<PAGE>
[Graphic Omitted]
- -----------------------------------------------------------
STEIN ROE ADVISOR TAX-MANAGED GROWTH FUND Semiannual report
- -----------------------------------------------------------
Managed by Stein Roe & Farnham Incorporated
April 30, 1998
-------------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
-------------------------------
<PAGE>
- --------------------------------------------------------------------------------
STEIN ROE ADVISOR TAX-MANAGED
GROWTH FUND HIGHLIGHTS
NOVEMBER 1, 1997 - APRIL 30, 1998
INVESTMENT OBJECTIVE: Stein Roe Advisor Tax-Managed Growth Fund seeks to
maximize long-term capital growth while reducing shareholder exposure to taxes.
THE FUND IS DESIGNED TO OFFER:
|X] Premier growth management
[X] A sensitivity to taxes
[X] The potential for attractive returns before and after taxes
PORTFOLIO MANAGER COMMENTARY: "Our portfolio management strategy not only seeks
strong growth potential, but enables long-term investors to invest for higher
returns with reduced concern about the tax implications typically associated
with successful equity investing."
- Mel Hughes and Steve Berman
STEIN ROE ADVISOR TAX-MANAGED GROWTH FUND PERFORMANCE
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
Inception date 12/30/96 12/30/96 12/30/96
- --------------------------------------------------------------------------------
Six-month total returns, assuming 17.86% 17.47% 17.39%
reinvestment of all distributions
and no sales charge or contingent
deferred sales charge (CDSC)
- --------------------------------------------------------------------------------
Net asset value per share on 4/30/98 $14.19 $14.05 $14.04
- --------------------------------------------------------------------------------
Top Five Holdings (as of 4/30/98)(1) Top Five Sectors (as of 4/30/98)(1)
- -------------------------------------- --------------------------------------
1. Pfizer, Inc. .............. 2.7% 1. Consumer Non-cyclical ..... 27%
2. Eli Lilly & Co. ........... 2.7% 2. Financial ................. 24%
3. United Healthcare Corp. ... 2.7% 3. Consumer Cyclical ......... 16%
4. Ecolab, Inc. .............. 2.6% 4. Technology ................ 14%
5. BankAmerica Corp. ......... 2.6% 5. Industrial ................ 11%
(1) Holdings are calculated as a percentage of total net assets. Sectors are
calculated as a percentage of total equity investments. The sector
classifications used on this page are based upon Stein Roe's defined
criteria. Industry sectors in the following financial statements are based
upon the standard industrial classifications (SIC) as published by the U.S.
Office of Management and Budget.
Because the Fund is actively managed, there can be no guarantee the Fund
will continue to hold these securities or invest in these sectors in the
future.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
TO FUND SHAREHOLDERS
---------------------------
[Photo of Harold W. Cogger]
---------------------------
I am pleased to present the semiannual report for the Stein Roe Advisor
Tax-Managed Growth Fund. This report provides information on the investment
environment and discusses the Fund's performance for the six-month period ended
April 30, 1998.
The economic environment we've enjoyed over the past six months was a healthy
one for corporate America. With low interest rates, low unemployment and low
inflation, companies within a variety of industries continued to prosper. As the
U.S. stock market reached new heights during this period, the Fund's management
team continued to find strong growth opportunities in various segments of the
market. At the same time, the Fund was successful in pursuing its tax-efficient
strategy -- providing positive investment returns without realizing net capital
gains during the period.
While the stock prices of many U.S. companies are trading at historical highs,
we remain optimistic that stocks of larger, well-established growth companies
will continue to provide attractive opportunities for investors. Going forward,
it will become increasingly important to identify companies with dominant market
share and superior management teams. Stein Roe Advisor Tax-Managed Growth Fund
remains a viable choice for long-term investors who are interested in pursuing
strong growth potential while minimizing taxable gains.
Effective February 28, 1998, the Fund's name changed from Colonial Tax-Managed
Growth Fund to Stein Roe Advisor Tax-Managed Growth Fund. This name change does
not affect the Fund's objective or management style, but more clearly identifies
Stein Roe & Farnham as the Fund's manager.
More detailed information about the Fund, its performance and the companies in
which it has invested appear on the following pages. Thank you for choosing
Stein Roe Advisor Tax-Managed Growth Fund and for the opportunity to serve your
investment needs.
Respectfully,
/s/ Harold W. Cogger
Harold W. Cogger
President
June 9, 1998
Because market conditions change frequently, there can be no assurance that the
trends described in this report will continue.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT REPORT
- ----------------------- -----------------------
[Photo of Mel Hughes] [Photo of Steve Berman]
- ----------------------- -----------------------
MEL HUGHES and STEVE BERMAN are senior equity analysts at Stein Roe & Farnham
Incorporated and members of the nine-person investment management team for Stein
Roe Advisor Tax-Managed Growth Fund.
A FAVORABLE ECONOMIC ENVIRONMENT OFFERED STRONG GROWTH OPPORTUNITIES
Over the six-months ended April 30, 1998, U.S. equity markets continued their
climb, particularly during the last four months of the period. With strong
domestic economic growth, low inflation and low interest rates, money continued
to flow into the equity market. Together, these factors helped drive stock
valuations to historical highs during the period. For this same period, Stein
Roe Advisor Tax-Managed Growth Fund produced a 17.9% total return for Class A
shares, based on net asset value.
BUILDING A PORTFOLIO OF ATTRACTIVE GROWTH STOCKS
In general, we've kept our core fund holdings focused primarily on quality
growth stocks of larger companies. Between 60%-80% of the portfolio is typically
invested in large-cap stocks. The remainder is a blend of small- and mid-cap
opportunity stocks which have the potential to surprise investors with positive
market activity. When considering adding a stock of any size company to the
portfolio, we continue to look for three key factors: strong or improving
fundamentals, superior earnings growth potential and reasonable market
valuations.
With a team of nine analysts, each concentrating on a particular sector of the
economy, we build the portfolio using detailed, bottom-up analysis. Our analysts
conduct fundamental research, carefully examining individual companies. This
active management style encourages each analyst to present what they believe are
the best opportunities their sector has to offer, enabling us to create a
focused portfolio of attractive growth stocks.
STRONG PERFORMANCE WITHIN A VARIETY OF SECTORS
As the period came to a close, the portfolio was overweighted in the financial
services, healthcare and consumer sectors, where we continued to find attractive
growth opportunities in the banking, retail, managed care and pharmaceutical
industries. A variety of stocks in the portfolio performed well. United
Healthcare, a dominant player in the managed care industry, rose 41% in the
first four months of 1998. In the pharmaceutical industry, Alza performed well,
appreciating 51% during the first four months of 1998. Alza (2.5% of total net
assets) is a company that once focused primarily on reformulating existing drugs
and is now in the early stages of developing and marketing its own line of
drugs. With a steady flow of new drugs, faster FDA approvals and increasing
demand from an aging population, pharmaceuticals should remain an attractive
segment of the market.
Healthy consumer spending, buoyed by strong real wage growth and low
unemployment, has also fueled growth in the retail industry. Dollar General
(2.5% of total net assets) is a rapidly growing niche retailer. Dollar General
operates a chain of small neighborhood discount stores that cater to
lower-income consumers -- a market segment that is not well served by the larger
retailers. With its low cost structure, discount prices and convenient store
locations, Dollar General has compiled an enviable growth record. Future new
store expansion opportunities appear very attractive. In addition to entering
new states, the company has plans in place to double its number of stores in the
24 states it currently operates.
Finally, the financial services sector continued to offer attractive growth
potential. The consolidation that has been taking place has created greater
efficiencies within many organizations. Low interest rates and strong consumer
spending are positives for consumer lending, as people are buying more and loan
delinquencies are moderating. Future earnings growth for many companies appears
sustainable. U.S. Bancorp (2.3% of total net assets) is a high quality regional
bank with excellent projected earnings growth and a very efficient operation.
Witnessing the pattern of acquisitions they've made over the last few years and
the potential for it to continue, we view U.S. Bancorp as an excellent holding
for the foreseeable future.
ADDING VALUE THROUGH DEDICATED TAX-MANAGEMENT
Stein Roe Advisor Tax-Managed Growth Fund continues to be one of the few funds
managed for attractive returns both before and after taxes. While pre-tax return
is always a focus, we consider the tax impact to shareholders on every portfolio
transaction. The Fund uses various techniques to manage taxable distributions to
shareholders. First, we focus on stocks offering strong long-term growth
prospects. Second, we selectively sell stocks in the portfolio in order to
realize capital losses that could offset current or future realized capital
gains. Third, when selling a stock, we try to sell our highest cost shares first
- -- helping to reduce any realized capital gains. We have a number of other
tax-management techniques at our disposal, but these are the most commonly used.
We're pleased to report that for the six-month period ended April 30, 1998, the
Fund did not distribute any taxable gains or dividend income to shareholders.
CAREFUL STOCK SELECTION IS MORE IMPORTANT THAN EVER
While it would be difficult for domestic equity markets to perform in the strong
manner they have for the last few years, the current economic environment still
favors stocks, and our long-term outlook remains positive. Entering the second
half of the Fund's fiscal year, we plan to continue our strategy of holding a
core group of large, quality growth stocks while remaining dedicated to
tax-efficient investing. We'll also continue to seek companies that offer
above-average underlying fundamentals and leading market positions with
sustainable competitive advantages.
- --------------------------------------------------------------------------------
<PAGE>
STEIN ROE ADVISOR TAX-MANAGED GROWTH FUND VS.
THE STANDARD & POOR'S 500 INDEX CHANGE IN VALUE
of $10,000 from 12/31/96 - 4/30/98
CLASS A SHARES BASED ON NAV AND POP
As of Date NAV POP S&P 500
- ------------- ------ ------ -------
December 31, 1996 10,000 10,000 10,000
January 31, 1997 10,428 9,829 10,624
February 28, 1997 10,269 9,678 10,708
March 31, 1997 9,711 9,153 10,269
April 30, 1997 10,000 9,425 10,881
May 31, 1997 10,767 10,148 11,546
June 30, 1997 11,285 10,636 12,060
July 31, 1997 12,181 11,481 13,019
August 31, 1997 11,643 10,974 12,290
September 30, 1997 12,400 11,687 12,963
October 31, 1997 11,992 11,302 12,531
November 30, 1997 12,271 11,565 13,110
December 31, 1997 12,440 11,725 13,335
January 31, 1998 12,679 11,950 13,482
February 28, 1998 13,556 12,776 14,454
March 31, 1998 14,143 13,330 15,194
April 30, 1998 14,133 13,321 15,349
VALUE OF A $10,000 INVESTMENT
MADE ON 12/31/96 AT 4/30/98
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
NAV POP NAV W/CDSC NAV W/CDSC
- --------------------------------------------------------------------------------
$14,133 $13,321 $14,008 $13,608 $13,998 $13,998
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/98
- --------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
INCEPTION 12/30/96 12/30/96 12/30/96
NAV POP NAV w/CDSC NAV w/CDSC
- --------------------------------------------------------------------------------
1 year 41.33% 33.21% 40.22% 35.22% 40.12% 39.12%
Life 29.22 23.61 28.26 25.49 28.19 28.19
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of U.S. stock market securities. Unlike mutual funds, indexes are
not investments, do not incur fees or expenses and are not professionally
managed.
Past performance cannot predict future results. Returns and value of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. Net asset value (NAV) returns do not
include sales charges or contingent deferred sales charges (CDSC). Public
offering price (POP) returns include the maximum sales charge of 5.75% for Class
A shares. The CDSC returns reflect charges of 5% for one year and 4% since
inception for Class B shares; and 1% for one year for Class C shares.
Performance for different share classes will vary based on differences in sales
charges and fees associated with each class.
For information on additional share classes, refer to the Financial Highlights
in the back of this report or call 1-800-345-6611.
- --------------------------------------------------------------------------------
<PAGE>
INVESTMENT PORTFOLIO
APRIL 30, 1998 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 91.7% COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 22.8%
DEPOSITORY INSTITUTIONS - 11.7%
Banc One Corp. 43 $ 2,522
BankAmerica Corp. 42 3,536
Chase Manhattan Corp. 24 3,284
Citicorp 23 3,401
U.S. Bancorp 26 3,239
--------
15,982
--------
INSURANCE CARRIERS - 9.3%
Allstate Corp. 27 2,570
Nationwide Financial Services, Class A 75 3,249
United Healthcare Corp. 53 3,709
Washington Mutual, Inc. 48 3,349
--------
12,877
--------
NONDEPOSITORY CREDIT INSTITUTIONS - 1.8%
Federal National Mortgage Association 43 2,545
--------
...............................................................................
MANUFACTURING - 42.4%
CHEMICALS & ALLIED PRODUCTS - 15.9%
Alza Corp. (a) 73 3,475
Ecolab, Inc. 113 3,568
Eli Lilly & Co. 54 3,729
Monsanto Co. 54 2,855
Pfizer, Inc. 33 3,790
Procter & Gamble Co. 24 1,989
SmithKline Beecham - Sponsored ADR UK 43 2,573
--------
21,979
--------
COMMUNICATIONS EQUIPMENT - 3.8%
Motorola, Inc. 42 2,325
Telefonakteibolaget L.M. Ericsson ADR Sw 58 2,963
--------
5,288
--------
ELECTRICAL INDUSTRIAL EQUIPMENT - 4.2%
Emerson Electric Co. 16 999
General Electric Co. 16 1,328
Hubbell, Inc., Class B 69 3,417
--------
5,744
--------
ELECTRONIC COMPONENTS - 4.4%
Analog Devices, Inc. (a) 73 $ 2,835
Intel Corp. 40 3,265
--------
6,100
--------
FABRICATED METAL - 1.8%
Gillette Co. 21 2,470
--------
FOOD & KINDRED PRODUCTS - 3.2%
Nabisco Holdings Corp. 52 2,462
Philip Morris Co., Inc. 53 1,989
--------
4,451
--------
MACHINERY & COMPUTER EQUIPMENT - 4.0%
Cisco Systems, Inc. (a) 42 3,109
U.S. Filter Corp. (a) 74 2,398
--------
5,507
--------
MEASURING & ANALYZING INSTRUMENTS - 2.5%
Medtronic, Inc. 67 3,515
--------
TRANSPORTATION EQUIPMENT - 2.6%
Lear Corp. (a) 66 3,524
--------
...............................................................................
MINING & ENERGY - 3.0%
CRUDE PETROLEUM & NATURAL GAS - 1.8%
Ocean Energy, Inc. (a) 104 2,542
--------
OIL & GAS FIELD SERVICES - 1.2%
Schlumberger Ltd. 20 1,674
--------
...............................................................................
RETAIL TRADE - 6.8%
BUILDING, HARDWARE & GARDEN SUPPLY - 2.4%
Home Depot, Inc. 48 3,335
--------
GENERAL MERCHANDISE STORES - 4.4%
Dollar General Corp. 92 3,468
Wal-Mart Stores, Inc. 52 2,644
--------
6,112
--------
...............................................................................
SERVICES - 7.6%
AUTO REPAIR, RENTAL & PARKING - 2.2%
Hertz Corp., Class A 74 $ 3,046
--------
BUSINESS SERVICES - 1.6%
Cendant Corp. (a) 87 2,172
--------
PERSONAL SERVICES - 3.8%
Service Corp. International 57 2,368
Stewart Enterprises, Inc. 112 2,884
--------
5,252
--------
...............................................................................
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 9.1%
BROADCASTING - 5.6%
CBS Corp. 82 2,904
Clear Channel Communications, Inc. (a) 31 2,922
Heftel Broadcasting Corp., Class A (a) 45 1,952
--------
7,778
--------
RAILROAD - 1.6%
Wisconsin Central Transportation Corp. (a) 91 2,232
--------
TELECOMMUNICATION - 1.9%
WorldCom, Inc. (a) 61 2,605
--------
TOTAL COMMON STOCKS (cost of $105,390) (b) 126,730
--------
SHORT-TERM OBLIGATIONS - 9.3% PAR
- -------------------------------------------------------------------------------
Repurchase agreement with ABN AMRO Chicago Corp.,
dated 04/30/98 due 05/01/98 at 5.520% collateralized
by U.S. Treasury notes and bill with various
maturities to 2021, market value $15,583 (repurchase
proceeds $12,879). $ 12,877 12,877
OTHER ASSETS & LIABILITIES - (1.0)% (1,374)
- -------------------------------------------------------------------------------
NET ASSETS - 100% $138,233
========
NOTES TO INVESTMENT PORTFOLIO:
- -------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is $105,554.
Summary of Securities by Country Country Value % of Total
- -------------------------------------------------------------------------------
United States $ 121,194 95.6
Sweden Sw 2,963 2.4
United Kingdom UK 2,573 2.0
--------- -----
$ 126,730 100.0
========= =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
Acronym Name
------- ----
ADR American Depositary Receipt
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 1998 (UNAUDITED)
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $105,390) $126,730
Short-term obligations 12,877
--------
139,607
Receivable for:
Fund shares sold $ 2,714
Investments sold 1,082
Dividends 54
Expense reimbursement due
from Adviser/Administrator 90
Other 62 4,002
------- --------
Total Assets 143,609
LIABILITIES
Payable for:
Investments purchased 4,140
Fund shares repurchased 1,015
Accrued:
Management fee 56
Distribution fee - Class B 49
Distribution fee - Class C 8
Distribution fee - Class F 1
Distribution fee - Class H 2
Administration fee 44
Service fee 28
Transfer agent fee 27
Bookkeeping fee 5
Other 1
-------
Total Liabilities 5,376
--------
NET ASSETS $138,233
========
Net asset value & redemption price per share -
Class A ($35,095/2,473) $ 14.19
========
Maximum offering price per share - Class A
($14.19/0.9425) $ 15.06(a)
========
(a) On sales of $50,000 or more the offering price is reduced.
Net asset value & offering price per share -
Class B ($82,123/5,847) $ 14.05(b)
========
Net asset value & offering price per share -
Class C ($14,288/1,017) $ 14.04(b)
========
Net asset value & redemption price per share -
Class E ($597/42) $ 14.17
========
Maximum offering price per share - Class E
($14.17/0.9500) $ 14.92(a)
========
Net asset value & offering price per share -
Class F ($825/59) $ 14.05(b)
========
Net asset value & redemption price
per share - Class G ($2,679/189) $ 14.19
========
Maximum offering price per share - Class G
($14.19/0.9550) $ 14.86(a)
========
Net asset value & offering price per share -
Class H ($2,626/187) $ 14.05(b)
========
COMPOSITION OF NET ASSETS
Capital paid in $ 118,525
Accumulated net realized loss (1,632)
Net unrealized appreciation 21,340
---------
$ 138,233
=========
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
(UNAUDITED)
(in thousands)
INVESTMENT INCOME
Dividends $ 401
Interest 197
-------
Total Investment Income (net of nonrebatable
foreign taxes withheld at source which
amounted to $5) 598
EXPENSES
Management fee $ 279
Administration fee 190
Service fee 122
Distribution fee - Class B 213
Distribution fee - Class C 36
Distribution fee - Class E (a)
Distribution fee - Class F 2
Distribution fee - Class G 1
Distribution fee - Class H 7
Transfer agent fee 121
Bookkeeping fee 21
Trustees fee 2
Custodian fee 9
Audit fee 12
Legal fee 2
Registration fee 8
Reports to shareholders 1
Other 5
------
1,031
Fees waived by the Adviser/
Administrator (47) 984
------ -------
Net Investment Loss (386)
-------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (1,054)
Net unrealized appreciation during the period 16,523
------
Net Gain 15,469
-------
Increase in Net Assets from Operations $15,083
=======
(a) Rounds to less than one.
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
Six months ended Period ended
(in thousands) April 30 October 31
---------------- ------------
INCREASE (DECREASE) IN NET ASSETS 1998 1997(a)(b)
Operations:
Net investment loss $ (386) $ (25)
Net realized loss (1,054) (578)
Net unrealized appreciation 16,523 4,810
-------- --------
Net Increase from Operations 15,083 4,207
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 16,865 16,100
Cost of shares repurchased - Class A (2,892) (615)
-------- --------
13,973 15,485
-------- --------
Receipts for shares sold - Class B 36,658 36,603
Cost of shares repurchased - Class B (1,821) (747)
-------- --------
34,837 35,856
-------- --------
Receipts for shares sold - Class C 7,392 5,703
Cost of shares repurchased - Class C (497) (90)
-------- --------
6,895 5,613
-------- --------
Receipts for shares sold - Class E 193 224
Cost of shares repurchased - Class E (20) -
-------- --------
173 224
-------- --------
Receipts for shares sold - Class F 309 277
Cost of shares repurchased - Class F (8) -
-------- --------
301 277
-------- --------
Receipts for shares sold - Class G 1,125 1,067
Cost of shares repurchased - Class G (54) -
-------- --------
1,071 1,067
-------- --------
Receipts for shares sold - Class H 1,172 991
Cost of shares repurchased - Class H (c) -
-------- --------
1,172 991
-------- --------
Net Increase from Fund Share Transactions 58,422 59,513
-------- --------
Total Increase 73,505 63,720
NET ASSETS
Beginning of period 64,728 1,008
-------- --------
End of period (net of accumulated net
investment loss of $0 and $0, respectively) $138,233 $ 64,728
======== ========
(a) The Fund commenced investment operations on December 16, 1996. The activity
shown is from the effective date of registration (December 30, 1996) with
the Securities and Exchange Commission.
(b) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(c) Rounds to less than one.
See notes to financial statements.
<PAGE>
(Unaudited)
Six months ended Period ended
(in thousands) April 30 October 31
---------------- ------------
1998 1997(a)(b)
NUMBER OF FUND SHARES
Sold - Class A 1,264 1,437
Repurchased - Class A (215) (53)
-------- --------
1,049 1,384
-------- --------
Sold - Class B 2,773 3,269
Repurchased - Class B (141) (64)
-------- --------
2,632 3,205
-------- --------
Sold - Class C 559 493
Repurchased - Class C (37) (8)
-------- --------
522 485
-------- --------
Sold - Class E 15 19
Repurchased - Class E (2) -
-------- --------
13 19
-------- --------
Sold - Class F 24 25
Repurchased - Class F (c) -
-------- --------
24 25
-------- --------
Sold - Class G 86 97
Repurchased - Class G (4) -
-------- --------
82 97
-------- --------
Sold - Class H 90 87
Repurchased - Class H (c) -
-------- --------
90 87
-------- --------
(a) The Fund commenced investment operations on December 16, 1996. The activity
shown is from the effective date of registration (December 30, 1996) with
the Securities and Exchange Commission.
(b) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(c) Rounds to less than one.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Stein Roe Advisor Tax-Managed Growth Fund (the
Fund), formerly Colonial Tax-Managed Growth Fund, a series of Colonial Trust I,
the accompanying financial statements contain all normal and recurring
adjustments necessary for the fair presentation of the financial position of
the Fund at April 30, 1998, and the results of its operations, the changes in
its net assets and the financial highlights for the six months then ended.
NOTE 2. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: The Fund is a diversified portfolio of a Massachusetts business
trust, registered under the Investment Company Act of 1940, as amended, as an
open-end, management investment company. The Fund's investment objective is to
maximize long-term capital growth while reducing shareholder exposure to taxes.
The Fund may issue an unlimited number of shares. The Fund offers seven classes
of shares: Class A, Class B, Class C, Class E, Class F, Class G and Class H.
Class A shares are sold with a front-end sales charge and 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 E, Class F, Class G and Class H shares are trust shares.
Class E and Class G shares are sold with a front-end sales charge and are
subject to an annual distribution fee and Class F and Class H shares are subject
to an annual distribution fee and a contingent deferred sales charge. Class F
and Class H shares will convert to Class E and Class G shares, respectively,
after they have been outstanding approximately eight years.
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 followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities generally are valued at
the last sale price or, in the case of unlisted or listed securities for which
there were no sales during the day, at current quoted bid prices.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than applicable 12b-1 fees) (see Note 3: Underwriting discounts,
service and distribution fees) and 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.
Per share data was calculated using average shares outstanding during the
period. Net investment income per share data reflects the distribution fee per
share where applicable.
Ratios are calculated by adjusting the expense and net investment income ratios
for the Fund for the entire period by the distribution fee where applicable.
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.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
OTHER: Corporate actions are recorded on the ex-date. Interest income is
recorded on the accrual basis.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES
- --------------------------------------------------------------------------------
MANAGEMENT FEE: Stein Roe & Farnham, Inc. (the Adviser) is the investment
Adviser of the Fund and receives a monthly fee equal to 0.60% annually of the
Fund's average net assets.
ADMINISTRATION FEE: Colonial Management Associates, Inc. (the Administrator), an
affiliate of the Adviser, provides accounting and other services for a monthly
fee equal to 0.40% annually of the Fund's average net assets.
BOOKKEEPING FEE: The Administrator provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer Agent), an
affiliate of the Administrator, provides shareholder services for a monthly fee
equal to 0.25% annually of the Fund's average net assets and receives
reimbursement for certain out-of-pocket expenses.
Effective October 1, 1997 and continuing through September 30, 1998, the
Transfer agent fee will be reduced by 0.0012% in cumulative monthly increments,
resulting in a decrease in the fee from 0.25% to 0.236% annually.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Liberty Financial
Investments, Inc. (the Distributor), a subsidiary of the Administrator, is the
Fund's principal underwriter. For the six months ended April 30, 1998, the Fund
has been advised that the Distributor retained net underwriting discounts of
$85,014 on sales of the Fund's Class A shares and received contingent deferred
sales charges (CDSC) of $46,196, $2,856, none, and none on Class B, Class C,
Class F and Class H share redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee to
the Distributor equal to 0.25% annually of the Fund's net assets as of the 20th
of each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B, Class C, Class F and Class H shares; 0.10% of the average net assets
attributable to Class E shares; and up to 0.25% of average net assets
attributable to Class G shares. The actual fee with respect to Class G shares
will be 0.10% on Class G assets attributable to shares outstanding for less than
five years and 0.25% on Class G assets attributable to shares outstanding five
years or more.
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 Adviser/Administrator have agreed, until further notice, to
waive fees and bear certain Fund expenses to the extent that total expenses
(exclusive of service fees and distribution fees, brokerage commissions,
interest, taxes and extraordinary expenses, if any) exceed 1.25% annually of the
first $100 million of the Fund's average net assets and 1.50% annually
thereafter.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser 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.
INVESTMENT ACTIVITY: During the six months ended April 30, 1998, purchases and
sales of investments, other than short-term obligations, were $63,859,431 and
$13,045,276, respectively.
Unrealized appreciation (depreciation) at April 30, 1998, based on cost of
investments for federal income tax purposes was:
Gross unrealized appreciation $22,556,557
Gross unrealized depreciation (1,380,535)
-----------
Net unrealized appreciation $21,176,022
===========
CAPITAL LOSS CARRYFORWARDS: At October 31, 1997, capital loss carry-forwards
available (to the extent provided in regulations) to offset future realized
gains were approximately as follows:
Year of Capital loss
expiration carryforward
------------ ---------------
2005 $ 559,000
Expired capital loss carryforwards, if any, are recorded as a reduction of
capital paid in.
To the extent loss carryforwards are used to offset any future realized gains,
it is unlikely that such gains would be distributed since they may be taxable to
shareholders as ordinary income.
OTHER: The Fund may focus its investments in certain industries, subjecting it
to greater risk than a fund that is more diversified.
NOTE 4. OTHER OPERATIONAL AND CAPITAL ACTIVITY
- --------------------------------------------------------------------------------
For the period December 16, 1996 through December 30, 1996, the Fund had net
investment income of $1,054 and unrealized appreciation of $6,829. The following
is a summary of capital activity from December 16, 1996 through December 30,
1996.
Shares
Receipts for shares sold - Class A $ 400,000 40,000
Receipts for shares sold - Class B $ 100,000 10,000
Receipts for shares sold - Class C $ 100,000 10,000
Receipts for shares sold - Class E $ 100,000 10,000
Receipts for shares sold - Class F $ 100,000 10,000
Receipts for shares sold - Class G $ 100,000 10,000
Receipts for shares sold - Class H $ 100,000 10,000
NOTE 5. LINE OF CREDIT
- --------------------------------------------------------------------------------
The Fund may borrow up to 10% of its net 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 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 April 30, 1998.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of each class outstanding throughout the period is as follows:
<CAPTION>
(Unaudited)
Six months ended April 30
-------------------------------------------------
1998
Class A Class B Class C Class E
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $ 12.040 $ 11.960 $ 11.960 $ 12.020
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(b) (0.017) (0.066) (0.066) (0.024)
Net realized and unrealized gain 2.167 2.156 2.146 2.174
-------- -------- -------- --------
Total from Investment Operations 2.150 2.090 2.080 2.150
-------- -------- -------- --------
Net asset value - End of period $ 14.190 $ 14.050 $ 14.040 $ 14.170
======== ======== ======== ========
Total return (c)(d)(e) 17.86% 17.47% 17.39% 17.89%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (f)(g) 1.50% 2.25% 2.25% 1.60%
Net investment income (loss) (f)(g) (0.26)% (1.01)% (1.01)% (0.36)%
Fees and expenses waived or borne by
the Adviser/Administrator (f)(g) 0.10% 0.10% 0.10% 0.10%
Portfolio turnover (e) 15% 15% 15% 15%
Average commission rate $ 0.0621 $ 0.0621 $ 0.0621 $ 0.0621
Net assets at end of period (000) $ 35,095 $ 82,123 $ 14,288 $ 597
(a) Net of fees and expenses waived or borne by the Adviser/Administrator
which amounted to: $ 0.006 $ 0.006 $ 0.006 $ 0.006
(b) Per share data was calculated using average shares outstanding during the period.
(c) Total return at net asset value assuming no initial sales charge or contingent
deferred sales charge.
(d) Had the Adviser/Administrator 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>
<PAGE>
<TABLE>
<CAPTION>
(Unaudited)
Six months ended April 30
------------------------------------------------
1998
Class F Class G Class H
-------- -------- --------
<S> <C> <C> <C>
Net asset value - Beginning of period $ 11.970 $ 12.040 $ 11.960
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(b) (0.066) (0.024) (0.067)
Net realized and unrealized gain 2.146 2.174 2.157
-------- -------- --------
Total from Investment Operations 2.080 2.150 2.090
-------- -------- --------
Net asset value - End of period $ 14.050 $ 14.190 $ 14.050
======== ======== ========
Total return (c)(d)(e) 17.38% 17.86% 17.47%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (f)(g) 2.25% 1.60% 2.25%
Net investment income (loss)(f)(g) (1.01)% (0.36)% (1.01)%
Fees and expenses waived or borne by
the Adviser/Administrator (f)(g) 0.10% 0.10% 0.10%
Portfolio turnover (e) 15% 15% 15%
Average commission rate $ 0.0621 $ 0.0621 $ 0.0621
Net assets at end of period (000) $ 825 $ 2,679 $ 2,626
$ 0.006 $ 0.006 $ 0.006
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
Selected data for a share of each class outstanding throughout the period is as follows:
<CAPTION>
Period ended October 31
------------------------------------------------
1997 (b)
Class A Class B Class C (c) Class E
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value - Beginning of period $ 10.080 $ 10.080 $ 10.080 $ 10.080
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(d) 0.040 (0.032) (0.032) 0.030
Net realized and unrealized gain 1.920 1.912 1.912 1.910
-------- -------- -------- --------
Total from Investment Operations 1.960 1.880 1.880 1.940
-------- -------- -------- --------
Net asset value - End of period $ 12.040 $ 11.960 $ 11.960 $ 12.020
======== ======== ======== ========
Total return (e)(f)(g) 19.44% 18.65% 18.65% 19.25%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (h)(i) 1.50% 2.25% 2.25% 1.60%
Net investment income (loss) (h)(i) 0.39% (0.36)% (0.36)% 0.29%
Fees and expenses waived or borne by
the Adviser/Administrator (h)(i) 0.98% 0.98% 0.98% 0.98%
Portfolio turnover (g) 51% 51% 51% 51%
Average commission rate $ 0.0564 $ 0.0564 $ 0.0564 $ 0.0564
Net assets at end of period (000) $ 17,142 $ 38,452 $ 5,923 $ 346
(a) Net of fees and expenses waived or borne by the Adviser/Administrator
which amounted to: $ 0.096 $ 0.096 $ 0.096 $ 0.096
(b) The Fund commenced investment operations on December 16, 1996. The activity shown is
from the effective date of registration (December 30, 1996) with the Securities and
Exchange Commission.
(c) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(d) Per share data was calculated using average shares outstanding during the period.
(e) Total return at net asset value assuming no initial sales charge or contingent
deferred sales charge.
(f) Had the Adviser/Administrator not waived or reimbursed a portion of expenses, total
return would have been reduced.
(g) Not annualized.
(h) The benefits derived from custody credits and directed brokerage arrangements had no
impact.
(i) Annualized.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS - CONT.
<CAPTION>
Period ended October 31
------------------------------------------------
1997 (b)
Class F Class G Class H
-------- -------- --------
<S> <C> <C> <C>
Net asset value - Beginning of period $ 10.080 $ 10.080 $ 10.080
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a)(d) (0.032) 0.030 (0.032)
Net realized and unrealized gain 1.922 1.930 1.912
-------- -------- --------
Total from Investment Operations 1.890 1.960 1.880
-------- -------- --------
Net asset value - End of period $ 11.970 $ 12.040 $ 11.960
======== ======== ========
Total return (e)(f)(g) 18.75% 19.44% 18.65%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS
Expenses (h)(i) 2.25% 1.60% 2.25%
Net investment income (loss)(h)(i) (0.36)% 0.29% (0.36)%
Fees and expenses waived or borne by
the Adviser/Administrator (h)(i) 0.98% 0.98% 0.98%
Portfolio turnover (g) 51% 51% 51%
Average commission rate $ 0.0564 $ 0.0564 $ 0.0564
Net assets at end of period (000) $ 421 $ 1,288 $ 1,156
$ 0.096 $ 0.096 $ 0.096
</TABLE>
<PAGE>
SHAREHOLDER SERVICES
TO MAKE INVESTING EASIER
Your Fund has one of the most extensive selections of shareholder services
available. Your financial advisor can help you arrange for any of these
services, or you can call Colonial Investors Service Center directly at
1-800-345-6611.
AFFORDABLE ADDITIONAL INVESTMENTS: Add to your account with as little as $50 on
most funds; $25 for an IRA account.
FREE EXCHANGES(1): Exchange all or part of your account into the same share
class of another fund distributed by Liberty Financial Investments, Inc. by
phone or mail.
EASY ACCESS TO YOUR MONEY(1): Make withdrawals from your account by phone, by
mail or, for certain funds, by check.
ONE-YEAR REINSTATEMENT PRIVILEGE: If you need access to your money, but then
choose to return it within one year, you can reinvest in any fund distributed by
Liberty Financial Investments of the same share class without any penalty or
sales charge.
FUNDAMATIC: Make periodic investments as low as $50 from your checking account
to your Fund account.
SYSTEMATIC WITHDRAWAL PLAN (SWP): Receive monthly, quarterly or semiannual
payments via check or bank transmission. There is a $5,000 account value
required, but no minimum for the payment amount. The maximum annual withdrawal
is 12% of account balance at time SWP is established. SWPs by check are
processed on the 10th calendar day of each month unless the 10th falls on a
non-business day or the first business day of the week. If this occurs, the
processing date will be the previous business day. Dividends and capital gains
must be reinvested.
AUTOMATED DOLLAR COST AVERAGING: Transfer money on a monthly basis from any fund
with a balance of $5,000 into the same share class of up to four other funds
distributed by Liberty Financial Investments. Minimum for each transfer is $100.
RETIREMENT PLANS: Choose from a broad range of retirement plans, including IRAs.
(1) Redemptions and exchanges are made at the next determined net asset value
after the request is received by the Transfer Agent. Proceeds may be more or
less than your original cost. The exchange privilege may be terminated at
any time. Exchanges are not available on all funds. Investors who purchase
Class B or C shares, or $1 million or more of Class A shares, may be subject
to a contingent deferred sales charge.
<PAGE>
HOW TO REACH COLONIAL
BY PHONE OR BY MAIL
BY TELEPHONE
CUSTOMER CONNECTION - 1-800-345-6611
For 24-hour account information, call from your touch-tone phone. (Rotary
callers will be automatically connected to a representative during business
hours.) A recorded message will guide you through the menu:
For fund prices, dividends and capital gains information ............. press 1
For account information .............................................. press 2
To speak to a service representative ................................. press 3
For yield and total return information ............................... press 4
For duplicate statements or new supply of checks ..................... press 5
To order duplicate tax forms and year-end statements ................. press 6
(February through May)
To review your options at any time during your call .................. press *
To speak with a shareholder services representative about your account, call
Monday to Friday, 8:00 a.m. to 8:00 p.m. ET, and Saturdays from February through
mid-April, 10:00 a.m. to 2:00 p.m. ET.
COLONIAL TELEPHONE TRANSACTION DEPARTMENT - 1-800-422-3737
To purchase, exchange or sell shares by telephone, call Monday to Friday, 9:00
a.m. to 7:00 p.m. ET. Transactions received after the close of the New York
Stock Exchange will receive the next business day's closing price.
LITERATURE - 1-800-426-3750
To request literature on any fund distributed by Liberty Financial Investments,
call Monday to Friday, 8:30 a.m. to 6:30 p.m. ET.
BY MAIL
COLONIAL INVESTORS SERVICE CENTER, INC.
P.O. BOX 1722
BOSTON, MA 02105-1722
<PAGE>
SHAREHOLDER COMMUNICATIONS
TO KEEP YOU INFORMED
To make recordkeeping easy and keep you up-to-date on the performance of your
investments, you can expect to receive the following information about your
account:
TRANSACTION CONFIRMATIONS: Each time you make a purchase, sale or exchange, you
receive a confirmation statement within just a few days.
QUARTERLY STATEMENTS: Every three months, if any transactions are made that
affect your share balance, this statement reports on your account activity
during the quarter (including any reinvestment of dividends). This statement
also provides year-to-date information.
LIBERTY FINANCIAL INVESTMENTS INVESTOR OPPORTUNITIES: Mailed with your quarterly
account statements, this newsletter highlights timely investment strategies,
portfolio manager commentary and shareholder service updates.
TAX FORMS AND YEAR-END TAX GUIDE: Easy-to-use forms and timely information are
designed to make tax reporting simpler. (Usually mailed in January.)
AVERAGE COST BASIS STATEMENTS: If you sold or exchanged shares during the year,
this statement may help you calculate your gain/loss for tax purposes. (Usually
mailed in February.)
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Stein Roe Advisor Tax-Managed Growth Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Stein Roe Advisor Tax-Managed Growth Fund mails one shareholder report to each
shareholder address. If you would like more than one report, please call
1-800-426-3750 and additional reports will be sent to you.
This report has been prepared for shareholders of Stein Roe Advisor Tax-Managed
Growth Fund. It 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 Liberty Financial Investments' Performance Update.
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES
ROBERT J. BIRNBAUM
Consultant (formerly Special Counsel, Dechert, Price & Rhoads; President and
Chief Operating Officer, New York Stock Exchange, Inc.; President, American
Stock Exchange, Inc.)
TOM BLEASDALE
Retired (formerly Chairman of the Board and Chief Executive Officer, Shore Bank
& Trust Company)
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)
WILLIAM E. MAYER
Partner, Development Capital, L.L.C. (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 and Chief Executive Officer, Hannaford
Bros. Co.)
JOHN J. NEUHAUSER
Dean, Boston College School of Management
ROBERT L. SULLIVAN
Retired Partner, Peat Marwick Main & Co. (formerly Management Consultant,
Saatchi and Saatchi Consulting Ltd. and Principal and International Practice
Director, Management Consulting, Peat Marwick Main & Co.)
[Logo] LIBERTY FINANCIAL INVESTMENTS, INC. (C)1998
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
MG-03/246F-0498 (6/98) 98/577
- --------------------------------------------------------------------------------
