<PAGE> 1
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE FUNDS SEMIANNUAL REPORT
--------------------------------------------------------------------------------
FEBRUARY 29, 2000
* STEIN ROE ADVISOR FLOATING RATE FUND
* STEIN ADVISOR FLOATING RATE ADVANTAGE FUND
<PAGE> 2
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
I am pleased to present the 2000 semiannual report for Stein Roe Advisor
Floating Rate Fund, now in its second year of operations, and Stein Roe Advisor
Floating Rate Advantage Fund, which began operations in mid-January of this
year.
The United States' economy has been very strong in recent months and entered
2000 moving at a fast pace, which has raised fears of higher inflation. This has
led to higher short-term interest rates. The equity markets barely felt the
impact of rising rates and continued to trade at or near record levels
throughout much of the period. In the bond market, however, most prices fell as
interest rates have increased in anticipation of more Federal Reserve interest
rate hikes.
This rising-rate environment highlighted an important feature of the Advisor
Floating Rate Funds. Both funds seek a high level of current income, while
reducing the volatility of principal, by investing in floating-rate senior bank
loans. Unlike fixed-income investments, the coupon rates on these loans are
reset periodically to keep them in line with short-term interest rates. When
rates escalate, the loans may adjust their coupons accordingly, so the principal
value of the loans historically has remained relatively stable compared to
fixed-rate bonds.
The outlook for the corporate loan market is very encouraging. The economy's
strength shows no signs of abating soon, and companies are pursuing new loans to
finance growth, fund leveraged buyouts, and finance mergers and acquisitions.
With a large supply of loans available, the Funds can be more selective about
the quality of the loans they buy while pursuing greater diversification.
In the following report, you will find detailed information about our
performance and the strategies used during these past months.
As always, we thank you for choosing a Stein Roe Advisor fund and for the
opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
April 12, 2000
Unlike floating rate loans, some fixed-income investments may be covered by FDIC
Insurance or other guarantees relating to timely payment of principal and
interest and some may provide tax benefits.
Because economic and market trends change frequently, there can be no assurance
that the trends described in this report will continue or come to pass.
-----------------------------
NOT FDIC MAY LOSE VALUE
INSURED ------------------
NO BANK GUARANTEE
-----------------------------
<PAGE> 3
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
* LIBOR RATE CLIMBED TO 5.75%
LIBOR is a benchmark for short-term interest rates on money lent to
institutions. Historically, when interest rates on LIBOR have risen,
interest rates on senior floating-rate bank loans have increased as
well.
* BOND MARKET CONDITIONS WERE CHALLENGING
The bond market suffered periods of considerable volatility over the
past six months. Short-term interest rates increased due to concerns
of inflation regarding higher oil prices and other commodities prices.
While at the same time, long-term interest rate s declined due to the
perception of lower supply of Treasurys.
* A MATURING CORPORATE LOAN MARKET.
More companies are turning to bank loans as a means of financing their
corporate funding needs. This is true for companies across a broad
range of industries and market capitalizations.
1
<PAGE> 4
SEMIANNUAL REPORT: STEIN ROE ADVISOR FLOATING RATE FUND
--------------------------------------------------------------------------------
PORTFOLIO MANAGERS' REPORT
--------------------------------------------------------------------------------
This Fund seeks to provide high current income while preserving capital by
investing in variable-rate senior bank loans made to corporations, partnerships
and others. Because these loans are below investment-grade and may involve
greater risks, they historically have paid higher yields than U.S. Treasury
bills or other short-term investments.
STRONG PERFORMANCE DURING THE PERIOD
Class A Shares of the Stein Roe Advisor Floating Rate Fund provided a total
return of 3.65%, including reinvested dividends, during the six months ended
February 29, 2000, without sales charge. The Fund's current SEC yield on these
shares as of February 29 was 8.05%, without a sales charge.
The Fund outperformed its benchmark index, DLJ Leveraged Loan Index Plus, which
generated a total return of 2.27% for the period. We attribute this strong
performance to a favorable trend in interest rates and our emphasis on broad
diversification and rigorous credit analysis.
HIGHER INTEREST RATES BOOSTED YIELD
The bank loans in the portfolio are adjustable-rate instruments that may adjust
or reset their rates periodically. The Federal Reserve raised short-term rates
twice during the six-month period, and loans in the portfolio reset their
borrowing rates accordingly, resulting in higher income to the Fund.
RECORD LOAN VOLUME AIDED DIVERSIFICATION
The strong economy in the United States fueled record issuance of below
investment-grade loans--$320 billion during calendar year 1999. This provided a
wide variety of corporate loans in many industries and allowed us greater
selectivity, providing increased diversification. Total holdings in the
portfolio increased to 86 issuers from companies in 32 industries, up from 69
issuers and 23 industries last August. Although overall default rates on
corporate loans rose during the period, the Fund was not impacted due to its
lack of exposure to energy-related businesses and long-term healthcare.
NEW ECONOMY LOANS PLAYED IMPORTANT ROLE
Credit quality of the portfolio was quite stable during the period and benefited
to some extent from investments in "new economy" loans to companies such as
Nextel Corp and Semiconductor Group (1.84% and 0.46% of net assets,
respectively). Nextel raised $5 billion through a bank loan during the six-month
period. The company has a favorable credit profile with substantial growth
opportunities. Semiconductor Group was formed through the leveraged buyout, by
Texas Pacific Partners, of what was
NET ASSET VALUE PER SHARE ON 2/29/00
Class A $10.04
-----------------------------------
Class B $10.04
-----------------------------------
Class C $10.04
-----------------------------------
Class Z $10.04
-----------------------------------
DISTRIBUTIONS DECLARED PER SHARE FROM 11/1/99 TO 2/29/00
Class A $0.269
-----------------------------------
Class B $0.245
-----------------------------------
Class C $0.239
-----------------------------------
Class Z (from 9/1/99) $0.407
-----------------------------------
30-DAY SEC YIELDS AS OF 2/29/00
Class A 8.05%
-----------------------------------
Class B 8.00%
-----------------------------------
Class C 7.82%
-----------------------------------
Class Z 8.71%
-----------------------------------
SEC yields reflect the portfolio's earning power net of expenses, expressed as
an annualized percentage of the public offering price per share. If the Advisor
had not waived or borne certain expenses, the SEC yields would have been lower.
2
<PAGE> 5
previously Motorola's semiconductor business. Since the spin-off from Motorola,
the company's fundamental business dramatically improved due to high
semi-conductor prices. This has improved the company's credit profile.
BRIGHT PROSPECTS FOR CORPORATE LOAN MARKET
Looking ahead, we expect the economy will remain robust and the demand by
businesses for financing will continue to grow. We also look for more signs of
higher inflation and, as a result, a continuation of the trend toward higher
interest rates. If this is the case, we believe more and more investors will
view senior bank loans--with their potential for high income and a history of
relative price stability--as a welcome addition to traditional fixed-income
portfolios.
/s/ Brian Good /s/ Jim Fellows
Mr. Brian Good, vice president of the Advisor, has been portfolio manager of
Stein Roe Advisor Floating Rate Fund since 1998. Mr. Jim Fellows, vice president
of the Advisor, has also been portfolio manager of Stein Roe Advisor Floating
Rate Fund since 1998.
An investment in the Fund offers significant current income potential. However,
the following could have the effect of reducing the net asset value (NAV) and
distributions of the Fund:defaults on the loans held in the portfolio;
non-payment of scheduled interest or principal payments; pre-payment of
principal by borrowers resulting in a loan's replacement with a lower-yielding
security, and the valuation of the portfolio's holdings.
The Fund is a continuously-offered, closed-end mutual fund and provides limited
liquidity through a quarterly tender offer between 5% and 25% of outstanding
shares. Each quarter, the Fund's Trustee's must approve the actual tender
amount. Please read the prospectus carefully before investing or sending money.
STEIN ROE ADVISOR FLOATING RATE FUND PERFORMANCE VS.
DLJ LEVERAGED LOAN INDEX PLUS: 8/31/99 - 2/29/00
[BAR CHART]
Stein Roe Advisor Floating Rate Fund, Class A without sales charge 3.65%
DLJ Leveraged Loan Index Plus 2.27%
Past performance cannot predict future results and values of an investment will
vary, resulting in a gain or loss on sale. All results shown assume reinvestment
of distributions.
TOP FIVE SECTOR BREAKDOWNS AS OF 2/29/00
Telecommunications sector 9.4%
Health, Education and Childcare 6.0%
Automotive 5.5%
Ecological 4.7%
Building & Real Estate 4.6%
Sector breakdowns are calculated as a percentage of total net assets. Because
the Fund is actively managed, there can be no guarantee the Fund will
continue to maintain this breakdown in the future.
3
<PAGE> 6
--------------------------------------------------------------------------------
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 2/29/00
<TABLE>
<CAPTION>
Share Class A B C Z
Inception 11/1/99 11/1/99 11/1/99 12/17/98
-----------------------------------------------------------------------------------------------------------------------
Without With Sales Without With Sales Without With Sales Without
Sales Charge Charge Sales Charge Charge Sales Charge Charge Sales Charge
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Six months 3.65% (0.02)% 3.41% 0.17% 3.35% 2.35% 3.81%
(cumulative)
-----------------------------------------------------------------------------------------------------------------------
1 year 7.70 3.98 7.45 4.20 7.39 6.39 7.86
-----------------------------------------------------------------------------------------------------------------------
Life of Fund 7.80 4.66 7.58 5.11 7.53 7.53 7.93
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
<TABLE>
<CAPTION>
Share Class A B C Z
-----------------------------------------------------------------------------------------------------------------------
Without With Sales Without With Sales Without With Sales Without
Sales Charge Charge Sales Charge Charge Sales Charge Charge Sales Charge
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Six months 3.08% (0.56)% 2.90% (0.32)% 2.87% 1.88% 3.18%
(cumulative)
-----------------------------------------------------------------------------------------------------------------------
1 year 7.68 3.94 7.49 4.24 7.46 6.46 7.77
-----------------------------------------------------------------------------------------------------------------------
Life of Fund 7.52 3.91 7.34 4.45 7.31 7.31 7.61
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 3.50% charge for Class A shares and the early withdrawal charge
(EWC) maximum charge of 3.25% for one year and 3% for Life of Fund for Class B
shares and 1% for one year for Class C shares. The above performance does not
reflect the reduced maximum sales charge of 1.50% payable on Class A shares
during the period from February 1 through April 30, 2000. Had performance been
adjusted to reflect this lower sales charge, the "with sales charge"performance
would have been higher. Please refer to the prospectus supplement dated February
1, 2000 for more details. Performance results reflect any voluntary waivers or
reimbursements of Fund expenses by the Advisor of its affiliates. Absent these
waivers and reimbursement arrangements, performance results would have been
lower. Performance for different share classes will vary based on differences in
sales charges and fees associated with each class.
Class A, B, and C (newer share classes) performance information includes returns
of the Fund's Class Z shares (the oldest existing class) for period prior to the
inception of the newer class shares. These Class Z share returns are not
restated to reflect any expense differential (e.g., Rule 12b-1 fees) between
Class Z shares and the newer class shares. Had the expense differential been
reflected, the returns for periods prior to the inception of Class A, B and C
shares would have been lower.
4
<PAGE> 7
SEMIANNUAL REPORT: STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND
--------------------------------------------------------------------------------
PORTFOLIO MANAGERS' REPORT
--------------------------------------------------------------------------------
A POSITIVE START
The Stein Roe Advisor Floating Rate Advantage Fund commenced operations on
January 13, 2000. Class A shares of the Fund generated a total return for the
six weeks through February 29 of 1.42%, without a sales charge, including
reinvested dividends.
RISING INTEREST RATES A KEY CONTRIBUTOR TO RESULTS
The Federal Reserve boosted short-term interest rates by 0.25% in February 2000.
This, in turn, helped to boost the Fund's yield, since the bank loans in which
we invest adjust their coupons regularly to reflect changes in short-rate
benchmarks like the London Interbank Offering Rate (LIBOR) or the U.S. Prime
Rate.
Since we may borrow up to one-third of the Fund's total assets to invest in
loans, rising rates also translated to higher costs for the Fund but ultimately
had little effect on the Fund's returns. Since both the cost of funds and the
loan interest income adjusted when rates ratcheted upward, the impact on yield
was minimal. Please bear in mind that leverage, or the use of borrowed funds,
may make the Fund's price more volatile.
LARGE, VARIED SUPPLY OF LOANS GOOD FOR DIVERSIFICATION
The robust U.S. economy triggered higher demand by corporations, partnerships,
and others for loans to fund leveraged buyouts, mergers, acquisitions and
internal growth. Below investment-grade issuance reached an all-time record of
$320 billion in 1999. The abundance of senior loans available allowed us to be
very selective in building the initial portfolio and to ensure that it was
broadly diversified. At the end of the period, the portfolio's total net assets
of $26.7 million were spread among loans from 25 issuers in 19 industries.
ATTRACTIVE INVESTMENT OPPORTUNITIES IN TECHNOLOGY AND TELECOMMUNICATIONS
The technology and communications industries presented attractive options for
investment. We were particularly drawn to offerings in the telecommunications,
wireless communications, cable TV and broadcasting subsectors. For instance, we
invested in a senior loan issued to Cincinnati Bell (3.79% of net assets), a
local exchange carrier (i.e., local phone company), to fund the purchase of
CLEC, a start-up telecommunications company.
We also saw opportunities to invest in basic industries. One holding in the
portfolio is a floating-rate senior loan to Kansas City Southern Railway (3.77%
of net assets), which owns and operates railroads.
NET ASSET VALUE PER SHARE ON 2/29/00
Class A $12.17
-----------------------------------
Class B $12.16
-----------------------------------
Class C $12.16
-----------------------------------
Class Z $12.17
-----------------------------------
TOP FIVE SECTOR BREAKDOWNS AS OF 2/29/00
Telecommunications Cellular 13.1%
Ecological 9.1%
Finance 7.8%
Chemicals, Plastics and Rubber 7.3%
Telecommunications Services 6.3%
Sector breakdowns are calculated as a percentage of total net assets. Because
the Fund is actively managed, there can be no guarantee the Fund will maintain
this breakdown in the future.
5
<PAGE> 8
--------------------------------------------------------------------------------
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
POSITIVE INVESTMENT OUTLOOK FOR THE REMAINDER OF FISCAL 2000
We're very encouraged about the outlook for this marketplace. The continued
economic expansion is likely to keep business demand for loans growing. Many
"old economy" providers of basic goods and services have seen their stock prices
beaten down in the "new," technology-oriented economy. If this continues, we
look for managements to take their companies private through bank financings.
Add this to the demand driven by healthy mergers-and-acquisitions activity and
we foresee many positive investment opportunities for the Fund.
We also look for more inflationary pressures, higher interest rates, and
volatility in the bond markets. In such a scenario, the relative price stability
and consistent yield potential of floating-rate senior loans should make them
even more attractive to investors.
/s/ Brian Good /s/ Jim Fellows
Mr. Brian Good, vice president of the Advisor, has been portfolio manager of
Stein Roe Advisor Floating Rate Advantage Fund since 1998. Mr. Jim Fellows, vice
president of the Advisor, has also been portfolio manager of Stein Roe Advisor
Floating Rate Advantage Fund since 1998.
An investment in the Fund offers significant current income potential. However,
the following could have the effect of reducing the net asset value (NAV) and
distributions of the Fund:defaults on the loans held in the portfolio;
non-payment of scheduled interest or principal payments; pre-payment of
principal by borrowers resulting in a loan's replacement with a lower-yielding
security, and the valuation of the portfolio's holdings.
The Fund is a continuously-offered, closed-end mutual fund and provides limited
liquidity through a quarterly tender offer for between 5% and 25% of outstanding
shares. Each quarter, the Fund's trustees must approve the actual tender amount.
Please read the prospectus carefully before investing or sending money.
CUMULATIVE TOTAL RETURNS AS OF 2/29/00
<TABLE>
<CAPTION>
Share Class A B C Z
Inception 1/13/00 1/13/00 1/13/00 1/13/00
-----------------------------------------------------------------------------------------------------------------------
Without With Sales Without With Sales Without With Sales Without
Sales Charge Charge Sales Charge Charge Sales Charge Charge Sales Charge
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund 1.42% (2.17)% 1.33 (1.92)% 1.33% 0.33% 1.42%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 3.50% charge for Class A shares and the maximum early withdrawal
charge (EWC) of 3.25% for Life of Fund for Class B shares and 1% for Life of
Fund for Class C shares. The above performance does not reflect the reduced
maximum sales charge of 1.50% payable on Class A shares during the period from
February 1 through April 30, 2000. Had performance been adjusted to reflect this
lower sales charge, the "with sales charge"performance would have been higher.
Please refer to the prospectus supplement dated February 1, 2000 for more
details. Performance results reflect any voluntary waivers or reimbursement
arrangements of Fund expenses by the Advisor or its affiliates. Absent these
waivers or reimbursement arrangements, performance results would have been
lower. Performance for different share classes will vary based on differences in
sales charges and fees associated with each class.
6
<PAGE> 9
--------------------------------------------------------------------------------
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
VARIABLE RATE SENIOR LOAN
INTERESTS (a)(b) - 83.6% Par Value
--------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE/DEFENSE - 1.4%
Decrane Aircraft Holdings:
Term B 9/30/05 $1,980 $ 1,989
Term C 4/30/06 993 997
-------
2,986
-------
AUTOMOTIVE - 5.5%
Blackstone Capital Co.,
Term 11/28/00 1,514 1,512
Blackstone Wasserstein Holdings,
Term 11/28/00 1,486 1,484
J.L. French Automotive,
Term B 10/8/05 1,579 1,585
Key Plastics, Inc.,
Term B 12/31/05 1,489 1,491
Meridian Automotive,
Term B 5/30/06 2,000 2,003
Stoneridge, Inc.,
Term B 12/30/05 1,980 1,996
Venture Holdings Trust,
Term B 6/20/05 1,990 1,988
-------
12,059
-------
BANKING - 1.3%
Sovereign Bancorp,
Term 11/14/03 2,825 2,852
-------
BEVERAGE, FOOD AND TOBACCO - 2.7%
American Seafoods Holdings,
Term B 12/31/05 5,000 5,035
United Signature Foods,
Term C 2/28/05 998 1,001
-------
6,036
-------
BROADCASTING - 2.1%
Comcorp Broadcasting, Inc.,
Term B 6/30/07 1,344 1,344
RCN Corp.,
Term B 4/29/07 2,000 2,016
White Knight Broadcasting,
Term B 6/30/07 1,365 1,365
-------
4,725
-------
BUILDING & REAL ESTATE - 4.6%
Juno Lighting,
Term B 5/1/06 1,310 1,309
NATG Holdings LLC,
Term B 12/14/06 3,934 3,951
Pebble Beach Co.,
Term B 6/30/06 799 802
Prison Realty Trust:
Term B 12/31/02 3,000 3,000
Delayed Term C 12/31/02 995 998
-------
10,060
-------
CARGO TRANSPORT - 2.8%
Evergreen International Aviation,
Term B-1 5/19/03 1,000 1,000
Gemini Air,
Term A 12/31/02 1,000 998
Kansas City Southern Railway,
Term B 12/31/06 1,000 1,005
RailAmerica, Inc.,
Term B 12/31/06 $ 3,000 $ 3,019
Transportation Technology,
Term B 4/29/05 199 200
-------
6,222
-------
CHEMICALS, PLASTICS AND RUBBER - 2.1%
Huntsman Chemicals:
Term B 6/30/07 500 504
Term C 6/30/08 500 504
Lyondell Petrochemical Co.,
Term E 5/20/06 3,474 3,580
-------
4,588
-------
CONTAINERS, PACKAGING AND GLASS - 1.2%
Stone Container,
Term E 10/1/03 2,726 2,732
-------
DIVERSIFIED MANUFACTURING - 4.4%
Freedom Forge Corp.,
Term 12/31/04 1,093 1,093
General Cable Corp.,
Term B 5/30/06 895 897
Polypore, Inc.,
Term B 12/31/06 2,000 2,007
Superior Telecom, Inc.,
Term B 11/27/05 1,955 1,970
Thermadyne Holdings Corp.:
Term B 5/22/06 1,953 1,895
Term C 5/22/05 1,953 1,894
-------
9,756
-------
DIVERSIFIED SERVICES - 1.5%
Concerta Managed Care:
Term B 6/30/06 663 623
Term C 6/30/07 332 312
Enterprise Profit Solutions,
Term A 9/1/01 936 940
URS Corp.:
Term B 6/18/06 746 747
Term C 6/18/07 746 747
-------
3,369
-------
ECOLOGICAL - 4.7%
Allied Waste:
Term B 7/21/06 2,046 1,977
Term C 7/21/07 2,454 2,372
Environmental Systems Products Holdings,
Term B 9/30/05 1,980 1,881
Stericycle Inc.,
Term 12/1/06 4,000 4,035
-------
10,265
-------
ELECTRONICS - 4.5%
Bridge Information Systems:
Term B 5/29/05 2,867 2,782
Multidraw5/29/03 1,641 1,526
Integrated Circuit Systems,
Term B 6/30/07 2,612 2,606
Intersil Corp,
Term B 6/30/05 1,000 1,005
</TABLE>
7
<PAGE> 10
--------------------------------------------------------------------------------
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY INVESTMENT PORTFOLIO
(CONTINUED)
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
VARIABLE RATE SENIOR LOAN
INTERESTS (CONTINUED) PAR VALUE
--------------------------------------------------------------------------------
<S> <C> <C>
Knowles Electronics, Inc.,
Term B 6/29/07 $ 1,000 $ 1,001
Semiconductor Components Group:
Term B 7/31/06 481 486
Term C 7/31/07 519 523
-------
9,929
-------
FARMING AND AGRICULTURE - 1.3%
Quality Stores,
Term B 4/30/06 2,974 2,976
-------
FINANCE - 1.1%
Outsourcing Solution, Inc.,
Term B 5/31/06 2,494 2,499
-------
GROCERY - 2.0%
Big V Supermarket,
Term B 8/10/03 2,475 2,468
Pantry Inc.,
Term B 1/31/06 1,980 1,990
-------
4,458
-------
HEALTH, EDUCATION AND CHILDCARE - 6.0%
Columbia-Healthone LLC,
Term B 7/21/05 1,986 1,989
Dade Behring:
Term B 6/30/07 498 499
Term C 6/30/06 498 499
King Pharmaceutical, Inc.,
Term B 12/18/06 1,980 2,003
Quest Diagnostics:
Term B 3/22/06 520 525
Term C 3/22/07 480 485
Stryker Corp.:
Term B 12/4/05 722 725
Term C 12/4/06 1,402 1,408
Vanguard Health Systems, Inc.,
Term B 2/1/06 5,000 5,012
-------
13,145
-------
HOME AND OFFICE FURNITURE - 0.9%
Rent-A-Center, Inc.:
Term B 1/31/06 652 650
Term C 1/31/07 797 795
Simmons Co.,
Term B 9/30/05 424 425
-------
1,870
-------
HOTELS - 0.5%
Wyndham International,
Term B 3/31/03 1,000 975
-------
INSURANCE - 0.9%
Willis Corroon Group PLC LN:
Term C 11/19/06 970 973
Term D 11/19/07 970 973
-------
1,946
-------
LEISURE/AMUSEMENT/MOTION PICTURE/ENTERTAINMENT - 4.3%
AMF Bowling Group:
Axel A 3/31/03 $ 2,553 $ 2,377
Term A 3/31/02 107 101
Axel B 3/31/04 1,342 1,251
Six Flags Theme Parks, Inc.,
Term 11/30/05 1,500 1,508
SFX Entertainment,
Term 6/30/06 3,000 2,987
United Artists Theatre Co.:
Term B 4/21/06 825 560
Term C 4/21/07 1,122 762
-------
9,546
-------
MACHINERY - 0.9%
SPX Corp.,
Term A 9/30/04 1,915 1,917
Mining/Steel/Iron/Metals - 0.9%
Ispat Inland, Inc.:
Term B 7/16/05 990 989
Term C 7/16/06 990 989
-------
1,978
-------
PERSONAL TRANSPORTATION - 1.1%
Avis Rent A Car:
Term B 6/8/06 500 502
Term C 6/8/07 500 502
Motor Coach Industries,
Term B 6/16/06 1,493 1,493
-------
2,497
-------
PERSONAL AND NON DURABLE GOODS - 1.8%
Weight Watchers International, Inc.:
Term B-1 9/29/06 3,537 3,552
Term B 9/29/06 463 466
-------
4,018
PERSONAL, FOOD, AND MISCELLANEOUS - 0.2%
American Safety Razor,
Term B 1/31/05 474 477
-------
PRINTING, PUBLISHING AND BROADCASTING - 4.4%
American Media, Inc.,
Term B 4/1/07 3,000 3,003
Bear Island Paper,
Term 12/31/05 296 296
DIMAC Corp.:
Term B 6/30/06 571 500
Term C 12/30/06 429 375
Merrill Corporation,
Term B 11/30/07 2,494 2,509
Weekly Reader, Inc.,
Term B 11/30/06 2,993 3,019
-------
9,702
-------
</TABLE>
8
<PAGE> 11
--------------------------------------------------------------------------------
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY INVESTMENT PORTFOLIO
(CONTINUED)
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
(In thousands)
VARIABLE RATE SENIOR LOAN
INTERESTS (CONTINUED) PAR VALUE
--------------------------------------------------------------------------------
RETAIL STORES - 2.7%
Duane Reade,
Term C 2/15/06 $ 2,970 $ 2,968
Shoppers Acquisition Corp.:
Term C 2/4/08 1,500 1,509
Term E 2/4/08 1,500 1,509
--------
5,986
--------
TELECOMMUNICATIONS-CELLULAR - 9.4%
Alec Acquisition Corp.:
Term B 11/4/07 1,579 1,583
Term C 5/14/08 1,421 1,425
Centennial Puerto Rico:
Term B 5/31/07 3,488 3,512
Term C 11/30/07 988 995
Dobson-Sygnet:
Term C 12/23/07 990 997
Term B 3/23/07 975 983
Dobson Operating Co.,
Term B 12/31/07 2,125 2,142
Nextel Finance Co., Inc.:
Term B 6/30/08 750 760
Term C 12/31/08 750 760
Nextel Partners, Inc.,
Term 1/29/08 2,500 2,535
Voicestream PCS Holdings,
Term B 2/25/09 5,000 5,036
--------
20,728
--------
TELECOMMUNICATIONS EQUIPMENT - 1.8%
American Towers,
Term B 12/31/07 4,000 4,034
--------
TELECOMMUNICATIONS SERVICES - 3.7%
Cincinnati Bell, Inc.:
Term B-1 11/2/06 556 560
Term B-2 11/2/06 444 448
ICG Communications, Inc.,
Term B 3/31/06 995 997
KMC Telecom, Inc.,
Term 7/1/07 2,000 2,001
Nextlink Communications Corp.,
Term B 10/31/05 4,000 4,045
--------
8,051
--------
TEXTILES AND LEATHER - 0.9%
Synthetic Industries,
Term B 12/14/07 2,000 2,005
--------
TOTAL VARIABLE RATE SENIOR LOAN INTERESTS
(cost of $184,776) (c) 184,387
--------
SHORT TERM OBLIGATIONS - 15.9%
BP Capital PLC,
5.820% 03/01/00 6,000 6,000
Coca-Cola Enterprises,
5.800% 03/01/00 8,410 8,410
Dow Chemical,
5.820% 03/01/00 5,000 5,000
Fortune Brands,
5.830% 03/01/00 6,000 6,000
General Dynamics,
5.850% 03/01/00 $ 3,100 $ 3,100
MCI Worldcom,
5.880% 03/01/00 1,550 1,550
Receivables Capital,
5.800% 03/01/00 4,900 4,900
--------
TOTAL SHORT-TERM OBLIGATIONS 34,960
--------
OTHER ASSETS AND LIABILITIES, NET - 0.5% 1,134
--------
NET ASSETS 100.0% $220,481
========
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Senior Loans in the Trust's portfolio generally are subject to mandatory
and/or optional prepayment. Because of these mandatory prepayment
conditions and because there may be significant economic incentives for a
Borrower to prepay, prepayments of Senior Loans in the trust's portfolio
may occur. As a result, the actual remaining maturity of Senior Loans held
in the Trust's portfolio may be substantially less than the stated
maturities shown. Although the Trust is unable to accurately estimate the
actual remaining maturity of individual Senior Loans, the Trust estimates
that the actual average maturity of the Senior Loans held in its portfolio
will be approximately 18-24 months.
(b) Senior Loans in which the Trust invests generally pay interest at rates
which are periodically redetermined by reference to a base lending rate
plus a premium. These base lending rates are generally (i) the prime rate
offered by one or more major United States banks, (ii) the lending rate
offered by one or more European banks such as the London Inter-Bank Offered
Rate ("LIBOR") and (iii) the certificate of deposit rate. Senior loans are
generally considered to be restricted in that the Trust ordinaril y is
contractually obligated to receive approval from the Agent Bank and/or
borrower prior to the disposition of a Senior Loan.
(c) Cost for federal income tax purposes is the same. Net unrealized
depreciation was $389, consisting of gross unrealized appreciation of $962
and gross unrealized depreciation of $1,351.
See notes to financial statements.
9
<PAGE> 12
--------------------------------------------------------------------------------
STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
(In thousands)
<S> <C>
ASSETS
Investments, at market value (cost $219,736) $219,347
Interest and fees receivable 1,646
Cash 10
--------
Total Assets 221,003
LIABILITIES
Deferred facility fees 419
Payable to Advisor 79
Other 24
--------
Total Liabilities 522
--------
Net assets applicable to investors' beneficial
interest $220,481
========
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended February 29, 2000 (Unaudited)
(In thousands)
INVESTMENT INCOME
Interest $ 6,689
Fee income 102
--------
6,791
EXPENSES
Management fee 325
Audit & legal fee
Accounting fee 14
Transfer agent fees 3
Custodian & other fees 26
--------
376
--------
Net Investment Income 6,415
--------
NET REALIZED & UNREALIZED GAIN (LOSS)
ON PORTFOLIO POSITIONS
Net realized gain 223
Net change in unrealized appreciation/depreciation (666)
--------
Net Loss (443)
--------
Increase in Net Assets from
Operations $ 5,972
========
<CAPTION>
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS PERIOD ENDED
ENDED FEBRUARY 29 AUGUST 31,
----------------- ------------
2000 1999(a)
----------------- ------------
(In thousands)
OPERATIONS
Net investment income $ 6,415 $ 4,274
Net realized gain 223 38
Net change in unrealized appreciation/
depreciation (666) 277
------- --------
Net Increase from Operations 5,972 4,589
------- --------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 90,119 124.223
Withdrawals (3,903) (519)
------- --------
Net increase from transactions in
investors' beneficial interest 86,216 123,704
------- --------
Total Increase 92,188 128,293
TOTAL NET ASSETS
Beginning of period 128,293 --
------- --------
End of period $220,481 $128,293
======== ========
</TABLE>
(a) The Fund commenced investment operations on December 17, 1998.
10 See notes to financial statements.
<PAGE> 13
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
(In thousands except for per share amounts and footnotes)
<S> <C>
ASSETS
Investment in SR Floating Rate LLC Portfolio,
at value $48,830
Receivable for:
Fund shares sold 4,635
Expense reimbursement due from Advisor 14
Other 69
-------
Total Assets 53,548
-------
LIABILITIES
Payable for:
Distributions 73
Accrued:
Administration fee 6
Transfer agent fee 5
Bookkeeping fee 3
Distribution fee - Class B 2
Distribution fee - Class C 3
Other 2
-------
Total Liabilities 94
-------
NET ASSETS $53,452
=======
Net asset value & redemption price per share -
Class A ($15,927/1,587) $ 10.04(a)
-------
Maximum offering price per share -
Class A ($10.04/0.9525) $ 10.15(b)
-------
Net asset value & redemption price per share -
Class B ($17,312/1,725) $ 10.04(a)
-------
Net asset value & redemption price per share -
Class C ($14,937/1,488) $ 10.04(a)
-------
Net asset value, offering & redemption price
per share - Class Z ($5,276/526) $ 10.04
-------
COMPOSITION OF NET ASSETS
Paid-in capital $53,424
Accumulated net realized gain 72
Net unrealized depreciation (44)
-------
$53,452
=======
</TABLE>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended February 29, 2000 (Unaudited)
(In thousands)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest allocated from SR Floating Rate
LLC Portfolio $499
Fees allocated from SR Floating Rate
LLC Portfolio (a)
Total Investment Income 499
----
EXPENSES
Expenses allocated from SR Floating Rate
LLC Portfolio $27
Audit & legal fees 13
Bookeeping fee 13
Administration fee 11
Distribution fee - Class A 1
Distribution fee - Class B 9
Distribution fee - Class C 11
Service fee - Class A 3
Service fee - Class B 5
Service fee - Class C 4
Transfer agent fee 9
Trustees fee 5
Custodian & other fees 20
131
---
Fees and expenses waived or
borne by the Advisor (52) 79
--- ----
Net Investment Income 420
----
NET REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS
ALLOCATED FROM SR FLOATING RATE LLC PORTFOLIO
Net realized gain (loss) on investments allocated
from SR Floating Rate LLC Portfolio 72
Net change in unrealized appreciation/
depreciation (45)
Net Gain 27
----
Increase in Net Assets
from Operations $447
====
</TABLE>
(a) Rounds to less than one.
11
See notes to financial statements.
<PAGE> 14
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE FUND--STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS PERIOD ENDED
ENDED FEBRUARY 29 AUGUST 31,
----------------- -------------
2000 1999(a)
----------------- -------------
(In thousands)
OPERATIONS
<S> <C> <C>
Net investment income $ 420 $ 30
Net realized gain (loss) on investments
allocated from SR Floating Rate
LLCPortfolio 72 (a)
Net change in unrealized
appreciation/depreciation (45) 1
Net Increase from Operations 447 31
-------- ----
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income - Class A (98) --
From net investment income - Class B (152) --
From net investment income - Class C (126) --
From net investment income - Class Z (44) (30)
27 1
-------- ----
SHARE TRANSACTIONS
Receipts for shares sold - Class A 15,849 --
Value of distributions
reinvested - Class A 69 --
Cost of shares repurchased - Class A -- --
-------- ----
15,918 --
-------- ----
Receipts for shares sold - Class B 17,221 --
Value of distributions
reinvested - Class B 82 --
Cost of shares repurchased - Class B (b) --
-------- ----
17,303 --
-------- ----
Receipts for shares sold - Class C 14,868 --
Value of distributions
reinvested - Class C 60 --
Cost of shares repurchased - Class C (b) --
-------- ----
14,928 --
-------- ----
Receipts for shares sold - Class Z 5,276 912
Value of distributions
reinvested - Class Z 19 23
Cost of shares repurchased - Class Z (912) (43)
-------- ----
4,383 892
-------- ----
Net Increase from Fund Share
Transactions 52,532 892
-------- ----
Total Increase 52,559 893
-------- ----
Total Net Assets
Beginning of period 893 --
-------- ----
End of period $ 53,452 $893
-------- ----
UNDISTRIBUTED NET INVESTMENT INCOME
AT END OF PERIOD $ (b) $ (b)
====== =====
</TABLE>
(a) The Fund commenced investment operations on December 17, 1998.
(b) Rounds to less than one.
12 See notes to financial statements.
<PAGE> 15
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE FUND--NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of the Administrator of Stein Roe Advisor Floating Rate Fund,
formerly Stein Roe Floating Rate Income Fund (the Fund), a series of Stein Roe
Advisor Investment Trust, the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at February 29, 2000, and the results of its
operations, the changes in its net assets and the financial highlights for the
six months then ended.
NOTE 2. ORGANIZATION
The Fund is a non-diversified, closed-end management investment company
organized as a Massachusetts business trust. The Fund invests all of its
investable assets in Stein Roe Floating Rate Limited Liability Company (the
"Portfolio"), which seeks to provide a high-level of current income, consistent
with preservation of capital.
The Portfolio is a non-diversified, closed-end management investment company
organized as a Delaware limited liability company. The Portfolio commenced
operations December 17, 1998. At commencement, the Fund contributed $100,000 in
cash in exchange for beneficial ownership of the Portfolio. At December 17,
1998, Stein Roe Institutional Floating Rate Fund contributed cash of $100,000.
The Portfolio allocates income, expenses, realized and unrealized gains and
losses to each investor on a daily basis, based on their respective percentage
of ownership. At February 29, 2000, Stein Roe Advisor Floating Rate Fund and
Stein Roe Institutional Floating Rate Income Fund owned 22.1% and 77.9%,
respectively, of the Portfolio.
NOTE 3. 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.
SECURITY VALUATIONS
All securities are valued as of February 29, 2000, the last business day of the
period. The value of the Portfolio is determined in accordance with guidelines
established, and periodically reviewed, by the Board of Trustees. Senior Loans
are generally valued using market prices or quotations provided by banks,
dealers or pricing services with respect to secondary market transactions. In
the absence of actual market values, Senior Loans will be valued by Stein Roe
and Farnham Incorporated (the Advisor), an indirect, wholly-owned subsidiary of
Liberty Financial Companies, Inc. ("Liberty"), on behalf of the Portfolio at
fair value, which is intended to approximate market value. In determining fair
value, the Advisor will consider on an ongoing basis, among other factors, (i)
the creditworthiness of the Borrower; (ii) the current interest rate, the
interest rate redetermination period, and maturity of such Senior Loan
interests; and (iii) recent prices in the market for instruments of similar
quality, rate and interest rate redetermination period and maturity. Because of
uncertainty inherent in the valuation process, the estimated value of a Senior
Loan interest may differ significantly from the value that would have been used
had there been market activity for that Senior Loan interest. Short-term
securities with remaining maturities of 60 days or less are valued at amortized
cost.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on trade date. Interest income is
recorded on the accrual basis. Facility fees received are treated as ordinary
income. Market premiums and discounts are amortized over the estimated life of
each applicable security. Realized gains and losses from investment transactions
are reported on an identified cost basis.
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 methods approved by the Internal Revenue Service.
DISTRIBUTIONS TO SHAREHOLDERS
Income dividends are declared and recorded each business day and are paid
monthly. Capital gains, if any, are declared and paid annually, which are
recorded on the ex-dividend date. Dividends are determined in accordance with
income tax principles, which may treat certain transactions differently than
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.
13
<PAGE> 16
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE FUND--NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
NOTE 4. TRUSTEES' FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio pays a monthly management fee and the Fund pays a monthly
administrative fee to the Advisor for its services as investment advisor and
manager, respectively.
The management fee for the Portfolio is computed at an annual rate of .45 of 1
percent. The administrative fee for the Fund is computed at an annual rate of
.20 of 1 percent. The Advisor has agreed to reimburse the Fund to the extent
that it's annual expenses exceeded 1.15 percent of average daily net assets.
The Advisor also provides fund accounting services for the period ended February
29, 2000, the Fund and Portfolio incurred charges of $13 and $14, respectively.
Transfer agent fees are paid to SteinRoe Services, Inc. (SSI), a direct,
wholly-owned subsidiary of Liberty. SSI has entered into an agreement with
Liberty Funds Services, Inc., an indirect, wholly-owned subsidiary of Liberty to
act as subtransfer agent for the Fund.
Certain officers and trustees of the Fund are also officers of the Advisor. The
compensation of trustees not affiliated with the Advisor for the Fund and the
Portfolio for the period ended February 29, 2000, was $9 and $8, respectively.
No remuneration was paid to any other trustee or officer of the Fund.
NOTE 5. INVESTMENT TRANSACTIONS
The Portfolio's aggregate cost of purchases and proceeds from sales other than
short-term obligations for the period ended February 29, 2000 were $86,795,222
and $21,589,424, respectively.
NOTE 6. TENDER OF SHARES
The Board of Trustees currently intends, each calendar quarter, to consider the
Fund to make tender offers for a portion of its then outstanding common shares
at the net asset value of the common shares at that time. The Tender Offer
Amount will be at least 5% and no more than 25% of the total number of shares
outstanding. During the six months ended February 29, 2000, Class B, Class C and
Class Z were tendered at $10.05 for 10, 6 and 89, to 3 shares, respectively.
NOTE 7. SENIOR LOAN PARTICIPATION COMMITMENTS
The Fund invests primarily in participations, assignment, or acts as a party to
the primary lending syndicate of a Variable Rate Senior Loan interest to United
States corporations, partnerships, and other entities. When the Fund purchases a
participation of a Senior Loan interest, the Fund typically enters into a
contractual agreement with the lender or other third party selling the
participation, but not with the borrower directly. As such, the Fund assumes the
credit risk of the Borrower, Selling Participant or other persons
interpositioned between the Fund and the Borrower.
At February 29, 2000 the following sets forth the selling participants with
respect to interests in Senior Loans purchased by the Fund on a participation
basis.
Principal
Amount Value
Selling Participant (000) (000)
---------------------------------------------------------------------
Goldman Sachs Credit Partners LP $4,710 $4,568
------ ------
14
<PAGE> 17
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE LIMITED LIABILITY COMPANY--FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 29, AUGUST 31,
---------------- -------------
2000 1999 (a)
---------------------------------------------------------------------
<S> <C> <C>
Ratios To Average Net Assets
Expenses 0.51%(b) 0.96%
Net investment income 8.80%(b) 7.59%
Portfolio turnover 16% 17%
</TABLE>
(a) The Fund commenced investment operations on December 17, 1998.
(b) Annualized.
15
<PAGE> 18
--------------------------------------------------------------------------------
STEIN ROE ADVISORS FLOATING RATE FUND--FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period
are as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
FEBRUARY 29, 2000 (a)
-----------------------------------------------------
CLASS A CLASS B CLASS C CLASS Z
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.050 $10.050 $10.050 $10.070
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.269 0.245 0.239 0.407
Net realized and unrealized losses on investments (0.010) (0.010) (0.010) (0.030)
------- ------- ------- -------
Total from investment operations 0.260 0.240 0.230 0.380
------- ------- ------- -------
DISTRIBUTIONS
Net investment income (0.269) (0.245) (0.239) (0.407)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $10.040 $10.040 $10.040 $10.040
======= ======= ======= =======
Ratio of net expenses to average net assets(b)(d) 1.15% 1.50% 1.70% 0.80%
Ratio of net investment income to average net assets(c)(d) 7.59% 7.24% 7.04% 7.94%
Total return (e) 3.65% 3.41% 3.35% 3.81%
Net assets, end of period(000's) $15,927 $17,312 $14,937 $ 5,276
</TABLE>
(a) Class A, Class B and Class C commenced operations on November 1, 1999.
(b) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by the investment Advisor, this ratio would have
been 1.72%.
(c) Computed giving effect to the investment Advisor's expense limitation
undertaking.
(d) Annualized.
(e) Not annualized and without sales charge.
<TABLE>
<CAPTION>
PERIOD ENDED
AUGUST 31,
1999(a)
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.000
-------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.470
Net realized and unrealized gain on investments allocated from SR Floating Rate LLC Portfolio 0.070
-------
Total from investment operations 0.540
-------
DISTRIBUTIONS
Net investment income (0.470)
In excess of net investment income (b)
-------
Total distributions (0.470)
-------
NET ASSET VALUE, END OF PERIOD $10.070
=======
Ratio of net expenses to average net assets(c)(e) 1.30%
Ratio of net investment income to average net assets(d)(e) 7.10%
Total return (f) 5.43%
Net assets, end of period(000's) $ 893
</TABLE>
(a) The Fund commenced investment operations on December 17, 1998.
(b) Rounds to less than 0.01%.
(c) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by the investment Advisor, this ratio would have
been 56.79%.
(d) Computed giving effect to the investment Advisor's expense limitation
undertaking.
(e) Annualized.
(f) Not annualized.
16
<PAGE> 19
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND--INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
VARIABLE RATE SENIOR LOAN
INTERESTS(a)(b)(c) - 100.0% Par Value
--------------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE/DEFENSE - 3.2%
Decrane Aircraft Holdings Inc.,
Term C 04/23/06 $1,000 $ 1,004
-------
BANKING - 3.2%
Sovereign Bancorp,
Term 11/14/03 1,000 1,005
-------
BEVERAGE, FOOD AND TOBACCO - 3.2%
American Seafoods Holdings,
Term B 12/31/05 1,000 1,007
-------
Building & Real Estate - 3.1%
Prison Realty Trust,
Term B 12/31/02 1,000 1,000
-------
CARGO TRANSPORT - 6.3%
Kansas City Southern Railway,
Term B 12/31/06 1,000 1,005
Railamerica Inc.,
Term B 12/31/06 1,000 1,006
-------
2,011
-------
CHEMICALS, PLASTICS AND RUBBER - 7.3%
Huntsman Chemicals:
Term B 06/30/07 1,913 1,928
Term C 06/30/08 387 389
-------
2,317
-------
DIVERSIFIED MANUFACTURING - 3.2%
Superior Telecom Inc.,
Term B 11/27/05 1,000 1,005
-------
ECOLOGICAL - 9.1%
Allied Waste:
Term B 07/23/06 1,364 1,317
Term C 07/23/07 1,636 1,580
-------
2,897
-------
FINANCE - 7.8%
Outsourcing Solutions Inc.,
Term B 05/31/06 2,494 2,499
-------
Grocery - 3.2%
Big V Supermarkets Inc. TLC,
Term C 08/10/03 998 1,004
Health, Education and Childcare - 3.2%
Vanguard Health Systems Inc.,
Term B 02/01/06 1,000 1,003
-------
LEISURE/AMUSEMENT/MOTION PICTURE/ENTERTAINMENT - 5.8%
AMF Group:
Axel A 03/31/03 1,156 1,073
Axel B 03/31/04 844 782
-------
1,855
-------
MINING/STEEL/IRON/METALS - 3.2%
Ispat Inland Inc.:
Term B 07/16/05 500 502
Term C 07/16/06 500 502
-------
1,004
-------
PERSONAL AND NON DURABLE GOODS - 6.3%
Weight Watchers International,
Term B-109/29/06 $2,000 $ 2,007
-------
PRINTING, PUBLISHING AND BROADCASTING - 6.3%
Merrill Corp.,
Term B 11/30/07 998 1,001
Weekly Reader Inc.,
Term B 11/30/06 1,000 1,009
-------
2,010
-------
RETAIL STORES - 3.0%
Duane Reade,
Term B 02/15/05 980 979
-------
TELECOMMUNICATIONS - CELLULAR - 13.1%
Centennial Puerto Rico Op Co.,
Term B-205/31/07 500 503
Dobson Operating Co.,
Term B 12/31/07 1,125 1,134
Nextel Partners,
Term B 01/29/08 2,000 2,021
PCS Holdings Omnipoint Financial,
Term 02/25/09 500 504
-------
4,162
-------
TELECOMMUNICATIONS EQUIPMENT - 3.2%
American Towers,
Term B 12/31/07 1,000 1,009
-------
TELECOMMUNICATIONS SERVICES - 6.3%
Cincinnati Bell Inc.:
Term B-1111/02/06 444 448
Term B-111/02/06 556 560
Nextlink Communications,
Term B 10/31/05 1,000 1,011
-------
2,019
-------
TOTAL VARIABLE RATE SENIOR
LOAN INTERESTS (cost of $31,747)(d) 31,797
-------
SHORT-TERM OBLIGATIONS
Dow Chemical Corp.,
5.820% 03/01/00 1,000 1,000
Fortune Brands,
5.830% 03/01/00 470 470
-------
TOTAL SHORT-TERM OBLIGATIONS 1,470
-------
OTHER ASSETS & LIABILITIES, NET (6,636)
-------
NET ASSETS $26,631
=======
</TABLE>
17
<PAGE> 20
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND--INVESTMENT PORTFOLIO (CONTINUED)
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
(In thousands)
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Senior Loans generally are subject to mandatory and/or optional prepayment.
Because of these mandatory prepayment conditions and because there may be
significant economic incentives for a Borrower to prepay, prepayments of
Senior Loans may occur. As a result, the actual remaining maturity of
Senior Loans held may be substantially less than the stated maturities
shown. Although the Fund is unable to accurately estimate the actual
remaining maturity of individual Senior Loans, the Fund estimates that the
actual average maturity of the Senior Loans held will be approximately
18-24 months.
(b) Senior Loans in which the Fund invests generally pay interest at rates
which are periodically redetermined by reference to a base lending rate
plus a premium. These base lending rates are generally (i) the prime rate
offered by one or more major United States banks, (ii) the lending rate
offered by one or more European banks such as the London Inter-Bank Offered
Rate ('LIBOR') and (iii) the certificate of deposit rate. Senior loans are
generally considered to be restricted in that the Fund ordinarily is
contractually obligated to receive approval from the Agent Bank and/or
borrower prior to the disposition of a Senior Loan.
(c) Industry classification percentages are based on total investments. Total
investments represent 119.4% of the Fund's net assets.
(d) Cost for federal income tax purposes is the same.
18 See notes to financial statements.
<PAGE> 21
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
(In thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $31,747) $31,797
Short-term obligations 1,470
-------
33,267
Receivable for:
Fund shares sold $ 359
Expense reimbursement due
from Advisor/Administrator 10
Securities Loaned Interest 253 622
----- -------
Total Assets 33,889
LIABILITIES
Payable due to custodian bank 3
Payable for:
Deferred facility fees 56
Accrued:
Service fees 2
Distribution fees - Class B 2
Distribution fees - Class C 1
Bookkeeping fees 3
Transfer agent fee 5
Other 102
Notes payable 7,000
-----
Total Liabilities 7,174
-------
NET ASSETS $26,715
-------
Net asset value & redemption price per share -
Class A ($11,136/915) $ 12.17(a)
-------
Maximum offering price per share -
Class A ($12.17/.9650) $ 12.61(b)
-------
Net asset value & offering price per share -
Class B ($10,403/855) $ 12.16(a)
-------
Net asset value & offering price per share -
Class C ($2,614/215) $ 12.16(a)
-------
Net asset value, offering & redemption price
per share - Class Z ($2,562/210) $ 12.17
-------
COMPOSITION OF NET ASSETS
Capital paid in $26,416
Undistributed net investment income 249
Net unrealized appreciation 50
-------
$26,715
-------
</TABLE>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Period Ended February 29, 2000 (Unaudited) (a)
(In thousands)
<S> <C> <C>
INVESTMENT INCOME
Interest $283
Fee income 2
----
285
EXPENSES
Management fee 13
Administration fee 6
Service fee - Class A, Class B, Class C 6
Distribution fee - Class A 1
Distribution fee - Class B 5
Distribution fee - Class C 2
Transfer agent fee 5
Bookkeeping fee 3
Audit fee 1
Other 1
--
45
Fees and expenses waived or borne
by the Advisor/Administrator (29)
Interest expense 20
Commitment fee 2 36
-- ----
Net Investment Income 249
NET REALIZED & UNREALIZED GAIN
ON PORTFOLIO POSITIONS
Net Change in Unrealized Appreciation/Depreciation 50
----
Increase in Net Assets from Operations $299
----
</TABLE>
(a) The Fund commenced investment operations on January 13, 2000.
19
See notes to financial statements.
<PAGE> 22
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND--STATEMENT OF CHANGES IN NET
ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED
FEBRUARY 29
INCREASE (DECREASE) IN NET ASSETS 2000 (a)
------------------------------------------------------------------------------------------
<S> <C>
OPERATIONS:
Net investment income $ 249
Net change in unrealized appreciation/depreciation 50
-------
Net Increase from Operations 299
-------
FUND SHARE TRANSACTIONS:
Receipts for shares sold -- Class A 11,018
Receipts for shares sold -- Class B 10,293
Receipts for shares sold -- Class C 2,580
Receipts for shares sold -- Class Z 2,525
-------
Net Increase from Fund Share Transactions 26,416
-------
Total Increase 26,715
NET ASSETS
Beginning of period --
-------
End of period (including undistributed net investment income of $249) $26,715
=======
NUMBER OF FUND SHARES
Sold -- Class A 915
-------
Sold -- Class B 855
-------
Sold -- Class C 215
-------
Sold -- Class Z 210
-------
</TABLE>
(a) The Fund commenced investment operations on January 13, 2000.
20 See notes to financial statements.
<PAGE> 23
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND--NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management of Liberty-Stein Roe Advisor Floating Rate
Advantage Fund (the Fund), the accompanying financial statements contain all
normal and recurring adjustments necessary for the fair presentation of the
financial position of the Fund at February 29, 2000, and the results of its
operations, the changes in its net assets and the financial highlights for the
period then ended.
NOTE 2. ACCOUNTING POLICIES
ORGANIZATION
The Fund is a Massachusetts business trust, registered under the Investment
Company Act of 1940, as amended, as a non-diversified, closed-end management
investment company. The Fund's investment objective is to provide a high level
of current income, consistent with preservation of capital. The Fund may issue
an unlimited number of shares. The Fund offers four classes of shares: Class A,
Class B, Class C and Class Z. Class A shares are sold with a front-end sales
charge. A 1.00% contingent deferred sales charge is assessed on redemptions made
within eighteen months on an original purchase of $1 million to $5 million.
Class B shares are subject to an annual distribution fee and a contingent
deferred sales charge. Class B shares will convert to Class A shares when they
have been outstanding approximately eight years. Class C shares are subject to a
contingent deferred sales charge on redemptions made within one year after
purchase and an annual distribution fee. Class Z shares are offered continuously
at net asset value. There are certain restrictions on the purchase of Class Z
shares, as described in the Fund's prospectus.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies that are consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS
Senior loans are generally valued using market prices or an independent
third-party pricing service. In the absence of actual market values, or if Stein
Roe & Farham Inc. (the Advisor) believes that a value provided by a third-party
pricing service does not represent a fair value, Senior Loans will be valued by
the Advisor, an indirect, wholly-owned subsidiary of Liberty Financial
Companies, Inc. (Liberty), at fair value, which is intended to approximate
market value. In determining fair value, the Advisor will consider on an ongoing
basis, among other factors, (i) the creditworthiness of the Borrower; (ii) the
current interest rate, the interest rate redetermination period and maturity of
such Senior Loan interests; and (iii) recent prices in the market for
instruments of similar quality, rate and interest rate redetermination period
and maturity. Because of uncertainty inherent in the valuation process, the
estimated value of a Senior Loan interest may differ significantly from the
value that would have been used had there been market activity for that Senior
Loan interest.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS
All income, expenses (other than the Class A, Class B and Class C service fees
and Class B and Class C distribution fees), realized and unrealized gains
(losses) are allocated to each class proportionately on a daily basis for
purposes of determining the net asset value of each class.
Class A, Class B and Class C per share data and ratios are calculated by
adjusting the expense and net investment income per share data and ratios for
the Fund for the entire period by the service fee per share applicable to Class
A, Class B and Class C shares and the distribution fee applicable to Class B and
Class C shares only.
FEDERAL INCOME TAXES
Consistent with the Fund's policy to qualify as a regulated investment company
and to distribute all of its taxable income, no federal income tax has been
accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM
Interest income is recorded on the accrual basis. Facility fees received are
treated as ordinary income. Market premiums and discounts are amortized over the
estimated life of each applicable security.
DISTRIBUTIONS TO SHAREHOLDERS
Effective March 1, 2000, the Fund will declare and record distributions daily
and pay monthly.
The amount and character of income and gains to be
21
<PAGE> 24
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND--NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
distributed are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Reclassifications are made
to the Fund's capital accounts to reflect income and gains available for
distribution (or available capital loss carryforwards) under income tax
regulations.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
MANAGEMENT FEE
Stein Roe & Farnham, Inc. (the Advisor), is the investment Advisor of the Fund
and receives a monthly fee equal to 0.45% annually of the Fund's average net
assets. The Advisor has agreed to waive the entire management fee until April 1,
2000.
ADMINISTRATION FEE
Colonial Management Associates, Inc. (the Administrator), an affiliate of the
Advisor, provides accounting and other services for a monthly fee equal to 0.20%
annually of the Fund's average net assets. The Administrator has agreed to waive
the entire administration fee until April 1, 2000.
BOOKKEEPING FEE
The Administrator provides bookkeeping and pricing services for a monthly fee
equal to $27,000 annually plus 0.035% annually of the Fund's average net assets
over $50 million.
TRANSFER AGENT FEE
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of the
Administrator, provides shareholder services for a monthly fee comprised of
0.07% annually of average net assets plus charges based on the number of
shareholder accounts and transactions and receives reimbursement for certain out
of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Liberty Funds Distributor, Inc. (the Distributor), a subsidiary of the
Administrator is the Fund's principal underwriter. For the period ended February
29, 2000, the Fund has been advised that the Distributor retained no net
underwriting discounts on sales of the Fund's Class A shares and received no
contingent deferred sales charges (CDSC) on Class A, Class B and Class C share
redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually on Class A, Class B and Class C net assets
as of the 20th of each month. The plan also requires the payment of a
distribution fee to the Distributor equal to 0.10%, 0.45% and 0.60% annually of
the average net assets attributable to Class A, Class B and Class C shares,
respectively.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS
The Advisor/Administrator have agreed, until April 30, 2000 notice, to waive all
fees and bear all Fund expenses (exclusive of service fees, distribution fees,
brokerage commissions, interest, commitment fees, taxes and extraordinary
expenses, if any).
OTHER
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor or Administrator.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 4. PORTFOLIO INFORMATION
INVESTMENT ACTIVITY
During the period ended February 29, 2000, purchases and sales of investments,
other than short-term obligations, were $30,628,358 and $5,000, respectively.
Unrealized appreciation (depreciation) at February 29, 2000, based on cost of
investments for both financial statement and federal income tax purposes was:
Gross unrealized appreciation $97,448
Gross unrealized depreciation (47,612)
-------
Net unrealized appreciation $49,836
=======
OTHER
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
NOTE 5. TENDER OF SHARES
The Board of Trustees currently intends, each calendar quarter, to consider the
the Fund to make tender offers for a portion of its then outstanding shares at
the net asset value of the shares at that time. The Tender Offer amount will be
at least 5% and no more than 25% of the total number of shares outstanding.
During the period ended February 29, 2000, there were no tender offers.
NOTE 6. SENIOR LOAN PARTICIPATION COMMITMENTS
The Fund invests primarily in participations and assignments or acts as a
party to the primary lending syndicate of a Variable Rate Senior Loan
interest to United States corporations, partnerships and other entities. When
the Fund purchases a participation of a Senior Loan interest, the Fund
typically enters into a contractual agreement with the lender or other third
party selling the participation, but not with the borrower directly. As such,
the Fund assumes the credit risk of the Borrower, Selling Participant or
other persons interpositioned between the
22
<PAGE> 25
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND--NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
--------------------------------------------------------------------------------
February 29, 2000 (Unaudited)
Fund and the Borrower. During the period ended February 29, 2000, there were no
Senior Loan Participation Commitments.
NOTE 7. LINE OF CREDIT
The Fund may borrow up to 33 1/3% of its assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal Notes to
Financial Statements/February 29, 2000 funds rate plus 1/2 of 1%, (2) the
lending bank's base rate or (3) IBOR offshore loan rate plus 1/2 of 1%. There
were no borrowings under the line of credit during the period ended February 29,
2000.
NOTE 8. OTHER RELATED PARTY TRANSACTIONS
At February 29, 2000, the Fund had one shareholder, Liberty Financial Companies,
Inc., who owned greater than 5% of the Fund's shares outstanding.
23
<PAGE> 26
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND--FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout the period is
as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
PERIOD ENDED FEBRUARY 29, 2000 (b)
-------------------------------------------------------
CLASS A CLASS B CLASS C CLASS Z
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.000 $12.000 $12.000 $12.000
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a) 0.009 0.009 0.009 0.009
Net realized and unrealized gain 0.161 0.151 0.151 0.161
------- ------- ------- -------
Total from Investment Operations 0.170 0.160 0.160 0.170
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $12.170 $12.160 $12.160 $12.170
------- ------- ------- -------
Total return (c) (d) (e) 1.42% 1.33% 1.33% 1.42%
------- ------- ------- -------
RATIOS TO AVERAGE NET ASSETS
Operating expenses (f) (g) 0.35% 0.70% 0.85% 0.00%
Securities lending interest and commitment fees expenses (g) 0.75% 0.75% 0.75% 0.75%
Total expenses (f) (g) 1.10% 1.45% 1.60% 0.75%
Net investment income (f) (g) 8.81% 8.46% 8.31% 9.16%
Fees and expenses waived or borne by the Advisor/Administrator (f) (g) 0.35% 0.35% 0.35% 0.35%
Portfolio turnover (e) -- -- -- --
Net assets at end of period (000's) $11,136 $10,403 $ 2,614 $ 2.562
(a) Net of fees and expenses waived or borne by the Advisor/Administrator
which amounted to: $ 0.006 $ 0.006 $ 0.006 $ 0.006
(b) The Fund commenced investment operations on January 13, 2000.
(c) Total return at net asset value assuming all distributions
reinvested and no initial sales charge or contingent deferred sales charge.
(d) Had the Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(g) Annualized.
</TABLE>
24
<PAGE> 27
TRUSTEES & TRANSFER AGENT
--------------------------------------------------------------------------------
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
JOHN V. CARBERRY
Senior Vice President of Liberty Financial Companies, Inc. (formerly Managing
Director, Salomon Brothers)
LORA S. COLLINS
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
JAMES E. GRINNELL
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
RICHARD W. LOWRY
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
SALVATORE MACERA
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
WILLIAM E. MAYER
Partner, Development Capital, LLC (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
JAMES L. MOODY, JR.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director,
Hannaford Bros. Co.)
JOHN J. NEUHAUSER
Academic Vice President and Dean of Faculties, Boston College (formerly Dean,
Boston College School of Management)
THOMAS E. STITZEL
Professor of Finance, College of Business, Boise State University; Business
Consultant and Author
ROBERT L. SULLIVAN
Retired Partner, KPMG LLP (formerly Management Consultant, Saatchi and Saatchi
Consulting Ltd. and Principal and International Practice Director, Management
Consulting, Peat Marwick Main & Co.)
ANNE-LEE VERVILLE
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
--------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Stein Roe Advisor Floating Rate Funds are:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The Funds mail one shareholder report to each shareholder address. If you would
like more than one report, please call 1-800-426-3750 and additional reports
will be sent to you.
This report has been prepared for shareholders of Stein Roe Advisor Floating
Rate Funds. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund and with the most
recent copy of the Liberty Funds Distributor, Inc. Performance Update.
SEMIANNUAL REPORT:
STEIN ROE ADVISOR FLOATING RATE FUNDS
<PAGE> 28
Liberty offers the independent thinking and collective strength of six financial
specialists. Our distinguished product line helps financial advisors and their
clients build diversified investment portfolios for long-term financial goals.
--------------------------------------------------------------------------------
LIBERTY FUNDS
--------------------------------------------------------------------------------
ALL-STAR INSTITUTIONAL MONEY MANAGEMENT APPROACH FOR INDIVIDUAL INVESTORS.
--------------------------------------------------------------------------------
COLONIAL FIXED INCOME AND VALUE STYLE EQUITY INVESTING.
--------------------------------------------------------------------------------
CRABBE A CONTRARIAN APPROACH TO FIXED INCOME AND EQUITY INVESTING.
HUSON
--------------------------------------------------------------------------------
NEWPORT A LEADER IN INTERNATIONAL INVESTING.(SM)
--------------------------------------------------------------------------------
STEIN ROE SOLUTIONS FOR GROWTH AND INCOME INVESTING.
ADVISOR
--------------------------------------------------------------------------------
[KEYPORT A LEADING PROVIDER OF INNOVATIVE ANNUITY PRODUCTS.
LOGO]
--------------------------------------------------------------------------------
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
BEFORE YOU INVEST, CONSULT YOUR FINANCIAL ADVISOR.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
--------------------------------------------------------------------------------
STEIN ROE ADVISOR FLOATING RATEFUNDS SEMIANNUAL REPORT
--------------------------------------------------------------------------------
[L I B E R T Y
F U N D S LOGO]
ALL-STAR * COLONIAL * CRABBE HUSON * NEWPORT * STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. (C)2000
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
www.libertyfunds.com
-----------------
BULK RATE
U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
-----------------
761-03/916A-0300 (4/00) 00/614
