yard
Partners, Series 1997,
5.650% 10/1/28 300,000 278,931
Port Authority of New York & New
Jersey, KIAC Partners, Series 1996
IV,
6.750% 10/1/19 200,000 208,250
PAR VALUE
--------------------------------------------------------------
PR Commonwealth of Puerto Rico
Industrial, Educational, Medical &
Environmental Cogeneration
Facilities, AES Project, Series
2000
6.625% 6/1/26 $ 250,000 $ 262,485
Suffolk County Industrial
Development Agency, Nissequogue
Cogen Partners, Series 1998,
5.500% 1/1/23 200,000 179,000
-----------
928,666
-----------
MUNICIPAL ELECTRIC - 5.1%
GM Guam Power Authority, Series 1999
A,
5.250% 10/1/34 1,000,000 998,050
Long Island Power Authority, Series
1998 A,
5.250% 12/1/26 1,000,000 987,540
-----------
1,985,590
-----------
WATER & SEWER - 7.0%
Albany Municipal Water Finance
Authority, Series 2000 A,
6.375% 12/1/17 200,000 223,556
Buffalo Municipal Water Finance
Authority, Series 1999,
6.000% 7/1/29 1,450,000 1,553,109
Clifton Park Water Authority, Series
1999 A,
5.000% 10/1/29 1,000,000 957,590
-----------
2,734,255
-----------
TOTAL MUNICIPAL BONDS
(cost of $34,869,503) (b) 37,997,399
-----------
OTHER ASSETS & LIABILITIES, NET - 2.4% 944,901
-----------
NET ASSETS - 100.0% $38,942,300
-----------
See notes to financial statements.
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INVESTMENT PORTFOLIO (CONTINUED)
May 31, 2001 (New York unless otherwise
stated)
(Unaudited)
NOTES TO INVESTMENT PORTFOLIO:
(a) This security, or a portion thereof, with a total market value of $1,004,610
is being used to collateralize open futures contracts.
(b) Cost for federal income tax purposes is the same.
Short futures contracts open on May 31, 2001:
Par value Unrealized
covered by Expiration depreciation
Type contracts month at 5/31/01
----------------------------------------------------------------------
Municipal Bond $3,900,000 September $(28,187)
Long futures contracts open on May 31, 2001:
Par value Unrealized
covered by Expiration appreciation
Type contracts month at 5/31/01
----------------------------------------------------------------------
US Treasury Bond $800,000 September $6,208
See notes to financial statements.
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STATEMENT OF ASSETS & LIABILITIES
May 31, 2001
(Unaudited)
ASSETS
Investments, at value (cost of $34,869,503) $37,997,399
Cash 303,657
Receivable for:
Interest 749,304
Other assets 22,530
----------
Total Assets 39,072,890
----------
LIABILITIES
Payable for:
Fund shares repurchased 22,835
Variation margin on futures contracts 22,215
Reimbursement due to Advisor 41,019
Management fee 11,327
Bookkeeping fee 1,500
Trustees' fee 1,350
Custody fee 90
Other fees 30,254
----------
Total Liabilities 130,590
----------
NET ASSETS $38,942,300
===========
COMPOSITION OF NET ASSETS
Auction Preferred shares (564 shares issued
and outstanding at $25,000 per share) $14,100,000
Paid-in capital -- common shares 22,687,783
Undistributed net investment income 32,164
Accumulated net realized loss (983,564)
Net unrealized appreciation (depreciation)
on:
Investments 3,127,896
Open futures contracts (21,979)
----------
NET ASSETS $38,942,300
===========
Net Assets at value for 1,606,900 common
shares of beneficial interest outstanding $24,842,300
===========
Net asset value per common share $ 15.46
===========
Net Assets at value including undeclared
dividends for 564 preferred shares
outstanding $14,100,000
===========
STATEMENT OF OPERATIONS
For the Six Months Ended May 31, 2001
(Unaudited)
INVESTMENT INCOME
Interest income $1,048,058
EXPENSES
Management fee $ 126,854
Bookkeeping fee 8,994
Trustees' fee 2,700
Custody fee 537
Transfer agent fee 14,123
Preferred shares remarketing
commissions 17,597
Other expenses 22,707
---------
Total Expenses 193,512
Fees and expenses waived or borne
by the Advisor (95,065)
---------
Net Expenses 98,447
---------
Net Investment Income 949,611
---------
NET REALIZED & UNREALIZED GAIN
(LOSS) ON PORTFOLIO POSITIONS
Net realized gain (loss) on:
Investments 751
Closed futures contracts (146,757)
---------
Net realized loss (146,006)
Net change in unrealized
appreciation/ depreciation on:
Investments 989,493
Open futures contracts 18,453
---------
Net change in unrealized
appreciation/depreciation 1,007,946
---------
Net Gain 861,940
---------
Increase in Net Assets from
Operations $1,811,551
==========
See notes to financial statements.
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STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
----------- ------------
INCREASE (DECREASE) IN NET ASSETS 2001 2000
--------------------------------------------------------------
Operations:
Net investment income $ 949,611 $ 2,032,614
Net realized loss on investments
and futures contracts (146,006) (837,558)
Net change in unrealized
appreciation/ depreciation on
investments and futures
contracts 1,007,946 2,229,971
---------- -----------
Net Increase from Operations 1,811,551 3,425,027
---------- -----------
Distribution to Shareholders:
Distribution from net investment
income -- common shares (676,510) (1,484,596)
Distribution from net investment
income -- preferred shares (288,258) (533,848)
---------- -----------
Total Distributions to
Shareholders (964,768) (2,018,444)
---------- -----------
Share Transactions:
Preferred share initial offering
(net of $287,366 commissions and
offering costs) -- 13,812,634
Value of distributions reinvested
-- common shares -- 3,149
---------- -----------
Net Increase from Shares
Transactions -- 13,815,783
---------- -----------
Total Increase in Net Assets 846,783 15,222,366
NET ASSETS
Beginning of period 38,095,517 22,873,151
---------- -----------
End of period (including
undistributed net investment
income of $32,164 and $47,321,
respectively) $38,942,300 $38,095,517
=========== ===========
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
----------- ------------
NUMBER OF FUND SHARES 2001 2000
--------------------------------------------------------------
Common Shares:
Issued for distributions
reinvested -- 233
Outstanding at
Beginning of period 1,606,900 1,606,667
---------- -----------
End of period 1,606,900 1,606,900
---------- -----------
Preferred Shares:
Issued in initial offering -- 564
Outstanding at
Beginning of period 564 --
---------- -----------
End of period 564 564
---------- -----------
See notes to financial statements.
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NOTES TO FINANCIAL STATEMENTS
May 31, 2001 (Unaudited)
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 (the "Act"),
as amended, as a nondiversified, closed-end management investment company. The
Fund's investment objective is to provide current income generally exempt from
ordinary federal income tax and New York State and City personal income taxes.
The Fund authorized an unlimited number of common shares of beneficial interest
and 564 Auction Preferred Shares ("APS").
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 APS is
generally seven days. The applicable dividend rate for the APS on May 31, 2001
was 2.50%. For the six months ended May 31, 2001, the Trust paid dividends to
Auction Preferred shareholders amounting to $288,258 representing an average APS
dividend rate of 4.10%.
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.
7
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10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 APS.
The APS 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 APS totaling
$146,366 were recorded as a reduction of capital paid in excess of par
applicable to common shares.
Under the Act, the Fund is required to maintain asset coverage of at least 200%
with respect to the APS as of the last business day of each month in which any
APS are outstanding. Additionally, the Fund is required to meet more stringent
asset coverage requirements under the terms of the APS and in accordance with
the guidelines prescribed by the rating agencies. Should these requirements not
be met, or should dividends accrued on the APS 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 APS. At May 31, 2001, there were no such
restrictions on the Fund.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY:
During the six months ended May 31, 2001, purchases and sales of investments,
other than short-term obligations, were none and $211,448, respectively.
Unrealized appreciation (depreciation) at May 31, 2001, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $3,127,896
Gross unrealized depreciation --
---------
Net unrealized appreciation $3,127,896
---------
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 paid
in capital.
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.
8
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11
FINANCIAL HIGHLIGHTS
Selected per share data, total return, ratios and supplemental data throughout
each period are as follows (common shares unless otherwise noted):
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED PERIOD ENDED
MAY 31, NOVEMBER 30, NOVEMBER 30,
----------- ------------ ------------
2001 2000 1999(A)
----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.93 $ 14.24 $ 14.33
--------- ---------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.60 1.27(i) 0.02
Offering costs -- common shares -- -- (0.03)
Commission and offering costs -- preferred shares (0.01) (0.18) --
Net realized and unrealized gain (loss) on investments and
futures contracts 0.54 0.86 (0.08)
--------- ---------- -----------
Total from Investment Operations 1.13 1.95 (0.09)
--------- ---------- -----------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- common shares (0.42) (0.93) --
From net investment income -- preferred shares (0.18) (0.33) --
--------- ---------- -----------
Total Distributions Declared to Shareholders (0.60) (1.26) --
--------- ---------- -----------
NET ASSET VALUE, END OF PERIOD $ 15.46 $ 14.93 $ 14.24
======= ======= =======
Market price per share $ 14.52 $ 14.63 $ 15.06
======= ======= =======
Total return based on market value (b)(c) 2.11%(e) 3.58% 0.41%(e)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS:
Expenses (d) 0.79%(f)(g)(j) 0.32%(g)(h) 0.20%(f)
Net investment income (d) 7.60%(f)(g) 6.53%(g) 5.20%(f)
Waiver/reimbursement 0.76%(f)(g) 0.18%(g) --
Portfolio turnover rate 0%(e) 32% 0%(e)
Net assets at end of period (000) -- common shares $24,842 $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 average 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 periods
reclassifications of differences between book and tax basis net investment
income.
(j) Ratio calculated using net assets of the fund equals 0.50%.
See notes to financial statements.
9
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12
DIVIDEND REINVESTMENT PLAN
1. You, EquiServe Trust Company, 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.
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.
10
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13
DIVIDEND REINVESTMENT PLAN (CONTINUED)
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.
11
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14
THIS PAGE INTENTIONALLY LEFT BLANK.
15
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial New York Insured
Municipal Fund is:
EquiServe Trust Company
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.
Transfer Agent
16
TRUSTEES
DOUGLAS A. HACKER
Executive Vice President and Chief Financial Officer of UAL, Inc. (formerly
Senior Vice President and Chief Financial Officer of UAL, Inc.)
JANET LANGFORD KELLY
Executive Vice President-Corporate Development and Administration, General
Counsel and Secretary, Kellogg Company (formerly Senior Vice President,
Secretary and General Counsel, Sara Lee Corporation)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President and Director of Itek Corp.)
WILLIAM E. MAYER
Managing Partner, Park Avenue Equity Partners (formerly Founding Partner,
Development Capital LLC; Dean and Professor, College of Business and Management,
University of Maryland)
CHARLES R. NELSON
Van Voorhis Professor, Department of Economics, University of Washington;
consultant on econometric and statistical matters (formerly Department Chairman
and Director of the Institute for Economic Research)
JOHN J. NEUHAUSER
Academic Vice President and Dean of Faculties, Boston College (formerly Dean,
Boston College School of Management)
JOSEPH R. PALOMBO
Chief Operations Officer, Mutual Funds, Liberty Financial Companies, Inc.;
Executive Vice President and Director of Colonial Management Associates, Inc.
and Stein Roe Farnham Incorporated; Executive Vice President and Chief
Administrative Officer Liberty Funds Group LLC (formerly Vice President of
Liberty Mutual Funds, Stein Mutual Funds and All-Star Funds, and Chief Operating
Officer, Putnam Mutual Funds)
THOMAS E. STITZEL
Business Consultant and Chartered Financial Analyst (formerly Professor of
Finance, College of Business, Boise State University)
THOMAS C. THEOBALD
Managing Director, William Blair Capital Partners (formerly Chief Executive
Officer and Chairman of the Board of Directors, Continental Bank Corporation)
ANNE-LEE VERVILLE
Chairman of the Board of Directors, Enesco Group, Inc. and author and speaker on
educational systems needs (formerly General Manager, Global Education Industry,
and President, Applications Solutions Division, IBM Corporation)
COLONIAL NEW YORK INSURED MUNICIPAL FUND SEMIANNUAL REPORT
IY-03/213G-0501 (7/01) 01/1240