STEIN ROE ADVISOR FUNDS
SEMIANNUAL REPORT
DECEMBER 31, 1999
[PHOTO OF BRIDGE]
STEIN ROE ADVISOR FUND
TAX-EXEMPT FUND
STEIN ROE ADVISOR HIGH-YIELD MUNICIPALS FUND
LOGO: STEIN ROE MUTUAL FUNDS
SENSIBLE RISKS. INTELLIGENT INVESTMENTS.(R)
<PAGE>
CONTENTS
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FUND PERFORMANCE............................................................. 1
How the Stein Roe Advisor High-Yield Municipals Fund has done over time
QUESTIONS & ANSWERS.......................................................... 2
Interview with the portfolio manager and a summary of investment activity
PORTFOLIO OF INVESTMENTS..................................................... 3
A complete list of investments with market values
FINANCIAL STATEMENTS......................................................... 9
Statements of assets and liabilities, operations and changes in net assets
NOTES TO FINANCIAL STATEMENTS................................................ 15
FINANCIAL HIGHLIGHTS......................................................... 17
Selected per-share data
Must be preceded or accompanied by a prospectus.
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FUND PERFORMANCE
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To evaluate a fund's historical performance, one can look at the cumulative
return percentage, the average annual return percentage or the growth of a
hypothetical $10,000 investment. Below we compare Stein Roe Advisor High-Yield
Municipals Fund with its benchmark. Each performance figure includes changes in
a fund's share price, plus reinvestment of any dividends (net investment income)
and capital gain distributions (the profits the fund earns when it sells
fixed-income securities that have grown in value).
SIX-MONTH CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1999
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<CAPTION>
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Six Months 1 Year 5 Years 10 Years
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<S> <C> <C> <C> <C>
ADVISOR HIGH-YIELD MUNICIPALS FUND (3.38)% (2.90)% 6.38% 5.94%
Lehman Brothers Municipal Bond Index (1.17) (2.06) 6.91 6.89
</TABLE>
GROWTH of a $10,000 investment for the periods ended December 31.
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STEIN ROE ADVISOR HIGH-YIELD MUNICIPALS FUND
STEIN ROE ADVISOR HIGH-YIELD LEHMAN BROTHERS
MUNICIPALS FUND MUNICIPAL BOND INDEX
12/31/89 10000 10000
12/31/90 10744 10729
12/31/91 11764 12032
12/31/92 12369 13094
12/31/93 13648 14702
12/31/94 13066 13941
12/31/95 15334 16376
12/31/96 15987 17101
12/31/97 17467 18676
12/31/98 18332 19887
12/31/99 17800 19476
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. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. Total return figures do not include sales
charges or contingent deferred sales charges (CDSC). Class K shares may be
purchased only through certain intermediaries, including certain bank trust
departments, wrap fee programs and retirement plans. The Advisor currently
limits expenses on Class K shares to 1.00% of average net assets. Absent this
limit, total return would be less. Historical performance for Class K shares for
the period prior to 2/4/98 is based on the performance of the SR&F High-Yield
Municipals Portfolio, restated to reflect 12b-1 fees and any other expenses
applicable to that class, without giving any effect to fee waivers and assuming
reinvestment of dividends and capital gains. This graph compares the performance
of the Stein Roe Advisor High-Yield Municipals Fund to the Lehman Brothers
Municipal Bond Index, an unmanaged group of municipal bonds not associated with
any Stein Roe fund. Unlike mutual funds, it is not possible to invest directly
in an index.
<PAGE>
QUESTIONS & ANSWERS
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AN INTERVIEW WITH MAUREEN NEWMAN, PORTFOLIO MANAGER OF
STEIN ROE ADVISOR HIGH-YIELD MUNICIPALS FUND AND SR&F HIGH-YIELD MUNICIPALS
PORTFOLIO
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FUND DATA
INVESTMENT OBJECTIVE:
Seeks a high level of tax-free income consistent with capital preservation by
investing in long-term municipal securities, principally of medium or lower
quality.
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Q: HOW DID THE FUND PERFORM DURING THE PERIOD?
NEWMAN: It was an extremely difficult six months for the municipal bond market.
Stronger-than-expected growth in the U.S. and rebounding foreign economies
fanned inflationary concerns and interest rate worries throughout the period. In
efforts designed to stymie any potential inflationary pressures, the Federal
Reserve Board (Fed) raised short-term interest rates by a total of a half a
percentage point during the period. Both Treasury and municipal bonds
experienced rising yields and falling prices in response to inflationary
concerns, although municipals proved more resilient than Treasurys and posted
smaller price declines. As a result, Stein Roe Advisor High-Yield Municipals
Fund returned negative 3.38% for the six months ended December 31, 1999, while
the Lehman Brothers Municipal Bond Index, a broad gauge of the municipal
market's performance, returned negative 1.17% for the same period.
Q: HOW DID YOU MANAGE THE PORTFOLIO'S INTEREST-RATE SENSITIVITY?
NEWMAN: The Portfolio's duration--a measure of its interest-rate sensitivity --
remained neutral. The Portfolio was no more or less sensitive to rising rates
than the overall high-yield municipal market. We chose to maintain a neutral
stance because it was unclear whether the market would welcome potential
interest rate hikes as pre-emptive strikes against inflation, or whether it
would view tightening actions as an indication that inflationary pressures
existed. Given that the market reaction to interest rate hikes was mostly
negative, the Portfolio's neutral stance did not detract from performance.
Q: IN WHAT OTHER AREAS DID YOU FIND THE BEST OPPORTUNITIES?
NEWMAN: We found some attractive opportunities in the hospital sector, which had
come under pressure due to a combination of cutbacks in Medicare reimbursements,
some well-publicized problems with scattered facilities around the country, and
the pullback on the part of some municipal bond insurers from lower-rated
hospitals. That provided the Portfolio with selective opportunities to add
high-yielding hospital bonds at very attractive prices. We chose well-managed
hospitals that were either the sole provider in their communities or those that
had a dominant market share in their service region. We also found attractively
priced, high-yielding opportunities among land-based bonds used to fund
single-family residential developments in California and Florida. We chose
projects headed by larger, more experienced developers who had successfully sold
a fair amount of the homes prior to development.
Q: WHAT IS YOUR OUTLOOK FOR THE YEAR AHEAD?
NEWMAN: We're reasonably optimistic that the interest rate environment will
improve by year-end. Our outlook calls for slower economic growth later this
year in response to rising interest rates. If this anticipated economic slowdown
occurs, we believe that long-term interest rates will stabilize. We expect that
the Fed will continue to hike short-term interest rates during the first half of
2000 in its fight against inflation. Whether the market reacts positively or
negatively to further rate hikes remains uncertain, so it wouldn't be surprising
if the market remains volatile. That's why we plan to keep the Portfolio's
duration neutral for the time being.
As for high-yield municipals, we believe they will do well relative to
their higher-rated counterparts as the supply and demand imbalance that caused
them to underperform in late 1999 abates. Furthermore, we believe municipal
bonds are likely to remain an attractive alternative to taxable fixed-income
securities for investors in high tax brackets.
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. Total
return includes changes in share price and reinvestment of income and capital
gains distributions, if any. Portfolio holdings are disclosed as a percentage of
SR&F High-Yield Municipals Portfolio as of 12/31/99 and are subject to change.
Investing in high-yield bonds involves greater credit risks than investing in
higher-quality bonds. Income distributions are exempt from federal income taxes
but may be subject to the federal alternative minimum tax and state and local
taxes. Capital gains, if any, are also taxable. The Lehman Brothers Municipal
Bond Index is an unmanaged group of investment grade municipal bonds; it is not
available for direct investment.
<PAGE>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
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Portfolio of Investments at December 31, 1999 (Unaudited)
(All amounts in thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS 96.1% Par Value
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<S> <C> <C>
EDUCATION - 3.3%
EDUCATION - 0.9%
IL State Development Finance Authority, Latin School of Chicago, Series 1998, 5.650% 8/1/28... $ 1,725 $ 1,515
MN Victoria, Holy Family Catholic High School, Series 1999-A, 5.875% 9/1/29................... 1,200 1,066
-----------
2,581
STUDENT LOANS - 2.4%
NE Nebhelp, Inc., Series 1993 A-6, 6.450% 6/1/18.............................................. 4,000 4,020
NM State Educational Assistance Foundation, Series 1996 A-2, 6.650% 11/1/25................... 1,955 1,955
TX Brazos Higher Educational Facilities Authority, Series 1993 C-2, 5.875% 6/1/04............. 390 393
-----------
6,368
HEALTHCARE - 19.7%
CONGREGATE CARE RETIREMENT - 6.7%
FL Orange County Health Facilities Authority, Orlando Lutheran Towers, Inc., Series 1996,
8.625% 7/1/20.............................................................................. 5,000 5,319
MA State Development Finance Agency, Series 1999-A:
5.625% 7/1/15.............................................................................. 500 436
5.750% 7/1/23.............................................................................. 250 211
NJ State Economic Development Authority, Winchester Gardens, Series 1996-A,
8.625% 11/1/25............................................................................. 5,000 5,381
TN Metropolitan Government, Nashville and Davidson County, Blakeford at Green Hills,
Series 1998, 5.650% 7/1/24................................................................. 1,500 1,215
TX Abilene Health Facilities Development Corp., Sears Methodist Retirement Obligation Group:
Series 1998-A, 5.900% 11/15/25............................................................. 2,100 1,748
Series 1999, 6.000% 11/15/29............................................................... 500 419
WI State Health & Educational Facilities Authority:
Attic Angel Obligated Group, 5.750% 11/15/27............................................... 1,250 1,021
Clement Manor, Series 1998, 5.750% 8/15/24................................................. 3,000 2,471
-----------
18,221
HEALTH SERVICES - 0.1%
MA State Development Finance Agency, Boston Biomedical Research Institute, Series 1999,
5.650% 2/1/19.............................................................................. 250 215
HOSPITALS - 9.4%
AZ Health Facilities Authority, Phoenix Memorial Hospital, Series 1991, 8.125% 6/1/12......... 2,500 2,528
CO La Junta, Arkansas Valley Regional Medical Center, Series 1999, 6.100% 4/1/24.............. 500 439
CO State Health Care Facilities Authority, National Jewish Medical & Research Center,
Series 1998, 5.375% 1/1/23................................................................. 250 200
FL Orange County Health Facilities Authority, Orlando Regional Healthcare System, Series 1999,
6.000% 10/1/26............................................................................. 1,200 1,123
IL Southwestern Illinois Development Authority, Anderson Hospital, Series 1999:
5.500% 8/15/20............................................................................. 500 414
5.625% 8/15/29............................................................................. 250 204
IN State Health Facilities Financing Authority, Riverview Hospital, Series 1999, 5.500% 8/1/24 575 475
KS Wichita, CSJ Health System of Wichita, Inc., Series 1991-X, 7.000% 11/15/18................ 2,000 2,123
LA State Public Facilities Authority, Touro Infirmary, Series 1999, 5.625% 8/15/29............ 1,500 1,241
MA State Health & Educational Facilities Authority, Dana Farber Cancer Institute, Series
1995 G-1, 6.250% 12/1/22................................................................... 2,000 1,934
MI Dickinson County, Series 1999, 5.800% 11/1/24.............................................. 1,300 1,100
MI State Hospital Finance Authority, Detroit Medical Center, Series 1998-A, 5.250% 8/15/28.... 1,000 752
MN Maplewood, Healtheast, Inc., Series 1996, 5.700% 11/15/02.................................. 500 488
NC State Medical Care Commission, Stanley Memorial Hospital, Series 1999, 6.375% 10/1/29...... 1,000 973
NH State Higher Educational & Health Facilities Authority, Littleton Hospital Assoc., Inc.,
Series 1998-A, 6.000% 5/1/28............................................................... 1,000 843
OH Franklin County, Doctors OhioHealth Corp., Series 1998-A, 5.600% 12/1/28................... 2,650 2,155
OH Highland County Joint Township Hospital District, Series 1999, 6.750% 12/1/29.............. 1,250 1,142
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO Continued
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Par Value
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<S> <C> <C>
HEALTHCARE - CONT.
HOSPITALS - (CONTINUED)
OH Miami County, Upper Valley Medical Center, Inc., Series 1996-A, 6.375% 5/15/26............. $ 1,015 $ 929
PA Philadelphia Hospitals & Higher Education Facilities Authority, Temple University Hospital,
Series 1997, 5.875% 11/15/23............................................................... 3,160 2,686
TX Richardson Hospital Authority, Baylor Richardson Medical Center, Series 1998,
5.625% 12/1/28............................................................................. 900 733
TX Tyler Health Facilities Development Corp., Mother Frances Hospital, Series 1997-A,
5.625% 7/1/13.............................................................................. 1,785 1,585
WA State Health Care Facilities Authority, Sacred Heart Medical Center, Series 1992,
6.875% 2/15/12............................................................................. 1,500 1,588
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25,655
INTERMEDIATE CARE FACILITIES - 0.6%
IL State Development Finance Authority, Hoosier Care, Inc., Series 1999-A, 7.125% 6/1/34...... 1,500 1,361
IN State Health Facilities Financing Authority, Hoosier Care, Inc., Series 1999-A,
7.125% 6/1/34.............................................................................. 150 136
-----------
1,497
NURSING HOMES - 2.9%
AK Juneau, St. Ann's Care Center, Series 1999, 6.875% 12/1/25................................. 700 637
CO State Health Facilities Authority, Volunteers of America Care Facilities, Inc., Series 1999-A,
5.750% 7/1/10.............................................................................. 1,095 1,001
IN State Health Facilities Financing Authority, Metro Health Indiana, Inc., Series 1998,
6.400% 12/1/33............................................................................. 1,500 1,292
MA State Development Finance Agency, Alliance Health Care Facilities, Series 1999,
7.100% 7/1/32.............................................................................. 1,250 1,176
MN Minneapolis, Walker Methodist Senior Services Group, Series 1998-C, 6.000% 11/15/28........ 1,300 1,079
MN New Hope, North Ridge Care Center, Inc., Series 1999, 5.875% 3/1/29........................ 900 759
MN Sartell, Foundation for Healthcare, Series 1999-A, 6.625% 9/1/29........................... 2,000 1,782
-----------
7,726
HOUSING - 7.8%
ASSISTED LIVING/SENIOR - 1.9%
DE Kent County, Heritage at Dover, Series 1999, 7.625% 1/1/30................................. 1,500 1,451
GA Columbus Housing Authority, The Gardens at Calvary, Series 1999, 7.000% 11/15/29........... 1,000 918
LA State Public Facilities Authority, Progressive Healthcare Providers, Inc., Series 1998,
6.375% 10/1/28............................................................................. 2,000 1,740
NC State Medical Care Commission, DePaul Community Facilities Project, Series 1999,
7.625% 11/1/29............................................................................. 1,250 1,211
-----------
5,320
MULTI-FAMILY - 4.0%
Charter Mac Equity Issue Trust, 6.625% 6/30/49 (a)............................................ 2,000 1,945
CO State Health Facilities Authority, Birchwood Manor Series 1991-A, 7.250% 4/1/11............ 610 623
FL Housing Finance Agency, Palm Aire Retirement Facility Project, Series 1989-S,
10.000% 1/1/20 (b)......................................................................... 2,731 2,676
GA Clayton County Housing Authority, Magnolia Park Apartments, Series 1999-A,
6.250% 6/1/30.............................................................................. 1,000 911
IL State Development Finance Authority, Catholic Charities Housing Development Corp., Series
1993-C, 5.950% 1/1/09...................................................................... 1,400 1,356
IL State Housing Development Authority, Series 1991-C, 7.400% 7/1/23.......................... 140 146
IN New Castle, Raintree Apartments, Series 1988-B, (c) 3/1/18 (b) ............................ 30,655 77
MO State Health & Educational Facilities Authority, Lutheran Senior Services, Series 1997,
5.750% 2/1/17.............................................................................. 2,000 1,830
OH Greater Allen County Housing Development Authority, Steiner-McBride Apartments,
10.250% 9/1/03............................................................................. 1,260 1,260
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10,824
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<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO Continued
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Par Value
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<S> <C> <C>
HOUSING - 7.8%
SINGLE FAMILY - 1.9%
IA State Housing Finance Authority, Series 1984-A, (c) 9/1/16................................. $ 9,590 $ 1,515
ID State Housing Agency, Series 1991-B, 7.500% 7/1/24......................................... 1,465 1,516
MT State Housing Board:
Series 1991 B-1, 7.300% 10/1/17............................................................ 300 308
Series 1991 B-2, 7.500% 4/1/23............................................................. 330 339
UT State Housing Finance Agency:
Series 1991 B-2, 7.750% 1/1/23............................................................. 60 61
Series 1991 C-3, 7.550% 7/1/23............................................................. 150 154
WA State Housing Finance Commission, Series 1991-C:
(c) 1/1/22................................................................................. 995 195
(c) 7/1/22................................................................................. 1,090 205
(c) 1/1/23................................................................................. 1,100 200
(c) 7/1/23................................................................................. 1,100 193
(c) 1/1/24................................................................................. 1,100 186
(c) 7/1/24................................................................................. 1,100 179
-----------
5,051
INDUSTRIAL - 10.4%
FOOD PRODUCTS - 3.3%
GA Cartersville Development Authority, Anheuser Busch Cos., Inc., Series 1999,
7.375% 5/1/09.............................................................................. 3,000 3,381
IN Hammond, American Maize Products Co., Series 1994, 8.000% 12/1/24.......................... 4,000 4,320
MI State Strategic Fund, Michigan Sugar Co., Carrolton Project, Series 1998-C,
6.550% 11/1/25............................................................................. 1,500 1,350
-----------
9,051
FOREST PRODUCTS - 4.0%
GA Rockdale County Development Authority, Solid Waste Disposal, Visy Paper, Inc., Series 1993,
7.500% 1/1/26.............................................................................. 1,000 1,030
IN Jasper County, Georgia Pacific Corp., Series 1999, 5.600% 4/1/29........................... 1,000 844
LA De Soto Parish, International Paper Co., Series-A, 7.700% 11/1/18.......................... 2,500 2,710
MS Lowndes County, Weyerhaeuser Corp., Series 1992-A, 6.800% 4/1/22........................... 5,995 6,350
-----------
10,934
METALS & MINING - 2.2%
IN State Development Finance Authority, Inland Steel, Series A, 5.750% 10/1/11................ 5,000 4,312
NV State Department of Business & Industry, Wheeling-Pittsburgh Steel Corp., Series 1999-A,
8.000% 9/1/14.............................................................................. 250 238
VA Greensville County Industrial Development Authority, Wheeling Steel, Series 1999-A:
6.375% 4/1/04.............................................................................. 125 120
7.000% 4/1/14.............................................................................. 555 508
VA Peninsula Ports Authority, Ziegler Coal Project, Series 1997,
6.900% 5/2/22.............................................................................. 825 712
-----------
5,890
OIL & GAS - 0.9%
TX Texas City Industrial Development Corp., Arco Pipe Line Co. Project, Series 1990,
7.375% 10/1/20............................................................................. 2,000 2,308
OTHER - 14.6%
OTHER - 0.4%
NY Westchester Tobacco Asset Securitization Corp., Series 2021, (c) 7/15/29................... 1,250 1,033
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO Continued
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Par Value
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<S> <C> <C>
OTHER - CONT.
REFUNDED/ESCROWED (D) - 14.2% CO Adams County, Series 1991-B:
11.250% 9/1/11............................................................................. $ 325 $ 468
11.250% 9/1/11............................................................................. 360 528
11.250% 9/1/11............................................................................. 220 329
11.250% 9/1/12............................................................................. 1,440 2,183
CO Denver City and County Airport, Series D, 7.750% 11/15/21.................................. 830 892
CO State Health Facilities Authority, PSL Health Systems, Series 1991-B, 8.500% 2/15/21....... 3,250 3,458
FL Leesburg, Leesburg Regional Medical Center, Series 1991-A, 7.375% 7/1/11................... 775 838
IL Chicago, Skyway Toll Bridge, Series 1994, 6.750% 1/1/17.................................... 1,500 1,631
IL Health Facility Authority, Edward Hospital Association Project, Series 1992, 7.000% 2/15/22 685 729
IL Health Facility Authority, United Medical Center-Formerly, Series 1991, 8.125% 7/1/06...... 2,015 2,161
IN Indianapolis Local Public Improvement Bond Bank, Series 1999-E, 6.700% 1/1/17 (e).......... 5,900 6,241
LA State Public Facilities Authority, Womans Hospital Foundation, Series 1992,
7.250% 10/1/22............................................................................. 2,300 2,481
MI Adams County, Jefferson Davis Memorial Hospital, Series 1991, 7.900% 10/1/08............... 750 805
NC Eastern Municipal Power Agency, Series 1991-A, 6.500% 1/1/18............................... 3,320 3,589
PA Allentown Area Hospital Authority, Sacred Heart Hospital of Allentown, Series 1991,
7.500% 7/1/06.............................................................................. 3,460 3,634
PA Montgomery County Higher Education & Health Authority, Jeanes Hospital, Series 1990,
8.750% 7/1/20.............................................................................. 3,200 3,334
SD State Student Loan Assistance Corp., Series 1989-C, 7.450% 8/1/00.......................... 2,700 2,749
WA Quincy, Series 1990-I, 9.250% 11/1/10...................................................... 2,255 2,346
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38,396
OTHER REVENUE - 2.0%
RECREATION
CA Long Beach Aquarium of the Pacific, Series 1995-A, 6.125% 7/1/23........................... 5,750 5,368
RESOURCE RECOVERY - 0.1%
DISPOSAL
IL Development Finance Authority, Waste Management, Inc., Series 1997, 5.050% 1/1/10.......... 250 209
TAX-BACKED - 10.2%
LOCAL APPROPRIATED - 0.9%
PA Philadelphia Municipal Authority, Series 1993-D, 6.250% 7/15/13............................ 2,500 2,509
LOCAL GENERAL OBLIGATIONS - 2.5%
NY New York City:
Series 1996-B, 7.250% 8/15/07.............................................................. 1,000 1,119
Series G, 5.750% 2/1/14.................................................................... 5,720 5,665
-----------
6,784
SPECIAL NON-PROPERTY TAX - 1.2%
MO St. Louis County Industrial Development Authority, Kiel Center Arena, Series 1992,
7.875% 12/1/24............................................................................. 3,000 3,154
SPECIAL PROPERTY TAX - 2.5%
CA Orange County Community Facilities District, Ladera Ranch, Series 1999 A,
6.500% 8/15/21............................................................................. 1,000 962
FL Heritage Palms Community Development District, Series 1999, 6.250% 11/1/04................. 1,000 988
FL Heritage Springs Community Development District, Series 1999-B, 6.250% 5/1/05.............. 1,250 1,234
FL Indigo Community Development District, Series 1999-B, 6.400% 5/1/06........................ 1,000 988
FL Northern Palm Beach County Improvement District, Series 1999, 6.000% 8/1/29................ 750 687
<PAGE>
<CAPTION>
SR&F High-Yield Municipals Portfolio Continued
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Par Value
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<S> <C> <C>
TAX-BACKED - CONT.
SPECIAL PROPERTY TAX - (CONTINUED)
FL Orlando, Conroy Road Interchange Project, Series 1998-A:
5.500% 5/1/10.............................................................................. $ 200 $ 189
5.800% 5/1/26.............................................................................. 500 432
FL Stoneybrook Community Development District:
Series 1998-A, 6.100% 5/1/19............................................................... 330 309
Series 1998-B, 5.700% 5/1/08............................................................... 975 936
-----------
6,725
STATE APPROPRIATED - 0.8%
NY Triborough Bridge & Tunnel Authority, Javits Convention Center Project, Series-E,
7.250% 1/1/10.............................................................................. 2,000 2,220
STATE GENERAL OBLIGATIONS - 2.3%
MA Massachusetts Bay Transportation Authority, Series 1992-B, 6.200% 3/1/16................... 5,825 6,098
TRANSPORTATION - 7.0%
AIR TRANSPORTATION - 5.4%
IN Indianapolis Airport Authority, Federal Express Corp., Series 1994, 7.100% 1/15/17......... 4,000 4,131
NY New York City Industrial Development Agency, Terminal One Group Association Project,
6.000% 1/1/15.............................................................................. 3,465 3,452
PA Philadelphia Authority for Industrial Development, Aero Philadelphia, Series 1999,
5.500% 1/1/24.............................................................................. 1,000 836
TX Alliance Airport Authority, AMR Corp., Series 1991, 7.000% 12/1/11......................... 4,070 4,283
TX Houston Airport System, Continental Airline Terminal, Series B, 6.125% 7/15/17............. 2,000 1,838
-----------
14,540
AIRPORTS - 1.6%
CO Denver City and County Airport, Series D, 7.750% 11/15/21.................................. 3,170 3,358
IN State Transportation Finance Authority, Airport Facilities Lease, Series 1992-A,
6.250% 11/1/16............................................................................. 950 951
-----------
4,309
UTILITY - 21.0%
INDEPENDENT POWER PRODUCER - 5.5%
OH State Water Development Authority, Bay Shore Power Project, Series 1998-A,
5.875% 9/1/20.............................................................................. 3,500 2,971
PA State Economic Development Financing Authority, Northampton Generating:
Series A, 6.500% 1/1/13.................................................................... 2,000 1,984
Series 1994-B, 6.750% 1/1/07............................................................... 3,000 3,061
VA Pittsylvania County Industrial Development Authority, Multitrade of Pittsylvania,
Series 1994-A:
7.450% 1/1/09............................................................................ 3,500 3,622
7.550% 1/1/19............................................................................ 3,100 3,208
-----------
14,846
INVESTOR OWNED - 6.9%
CT State Development Authority, Connecticut Light & Power Co.,
Series 1993-A, 5.850% 9/1/28.............................................................. 2,900 2,570
LA Calcasieu Parish Industrial Development Board, Entergy Gulf States, Inc., Series 1999,
5.450% 7/1/10.............................................................................. 500 467
LA West Feliciana Parish, Entergy Gulf States, Inc., Series 1999-B, 6.600% 9/1/28............. 250 238
MS State Business Finance Corp., Systems Energy Resources, Inc., Series 1999,
5.900% 5/1/22.............................................................................. 1,250 1,081
NM Farmington:
Public Service Co. of New Mexico, Series 1996-A, 6.300% 12/1/16............................ 5,000 4,830
Tucson Electric Power Co., Series 1997-A, 6.950% 10/1/20................................... 2,000 1,945
NV Humboldt County Pollution Control Revenue, Idaho Power Co. Project, 8.300% 12/1/14......... 2,000 2,239
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<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO Continued
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Par Value
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<S> <C> <C>
UTILITY - CONT.
INVESTOR OWNED - (CONTINUED)
PA Beaver County Industrial Development Authority, Toledo Edison Co., Series 1995,
7.625% 5/1/20.............................................................................. $ 4,900 $ 5,249
-----------
18,619
JOINT POWER AUTHORITY - 5.7%
GA Municipal Electric Authority, Series 1991-V, 6.600% 1/1/18................................. 6,065 6,439
NC Eastern Municipal Power Agency, Series 1991-A, 6.500% 1/1/18............................... 1,680 1,642
WA State Public Power Supply System, Nuclear Project No. 2:
Series 1991-A, (c) 7/1/07.................................................................. 6,945 4,630
Series 1992-A, 6.300% 7/1/12............................................................... 2,500 2,653
-----------
15,364
WATER & SEWER - 2.9%
PA Dauphin County Industrial Development Authority, Dauphin Water Supply Co.,
Series 1992-A, 6.900% 6/1/24............................................................... 3,200 3,484
PA Philadelphia, Series 1992-10, 7.350% 9/1/04(e)............................................. 4,060 4,357
-----------
7,841
TOTAL MUNICIPAL BONDS
(cost of $262,963) (f)........................................................................ 259,656
-----------
- ---------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS 1.8%
- ---------------------------------------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (G)
MI Flint Hospital Building Authority, Hurley Medical Center, Series 1995 B, 5.500% 7/1/15..... 600 600
MN Minneapolis, Series B, 5.500% 12/1/07...................................................... 3,180 3,180
MO State Environmental Improvement & Energy Resource Authority, Monsanto Co.,
Series 1993, 5.500% 6/1/23................................................................. 200 200
TX Gulf Coast Waste Disposal Authority, Monsanto Co., Series 1996, 4.750% 7/1/01.............. 800 800
-----------
TOTAL SHORT-TERM OBLIGATIONS..................................................................... 4,780
-----------
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET 2.1%............................................................. 5,732
-----------
NET ASSETS 100.0%................................................................................ $270,168
===========
- ---------------------------------------------------------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) This security is exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1999, the value of this security amounted to $1,945 or 0.1% of net assets.
(b) This issuer is in default of certain debt covenants. Income is not being
accrued.
(c) Zero coupon bond.
(d) The Fund has been informed that each issuer has placed direct obligations of
the U.S. Government in an irrevocable trust solely for the payment of
principal and interest.
(e) These securities, or a portion thereof, with a total market value of
$10,598, are being used to collateralize open futures contracts.
(f) Cost for financial statement and federal income tax purposes is identical.
(g) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of December 31, 1999.
Short futures contracts open at December 31, 1999:
Par value Unrealized
covered by Expiration appreciation
Type contract month at 12/31/99
----- -------- -------- -------
Municipal Bond 4,900 March $ 14
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
(All amounts in thousands)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments, at market value (cost $262,963) ................................... $259,656
Short-term obligations ......................................................... 4,780
Interest receivable ............................................................ 5,350
Receivable for investments sold ................................................ 427
Cash ........................................................................... 35
Variation margin receivable on futures ......................................... 1
--------
Total assets ................................................................ 270,249
--------
LIABILITIES
Payable to investment Advisor .................................................. 10
Other liabilities .............................................................. 71
--------
Total liabilities ........................................................... 81
--------
Net assets applicable to investors' beneficial interest ..................... $270,168
========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
December 31, 1999 (Unaudited)
(All amounts in thousands)
<S> <C>
INVESTMENT INCOME
Interest .................................................................................... $ 9,164
--------
EXPENSES
Management fees ............................................................................. 622
Accounting fees ............................................................................. 16
Transfer agent fees ......................................................................... 3
Trustees fees ............................................................................... 10
Custodian fees .............................................................................. 1
Audit fees .................................................................................. 8
Other ....................................................................................... 68
--------
Total expenses ........................................................................... 728
--------
Net investment income .................................................................... 8,436
--------
REALIZED AND UNREALIZED (GAIN) LOSS ON INVESTMENTS AND FUTURES TRANSACTIONS
Net realized gain on investments and futures transactions ................................... 3,731
Net change in unrealized appreciation/depreciation on investments and futures transactions .. (18,977)
--------
Net loss on investments and futures transactions ......................................... (15,246)
--------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................................ $ (6,810)
========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
SR&F High-Yield Municipals Portfolio
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
(All amounts in thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
1999 1999
------------ ----------
<S> <C> <C>
OPERATIONS
Net investment income ........................................................................ $ 8,436 $ 18,389
Net realized gain on investments and futures transactions .................................... 3,731 3,631
Net change in unrealized appreciation/depreciation on investments and futures transactions ... (18,977) (10,388)
--------- ---------
Net increase (decrease) in net assets resulting from operations ........................... (6,810) 11,632
--------- ---------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions ................................................................................ 14,929 27,867
Withdrawals .................................................................................. (37,614) (83,002)
--------- ---------
Net decrease from transactions in investors' beneficial interest .......................... (22,685) (55,135)
--------- ---------
Net decrease in net assets ................................................................ (29,495) (43,503)
NET ASSETS
Beginning of period .......................................................................... 299,663 343,166
--------- ---------
End of period ................................................................................ $ 270,168 $ 299,663
========= =========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
STEIN ROE ADVISOR HIGH-YIELD MUNICIPALS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
(All amounts in thousands, except per-share amount)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investment in SR&F High-Yield Municipals Portfolio, at value ................... $ 168
Other assets ................................................................... 23
-----
Total assets ................................................................ 191
-----
LIABILITIES
Payable for fund shares redeemed ............................................... 7
Dividends payable .............................................................. 1
-----
Total liabilities ........................................................... 8
-----
Net Assets .................................................................. $ 183
=====
ANALYSIS OF NET ASSETS
Paid-in capital ................................................................ $ 245
Overdistributed net investment income .......................................... (2)
Accumulated net realized loss on investments and futures transactions .......... (56)
Net unrealized depreciation on investments and futures transactions ............ (4)
-----
Net Assets .................................................................. $ 183
=====
Shares outstanding (unlimited number authorized) ............................... 20
=====
Net asset value per share ...................................................... $9.18
=====
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE ADVISOR HIGH-YIELD MUNICIPALS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands)
<S> <C>
INVESTMENT INCOME
Interest allocated from SR&F High-Yield Municipals Portfolio ................................... $ 17
----
EXPENSES
Expenses allocated from SR&F High-Yield Municipals Portfolio ................................... 1
Transfer agent fees ............................................................................ 1
Accounting fees ................................................................................ 13
Trustees fees .................................................................................. 6
Custodian fee .................................................................................. 1
Audit fee ...................................................................................... 4
Legal fee ...................................................................................... 1
Registration fee ............................................................................... 1
Reports to shareholders ........................................................................ 7
----
Total expenses .............................................................................. 35
Reimbursement of expenses by investment Advisor ................................................ (31)
----
Net expenses ................................................................................ 4
----
Net investment income ....................................................................... 13
----
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES TRANSACTIONS
ALLOCATED FROM SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
Net realized loss on investments and futures transactions ...................................... (30)
Net change in unrealized appreciation/depreciation on investments and futures transactions ..... 3
----
Net loss on investments and futures transactions ............................................ (27)
----
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................................... $(14)
====
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
STEIN ROE ADVISOR HIGH-YIELD MUNICIPALS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
(All amounts in thousands)
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
1999 1999
------------ ----------
<S> <C> <C>
OPERATIONS
Net investment income ................................................................................ $ 13 $ 94
Net realized loss on investments and futures transactions allocated from SR&F High-Yield
Municipals Portfolio .............................................................................. (30) (24)
Net change in unrealized appreciation/depreciation on investments and futures transactions
allocated from SR&F High-Yield Municipals Portfolio ............................................... 3 (8)
------- -------
Net increase (decrease) in net assets resulting from operations ................................... (14) 62
------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income ............................................................. (14) (95)
------- -------
SHARE TRANSACTIONS
Subscriptions to fund shares ......................................................................... -- 1,604
Value of distributions reinvested .................................................................... 12 85
Redemptions of fund shares ........................................................................... (737) (1,749)
------- -------
Net decrease from share transactions .............................................................. (725) (60)
------- -------
Net decrease in net assets ........................................................................ (753) (93)
NET ASSETS
Beginning of period .................................................................................. 936 1,029
------- -------
End of period ........................................................................................ $ 183 $ 936
======= =======
Net of overdistributed net investment income ......................................................... (2) (1)
------- -------
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Subscriptions to fund shares ......................................................................... -- 161
Issued in reinvestment of distributions .............................................................. 1 9
Redemptions of fund shares ........................................................................... (77) (177)
------- -------
Net decrease in fund shares ....................................................................... (76) (7)
Shares outstanding at beginning of period ............................................................ 96 103
------- -------
Shares outstanding at end of period .................................................................. 20 96
======= =======
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(All amounts in thousands) (Unaudited)
NOTE 1. ORGANIZATION
Stein Roe Advisor High-Yield Municipals Fund (the "Fund"), a series of
Liberty-Stein Roe Advisor Trust (the "Trust") formerly Stein Roe Advisor Trust,
is an open-end management investment company organized as a Massachusetts
business trust. The Fund invests substantially all of its assets in SR&F
High-Yield Municipals Portfolio (the "Portfolio"), which seeks a high level of
tax-free income by investing in long-term municipal securities principally of
medium and lower quality.
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 2, 1998. At commencement,
Stein Roe High-Yield Municipals Fund contributed $335,711 in securities and
other assets in exchange for beneficial ownership of the Portfolio. On February
4, 1998, Stein Roe Advisor High-Yield Municipals Fund contributed $100 in
securities and other assets. The Portfolio allocates income, expenses, realized
and unrealized gains and losses to each investor on a daily basis, based on
methods approved by the Internal Revenue Service. At December 31, 1999, Stein
Roe Advisor High-Yield Municipals Fund owned 0.1% of the Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Fund and the
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.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on trade date. Interest income,
including discount accretion and premium amortization, is recorded daily on the
accrual basis. Realized gains or losses from investment transactions are
reported on an identified cost basis.
Securities purchased on a when-issued or delayed delivery basis may be
settled a month or more after the transaction date. The values of such
securities are subject to market fluctuations during this period. The Portfolio
had no when-issued or delayed delivery purchase commitments as of December 31,
1999.
INVESTMENT VALUATIONS
Municipal securities are valued at a fair value using a procedure determined in
good faith by the Board of Trustees, which has authorized the use of bid
valuations provided by a pricing service. Other securities and assets are valued
at fair value as determined in good faith by or under the direction of the Board
of Trustees.
FUTURES CONTRACTS
The Portfolio may enter into futures contracts to either hedge against expected
declines of its portfolio securities or as a temporary substitute for the
purchase of individual bonds. Risks of entering into futures contracts include
the possibility that there may be an illiquid market at the time the Portfolio
seeks to close out a contract, and changes in the value of the futures contract
may not correlate with changes in the value of the portfolio securities being
hedged.
Upon entering into a futures contract, the Portfolio deposits with its
custodian cash or securities in an amount sufficient to meet the initial margin
requirements. Subsequent payments are made or received by the Portfolio equal to
the daily change in the contract value and are recorded as unrealized gains or
losses. The Portfolio recognizes a realized gain or loss when the contract is
closed or expires. See the Portfolio's Portfolio of Investments for a summary of
open futures contracts at December 31, 1999.
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 makes 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 methods approved by the Internal Revenue Service.
The Fund intends to utilize provisions of the federal income tax law that
allows it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized gains. At
June 30, 1999, the Fund had capital loss carryforwards as follows:
Amount Year of Expiration
------ ------------------
$24 2007
2 2006
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Capital gains distributions, if any, are distributed annually. Dividends are
determined in accordance with income tax principles, which may treat certain
transactions differently than 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.
NOTE 3. PORTFOLIO COMPOSITION
The Portfolio invests in municipal securities including, but not limited to,
general obligation bonds, revenue bonds and escrowed bonds (which are bonds that
have been refinanced, the proceeds of which have been invested in U.S.
government or agency obligations and set aside to pay off the original issue at
the first call date or maturity). Among the Portfolio's investments are
securities that are insured by private insurers who guarantee the payment of
principal and interest in the event of default. At December 31, 1999,
investments in these securities represented 2.3% of the Portfolio's net assets.
See the Portfolio's Portfolio of Investments for additional information
regarding portfolio composition.
NOTE 4. 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 "Advisor"), an
indirect, majority-owned subsidiary of Liberty Mutual Insurance Company, for its
services as investment advisor and manager.
The management fee for the Portfolio is computed at an annual rate of 0.45%
of the first $100 million of average daily net assets, 0.425% of the next $100
million, and 0.40% thereafter. The administrative fee for the Fund is computed
at an annual rate of 0.15% of the first $100 million of average daily net
assets, 0.125% of the next $100 million, and 0.10% thereafter.
The Advisor also provides fund accounting services.
The Advisor had agreed to reimburse the Fund to the extent that expenses
exceeded 1.10% of average annual net assets. This expense limitation expires on
January 31, 2001.
Shares of the Fund are distributed by Liberty Funds Distributor, 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% of average daily net assets.
Transfer agent fees are paid to Liberty Funds Distributor, Inc., (the
Transfer Agent), an indirect, majority-owned subsidiary of Liberty Mutual
Insurance Company. The Transfer Agent provides shareholder services for a
monthly fee equal to 0.30% annually of the Fund's average net assets and
receives reimbursement for certain out-of-pocket expenses.
Certain officers and trustees of the Trust are also officers of the Advisor.
No remuneration was paid to any other trustee or officer of the Trust who is
affiliated with the Advisor.
NOTE 5. SHORT-TERM DEBT
To facilitate portfolio liquidity, the Fund and the Portfolio maintain borrowing
arrangements under which they can borrow against portfolio securities. There
were no borrowings by either the Fund or the Portfolio during the six months
ended December 31, 1999.
NOTE 6. INVESTMENT TRANSACTIONS
The Portfolio's aggregate cost of purchases and proceeds from sales or maturity
of securities, excluding short-term obligations, for the six months ended
December 31, 1999, were $16,624 and $34,670, respectively.
Unrealized appreciation (depreciation) at December 31, 1999 for both
financial statement and federal income tax purposes was:
Gross unrealized appreciation...... $ 7,726
Gross unrealized depreciation...... (11,033)
-------
Net unrealized depreciation........ $(3,307)
=======
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STEIN ROE ADVISOR HIGH-YIELD MUNICIPALS FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, JUNE 30, JUNE 30,
1999 1999 1998 (a)
------------ -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................. $ 9.75 $ 9.94 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... 0.25 0.48 0.20
Net realized and unrealized loss.............................. (0.57) (0.18) (0.06)
------- ------- -------
Total from investment operations............................ (0.32) 0.30 0.14
------- ------- -------
DISTRIBUTIONS
Net investment income......................................... (0.25) (0.49) (0.20)
------- ------- -------
NET ASSET VALUE, END OF PERIOD................................... $ 9.18 $ 9.75 $ 9.94
======= ======= =======
Ratio of net expenses to average net assets (b).................. 1.10%(c) 1.10% 1.10%(c)
Ratio of net investment income to average net assets (d)......... 4.98%(c) 4.88% 5.13%(c)
Total return (d)................................................. (3.38)%(f) 3.08%(e) 1.42%(f)
Net assets, end of period (000's)................................ $ 183 $ 936 $ 1,029
(a) From commencement of operations on February 4, 1998.
(b) If the Fund had paid all of its expenses and there had been no reimbursement
by the Advisor, this ratio would have been 11.92%, 5.97%, and 16.25%,
respectively.
(c) Annualized.
(d) Computed giving effect to Advisor's expense limitation undertaking.
(e) 0.50% of the return for the fiscal year ended June 30, 1999 is attributable
to a one-time revaluation of a portfolio security reflecting the
restructuring of this security. Absent this revaluation, the total return
for the Fund for this period would have been 2.58%.
(f) Not annualized.
</TABLE>
- --------------------------------------------------------------------------------
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, JUNE 30, JUNE 30,
1999 1999 1998 (a)
------------ -------- --------
<S> <C> <C> <C>
SELECTED RATIOS
Ratio of net expenses to average net assets..................... 0.51%(b) 0.45% 0.47%(b)
Ratio of net investment income to average net assets............ 5.91%(b) 5.55% 5.72%(b)
Portfolio turnover rate......................................... 6%(c) 19% 3%(c)
</TABLE>
(a) From commencement of operations on February 2, 1998.
(b) Annualized.
(c) Not annualized.
<PAGE>
TO CONTACT US. . .
- --------------------------------------------------------------------------------
BY PHONE 800-338-2550
You can discuss your investment questions with a Stein Roe account
representative by calling us toll free. We'll be happy to answer questions about
your current account, or to provide you with information about opening a Stein
Roe account, including Stein Roe Traditional, Roth and Education IRAs. We're
available Monday through Friday, from 8 a.m. to 8 p.m. ET, and Saturdays from
10 a.m. to 2 p.m. ET.
STEIN ROE'S FUNDS-ON-CALL(R)
24-HOUR SERVICE LINE
Using a touch-tone phone, call our toll-free number, day or night, for your
current account balance, the latest Stein Roe Fund prices and yields, and other
information. In addition, if you have a Personal Identification Number (PIN),
you may place orders for the following transactions 24 hours a day:
o Exchange shares between your Stein Roe accounts;
o Purchase fund shares by electronic transfer;
o Order additional account statements and money market
fund checks;
o Redeem shares by check, wire or electronic transfer.
RETIREMENT PLAN ACCOUNTS
Call us for information about how we can assist you with your defined
contribution plan, including 401(k) plans. You can reach us toll free at
800-322-1130. For information on Traditional, Roth and Education IRA plans, call
us toll free at 800-338-2550.
BY MAIL OR E-MAIL
If you prefer to contact us by mail, please address all correspondence to: P.O.
Box 8900, Boston, MA 02205-8900. To contact us by e-mail, send correspondence
directly to: [email protected] or visit us at www.steinroe.com on the
Internet.
ADDITIONAL REPORTS
The Funds mail one shareholder report to each shareholder address. If you would
like more than one report, please call 800-338-2550 and additional reports will
be sent to you.
Must be preceded or accompanied by a prospectus.
<PAGE>
Liberty-Stein Roe Funds Municpal Trust
Trustees
John A. Bacon, Jr.
Private Investor
William W. Boyd
Chairman and Director, Sterling Plumbing Group Inc.
Lindsay Cook
Executive Vice President, Liberty Financial
Companies, Inc.
Douglas A. Hacker
Executive Vice President and Chief Financial Officer,
United Airlines
Janet Langford Kelly
Executive Vice President, Secretary and General
Counsel, Kellogg Company
Charles R. Nelson
Van Voorhis Professor of Political Economy,
University of Washington
Thomas C. Theobald
Managing Director, William Blair Capital Partners
Officers
Stephen E. Gibson, President
William D. Andrews, Executive Vice President
Kevin M. Carome, Executive Vice President,
Secretary
Loren A. Hansen, Executive Vice President
Christine Balzano, Vice President
Denise Chasmer, Vice President
J. Kevin Connaughton, Vice President, Treasurer
Joanne Costopoulos, Vice President
Brian Hartford, Vice President
Timothy Jacoby, Vice President
Gail D. Knudsen, Vice President, Controller
William Loring, Vice President
Lynn Maddox, Vice President
Mary D. McKenzie, Vice President
Maureen Newman, Vice President
Nicholas Norton, Vice President
Nicolette D. Parrish, Vice President,
Assistant Secretary
Veronica Wallace, Vice President
Michael Fisher, Assistant Treasurer
Agents and Advisors
Stein Roe & Farnham Incorporated
Investment Advisor
State Street Bank and Trust Company
Custodian
Liberty Funds Services, Inc.
Transfer Agent
Bell, Boyd & Lloyd, LLC
Legal Counsel to the Trust
Ernst & Young LLP
Independent Auditors
<PAGE>
Stein Roe & Farnham
One South Wacker Drive
Chicago, IL 60606-1130
www.steinroe.com
Liberty Funds Distributor, Inc. 2/00
DIR-03/276A-0100 (2/00) 00/252
