Stein Roe Advisor Funds
Semiannual Report
March 31, 1998
Photo of: Hands on globe.
Stein Roe Advisor Fund
International Fund
Stein Roe Advisor International Fund
Stein Roe Mutual Funds
Sensible Risks. Intelligent Investments.(sm)
<PAGE>
Contents
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Performance........................................................... 1
How the Stein Roe Advisor International Fund has done over time
Q&A................................................................... 2
Interview with the portfolio manager and summary of investment activity Stein
Roe Advisor International Fund
Portfolio of Investments.............................................. 4
A complete list of investments with market values
Financial Statements.................................................. 8
Statements of assets and liabilities, operations and changes in net assets
Notes to Financial Statements......................................... 14
Financial Highlights.................................................. 16
Selected per-share data
Must be preceded or accompanied by a prospectus.
<PAGE>
Fund Performance
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There are several ways to evaluate a fund's historical performance. You can look
at the total percentage change in value, the average annual percentage change or
the growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any dividends
(net investment income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
Average Annual Total Returns
Periods ended March 31, 1998
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Past 1 Past 3 Life
year years of Fund(1)
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Stein Roe Advisor International Fund 9.28% 9.77% 5.79%
MSCI EAFE Index 18.61 10.57 8.05
1 Inception dates: SR&F International Portfolio - March 1, 1994; Because
index returns are calculated on a monthly basis, the index returns marked "Life
of Fund" are calculated from the month-end results that fall closest to the
portfolio's inception date.
Investment Comparison
Comparison of change in value of a $10,000 investment.
Line Chart:
International Fund MSCI EAFE
3/01/94 10000 10000
3/31/94 9758 9569
9/30/94 10598 10068
3/31/95 9514 10151
9/30/95 10442 10651
3/31/96 10868 11402
9/30/96 11279 11568
3/31/97 11515 11568
9/30/97 12358 12977
3/31/98 12583 13721
Investment in the MSCI EAFE Index is calculated from 2/28/94 because index
returns are calculated on a monthly basis starting with the prior month's end.
Past performance is no guarantee of future results. Share price and investment
return will vary, so you may have a gain or loss when you sell shares. This
graph compares the performance of the Stein Roe Advisor International Fund to
the Morgan Stanley Capital International Europe, Australia and Far East (MSCI
EAFE) Index, an unmanaged group of stocks that differs from the composition of
each Stein Roe fund. The index is not available for direct investment. The
Adviser currently limits expenses to 1.75% of average annual net assets. Absent
this limit, total returns would be less. Historical performance for Class K
shares for the period prior to Feb. 14, 1997 is based on the performance of the
SR&F International Portfolio, restated to reflect the 12b-1 fees and any other
expenses applicable to that class, without giving effect to any fee waivers and
assuming reinvestment of dividends and capital gains. Total return performance
includes changes in share price and reinvestment of income and capital gains
distributions. A fund's performance, especially for short time periods, should
not be the sole factor in making your investment decision.
<PAGE>
Q&A
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An Interview with David Harris, Portfolio Manager of Stein Roe Advisor
International Fund
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Fund Data
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Investment Objective:
Seeks long-term growth of capital by investing primarily in a diversified
portfolio of foreign securities. Under normal market conditions, the
portfolio will invest at least 65 percent of its total assets in foreign
securities of at least three countries outside of the United States.
Q: The past six months consisted of an extremely volatile fourth quarter of
1997 followed by a period of record returns in the first quarter of 1998. What
was the Fund's combined result?
A: The Fund delivered an overall return of 1.83 percent for the six-month period
ended March 31, 1998, underperforming both the Lipper peer group median return
of 5.72 percent and the Morgan Stanley Capital International Europe, Asia and
Far East (MSCI EAFE) Index return of 4.93 percent.
Q: What happened in the fourth quarter?
A: International markets were dominated by turmoil in Asian currencies during
the fourth quarter, negatively impacting the performance of international
investments. The vicious cycle of currency crises spread from Asia to
surrounding southeast Asian countries and then to most other world markets. Most
markets recovered, but certain Asian countries were so severely affected that
they still have yet to recover all that was lost in the fourth quarter of 1997.
Q: Why did the Fund underperform its peers?
A: We underperformed our peers because we stayed invested in smaller- and
mid-cap stocks which we think are more attractively valued than larger-cap
stocks, but that lagged in performance during this period. When times got tough
in the international markets, some of our competitors fled to the larger-cap
international companies -- most typically those that are traded on the New York
Stock Exchange as American Depositary Receipts (ADRs). Foreign stocks that trade
as ADRs often trade in tandem with the U.S. market and consequently tend to be
top performers when the U.S. market is strong. Our strategy is geared toward
performing best when international markets are strong, allowing small- and
mid-cap international stocks to outperform. We invest for long-term growth and
see the relative weakness in smallerand mid-cap stocks as a short-term event and
a buying opportunity.
Q: Did your strategy help the Fund to outperform in recent months when
international equities outperformed U.S. equities?
A: Yes. When international stocks began their recovery in late-January, the
portfolio rebounded ahead of its peers. The Fund returned 15.68 percent for the
first quarter of 1998, compared to a return of 14.60 percent for the Lipper peer
group and 14.70 percent return for the MSCI EAFE Index. Asian holdings had the
most to gain after experiencing sharp declines during the fourth quarter's
financial crisis. The performance of these holdings during the recovery added to
the Fund's total return. For example, IFCT, a Thai finance company (0.3 percent
of total net assets), has gained more than 300 percent from the beginning of
1998 through March 31, 1998.
Q: What is an example of a stock you own that had better valuation and growth
potential than an ADR throughout the period?
A: We own Olivetti Group (2.0 percent of total net assets), an Italian holding
company. Olivetti leads a consortium that is the second largest provider of
wireless telecommunications services in Italy. This company recently shifted its
business focus from office equipment to telecommunications. The company was not
widely followed during this transition, providing us the opportunity to invest
in a rapidly growing business at what we believed was an attractive valuation
level. This holding is up more than 180 percent over the past six months.
Q: Do you think that international markets will continue to feel the effects of
the Asian crisis?
A: It appears that the worst is over. The crisis did not impact the larger
foreign markets as hard as some investors feared. The best performing markets
have been those in Europe; they are experiencing strong growth due to corporate
restructurings and the increasing enthusiasm surrounding the monetary
unification scheduled for Jan. 1, 1999. We're hopeful that this growth cycle
will continue.
<PAGE>
Q: How do you think the transition to a unified currency -- the Euro -- will
affect trading in the international markets?
A: It appears the transition to the unified currency will take place as
scheduled on Jan 1, 1999. We believe this already has had a positive effect on
some of the smaller markets such as Finland, Italy, Portugal and Spain.
Currently these markets must offer higher short-term interest rates than larger,
more developed countries such as France and Germany. With currency unification,
interest rates will be set by a common central bank -- the European Central Bank
- -- and all countries participating will have the same interest rates. The
impending decline in short-term interest rates in the smaller countries has
already boosted equity prices.
Past performance is no guarantee of future results. Share price and investment
returns will vary, so you may have a gain or loss when you sell shares. Holdings
are disclosed as a percentage of the SR&F International Portfolio's total net
assets. Portfolio holdings are as of March 31, 1998, and are subject to change.
The Adviser currently limits expenses to 1.75% of average annual net assets.
Absent this limit, total returns would be less. Historical performance for Class
K shares for the period prior to Feb. 14, 1997 is based on the performance of
the SR&F International Portfolio, restated to reflect the 12b-1 fees and any
other expenses applicable to that class, without giving effect to any fee
waivers and assuming reinvestment of dividends and capital gains. Total return
performance includes changes in share price and reinvestment of income and
capital gains distributions. The MSCI EAFE Index is an unmanaged group of stocks
that differs from the composition of each Stein Roe fund; it is not available
for direct investment. According to Lipper Analytical Services, Inc., an
independent monitor of mutual fund performance, the median returns for the
Fund's international fund peer group for the one-, three-year and since
inception periods ended March 31, 1998, were 19.35 percent, 13.65 percent and
9.74 percent, respectively.
o Foreign investments involve market, political and currency risks not
generally associated with U.S. investments. Emerging market investments involve
market, political and currency risks not generally associated with investing in
either U.S. securities or more developed international markets.
o Funds that emphasize investments in smaller companies may experience
short-term volatility.
<PAGE>
<TABLE>
<CAPTION>
SR&F International Portfolio
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Portfolio of Investments at March 31, 1998
(Dollar amounts in thousands)
(Unaudited)
Number Market
Equity Securities (98.6%) of Shares Value
<S> <C> <C>
Argentina (2.3%)
Telecom Argentina ADRs........................................................................... 28,100 $ 1,006
YPF Sociedad Anonima ADRs........................................................................ 75,000 2,550
----------
3,556
Australia (1.1%)
Reinsurance Australia ........................................................................... 658,301 1,764
Belgium (1.9%)
Generale de Banque............................................................................... 5,670 3,002
Brazil (2.1%)
Globex Utilidades, preference shares............................................................. 71,000 600
Perdigao, preference shares ..................................................................... 364,700,000 577
SABESP........................................................................................... 4,740,000 1,092
Telebras ADRs.................................................................................... 7,700 1,000
----------
3,269
Finland (7.8%)
Enso, R shares .................................................................................. 259,100 2,391
Kemira .......................................................................................... 179,200 1,868
Merita, A shares................................................................................. 568,000 3,421
Metsa-Serla, B shares............................................................................ 287,800 2,564
Neste............................................................................................ 66,000 1,952
----------
12,196
France (10.2%)
Alcatel Alsthom.................................................................................. 19,386 3,639
Banque Nationale de Paris........................................................................ 64,300 4,997
Compagnie Generale des Eaux...................................................................... 16,990 2,759
Compagnie Generale des Eaux, warrants (a)........................................................ 17,673 20
Moulinex (a)..................................................................................... 52,300 1,300
Total, B shares.................................................................................. 25,916 3,112
----------
15,827
Germany (9.6%)
AGIV (a)......................................................................................... 79,400 1,709
Deutsche Bank.................................................................................... 62,800 4,708
Friedrich Grohe ................................................................................. 6,800 1,930
Henkel KGaA
Ordinary shares............................................................................... 6,500 415
Preferred shares.............................................................................. 44,500 3,205
Mannesmann ...................................................................................... 4,130 2,988
----------
14,955
Hong Kong (1.9%)
Companion Building Materials..................................................................... 11,118,752 257
Hong Kong Ferry.................................................................................. 683,000 648
HSBC Holdings.................................................................................... 52,200 1,597
Vitasoy International Holdings................................................................... 1,320,364 477
----------
2,979
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<CAPTION>
<S> <C> <C>
India (0.6%)
Indian Petrochemicals GDRs....................................................................... 92,000 $ 518
Reliance Industries GDSs (a)..................................................................... 58,000 486
1,004
Indonesia (0.4%)
Charoen Pokphand Indonesia....................................................................... 1,037,500 57
Ever Shine Textile............................................................................... 2,019,688 99
Kawasan Industri Jababeka........................................................................ 1,516,333 171
Matahari Putra Prima............................................................................. 6,083,000 334
Putra Surya Multidana (a)........................................................................ 743,500 28
----------
689
Israel (0.6%)
Koor Industries ADRs............................................................................. 39,500 978
Italy (7.9%)
Banca Popolare di Milano......................................................................... 382,100 3,469
Olivetti Group (a)............................................................................... 2,216,320 3,155
Telecom Italia, savings shares................................................................... 910,325 5,578
----------
12,202
Japan (15.6%)
Canon ........................................................................................... 94,000 2,122
Hitachi.......................................................................................... 210,000 1,528
Ito-Yokado....................................................................................... 49,000 2,653
JF Japan OTC Fund (a)............................................................................ 840 336
JUSCO............................................................................................ 125,000 2,240
Kaneshita Construction........................................................................... 73,000 449
Kokusai Securities............................................................................... 123,000 1,098
Matsushita Electric Industrial................................................................... 201,000 3,226
Murata Manufacturing............................................................................. 55,000 1,518
Nippon Telegraph & Telephone (a)................................................................. 314 2,614
Promise.......................................................................................... 39,500 2,047
Tokyo Style...................................................................................... 140,000 1,375
World Equity Benchmark Shares - Japan Index Series............................................... 204,800 2,035
Yamazen ......................................................................................... 521,000 1,043
----------
24,284
Malaysia (0.2%)
IOI Properties .................................................................................. 298,000 255
Netherlands (5.6%)
Fortis Amev...................................................................................... 61,886 3,652
KPN.............................................................................................. 45,069 2,335
Philips Electronics, NY shares................................................................... 28,000 2,056
Koninklijke Sphinx Gustavsberg................................................................... 55,227 668
----------
8,711
New Zealand (0.8%)
Brierley Investments............................................................................. 2,154,883 1,218
Norway (3.8%)
Helikopter Services Group........................................................................ 124,000 1,415
Norsk Hydro ..................................................................................... 44,400 2,201
Saga Petroleum .................................................................................. 132,700 2,358
----------
5,974
<PAGE>
<CAPTION>
<S> <C> <C>
Panama (1.2%)
Banco Latinoamericanode Exportaciones, class E................................................... 47,800 $ 1,799
Peru (0.5%)
Southern Peru Copper............................................................................. 48,100 728
Philippines (0.7%)
Metro Pacific.................................................................................... 12,451,460 769
Southeast Asia Cement Holdings (a)............................................................... 15,000,000 249
----------
1,018
Portugal (0.9%)
Portugal Telecom ADRs............................................................................ 26,757 1,403
Russia (0.5%)
Fleming Russia Securities Fund (a)............................................................... 40,400 717
South Korea (1.9%)
Samchully ....................................................................................... 28,543 682
Samsung Electronics..............................................................................
GDRs, private placement (b)................................................................... 65,253 691
GDRs, registered.............................................................................. 248 7
Ordinary shares............................................................................... 1,337 70
Preferred shares.............................................................................. 25,774 411
SK Corporation................................................................................... 110,920 969
SK Telecom....................................................................................... 107 60
----------
2,890
Sweden (4.8%)
Asticus (a)...................................................................................... 86,950 1,001
Avesta-Sheffield................................................................................. 243,900 1,525
Biora ADRs (a)................................................................................... 32,200 805
Diligentia....................................................................................... 203,900 1,964
SSAB, B shares................................................................................... 115,400 2,122
----------
7,417
Switzerland (3.4%)
Bucher Holding................................................................................... 1,791 1,844
Danzas Holding................................................................................... 5,100 1,322
Novartis......................................................................................... 1,170 2,071
----------
5,237
Thailand (0.6%)
IFCT............................................................................................. 851,100 499
Siam Commercial Bank............................................................................. 283,666 419
----------
918
United Kingdom (10.0%)
Billiton ........................................................................................ 515,500 1,388
BG ...................................................................................... 531,164 2,749
Celsis International (a)......................................................................... 616,405 387
Centrica (a)..................................................................................... 638,000 1,207
Inchcape......................................................................................... 888,002 3,235
Powerscreen International ....................................................................... 368,930 1,437
Racal Electronics................................................................................ 455,800 2,595
SmithKline Beecham .............................................................................. 197,806 2,478
----------
15,476
<PAGE>
<CAPTION>
<S> <C> <C>
United States (1.7%)
Tele-Communications International, class A (a)................................................... 134,600 $ 2,709
----------
Total Equity Securities
(Cost $136,072).................................................................................. 153,175
<CAPTION>
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Principal
Short-Term Obligations (2.3%) Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United States (2.3%)
Commercial Paper (2.3%)
Associates Corp. of North America 6.050% 4/01/98
(Amortized cost $3,550).......................................................................... $ 3,550 3,550
- --------------------------------------------------------------------------------------------------------------------------------
Total Investments (100.9%)
(Cost Basis $139,622) (c)........................................................................ 156,725
Other Assets, Less Liabilities (-0.9%)........................................................... (1,375)
- --------------------------------------------------------------------------------------------------------------------------------
Total Net Assets (100.0%)........................................................................ $155,350
========
- --------------------------------------------------------------------------------------------------------------------------------
Notes to Portfolio of Investments
(a) Non-income producing security.
(b) Security is subject to contractual or legal restrictions on its resale. At
March 31, 1998, the value of all such securities represented 0.4 percent of
total net assets.
(c) At March 31, 1998, the cost of investments for federal income tax purposes
was $140,757. Net unrealized appreciation was $15,968, consisting of gross
unrealized appreciation of $38,323 and gross unrealized depreciation of
$22,355.
See accompanying Notes to Financial Statements.
</TABLE>
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<TABLE>
<CAPTION>
Stein Roe Advisor International Fund
Statement of Assets and Liabilities
March 31, 1998
(All amounts in thousands, except per-share amounts)
(Unaudited)
<S> <C>
Assets
Investment in SR&F International Portfolio, at value............................ $ 620
Cash ........................................................................... 33
Receivable for fund shares sold................................................. 1
Other assets.................................................................... 16
---------
Total assets................................................................. 670
---------
Liabilities
Payable to investment adviser................................................... 33
Other liabilities............................................................... 12
---------
Total liabilities............................................................ 45
---------
Net assets................................................................... $ 625
---------
Analysis of Net Assets
Paid-in capital................................................................. $ 593
Net unrealized appreciation on investments...................................... 44
Accumulated undistributed net investment income................................. 1
Accumulated net realized loss on investments ................................... (13)
---------
Net assets................................................................... $ 625
=========
Shares outstanding (unlimited number authorized)................................ 58
=========
Net asset value per share....................................................... $ 10.70
=========
See accompanying Notes to Financial Statements.
</TABLE>
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<TABLE>
Stein Roe Advisor International Fund
<CAPTION>
Statement of Operations
For the Six Months Ended March 31, 1998
(All amounts in thousands)
(Unaudited)
<S> <C>
Investment Income
Dividends and interest allocated from SR&F International Portfolio, net
of foreign taxes withheld..................................................... $ 3
------
Expenses
Amortization of organization costs.............................................. 14
Accounting fees................................................................. 12
SEC and state registration fees................................................. 10
Printing and postage............................................................ 3
Legal and audit fees............................................................ 3
Trustees' fees.................................................................. 3
Expenses allocated from SR&F International Portfolio............................ 1
Other........................................................................... 3
------
Total expenses............................................................... 49
Reimbursement of expenses by investment adviser................................. (47)
------
Net expenses................................................................. 2
------
Net investment income........................................................ 1
------
Realized and Unrealized Gains on Investments
Net realized losses on investments and foreign currency transactions
allocated from SR&F International Portfolio............................. (13)
Net change in unrealized appreciation or depreciation on investments and
foreign currency translations................................................. 37
------
Net gains on investments..................................................... 24
------
Net increase in net assets resulting from operations......................... $ 25
======
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Stein Roe Advisor International Fund
<CAPTION>
Statements of Changes in Net Assets
(All amounts in thousands)
(Unaudited)
Six Months Period
Ended Ended
March 31, September 30,
1998 1997(a)
-------------------------------
<S> <C> <C>
Operations
Net investment income .......................................................... $ 1 $ 1
Net realized losses on investments ............................................. (13) (1)
Net change in unrealized appreciation or depreciation of investments ........... 37 7
----- -----
Net increase in net assets resulting from operations ........................ 25 7
----- -----
Distributions to Shareholders
Distributions from net capital gains ........................................... (2) --
----- -----
Share Transactions
Subscriptions to fund shares ................................................... 493 100
Value of distributions reinvested .............................................. 2 --
----- -----
Net increase from share transactions ........................................ 495 100
----- -----
Net increase in net assets .................................................. 518 107
Total Net Assets
Beginning of period ............................................................ 107 --
----- -----
End of period .................................................................. $ 625 $ 107
===== =====
Accumulated Undistributed Net Investment Income ................................ $ 1 $ --
===== =====
Analyses of Changes in Shares of Beneficial Interest
Subscriptions to fund shares ................................................... 47 10
Issued in reinvestment of distributions ........................................ 1 --
----- -----
Net increase in fund shares ................................................. 48 10
Shares outstanding at beginning of period ...................................... 10 --
----- -----
Shares outstanding at end of period ............................................ 58 10
===== =====
(a)From commencement of operations on February 14, 1997.
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SR&F International Portfolio
<CAPTION>
Statement of Assets and Liabilities
March 31, 1998
(All amounts in thousands)
(Unaudited)
<S> <C>
Assets
Investments, at market value (cost $139,622).................................... $156,725
Cash ........................................................................... 57
Dividends receivable............................................................ 715
Receivable for investments sold................................................. 52
Other assets.................................................................... 1
-------------
Total assets................................................................. 157,550
-------------
Liabilities
Payable for investments purchased............................................... 2,057
Payable to investment adviser................................................... 116
Other liabilities............................................................... 27
-------------
Total liabilities............................................................ 2,200
-------------
Net assets applicable to investors' beneficial interest...................... $155,350
=============
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SR&F International Portfolio
<CAPTION>
Statement of Operations
For the Six Months Ended March 31, 1998
(All amounts in thousands)
(Unaudited)
<S> <C>
Investment Income
Dividends....................................................................... $1,119
Interest........................................................................ 272
--------
1,391
Foreign taxes withheld.......................................................... (138)
--------
Total investment income...................................................... 1,253
--------
Expenses
Management fees................................................................. 628
Custodian fees.................................................................. 39
Accounting fees................................................................. 14
Other........................................................................... 6
--------
Total expenses............................................................... 687
--------
Net investment income........................................................ 566
--------
Realized and Unrealized Gains (Losses) on Investments and
Foreign Currency Transactions
Net realized losses on investments.............................................. (3,670)
Net realized losses on foreign currency transactions............................ (46)
Net change in unrealized appreciation or depreciation on investments and
foreign currency translations................................................. 4,839
--------
Net gains on investments and foreign currency transactions................... 1,123
--------
Net Increase in Net Assets Resulting from Operations............................ $1,689
==========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SR&F International Portfolio
<CAPTION>
Statements of Changes in Net Assets
(All amounts in thousands)
(Unaudited)
Six Months Period
Ended Ended
March 31, September 30,
1998 1997(a)
----------------------------
<S> <C> <C>
Operations
Net investment income ............................................................ $ 566 $ 1,563
Net realized gains (losses) on investments and foreign currency transactions ..... (3,716) 5,995
Net change in unrealized appreciation or depreciation on investments and
foreign currency translations .................................................. 4,839 5,615
--------- ---------
Net increase in net assets resulting from operations .......................... 1,689 13,173
--------- ---------
Transactions in Investors' Beneficial Interests
Contributions .................................................................... 13,699 171,752
Withdrawals ...................................................................... (26,468) (18,495)
--------- ---------
Net increase (decrease) from transactions in investors' beneficial interest ... (12,769) 153,257
--------- ---------
Net increase (decrease) in net assets ......................................... (11,080) 166,430
Total Net Assets
Beginning of Period .............................................................. 166,430 --
--------- ---------
End of Period .................................................................... $ 155,350 $ 166,430
========= =========
(a) From commencement of operations on February 3, 1997.
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
Notes to Financial Statements
(All amounts, except per-share amounts, in thousands)
Note 1. Organization
The Stein Roe Advisor International Fund (the "Fund") is a series of the Stein
Roe Advisor Trust (the "Trust"), an open-end management investment company
organized as a Massachusetts business trust. The Fund invests substantially all
of its assets in SR&F International Portfolio (the "Portfolio"), which seeks to
achieve long-term growth of capital by investing primarily in a diversified mix
of foreign securities.
The Portfolio is a series of SR&F Base Trust, a Massachusetts common law
trust organized under an Agreement and Declaration of Trust dated August 23,
1993. The Portfolio commenced operations on February 3, 1997. At commencement,
Stein Roe International Fund contributed $132,942 in securities and other assets
in exchange for beneficial ownership of the Portfolio. On February 14, 1997,
Stein Roe Advisor International Fund contributed cash of $100. The Portfolio
allocates net asset value, income and expenses to each investor on a daily
basis, based on their respective percentage of ownership. At March 31, 1998,
Stein Roe International Fund and Stein Roe Advisor International Fund owned
99.60 percent and .40 percent, respectively, of the Portfolio.
Note 2. Significant Accounting Policies
The following summarizes the significant accounting policies of the Fund and
Portfolio. These policies are in conformity with generally accepted accounting
principles, which require management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
The books and records of the Fund and Portfolio are maintained in
U.S. dollars.
Investment Transactions and Investment Income
Investment transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date, and interest income is recorded on the accrual
basis. Interest income includes discount accretion on fixed income securities.
Realized gains and losses from investment transactions are reported on an
identified cost basis.
Security Valuations
All securities are valued as of March 31, 1998. Securities are valued at,
depending on the security involved, the last reported sales price, last bid or
asked price, or the mean between the last bid and asked prices as of the close
of the appropriate exchange or other designated time. A security that is listed
or traded on more than one exchange is valued at the quotation on the exchange
determined to be the primary exchange for such security. Securities and other
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees.
Currency Translations
For purposes of valuation, assets and liabilities are translated into U.S.
dollars using currency exchange rates that represent the midpoint between the
bid and asked rates as of 4 p.m., London time. Purchases and sales of securities
are translated into U.S. dollars using the prevailing exchange rate on the dates
of such transactions. The effect of changes in foreign exchange rates on
realized and unrealized security gains and losses is reflected as a component of
such gains and losses.
Forward Currency Exchange Contracts
The Fund and Portfolio may enter into forward currency exchange contracts
under which the Fund or Portfolio is obligated to exchange currencies at
specified future dates. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movements in
currency values. Neither the Fund nor the Portfolio had open contracts at March
31, 1998.
Federal Income Taxes
No provision is made for federal income taxes since (a) the Fund elects to
be taxed as a "regulated investment company" and make distributions to its
shareholders to be relieved of all federal income taxes under provisions of
current federal tax law; and (b) the Portfolio is treated as a partnership for
federal income tax purposes and all of its income is allocated to its owners
based on respective percentages of ownership.
Distribution to Shareholders
The Fund annually declares and pays dividends of any net investment income
and net realized capital gains, which are recorded on the ex-dividend date.
Dividends are determined in accordance with income tax principles, which may
treat certain transactions differently from generally accepted accounting
principles. Distributions in excess of tax basis earnings are reported in the
financial statements as a return of capital. Permanent differences in the
recognition or classification of income between the financial statements and tax
earnings are reclassified to paid-in capital.
<PAGE>
Note 3. Trustees' Fees and Transactions with Affiliates
The Portfolio pays a monthly management fee and the Fund pays a monthly
administrative fee to Stein Roe & Farnham Incorporated (the "Adviser"), an
indirect, majority-owned subsidiary of Liberty Mutual Insurance Company, for its
services as investment adviser and manager. The management fee is computed at an
annual rate of .85 percent of average daily net assets. The administrative fee
is computed at an annual rate of .15 percent of average daily net assets.
The Adviser also provides certain accounting services. For the period ended
March 31, 1998, the Fund and Portfolio incurred charges of $12 and $14,
respectively.
The administrative agreement provides that the Adviser will reimburse the
Fund to the extent that its annual expenses, excluding certain expenses, exceed
the applicable limits prescribed by any state in which the Fund's shares are
offered for sale. In addition, the Adviser has agreed to reimburse the Fund to
the extent that expenses exceed 1.75 percent of average annual net assets. This
expense limitation expires on January 31, 1999, subject to earlier termination
by the Adviser on 30 days notice.
Shares of the Fund are distributed by Liberty Financial Investments, Inc.
(the "Distributor"), an indirect, majority-owned subsidiary of Liberty Mutual
Insurance Company. The trustees of the Trust have adopted a plan of distribution
and service pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Plan"). The Plan provides that, as compensation for services and/or
distribution, the Distributor receives from the Fund a fee at an annual rate not
to exceed 0.25 percent of average daily net assets.
Transfer agent fees are paid to Colonial Investors Service Center, Inc.
("CISC"), an indirect, majority-owned subsidiary of Liberty Mutual Insurance
Company. Prior to October 15, 1997, transfer agent fees were paid to SteinRoe
Services Inc., also an indirect, majority-owned subsidiary of Liberty Mutual
Insurance Company.
Certain officers and trustees of the Trust are also officers of the Adviser.
The compensation of trustees not affiliated with the Adviser for the Fund and
the Portfolio for the period ended March 31, 1998, was $3 and $8, respectively.
No remuneration was paid to any other trustee or officer of the Trust.
Note 4. Short-Term Debt
To facilitate portfolio liquidity, the Fund and Portfolio maintain borrowing
arrangements under which they can borrow against portfolio securities. Neither
the Fund nor the Portfolio had borrowings during the period ended March 31,
1998.
Note 5. Investment Transactions
The Portfolio's aggregate cost of purchases and proceeds from sales other than
short-term obligations for the period ended March 31, 1998, were $30,252 and
$26,037, respectively.
<PAGE>
<TABLE>
Financial Highlights
Stein Roe Advisor International Fund
<CAPTION>
Selected per-share data (for a share outstanding throughout the period), ratios
and supplemental data.
Six Months
Ended Period
March 31, Ended
1998 September 30,
(Unaudited) 1997 (d)
------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period............................................. $10.70 $10.00
-------- --------
Income From Investment Operations
Net investment income 0.06 0.06
Net realized and unrealized gains on investments 0.11 0.64
-------- --------
Total from investment operations 0.17 0.70
-------- --------
Distributions
Net realized capital gains.................................................... (0.17) --
-------- --------
Net Asset Value, End of Period................................................... $10.70 $10.70
======== ========
Ratio of net expenses to average net assets (a).................................. 1.75%(c) 1.75%(c)
Ratio of net investment income to average net assets (b) 1.22%(c) 0.87%(c)
Total return (b) 1.83% 7.00%
Net assets, end of period (000's)................................................ $ 625 $ 107
(a)If the Fund had paid all of its expenses and there had been no reimbursement
of expenses by the investment adviser, this ratio would have been 56.41
percent for the six months ended March 31, 1998, and 88.15 percent for the
period ended September 30, 1997.
(b)Computed giving effect to the investment adviser's expense limitation
undertaking.
(c)Annualized
(d)From commencement of operations on February 14, 1997.
</TABLE>
<PAGE>
<TABLE>
Financial Highlights CONTINUED
<CAPTION>
SR&F International Portfolio
Six Months
Ended Period
March 31, Ended
1998 September 30,
(Unaudited) 1997 (c)
<S> <C> <C>
Ratios to Average Net Assets
Ratio of net expenses to average net assets ................................. 0.93%(a) 0.98%(a)
Ratio of net investment income to average net assets ........................ 0.77%(a) 1.58%(a)
Portfolio turnover rate ..................................................... 19% 18%
Average commissions per share (b) ........................................... $ 0.0062 $ 0.0002
(a)Annualized
(b)Foreign commissions are generally lower than U.S. commissions when expressed
as cents per share due to the lower per-share price of many non-U.S.
securities.
(c)From commencement of operations on February 3, 1997.
</TABLE>
<PAGE>
Stein Roe Advisor Trust
Trustees
Thomas W. Butch
President, Mutual Fund Division and Director,
Stein Roe & Farnham Incorporated
William W. Boyd
Chairman and Director, Sterling Plumbing
Group Inc.
Lindsay Cook
Senior Vice President, Liberty Financial
Companies, Inc.
Douglas A. Hacker
Senior Vice President and Chief Financial
Officer, United Airlines
Janet Langford Kelly
Senior Vice President, Secretary and General
Counsel, Sara Lee Corporation
Charles R. Nelson
Van Voorhis Professor of Political Economy,
University of Washington
Thomas C. Theobald
Managing Partner, William Blair Capital Partners
Officers
Thomas W. Butch, President
William D. Andrews, Executive Vice President
Loren A. Hansen, Executive Vice President
Hans P. Ziegler, Executive Vice President
Gary A. Anetsberger, Senior Vice President,
Chief Financial Officer
David P. Brady, Vice President
Kevin M. Carome, Vice President, Assistant Secretary
Daniel K. Cantor, Vice President
Erik P. Gustafson, Vice President
David P. Harris, Vice President
Harvey B. Hirschhorn, Vice President
Michael T. Kennedy, Vice President
Stephen F. Lockman, Vice President
Eric S. Maddix, Vice President
Lynn C. Maddox, Vice President
Anne E. Marcel, Vice President
M. Jane McCart, Vice President
John S. McLandsborough, Vice President
Arthur J. McQueen, Vice President
Nicolette D. Parrish, Vice President, Assistant Secretary
Richard B. Peterson, Vice President
M. Gerard Sandel, Vice President
Gloria J. Santella, Vice President
Heidi J. Walter, Vice President, Secretary
Sharon R. Robertson, Controller
Scott E. Volk, Treasurer
Margaret O. Zwick, Assistant Treasurer
Janet B. Rysz, Assistant Secretary
Agents and Advisers
Stein Roe & Farnham Incorporated
Investment Adviser
State Street Bank and Trust Company
Custodian
Colonial Investors Service Center, Inc.
Transfer Agent
Bell, Boyd & Lloyd
Legal Counsel to the Trust
Arthur Andersen LLP
Independent Public Accountants
<PAGE>
Stein Roe & Farnham
One South Wacker Drive
Chicago, IL 60606-1130
www.steinroe.com
Liberty Financial Investments, Inc. Distributor
