UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-9537
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Colonial California Insured Municipal Fund
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Russell Kane, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3363
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Date of fiscal year end: 11/30/2003
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Date of reporting period: 11/30/2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
[photo of bridge]
Colonial California Insured Municipal Fund
ANNUAL REPORT
NOVEMBER 30, 2003
Not FDIC Insured
May Lose Value
No Bank Guarantee
COLONIAL FUNDS
One Financial Center
Boston, MA 02111-2621
January 14, 2004
Dear Shareholder:
I am writing to you as the independent chairman of the board of trustees of your
Colonial fund. I have been privileged to serve on the board of the Colonial
funds for more than three years and on the board of many of the affiliated
Columbia funds for more than seven years. On December 8, 2003 the board of
trustees elected me the chairman. Over those seven years I have gained a deep
sense of responsibility for the continued success of our funds. Needless to say,
the entire board shares that commitment to you.
These have been troubling times in the fund industry, with newspapers reporting
widely on trading and governance failings. Your board has been energetic over
the past year in strengthening our organization and our capacity to effectively
oversee the Colonial funds.
First, as already indicated, the trustees in December elected an independent
trustee to chair our twelve person board. All of the trustees are completely
independent of the advisor and its affiliates except for the president of the
funds, Joseph Palombo. Each committee of the board is comprised only of
independent trustees.
Second, last year we reconfigured the membership of the four person audit
committee to include only persons qualifying as "audit committee financial
experts" under the demanding standards of the Sarbanes-Oxley legislation. Few
audit committees are fortunate to possess such a breadth and depth of financial
experience.
Third, we strengthened our oversight capacity by appointing Martha Fox as chief
compliance officer of the Colonial funds, reporting directly to your fund's
audit committee. We also assigned board members to four separate investment
oversight committees, each better able to monitor performance of individual
funds.
Fourth, with guidance from our board the investment advisor last year increased
its vigilance to identify and discourage trading in open end mutual fund shares
by speculators. Monitoring personnel have attempted to identify and reject
frequent traders, but frankly that effort by itself cannot be 100% effective.
Accordingly, in February 2003 we implemented 2% redemption penalties in the open
end international funds most subject to market timing, and we are considering
still broader application of redemption fees to curb further attempts to profit
from the open end funds by short-term trading. We are also closely monitoring
legislative and regulatory initiatives that would aid in preventing abuses of
open end funds that currently cannot be detected directly by management or our
transfer agent.
Finally, to further align the interests of the trustees with those of our
shareholders, the board late last year voted to double the required investment
by each trustee in the funds that we oversee. At the same time, new policies
were instituted requiring all investment personnel and trustees to hold any
mutual fund shares for a minimum of one year (unless extraordinary circumstances
warrant an exception to be granted by a board committee).
Undoubtedly, more improvements will be made in the period ahead, but the board
wants you to know that we take our responsibilities very seriously and we commit
to you our continued efforts to serve your interests.
Sincerely,
/s/ Thomas C. Theobald
Thomas C. Theobald
Chairman
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
It was another solid year for the US bond market. However, the positive gains
reported from all major sectors masked an extremely volatile environment. Most
of the gains were actually earned in the first half of the reporting period and
they were sufficient to offset losses or declining performance in the second
half.
From December through mid-June, interest rates generally declined and bond
prices rose as the economy struggled to gain a solid footing and the nation
prepared to go to war. In June, the yield on the 10-year Treasury note fell to a
45-year low of just over 3.1%. High-yield bonds were the primary beneficiaries
of this trend as investors seemed willing to put their fears aside and look to
better times ahead. However, after the major military battles of the war were
declared over and the economy showed clear signs of picking up, interest rates
began to rise and bond prices came down in most sectors. The 10-year yield
reached a high of 4.4% in August, then moved within a tight range around 4.0% to
4.2% for the remainder of the period. As the environment changed, high-yield and
mortgage bonds held up better than other sectors while Treasury bonds lagged.
This reversal of fortune for bonds and a shift of investor enthusiasm back to
stocks, which drove equity returns back into double digit territory, serve as a
reminder that a diversified portfolio may offer the best opportunity for
long-term investment success. Talk to your financial advisor if you're uncertain
about the level of diversification of your portfolio. Your advisor can help you
keep your investments on track.
As always, thank you for investing in Colonial Funds. We look forward to
continuing to serve you in the years ahead.
Sincerely,
/s/ Joseph R. Palombo
Joseph R. Palombo
President
January 12, 2004
Economic and market conditions change frequently. There is no assurance that the
trends described in this report will continue or commence.
1
PORTFOLIO MANAGER'S REPORT
PRICE PER SHARE AS OF 11/30/03 ($)
Net asset value 15.21
- -----------------------------
Market price 15.60
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1-YEAR TOTAL RETURN
AS OF 11/30/03 (%)
Net asset value 6.24
- -----------------------------
Market price 1.65
- -----------------------------
Lipper California Insured
Municipal Debt Funds
Category average 8.37
- -----------------------------
All results shown assume reinvestment of distributions.
DISTRIBUTIONS DECLARED
PER COMMON SHARE
12/1/02-11/30/03 ($)
1.02
- -----------------------------
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 5 SECTORS AS OF 11/30/03 (%)
Local general obligations 14.1
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Special property tax 11.0
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Local appropriated 10.3
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Water and sewer 9.1
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Special non-property tax 7.4
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QUALITY BREAKDOWN
AS OF 11/30/03 (%)
AAA 88.4
- ------------------------------------
A 4.9
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BBB 5.6
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CC 0.2
- ------------------------------------
Non-rated 0.9
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Sector breakdowns are calculated as a percentage of net assets (including
auction preferred shares). 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.
Because the fund is actively managed, there can be no guarantee that the fund
will continue to maintain this quality breakdown or invest in these sectors in
the future.
For the 12-month period ended November 30, 2003, Colonial California Insured
Municipal Fund returned 6.24% based on investment at net asset value. That was
less than the 8.37% return of its peer group, the Lipper California Insured
Municipal Debt Funds Category average.1 The fund's investments performed
satisfactorily during the period, as interest rates on insured municipal bonds,
generally, trended lower and bond prices moved higher. However, hedging
strategies initiated during the year hurt overall performance. Hedging is a
strategy for reducing some of the risk involved in holding an investment by
taking an opposite position, typically in the futures market. However, there are
costs associated with hedging, hedging can limit potential returns and there is
no guarantee that the strategy will be successful.
Leveraged positions provided the fund with additional income during the period.
We have, in effect, "borrowed against" the fund's investment positions by
issuing preferred shares, which pay out a short-term variable rate. When those
preferred shares were issued in 1999, we invested the proceeds in bonds with
longer maturities. During this reporting period, the payout rate of preferred
shares was much lower than the yield the trust earned from those longer-maturity
bonds. The fund issued preferred shares because the leverage they provided made
it possible to enhance yield. However, the use of leverage increases the
likelihood of share price volatility and market risk.
The fund implemented hedging techniques in an attempt to protect it from an
increase in interest rates, as well as to preserve the ability to profit from
further declines. Unfortunately, when July's upbeat economic forecasts spurred
fears of inflation, interest rates rose dramatically across all maturities.
The yield change was well outside of the usual variability of the 10-year
Treasury note, which serves as a benchmark for interest rates, and also outside
the range of protection offered by the hedging strategy. The result was a loss
for the portfolio.
- ----------------
1 Lipper, Inc., a widely respected data provider in the industry, calculates
an average return for mutual funds with similar investment objectives as
the fund.
2
PORTFOLIO MANAGER'S REPORT (CONTINUED)
By contrast, the fund benefited from owning non-callable bonds, including some
zero coupon bonds, which accrue interest as they appreciate to face value at
maturity and thrive when rates are declining.
California's well-publicized budget difficulties have held back the performance
of much of its municipal debt. During the summer, Standard & Poor's downgraded
the state's general obligation bonds from A to BBB, a move that raises borrowing
costs for new issuance. However, we believe that bonds with dedicated revenue
streams continue to offer good value. Water and sewer bonds, which constitute
nearly 10 percent of the portfolio, are significant holdings for the fund
because they represent essential services that are insulated from the intense
pressures faced by the state budget as a whole. Some of the fund's utility bonds
also fit into this category. Hospital bonds, on the other hand, could be
candidates for selling should their prices rise, as we anticipate they could, in
response to the new generous Medicare reimbursement package.
/s/ Kimberly Campbell
Kimberly Campbell has been the portfolio manager of Colonial California Insured
Municipal Fund since October 2003. In addition to serving as portfolio manager
of the fund, Ms. Campbell was chief trader for municipal investments of Columbia
Management Advisors, Inc. or its predecessors since 1995.
Past performance is no guarantee of future investment results. Current
performance may be higher or lower than the performance data quoted.
Tax-exempt investing offers current tax-free income, but it also involves
certain risks. The value of the fund shares will be affected by interest rate
changes and the creditworthiness of issues held in the fund. Investing in high
yield securities offers the potential for high current income and attractive
total return, but involves certain risks. Lower-rated bond risks include default
of the issuer and rising interest rates.
Single-state municipal bond funds pose additional risks due to limited
geographical diversification. Interest income from certain tax-exempt bonds may
be subject to the federal alternative minimum tax for individuals and
corporations.
3
INVESTMENT PORTFOLIO
November 30, 2003 (California unless otherwise stated)
MUNICIPAL BONDS - 97.4% PAR VALUE
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EDUCATION - 3.7%
State Community College Financing
Authority, West Valley Mission
Community College,
Series 1997,
5.625% 05/01/22 $2,000,000 $ 2,221,040
State Educational Facilities Authority,
La Verne University, Series 2000,
6.625% 06/01/20 250,000 273,490
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2,494,530
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- -----------------------------------------------------------
HEALTH CARE - 3.7%
CONGREGATE CARE RETIREMENT - 0.4%
Statewide Community Development
Authority, Eskaton Village - Grass
Valley, Series 2000,
8.250% 11/15/31 (a) 250,000 270,435
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HOSPITALS - 3.3%
Oakland, Harrison Foundation,
Series 1999 A,
6.000% 01/01/29 1,000,000 1,140,460
State Health Facilities Financing Authority,
Cedars-Sinai Medical Center,
Series 1999 A,
6.125% 12/01/30 250,000 267,372
Statewide Community Development
Authority, Catholic Healthcare West,
Series 1999,
6.500% 07/01/20 500,000 540,000
Whittier Health Facility, Presbyterian
Intercommunity Hospital,
Series 2002,
5.750% 06/01/31 250,000 255,537
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2,203,369
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- -----------------------------------------------------------
HOUSING - 9.5%
ASSISTED LIVING/SENIOR - 4.2%
Abag Finance Authority for Nonprofit Corps.:
O'Connor Woods, Series 1999,
6.200% 11/01/29 500,000 533,990
Odd Fellows Home, Series 1999,
6.000% 08/15/24 2,000,000 2,281,260
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2,815,250
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MULTI-FAMILY - 3.9%
Abag Finance Authority for Nonprofit Corps.,
Civic Center Drive Apartments,
Series 1999 A,
5.875% 03/01/32 2,500,000 2,606,800
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PAR VALUE
- -----------------------------------------------------------
SINGLE FAMILY - 1.4%
State Housing Finance Agency,
Series 1997 I,
5.750% 02/01/29 $ 270,000 $ 277,463
State Rural Home Mortgage Finance
Authority:
Series 1998 A,
6.350% 12/01/29 305,000 320,729
Series 1998 B-4,
6.350% 12/01/29 300,000 305,241
-----------
903,433
-----------
- -----------------------------------------------------------
OTHER - 3.9%
OTHER - 1.8%
Golden State Securitization Corp.,
Tobacco Settlement:
Series 2003 A-1:
6.250% 06/01/33 125,000 117,347
6.750% 06/01/39 250,000 240,898
Series 2003 A-2,
7.900% 06/01/42 250,000 265,430
Series 2003 B,
5.500% 06/01/43 500,000 490,515
Statewide Financing Authority, Tobacco
Settlement, Series 2002 B,
6.000% 05/01/43 100,000 87,011
-----------
1,201,201
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REFUNDED/ESCROWED (b) - 2.1%
Los Angeles Department of
Water & Power, Series 1999,
6.100% 10/15/39 750,000 903,263
Ontario Redevelopment Financing
Authority, Ontario Redevelopment
Project No. 1, Series 1993,
5.800% 08/01/23 500,000 511,510
-----------
1,414,773
-----------
- -----------------------------------------------------------
RESOURCE RECOVERY - 3.7%
DISPOSAL - 3.7%
Sacramento City Financing Authority,
Series 1999,
5.875% 12/01/29 1,250,000 1,420,088
Salinas Valley Solid Waste Authority,
Series 2002,
5.125% 08/01/22 500,000 513,495
Sunnyvale Solid Waste Authority,
Series 2003,
4.500% 10/01/08 500,000 541,995
-----------
2,475,578
-----------
- -----------------------------------------------------------
See notes to investment portfolio.
4
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003 (California unless otherwise stated)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
- -----------------------------------------------------------
TAX-BACKED - 51.1%
LOCAL APPROPRIATED - 10.3%
Del Norte County, Series 1999,
5.400% 06/01/29 $ 500,000 $ 535,115
Los Angeles County Schools,
Series 1999 A:
(d) 08/01/18 2,020,000 1,005,596
(d) 08/01/23 2,220,000 796,247
Pacifica, Series 1999,
5.875% 11/01/29 1,500,000 1,703,715
San Bernardino County,
Medical Center Financing Project,
Series 1994,
5.500% 08/01/17 2,500,000 2,835,350
-----------
6,876,023
-----------
LOCAL GENERAL OBLIGATIONS - 14.1%
Brea-Olinda Unified School District,
Series 1999 A,
5.600% 08/01/20 1,000,000 1,120,460
Inglewood Unified School District,
Series 1999 A,
5.600% 10/01/24 1,185,000 1,296,070
Los Angeles Unified School District,
Series 2002,
5.750% 07/01/16 500,000 586,420
Pomona Unified School District,
Series 2000 A,
6.550% 08/01/29 1,000,000 1,272,350
San Diego Unified School District,
Election of 1998, Series 2000 B,
6.000% 07/01/19 1,000,000 1,200,530
Union Elementary School District,
Series 1999 A,
(d) 09/01/18 1,630,000 811,740
Upland Unified School District,
Series 2001,
5.125% 08/01/25 250,000 259,745
Vallejo City Unified School District,
Series 2002 A:
5.900% 02/01/21 500,000 589,700
5.900% 08/01/25 500,000 583,990
West Contra Costa Unified School District,
Series 2001 A,
5.700% 02/01/23 500,000 574,675
West Covina Unified School District,
Series 2002 A,
5.800% 02/01/21 500,000 585,045
Yuba City Unified School District,
Series 2000,
(d) 09/01/18 1,000,000 498,000
-----------
9,378,725
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PAR VALUE
- -----------------------------------------------------------
SPECIAL NON-PROPERTY TAX - 7.4%
PR Commonwealth of Puerto Rico
Highway & Transportation Authority:
Series 1996 Y,
5.500% 07/01/36 $1,500,000 $ 1,640,900
Series 2002 E:
5.500% 07/01/21 250,000 287,755
5.500% 07/01/23 1,000,000 1,139,120
San Francisco City & County Hotel Tax
Agency, Series 1994,
6.750% 07/01/25 1,000,000 1,050,860
VI Virgin Islands Public Finance Authority,
Series 1999,
6.500% 10/01/24 750,000 828,968
-----------
4,947,603
-----------
SPECIAL PROPERTY TAX - 11.0%
Huntington Beach Community Facilities
District, Grand Coast Resort,
Series 2001,
6.450% 09/01/31 100,000 102,975
Milpitas Redevelopment Agency,
Redevelopment Project No. 1,
Series 2003,
5.000% 09/01/22 1,000,000 1,039,870
Oceanside Community Development
Commission, Downtown
Redevelopment Project, Series 2003,
5.700% 09/01/25 (c) 500,000 499,210
Orange County Community Facilities
District, Ladera Ranch, Series 1999 A,
6.700% 08/15/29 200,000 210,902
Palmdale Elementary School District,
Community Facilities District No. 90-1,
Series 1999,
5.800% 08/01/29 1,500,000 1,686,420
Pittsburg Redevelopment Agency,
Los Medanos Project, Series 1999,
(d) 08/01/21 2,575,000 1,059,510
Rancho Cucamonga Redevelopment Agency,
Series 1999,
5.250% 09/01/20 1,000,000 1,076,500
Ridgecrest, Ridgecrest Civic Center,
Series 1999,
6.250% 06/30/26 500,000 535,680
San Jose Redevelopment Agency,
Series 1997,
5.625% 08/01/25 1,000,000 1,096,070
-----------
7,307,137
-----------
STATE APPROPRIATED - 4.0%
State Public Works Board,
Department of Health Services,
Series 1999 A,
5.750% 11/01/24 (e) 2,500,000 2,692,225
-----------
See notes to investment portfolio.
5
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003 (California unless otherwise stated)
MUNICIPAL BONDS (CONTINUED) PAR VALUE
- -----------------------------------------------------------
STATE GENERAL OBLIGATIONS - 4.3%
PR Commonwealth of Puerto Rico,
Series 1997,
5.375% 07/01/25 $1,000,000 $ 1,120,080
State of California:
Series 2002,
6.000% 02/01/17 1,000,000 1,195,250
Series 2003,
5.250% 02/01/20 500,000 526,805
-----------
2,842,135
-----------
- -----------------------------------------------------------
TRANSPORTATION - 2.6%
AIR TRANSPORTATION - 0.2%
Statewide Community Development Authority:
United Airlines, Inc.:
Series 1997 A,
5.700% 10/01/33 (f) 250,000 106,878
Series 2001,
6.250% 10/01/35 (f) 250,000 39,588
-----------
146,466
-----------
AIRPORTS - 1.6%
Port of Oakland, Series 2000 K,
5.750% 11/01/29 1,000,000 1,074,790
-----------
PORTS - 0.4%
Port of Oakland, Series 2002 L,
5.500% 11/01/20 250,000 268,200
-----------
TRANSPORTATION - 0.4%
San Francisco Bay Area Rapid Transit
District, Series 1999,
5.500% 07/01/34 250,000 270,957
-----------
- -----------------------------------------------------------
UTILITY - 19.2%
INDEPENDENT POWER PRODUCER - 0.4%
PR Commonwealth of Puerto Rico Industrial,
Educational, Medical & Environmental
Cogeneration Facilities, AES Project,
Series 2000,
6.625% 06/01/26 250,000 259,377
-----------
INVESTOR OWNED - 4.8%
State Pollution Control Financing Authority:
Pacific Gas & Electric Co.,
Series 1996 A,
5.350% 12/01/16 1,000,000 1,065,360
San Diego Gas & Electric Co.,
Series 1991 A,
6.800% 06/01/15 500,000 569,840
Southern California Edison Co.,
Series 1999 B,
5.450% 09/01/29 1,500,000 1,584,015
-----------
3,219,215
-----------
PAR VALUE
- -----------------------------------------------------------
MUNICIPAL ELECTRIC - 4.9%
PR Puerto Rico Electric Power Authority,
Series 1997 AA,
5.375% 07/01/27 $2,500,000 $ 2,703,175
State Department of Water Resources,
Series 2002 A,
5.500% 05/01/14 500,000 565,965
-----------
3,269,140
-----------
WATER & SEWER - 9.1%
Culver City, Series 1999 A,
5.700% 09/01/29 1,500,000 1,664,985
Pico Rivera Water Authority,
Series 1999 A,
5.500% 05/01/29 2,000,000 2,239,060
Placer County Water Agency,
Series 1999,
5.500% 07/01/29 1,000,000 1,082,320
Pomona Public Financing Authority,
Series 1999 AC,
5.500% 05/01/29 1,000,000 1,082,060
-----------
6,068,425
-----------
TOTAL MUNICIPAL BONDS - 97.4%
(cost of $58,638,234) (g) 65,005,787
-----------
OTHER ASSETS & LIABILITIES, NET - 2.6% 1,704,399
- -----------------------------------------------------------
NET ASSETS* - 100.0% $66,710,186
-----------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
* Net assets represent both Common Shares and Auction Preferred Shares.
(a) Denotes a restricted security, which is subject to restrictions on resale
under federal securities laws. At November 30, 2003, the value of this
security amounted to $270,435, which represents 0.4% of net assets.
Additional information on this security is as follows:
Acquisition Acquisition
Security Date Cost
- --------------------------------------------------------------------------------
Statewide Community Development
Authority, Eskaton Village - Grass
Valley, Series 2000,
8.250% 11/15/31 09/08/00 $250,000
(b) The Fund has been informed that the issuer has placed direct obligations of
the U.S. Government in an irrevocable trust, solely for the payment of
principal and interest.
(c) This security has been purchased on a delayed delivery basis.
(d) Zero coupon bond.
(e) This security, or a portion thereof, with a market value of $1,981,478, is
being used to collateralize open futures contracts.
(f) As of November 30, 2003, the Fund held securities of certain issuers that
have filed for bankruptcy protection under Chapter 11, representing 0.2% of
net assets. This issuer is in default of certain debt covenants. Income is
not being accrued
(g) Cost for federal income tax purposes is $58,584,078.
See notes to financial statements.
6
INVESTMENT PORTFOLIO (CONTINUED)
November 30, 2003 (California unless otherwise stated)
NOTES TO INVESTMENT PORTFOLIO (CONTINUED):
- --------------------------------------------------------------------------------
Short futures contracts open at November 30, 2003:
Par Value Unrealized
Covered By Expiration Appreciation
Type Contracts Month at 11/30/03
- -----------------------------------------------------------
10 Year U.S. Treasury
Note $12,200,000 Mar-04 $ 18,391
U.S. Treasury Bond 1,000,000 Mar-04 726
--------
$ 19,117
--------
For the year ended November 30, 2003, transactions in written options were as
follows:
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
---------- ----------
Options outstanding
at November 30, 2002 -- $ --
Options written - call 1,886 1,338,122
Options written - put 2,091 1,005,171
Options closed (3,977) (2,343,293)
Options expired -- --
Options exercised -- --
------- ----------
Options outstanding
at November 30, 2003 -- $ --
------- ----------
The Fund holds investments that are insured by private insurers who guarantee
the payment of principal and interest in the event of default or that are
supported by a letter of credit. A listing of these insurers is as follows:
% of
Insurer Total Investments
- -----------------------------------------------------------
MBIA Insurance Corp. 40.7%
Ambac Assurance Corp. 17.0
Financial Security Assurance, Inc. 15.9
Financial Guaranty Insurance Corp. 13.8
FNMA Collateralized 1.0
ACA Financial Guaranty Corp. 0.8
-------
89.2%
-------
Acronym Name
--------------- -------------------------------
Abag Association of Bay Area Government
See notes to financial statements.
7
STATEMENT OF ASSETS & LIABILITIES
November 30, 2003
ASSETS:
Investments, at cost $58,638,234
-----------
Investments, at value $65,005,787
Cash 1,507,028
Receivable for:
Interest 902,309
Futures variation margin 103,094
Expense reimbursement due from
Investment Advisor 4,404
Deferred Trustees' compensation plan 2,470
-----------
Total Assets 67,525,092
-----------
LIABILITIES:
Payable for:
Preferred shares remarketing commissions 492
Investments purchased on a
delayed delivery basis 500,000
Distributions - common shares 236,212
Distributions - preferred shares 1,784
Investment advisory fee 19,959
Pricing and bookkeeping fees 5,977
Trustees' fees 1,190
Audit fee 32,510
Transfer agent fee 5,130
Deferred Trustees' fees 2,470
Other liabilities 9,182
-----------
Total Liabilities 814,906
-----------
Auction Preferred Shares (978 shares issued
and outstanding at $25,000 per share) $24,450,000
-----------
COMPOSITION OF NET ASSETS
APPLICABLE TO COMMON SHARES:
Paid-in capital - common shares $39,348,777
Undistributed net investment income 24,814
Accumulated net realized loss (3,500,075)
Net unrealized appreciation on:
Investments 6,367,553
Futures contracts 19,117
-----------
Net assets at value applicable to 2,778,965
common shares of beneficial interest
outstanding $42,260,186
===========
Net asset value per common share $ 15.21
===========
STATEMENT OF OPERATIONS
For the Year Ended November 30, 2003
INVESTMENT INCOME:
Interest $ 3,421,888
-----------
EXPENSES:
Investment advisory fee 437,261
Transfer agent fee 33,764
Pricing and bookkeeping fees 61,216
Trustees' fees 8,987
Preferred shares remarketing commissions 61,656
Custody fee 7,968
Audit fee 44,181
Other expenses 33,576
-----------
Total Expenses 688,609
Fees and expenses waived or reimbursed
by Investment Advisor (311,864)
Custody earnings credit (7,083)
-----------
Net Expenses 369,662
-----------
Net Investment Income 3,052,226
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FUTURES CONTRACTS
AND WRITTEN OPTIONS:
Net realized gain (loss) on:
Investments 868,213
Futures contracts (2,115,692)
Written options (266,705)
-----------
Net realized loss (1,514,184)
-----------
Net change in unrealized
appreciation/depreciation on:
Investments 1,331,393
Futures contracts (59,703)
-----------
Net change in unrealized
appreciation/depreciation 1,271,690
-----------
Net Loss (242,494)
-----------
Net Increase in Net Assets from Operations 2,809,732
-----------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (227,577)
-----------
Net Increase in Net Assets from Operations
Applicable to Common Shares $ 2,582,155
-----------
See notes to financial statements.
8
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED
NOVEMBER 30,
--------------------------
INCREASE (DECREASE) IN NET ASSETS: 2003 2002
- -----------------------------------------------------------
OPERATIONS:
Net investment income $ 3,052,226 $ 3,255,254
Net realized loss on investments,
futures contracts and
written options (1,514,184) (548,063)
Net change in unrealized appreciation/
depreciation on investments,
futures contracts and
written options 1,271,690 (739,273)
----------- -----------
Net Increase from Operations 2,809,732 1,967,918
----------- -----------
LESS DISTRIBUTIONS DECLARED TO
PREFERRED SHAREHOLDERS:
From net investment income (227,577) (327,234)
----------- -----------
Increase in Net Assets from
Operations Applicable to
Common Shares 2,582,155 1,640,684
----------- -----------
LESS DISTRIBUTIONS DECLARED TO
COMMON SHAREHOLDERS:
From net investment income (2,832,811) (2,966,537)
----------- -----------
SHARE TRANSACTIONS:
Distributions reinvested -
common shares 78,817 79,711
----------- -----------
Total Decrease in Net Assets
Applicable to Common Shares (171,839) (1,246,142)
NET ASSETS APPLICABLE
TO COMMON SHARES:
Beginning of period 42,432,025 43,678,167
----------- -----------
End of period (including
undistributed net investment
income of $24,814 and
$82,828, respectively) $42,260,186 $42,432,025
=========== ===========
YEAR ENDED
NOVEMBER 30,
--------------------------
NUMBER OF FUND SHARES: 2003 2002
- -----------------------------------------------------------
Common Shares:
Issued for distributions reinvested 5,067 5,458
Outstanding at:
Beginning of period 2,773,898 2,768,440
----------- -----------
End of period 2,778,965 2,773,898
----------- -----------
Preferred Shares:
Outstanding at end of period 978 978
----------- -----------
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
November 30, 2003
NOTE 1. ORGANIZATION
Colonial California Insured Municipal Fund (the "Fund"), is a Massachusetts
business trust registered under the Investment Company Act of 1940 (the "Act"),
as amended, as a non-diversified, closed-end management investment company.
INVESTMENT GOAL
The Fund seeks to provide current income generally exempt from ordinary federal
income tax and California State personal income tax.
FUND SHARES
The Fund may issue an unlimited number of common shares. On December 10, 1999,
the Fund issued 978 Auction Preferred Shares ("APS").
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue 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
Debt securities generally are valued by a pricing service approved by the Fund's
Board of Trustees, based upon market transactions for normal, institutional-size
trading units of similar securities. The services may use various pricing
techniques which take into account appropriate factors such as yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other data, as
well as broker quotes. Certain securities, which tend to be more thinly traded
and of lesser quality, are priced based on fundamental analysis of the financial
condition of the issuer and the estimated value of any collateral. Valuations
developed through pricing techniques may vary from the actual amounts realized
upon sale of the securities, and the potential variation may be greater for
those securities valued using fundamental analysis. Debt securities for which
quotations are readily available are valued at an over-the-counter or exchange
bid quotation.
Short-term obligations maturing within 60 days are valued at amortized cost,
which approximates market value.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
Options are valued at the last reported sale price, or in the absence of a sale,
the mean between the last quoted bid and ask price.
Investments for which market quotations are not readily available are valued at
fair value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
FUTURES CONTRACTS
The Fund may invest in municipal and U.S. Treasury futures contracts. The Fund
will 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 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 differing trading hours, or the temporary absence of
a liquid market, for either the instrument or the underlying securities, or (3)
an inaccurate prediction by Columbia Management Advisors, Inc. of the future
direction of interest rates. Any of these risks may involve amounts exceeding
the variation margin recorded in the Fund's Statement of Assets and Liabilities
at any given time.
Upon entering into a futures contract, the Fund deposits cash or securities with
the broker in an amount sufficient to meet the initial margin requirement.
Subsequent payments are made or received by the Fund equal to the daily change
in the contract value and are recorded as variation margin payable or receivable
and offset in unrealized gains or losses. The Fund also identifies portfolio
securities as segregated with the custodian in a separate account in an amount
equal to the futures contract. The Fund recognizes a realized gain or loss when
the contract is closed or expires.
10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2003
OPTIONS
The Fund may write call and put options on futures it owns or in which it may
invest. Writing put options tends to increase the Fund's exposure to the
underlying instrument. Writing call options tends to decrease the Fund's
exposure to the underlying instrument. When the Fund writes a call or put
option, an amount equal to the premium received is recorded as a liability and
subsequently marked-to-market to reflect the current value of the option
written. Premiums received from writing options which expire are treated as
realized gains. Premiums received from writing options which are exercised or
closed are added to the proceeds or offset against the amounts paid on the
underlying future transaction to determine the realized gain or loss. The Fund
as a writer of an option has no control over whether the underlying future may
be sold (call) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the future underlying the written option.
There is the risk the Fund may not be able to enter into a closing transaction
because of an illiquid market.
The Fund may also purchase put and call options. Purchasing call options tends
to increase the Fund's exposure to the underlying instrument. Purchasing put
options tends to decrease the Fund's exposure to the underlying instrument.
The Fund pays a premium, which is included in the Fund's Statement of Assets and
Liabilities as an investment and subsequently marked-to-market to reflect the
current value of the option. The risk associated with purchasing put and call
options is limited to the premium paid. Premiums paid for purchasing options
which expire are treated as realized losses. Premiums paid for purchasing
options which are exercised or closed are added to the amounts paid or offset
against the proceeds on the underlying future transaction to determine the
realized gain or loss. The Fund's custodian will set aside cash or liquid
portfolio securities equal to the amount of the written options contract
commitment in a separate account.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from registration. In
some cases, the issuer of restricted securities has agreed to register such
securities for resale at the issuer's expense either upon demand by the Fund or
in connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to be
liquid under criteria established by the Board of Trustees. The Fund will not
incur any registration costs upon such resale.
DELAYED DELIVERY SECURITIES
The Fund may trade securities on other than normal settlement terms, including
securities purchased or sold on a "when-issued" basis. 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. The Fund's custodian will
set aside cash or liquid portfolio securities equal to the amount of the delayed
delivery commitment in a separate account.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Premium and discount are
amortized and accreted, respectively, on all debt securities.
FEDERAL INCOME TAX STATUS
The Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, by distributing
substantially all of its taxable or tax-exempt income, if any, for its tax year,
and as such will not be subject to federal income taxes. In addition, by
distributing in each calendar year substantially all of its net investment
income, capital gains and certain other amounts, if any, the Fund will not be
subject to federal excise tax. Therefore, no federal income or excise tax
provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to common shareholders are recorded on ex-date.
Distributions to Auction Preferred shareholders are recorded daily and 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 November 30,
2003 was 1.00%. For the year ended November 30, 2003, the Fund declared
dividends to Auction Preferred shareholders amounting to $227,577, representing
an average APS dividend rate of 0.93%.
NOTE 3. FEDERAL TAX INFORMATION
The timing and character of income and capital gain distributions are determined
in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Fund's capital accounts for permanent tax
differences to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2003
For the year ended November 30, 2003, permanent differences resulting primarily
from differing treatments for discount accretion/premium amortization on debt
securities were identified and reclassified among the components of the Fund's
net assets as follows:
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN
INCOME LOSS CAPITAL
------------ ------------ ------
$(49,852) $49,851 $1
Net investment income and net realized losses, as disclosed on the Statement of
Operations, and net assets were not affected by this reclassification.
The tax character of distributions paid during the years ended November 30, 2003
and November 30, 2002 was as follows:
NOVEMBER 30, NOVEMBER 30,
2003 2002
------------ ------------
Distributions paid from:
Tax-Exempt Income $3,060,388 $3,292,961
Ordinary Income* -- 810
Long-Term Capital Gains -- --
* For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
As of November 30, 2003, the components of distributable earnings on a tax basis
were as follows:
UNDISTRIBUTED UNDISTRIBUTED UNDISTRIBUTED
TAX-EXEMPT ORDINARY LONG-TERM NET UNREALIZED
INCOME INCOME CAPITAL GAINS APPRECIATION*
------------ ------------ ------------ -------------
$201,704 $-- $-- $6,421,709
* The differences between book-basis and tax-basis net unrealized appreciation
is primarily due to deferral of losses from wash sales and discount
accretion/premium amortization on debt securities.
Unrealized appreciation and depreciation at November 30, 2003, based on cost of
investments for federal income tax purposes was:
Unrealized appreciation $6,813,679
Unrealized depreciation (391,970)
----------
Net unrealized appreciation $6,421,709
----------
The following capital loss carryforwards are available to reduce taxable income
arising from future net realized gains on investments, if any, to the extent
permitted by the Internal Revenue Code:
CAPITAL LOSS
YEAR OF EXPIRATION CARRYFORWARD
---------- ------------
2008 $ 5,151
2010 760,735
2011 889,444
------------
$1,655,330
------------
No capital loss carryforwards were utilized and/or expired during the year ended
November 30, 2003 for the Fund.
Expired capital loss carryforwards are recorded as a reduction of paid-in
capital.
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
On April 1, 2003, Colonial Management Associates, Inc., the previous investment
advisor to the Fund, merged into Columbia Management Advisors, Inc.
("Columbia"), formerly known as Columbia Management Co., an indirect,
wholly-owned subsidiary of FleetBoston Financial Corporation. As a result of the
merger, Columbia now serves as the Fund's investment advisor. The merger did not
change the way the Fund is managed, the investment personnel assigned to manage
the Fund or the fees paid by the Fund.
INVESTMENT ADVISORY FEE
Columbia is the investment advisor to the Fund and provides administrative and
other services. Columbia receives a monthly fee at the annual rate of 0.65% of
the Fund's average weekly net assets, including assets applicable to the APS.
Through November 30, 2004, Columbia has contractually agreed to waive a portion
of its investment advisory fee so that such fees will not exceed 0.35% annually.
PRICING AND BOOKKEEPING FEES
Columbia is responsible for providing pricing and bookkeeping services to the
Fund under a pricing and bookkeeping agreement. Under a separate agreement
(the "Outsourcing Agreement"), Columbia has delegated those functions to State
Street Corporation ("State Street").
Under its pricing and bookkeeping agreement with the Fund, Columbia receives
from the Fund an annual flat fee of $10,000 paid monthly, and in any month that
the Fund's average weekly net assets, including assets applicable to the APS,
exceed $50 million, an additional monthly fee. The additional fee rate is
calculated by taking into account the fees payable to State Street under the
Outsourcing Agreement. This rate is applied to the average weekly net assets,
including assets applicable to the APS, of the Fund for that month. The Fund
also pays additional fees for pricing services. For the year ended November 30,
2003, the effective pricing and bookkeeping fee rate was 0.091%. Columbia pays
the total fees collected to State Street under the Outsourcing Agreement.
12
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
November 30, 2003
EXPENSE LIMITS AND FEE WAIVERS
Columbia has voluntarily agreed to reimburse the Fund for certain expenses so
that total expenses (exclusive of investment advisory fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any) would not
exceed 0.20% annually of the Fund's average weekly net assets including assets
applicable to APS. Columbia, at its discretion, may revise or discontinue this
arrangement any time.
CUSTODY CREDITS
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. The Fund could have invested a portion of the
assets utilized in connection with the expense offset arrangement in an
income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
The Fund pays no compensation to its officers, all of whom are employees of
Columbia or its affiliates.
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 5. PREFERRED SHARES
The Fund currently has outstanding 978 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).
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 Agreement and in
accordance with the guidelines prescribed by the APS' 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 APS. At November 30, 2003,
there were no restrictions on the Fund.
NOTE 6. PORTFOLIO INFORMATION
PURCHASES AND SALES OF SECURITIES
For the year ended November 30, 2003, the cost of purchases and proceeds from
sales of securities, excluding short-term obligations, were $6,399,365 and
$8,946,294, respectively.
NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
INDUSTRY FOCUS
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
GEOGRAPHIC CONCENTRATION
The Fund invests primarily in debt obligations issued by the state of California
and its respective political subdivisions, agencies and public authorities to
obtain funds for various purposes. The Fund is more susceptible to economic and
political factors adversely affecting issuers of the state's specific municipal
securities than are municipal bond funds that are not concentrated to the same
extent in these issuers.
CONCENTRATION OF CREDIT RISK
The Fund holds investments that are insured by private insurers who guarantee
the payment of principal and interest in the event of default or that are
supported by a letter of credit. Each of the Fund's insurers is rated AAA by
Moody's Investor Services. At November 30, 2003, investments supported by
private insurers or by a letter of credit from institutions that represent
greater than 5% of the total investments of the Fund were as follows:
% OF TOTAL
INSURER INVESTMENTS
- ------------------------------------------------------------
MBIA Insurance Corp. 40.7%
Ambac Assurance Corp. 17.0
Financial Security Assurance, Inc. 15.9
Financial Guaranty Insurance Corp. 13.8
13
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period is as follows
(common shares unless otherwise noted):
PERIOD
YEAR ENDED NOVEMBER 30, ENDED
------------------------------------------------- NOVEMBER 30,
2003 2002 2001 2000 1999 (a)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.30 $ 15.78 $ 15.16 $ 14.29 $ 14.33
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 1.10(b) 1.17(b)(c) 1.19(b) 1.18(d) 0.05
Net realized and unrealized gain (loss) on investments,
futures contracts and written options (0.09) (0.46)(c) 0.59 1.07 (0.06)
----------- ----------- ----------- ----------- -----------
Total from Investment Operations 1.01 0.71 1.78 2.25 (0.01)
----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO PREFERRED SHAREHOLDERS:
From net investment income (0.08) (0.12) (0.24) (0.34) --
----------- ----------- ----------- ----------- -----------
Total from Investment Operations Applicable
to Common Shareholders 0.93 0.59 1.54 1.91 (0.01)
----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS DECLARED TO COMMON SHAREHOLDERS:
From net investment income (1.02) (1.07) (0.92) (0.90) --
----------- ----------- ----------- ----------- -----------
LESS SHARE TRANSACTIONS:
Offering costs-- common shares -- -- -- --(e) (0.03)
Commission and offering costs -- preferred shares -- -- -- (0.14) --
----------- ----------- ----------- ----------- -----------
Total Share Transactions -- -- -- (0.14) (0.03)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 15.21 $ 15.30 $ 15.78 $ 15.16 $ 14.29
----------- ----------- ----------- ----------- -----------
Market price per share -- common shares $ 15.60 $ 16.40 $ 16.60 $ 12.69 $ 15.00
----------- ----------- ----------- ----------- -----------
Total return -- based on market value -- common shares (f)(g) 1.65% 5.67% 38.91% (9.86)% 0.00%(h)
----------- ----------- ----------- ----------- -----------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (i)(j) 0.88%(k) 0.86%(k) 0.86%(k) 0.87%(k) 0.55%(l)
Net investment income before preferred stock dividends (i)(j) 7.17% 7.57%(c) 7.58% 8.27% 4.12%(l)
Net investment income after preferred stock dividends (i)(j) 6.63% 6.81%(c) 6.02% 5.93% 4.12%(l)
Voluntary waiver/reimbursement (j) 0.26% 0.23% 0.22% 0.27% 1.08%(l)
Portfolio turnover rate 10% 11% 7% 22% 0%(h)
Net assets, end of period (000's) -- common shares $ 42,260 $ 42,432 $ 43,678 $ 41,947 $ 34,382
(a) The Fund commenced investment operations on October 29, 1999. Per share data
and total return reflect activity from that date.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Effective December 1, 2001, the Fund adopted the provisions of the AICPA
Audit and Accounting Guide for Investment Companies and began accreting
market discount on all debt securities. The effect of this change, for the
year ended November 30, 2002 was to increase the ratio of net investment
income to average net assets from 7.51% to 7.57% and increase the ratio of
net investment income (adjusted for dividend payments to preferred
shareholders) from 6.75% to 6.81%. The impact to net investment income and
net realized and unrealized loss per share was less than $0.01. Per share
data and ratios for periods prior to November 30, 2002 have not been
restated to reflect this change in presentation.
(d) The per share net investment income amount does not reflect the period's
reclassifications of differences between book and tax basis net investment
income.
(e) Rounds to less than $0.01 per share.
(f) Total return at market value assuming all distributions reinvested at prices
calculated in accordance with the Dividend Reinvestment Plan.
(g) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(h) Not annualized.
(i) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%, except for
the year ended November 30, 2003 which had an impact of 0.02%.
(j) Ratios reflect average net assets available to common shares only.
(k) Ratios calculated using average net assets of the Fund, including the effect
of custody credits equals 0.55%, 0.55%, 0.55% and 0.55% for the years ended
November 30, 2003, November 30, 2002, November 30, 2001 and November 30,
2000, respectively.
(l) Annualized.
ASSET COVERAGE REQUIREMENTS
INVOLUNTARY
ASSET LIQUIDATING AVERAGE
TOTAL AMOUNT COVERAGE PREFERENCE MARKET VALUE
OUTSTANDING PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------------------------------------------------------
11/30/03 $24,450,000 $68,211 $25,002 $25,000
11/30/02 24,450,000 68,387 25,002 25,000
11/30/01 24,450,000 69,661 25,001 25,000
11/30/00 * 24,450,000 67,891 25,019 25,000
* On December 10, 1999, the Fund began offering Auction Preferred Shares.
14
REPORT OF INDEPENDENT AUDITORS
TO THE TRUSTEES AND THE SHAREHOLDERS OF COLONIAL CALIFORNIA 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 California Insured
Municipal Fund (the "Fund") at November 30, 2003, and the results of its
operations, the changes in its net assets and its financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and 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 securities at
November 30, 2003 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 12, 2004
15
UNAUDITED INFORMATION
FEDERAL INCOME TAX INFORMATION
100.0% of the distributions from net investment income will be treated as exempt
income for federal income tax purposes.
16
DIVIDEND REINVESTMENT PLAN
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND
Pursuant to the Fund's Dividend Reinvestment Plan (the "Plan"), all Common
Shareholders whose shares are registered in their own names will have all
distributions reinvested automatically in additional Common Shares of the Fund
by EquiServe Trust Company, N.A. (the "Plan Agent"), as agent under the Plan,
unless a Common Shareholder elects to receive cash. An election to receive cash
may be revoked or reinstated at the option of the Common Shareholder.
Shareholders whose shares are held in the name of a broker or nominee will have
distributions reinvested automatically by the broker or nominee in additional
shares under the Plan, unless the service is not provided by the broker or
nominee, or unless the shareholder elects to receive distributions in cash. If
the service is not available, such distributions will be paid in cash.
Shareholders whose shares are held in the name of a broker or nominee should
contact the broker or nominee for details. All distributions to investors who
elect not to participate (or whose broker or nominee elects not to participate)
in the Plan will be paid by check mailed directly to the record holder by the
Plan Agent, as dividend paying agent.
The Plan Agent will furnish each person who buys shares in the offering with
written information relating to the Plan. Included in such information will be
procedures for electing to receive distributions in cash (or, in the case of
shares held in the name of a broker or nominee who does not participate in the
Plan, procedures for having such shares registered in the name of the
shareholder so that such shareholder may participate in the Plan).
If the Trustees of the Fund declare a dividend (including a capital gain
dividend) payable either in shares or in cash, as holders of shares may have
elected, then nonparticipants in the Plan will receive cash and participants in
the Plan will receive the equivalent in shares valued as set forth below.
Whenever a market price is equal to or exceeds net asset value at the time
shares are valued for the purpose of determining the number of shares equivalent
to the distribution, participants will be issued shares at the net asset value
most recently determined as provided under "Net Asset Value" in the Fund's
prospectus and its Statement of Additional Information, but in no event less
than 95% of the market price. If the net asset value of the shares at such time
exceeds the market price of shares at such time, or if the Fund should declare a
dividend (including a capital gain dividend) payable only in cash, the Plan
Agent will, as agent for the participants, use the cash that the shareholders
would have received as a dividend to buy shares in the open market, the New York
Stock Exchange or elsewhere, for the participants' accounts. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
of the shares, the average per share purchase price paid by the Plan Agent may
exceed the net asset value of the shares, resulting in the acquisition of fewer
shares than if the dividend (including a capital gain dividend) had been paid in
shares issued by the Fund. The Plan Agent will apply all cash received as a
dividend (including a capital gain dividend) to purchase shares on the open
market as soon as practicable after the payment date of such dividend, but in no
event later than 30 days after such date, except where necessary to comply with
applicable provisions of the federal securities laws.
There is no charge to participants for reinvesting dividends (including capital
gain dividends). The Plan Agent's fees for handling the reinvestment of
dividends (including capital gain dividends) will be paid by the Fund. There
will be no brokerage charges with respect to shares issued directly by the Fund
as a result of dividends or capital gains distributions payable either in stock
or in cash. However, each participant will pay a pro rata share of brokerage
commissions incurred with respect to the Plan Agent's open market purchases in
connection with the reinvestment of dividends (including capital gain
dividends).
The automatic reinvestment of dividends (including capital gain dividends) will
not relieve participants of any income tax which may be payable on such
dividends. The amount of the dividend for tax purposes may vary depending on
whether the Fund issues new Common Shares or purchases them on the open market.
The Plan may be amended or terminated on 30 days' written notice to Plan
participants. All correspondence concerning the Plan should be directed to
EquiServe Trust Company, N.A., by mail at P.O. Box 43010, Providence, RI
02940-3010, or by phone at 1-800-730-6001.
17
TRUSTEES
Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were
appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth
had been directors of 15 Columbia Funds and 20 funds in the CMG Fund Trust. Also
effective October 8, 2003, the incumbent trustees of the Fund were elected as
directors of the 15 Columbia Funds and as trustees of the 20 funds in the CMG
Fund Trust. The new combined Board of Trustees/Directors of the Fund now
oversees 119 funds in the Columbia Funds Complex (including the former Liberty
Funds, former Stein Roe Funds, Columbia Funds and CMG Funds). Several of these
trustees/directors also serve on the Boards of other funds in the Columbia Funds
Complex.
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Funds in the Columbia
Funds complex, the year each was first elected or appointed to office, their
principal business occupations during at least the last five years, the number
of portfolios overseen by each Trustee/Director and other directorships they
hold are shown below. Each officer listed below serves as an officer of each
Fund in the Columbia Funds Complex.
Number of
portfolios in
Year first Columbia Funds
elected or Complex Other
Position appointed Principal occupation(s) overseen by directorships
Name, address and age with Funds to office1 during past five years Trustee/Director held
- ---------------------------------------------------------------------------------------------------------------------------------
Disinterested Trustees
- ----------------------
Douglas A. Hacker Trustee 1996 Executive Vice President-Strategy of United Airlines 119 Orbitz
(age 48) (airline) since December, 2002 (formerly President (online
P.O. Box 66100 of UAL Loyalty Services (airline) from September, travel
Chicago, IL 60666 2001 to December, 2002; Executive Vice President company)
and Chief Financial Officer of United Airlines from
March, 1993 to September, 2001).
Janet Langford Kelly Trustee 1996 Chief Administrative Officer and Senior Vice 119 None
(age 45) President, Kmart Holding Corporation (consumer
3100 West Beaver Road goods) since September, 2003 (formerly Executive
Troy, MI 48084-3163 Vice President-Corporate Development and
Administration, General Counsel and Secretary,
Kellogg Company (food manufacturer), from September,
1999 to August, 2003; Senior Vice President,
Secretary and General Counsel, Sara Lee Corporation
(branded, packaged, consumer- products manufacturer)
from January, 1995 to September, 1999).
Richard W. Lowry Trustee 1995 Private Investor since August, 1987 (formerly 121 3 None
(age 67) Chairman and Chief Executive Officer, U.S. Plywood
10701 Charleston Drive Corporation (building products manufacturer)).
Vero Beach, FL 32963
Charles R. Nelson Trustee 1981 Professor of Economics, University of Washington, 119 None
(age 61) since January, 1976; Ford and Louisa Van Voorhis
Department of Economics Professor of Political Economy, University of
University of Washington Washington, since September, 1993; Director,
Seattle, WA 98195 Institute for Economic Research, University of
Washington, since September, 2001; Adjunct
Professor of Statistics, University of Washington,
since September, 1980; Associate Editor, Journal of
Money Credit and Banking, since September, 1993;
consultant on econometric and statistical matters.
John J. Neuhauser Trustee 1985 Academic Vice President and Dean of Faculties 122 3,4 Saucony, Inc.
(age 60) since August, 1999, Boston College (formerly (athletic
84 College Road Dean, Boston College School of Management from footwear);
Chestnut Hill, MA 02467-3838 September, 1977 to September, 1999). SkillSoft Corp.
(e-learning)
Patrick J. Simpson Trustee 2000 Partner, Perkins Coie L.L.P. (law firm). 119 None
(age 58)
1211 S.W. 5th Avenue
Suite 1500
Portland, OR 97204
18
TRUSTEES (CONTINUED)
Number of
portfolios in
Year first Columbia Funds
elected or Complex Other
Position appointed Principal occupation(s) overseen by directorships
Name, address and age with Funds to office1 during past five years Trustee/Director held
- ---------------------------------------------------------------------------------------------------------------------------------
Disinterested Trustees (continued)
- ----------------------------------
Thomas E. Stitzel Trustee 1998 Business Consultant since 1999 (formerly Professor 119 None
(age 67) of Finance from 1975 to 1999, College of Business,
2208 Tawny Woods Place Boise State University); Chartered Financial Analyst.
Boise, ID 83706
Thomas C. Theobald Trustee 1996 Managing Director, William Blair Capital Partners 119 Anixter
(age 66) and (private equity investing) since September, 1994. International
27 West Monroe Street, Chairman of (network
Suite 3500 the Board6 support
Chicago, IL 60606 equipment
distributor),
Jones Lang
LaSalle (real
estate
management
services) and
MONY Group
(life insurance)
Anne-Lee Verville Trustee 1998 Author and speaker on educational systems needs 120 4 Chairman of
(age 58) (formerly General Manager, Global Education the Board of
359 Stickney Hill Road Industry, IBM Corporation (computer and Directors,
Hopkinton, NH 03229 technology) from 1994 to 1997). Enesco Group,
Inc. (designer,
importer and
distributor of
giftware and
collectibles)
Richard L. Woolworth Trustee 1991 Retired since December 2003 (formerly Chairman 119 NW Natural
(age 62) and Chief Executive Officer, The Regence Group (a natural gas
100 S.W. Market Street (regional health insurer); Chairman and Chief service provider)
#1500 Executive Officer, BlueCross BlueShield of Oregon;
Portland, OR 97207 Certified Public Accountant, Arthur Young & Company).
19
TRUSTEES (CONTINUED)
Number of
portfolios in
Year first Columbia Funds
elected or Complex Other
Position appointed Principal occupation(s) overseen by directorships
Name, address and age with Funds to office1 during past five years Trustee/Director held
- ---------------------------------------------------------------------------------------------------------------------------------
Interested Trustees
- -------------------
William E. Mayer2 Trustee 1994 Managing Partner, Park Avenue Equity Partners 121 3 Lee Enterprises
(age 63) (private equity) since February, 1999 (formerly (print media),
399 Park Avenue Founding Partner, Development Capital LLC from WR Hambrecht
Suite 3204 November 1996 to February, 1999). + Co. (financial
New York, NY 10022 service provider)
and First Health
(healthcare)
Joseph R. Palombo2 Trustee 2000 Executive Vice President and Chief Operating 120 5 None
(age 50) and Officer of Columbia Management Group, Inc. since
One Financial Center President December, 2001 and Director, Executive Vice
Boston, MA 02111 President and Chief Operating Officer of Columbia
Management Advisors, Inc. (Advisor) since April,
2003 (formerly Chief Operations Officer of Mutual
Funds, Liberty Financial Companies, Inc. from
August, 2000 to November, 2001; Executive Vice
President of Stein Roe & Farnham Incorporated
(Stein Roe) from April, 1999 to April, 2003;
Director of Colonial Management Associates, Inc.
(Colonial) from April, 1999 to April, 2003;
Director of Stein Roe from September, 2000 to
April, 2003) President of Columbia Funds and
Galaxy Funds since February, 2003 (formerly Vice
President from September 2002 to February 2003);
Manager of Columbia Floating Rate Limited Liability
Company since October, 2000; (formerly Vice
President of the Columbia Funds from April, 1999
to August, 2000; Chief Operating Officer and Chief
Compliance Officer, Putnam Mutual Funds from
December, 1993 to March, 1999).
1 In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds complex.
2 Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co. Mr. Palombo is an interested person as an employee of the Advisor.
3 Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of
the All-Star Funds, currently consisting of 2 funds, which are advised by
an affiliate of the Advisor.
4 Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
5 Mr. Palombo also serves as an interested director of Columbia Management
Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor.
6 Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003. Prior to that date, Mr. Palombo was Chairman of the Board.
20
OFFICERS
Year first
Position with elected or
Columbia appointed
Name, address and age funds to office Principal occupation(s) during past five years
- ------------------------------------------------------------------------------------------------------------------------------------
Officers
- --------
Vicki L. Benjamin Chief 2001 Controller of the Columbia Funds and of the Liberty All-Star Funds since May, 2002;
(Age 42) Accounting Chief Accounting Officer of the Columbia Funds and Liberty All-Star Funds since
One Financial Center Officer and June, 2001; Controller and Chief Accounting Officer of the Galaxy Funds since
Boston, MA 02111 Controller September, 2002 (formerly Vice President, Corporate Audit, State Street Bank and
Trust Company from May, 1998 to April, 2001).
J. Kevin Connaughton Treasurer 2000 Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December,
(Age 39) 2000; Vice President of the Advisor since April, 2003 (formerly Controller of the
One Financial Center Liberty Funds and of the Liberty All-Star Funds from February, 1998 to October,
Boston, MA 02111 2000); Treasurer of the Galaxy Funds since September 2002; Treasurer, Columbia
Management Multi-Strategy Hedge Fund, LLC since December, 2002 (formerly Vice
President of Colonial from February, 1998 to October, 2000).
David A. Rozenson Secretary 2003 Secretary of the Columbia Funds and of the Liberty All-Star Funds since December,
(Age 49) 2003; Senior Counsel, Fleet Boston Financial Corporation since January, 1996;
One Financial Center Associate General Counsel, Columbia Management Group since November, 2002.
Boston, MA 02111
21
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TRANSFER AGENT
- --------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Colonial California Insured Municipal Fund is:
EquiServe Trust Company, N.A.
150 Royall Street
Canton, MA 02021
The trust mails one shareholder report to each shareholder address. Shareholders
can order additional reports by calling 800-730-6001. In addition,
representatives at that number can provide shareholders information about the
fund.
Financial advisors who want additional information about the fund may speak to a
representative at 800-426-3750.
A description of the policies and procedures that the fund uses to determine how
to vote proxies relating to its portfolio securities is available (i) without
charge, upon request, by calling 800-730-6001 and (ii) on the Securities and
Exchange Commissionwebsite at http://www.sec.gov.
This report has been prepared for shareholders of Colonial California Insured
Municipal Fund.
COLONIAL CALIFORNIA INSURED MUNICIPAL FUND ANNUAL REPORT
IC-02/577Q-1103 (01/04) 03/3855
Item 2. Code of Ethics.
(a) The registrant has, as of the end of the period covered by this report,
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless
of whether these individuals are employed by the registrant or a third
party.
(b) During the period covered by this report, there were not any amendments to
a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers or
implicit waivers to a provision of the code of ethics adopted in 2(a)
above.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas
E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members
of the registrant's Board of Trustees and Audit Committee, each qualify as an
audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr.
Woolworth are each independent trustees, as defined in paragraph (a)(2) of this
item's instructions and collectively constitute the entire Audit Committee.
Item 4. Principal Accountant Fees and Services.
Not applicable at this time.
Item 5. Audit Committee of Listed Registrants.
Not applicable at this time.
Item 6. Reserved.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
The Fund has delegated to Columbia Management Advisors, Inc. (the "Advisor") the
responsibility to vote proxies relating to portfolio securities held by the
Fund. In deciding to delegate this responsibility to the Advisor, the Board of
Trustees of the Trust reviewed and approved the policies and procedures adopted
by the Advisor. These included the procedures that the Advisor follows when a
vote presents a conflict between the interests of the Fund and its shareholders
and the Advisor, its affiliates, its other clients or other persons.
The Advisor's policy is to vote all proxies for Fund securities in a manner
considered by the Advisor to be in the best interest of the Fund and its
shareholders without regard to any benefit to the Advisor, its affiliates, its
other clients or other persons. The Advisor examines each proposal and votes
against the proposal, if, in its judgment, approval or adoption of the proposal
would be expected to impact adversely the current or potential market value of
the issuer's securities. The Advisor also examines each proposal and votes the
proxies against the proposal, if, in its judgment, the proposal would be
expected to affect adversely the best interest of the Fund. The Advisor
determines the best interest of the Fund in light of the potential economic
return on the Fund's investment.
The Advisor addresses potential material conflicts of interest by having
predetermined voting guidelines. For those proposals that require special
consideration or in instances where special circumstances may require varying
from the predetermined guideline, the Advisor's Proxy Committee determines the
vote in the best interest of the Fund, without consideration of any benefit to
the Advisor, its affiliates, its other clients or other persons. A member of the
Proxy Committee is prohibited from voting on any proposal for which he or she
has a conflict of interest by reason of a direct relationship with the issuer or
other party affected by a given proposal. Persons making recommendations to the
Proxy Committee or its members are required to disclose to the Committee any
relationship with a party making a proposal or other matter known to the person
that would create a potential conflict of interest.
The Advisor has three classes of proxy proposals. The first two classes are
predetermined guidelines to vote for or against specific proposals, unless
otherwise directed by the Proxy Committee. The third class is for proposals
given special consideration by the Proxy Committee. In addition, the Proxy
Committee considers requests to vote on proposals in the first two classes other
than according to the predetermined guidelines.
The Advisor generally votes in favor of proposals related to the following
matters: selection of auditors (unless the auditor receives more than 50% of its
revenues from non-audit activities from the company and its affiliates),
election of directors (unless the proposal gives management the ability to alter
the size of the board without shareholder approval), different persons for
chairman of the board /chief executive officer (unless, in light of the size of
the company and the nature of its shareholder base, the role of chairman and CEO
are not held by different persons), compensation (if provisions are consistent
with standard business practices), debt limits (unless proposed specifically as
an anti-takeover action), indemnifications (unless for negligence and or
breaches of fiduciary duty), meetings, name of company, principal office (unless
the purpose is to reduce regulatory or financial supervision), reports and
accounts (if the certifications required by Sarbanes-Oxley Act of 2002 have been
provided), par value, shares (unless proposed as an anti-takeover action), share
repurchase programs, independent committees, and equal opportunity employment.
The Advisor generally votes against proposals related to the following matters:
super majority voting, cumulative voting, preferred stock, warrants, rights,
poison pills, reclassification of common stock and meetings held by written
consent.
The Advisor gives the following matters special consideration: new proposals,
proxies of investment company shares (other than those covered by the
predetermined guidelines), mergers/acquisitions (proposals where a hostile
merger/acquisition is apparent or where the Advisor represents ownership in more
than one of the companies involved), shareholder proposals (other than those
covered by the predetermined guidelines), executive/director compensation (other
than those covered by the predetermined guidelines), pre-emptive rights and
proxies of international issuers which block securities sales between submission
of a proxy and the meeting (proposals for these securities are voted only on the
specific instruction of the Proxy Committee and to the extent practicable in
accordance with predetermined guidelines).
In addition, if a portfolio manager or other party involved with a client of the
Advisor or Fund account concludes that the interest of the client or Fund
requires that a proxy be voted on a proposal other than according to the
predetermined guidelines, he or she may request that the Proxy Committee
consider voting the proxy differently. If any person (or entity) requests the
Proxy Committee (or any of its members) to vote a proxy other than according to
a predetermined guideline, that person must furnish to the Proxy Committee a
written explanation of the reasons for the request and a description of the
person's (or entity's) relationship with the party proposing the matter to
shareholders or any other matter known to the person (or entity) that would
create a potential conflict of interest.
The Proxy Committee may vary from the predetermined guideline if it determines
that voting on the proposal according to the predetermined guideline would be
expected to impact adversely the
current or potential market value of the issuer's securities or to affect
adversely the best interest of the client. References to the best interest of a
client refer to the interest of the client in terms of the potential economic
return on the client's investment. In determining the vote on any proposal, the
Proxy Committee does not consider any benefit other than benefits to the owner
of the securities to be voted.
The Advisor's Proxy Committee is composed of operational and investment
representatives of its regional offices as well as senior representatives of the
Advisor's equity investments, equity research, compliance and legal functions.
During the first quarter of each year, the Proxy Committee reviews all
guidelines and establishes guidelines for expected new proposals. In addition to
these reviews and its other responsibilities described above, its functions
include annual review of its Proxy Voting Policy and Procedures to ensure
consistency with internal policies and regulatory agency policies, and
development and modification of voting guidelines and procedures as it deems
appropriate or necessary.
The Advisor uses Institutional Shareholder Services ("ISS"), a third party
vendor, to implement its proxy voting process. ISS provides proxy analysis,
record keeping services and vote disclosure services.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable at this time.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable at this time.
Item 10. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer, based on their evaluation of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing of this report,
have concluded that such controls and procedures are adequately designed to
ensure that information required to be disclosed by the registrant in Form
N-CSR is accumulated and communicated to the registrant's management,
including the principal executive officer and principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11. Exhibits.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR
attached hereto as Exhibit 99.CODE ETH
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Colonial California Insured Municipal Fund
------------------------------------------------------------------
By (Signature and Title) /s/ Joseph R. Palombo
------------------------------------------------------
Joseph R. Palombo, President
Date February 4, 2004
--------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Joseph R. Palombo
------------------------------------------------------
Joseph R. Palombo, President
Date February 4, 2004
--------------------------------------------------------------------------
By (Signature and Title) /s/ J. Kevin Connaughton
------------------------------------------------------
J. Kevin Connaughton, Treasurer
Date February 4, 2004
--------------------------------------------------------------------------