[PHOTO OF WHITE HOUSE]
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LIBERTY MONEY MARKET FUND Annual report
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June 30, 2000
<PAGE>
[BEGIN SIDE BAR]
President's Message
[END SIDE BAR]
To Our Shareholders:
You may have noticed that your Fund has a new name. Beginning July 14, the names
of our funds changed to include Liberty. Rest assured, the investment objective
and strategies employed by the Fund's managers are not affected by this name
change. We believe the new name better reflects that your Fund is part of the
Liberty Funds, a diverse family of funds representing a wide selection of
investment styles and specialized money management. The goal of all Liberty
funds is to help you reach for financial freedom--however you define it.
Consumer confidence remained high and spending was strong, posting near-record
sales in many industries during the 12-month period ending June 30, 2000. The
U.S. economy continued its steady growth through the second half of 1999, and
though it has shown signs of slowing in the first two quarters of 2000, it has
not stabilized sufficiently to satisfy the Federal Reserve Board (the Fed).
The bond market has been volatile, buoyed on the one hand by signs of slowing
economic activity, yet troubled by signs of inflation creep on the other. Supply
and demand have worked at cross purposes as well, with liquidations of bond
mutual funds suppressing demand, even as the Treasury acts to reduce supply by
using the budget surplus to buy outstanding Treasury debt. Institutional
investors became more cautious, selling off corporate debt and buying short-term
treasuries, which further added to the volatility.
We remain confident that for those seeking a relatively stable haven for their
dollars and potential for current income, Liberty Money Market Fund may be an
attractive option. The following report will provide you with more specific
information about your Fund's performance and the strategies used during the
period. I thank you for giving us the opportunity to serve your investment
needs.
Sincerely,
/s/ Stephen E. Gibson
---------------------
Stephen E. Gibson
President
August 18, 2000
Past performance cannot predict future investment results. Because market and
economic conditions change frequently, there can be no assurance that the trends
described above or on the following pages will continue.
|-------------------------------|
| Not FDIC | May Lose Value |
| |--------------------|
| Insured | No Bank Guarantee |
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<PAGE>
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Highlights
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> Objective(1)
Liberty Money Market Fund seeks to obtain maximum current income
consistent with preservation of capital and the maintenance of
liquidity.
> The Fed Action Benefits Shareholders
The most significant force in the short-term bond market is always the
Federal Reserve Board. As we expected, the Fed reacted to a strong U.S.
economy by raising interest rates five times during the 12-month period
ended June 30, 2000, from 5% to 6.5%. The Fed's action benefited
shareholders by increasing the income paid by money market securities.
> Fund Maintains Defensive Posture
In anticipation of a long series of interest rate increases by the Fed,
we maintained our defensive posture throughout the period. The average
maturity of the Fund remained consistently short during the period,
averaging approximately 26 days. We decreased holdings in letter of
credit commercial paper (from 8.2% to 5.7% of the Fund's assets) and
corporate notes (from 5.6% to 4.2%), while increasing holdings in
commercial paper (from 79.1% to 82.5%).
> Portfolio Management Remains Cautious
Despite the gradual slowing of economic growth, we anticipate the
possibility of further tightening by the Fed. Accordingly, we will
continue to maintain a cautious approach to managing the Fund. As
always, we will lengthen average maturity only when we see a yield
advantage.
/s/ Jane M. Naeseth
-------------------
Jane M. Naeseth, senior vice president of the Advisor, has managed
Liberty Money Market Fund since 1998.
LIBERTY MONEY MARKET FUND
6/30/99 - 6/30/00
[START BAR CHART]
<TABLE>
<S> <C>
--------------------------------------------------
Liberty Money Market Fund 5.28%
(Class A Shares)
--------------------------------------------------
Lipper Peer Group Average(2) 5.06%
--------------------------------------------------
</TABLE>
[END BAR CHART]
(1)The Fund pursues its objective by investing all of its assets in the SR&F
Cash Reserves Portfolio (Portfolio), a money market fund with the same
investment objective as the Fund.
(2)Lipper, Inc, a widely respected data provider in the industry, calculates
total returns for mutual funds with investment objectives similar to the
Fund. The Lipper Money Market Funds Category total return average is shown
above as the Lipper peer group average.
Performance for different share classes will vary with fees associated with
each class. Past performance cannot predict future results.
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
[START SIDE BAR]
Twelve-month Distributions
declared per share
<TABLE>
<S> <C>
Class A $0.052
Class B $0.041
Class C $0.048
</TABLE>
Seven-day yields on 6/30/00(3)
<TABLE>
<S> <C>
Class A 5.56%
Class B 4.55%
Class C 5.15%
</TABLE>
30-day yields on 6/30/00(3)
<TABLE>
<S> <C>
Class A 5.64%
Class B 4.51%
Class C 5.14%
</TABLE>
(3)If the Advisor or its affiliates had not waived certain Fund expenses, the
7-day and 30-day yields would have been 4.55% and 4.54% for Class C Shares.
<TABLE>
<S> <C>
Portfolio Breakdown(4)
(as of 6/30/2000)
......................................
Commercial Paper ...................... 82.5%
Yankee Certificate of Deposit ......... 7.6%
Letter Of Credit ...................... 5.7%
Corporate Notes ....................... 4.2%
</TABLE>
<TABLE>
<S> <C>
Portfolio Maturity(4)
(as of 6/30/2000)
...................
0-4 days ........... 8%
5-14 days .......... 59%
15-29 days ......... 8%
30-59 days ......... 11%
60+ days ........... 14%
</TABLE>
(4)Portfolio breakdown and maturity weightings are calculated as a percentage of
total market value of the investment portfolio. Because it is actively
managed, there can be no guarantee the Portfolio will continue to hold or
invest in these securities in the future. An investment in the Fund is not
insured or guaranteed by the U.S. government. There can be no assurance that
the $1.00 net asset value per share will be maintained. It is possible to
lose money by investing in the Fund. On March 2, 1998, the Fund became a
feeder fund for the SR&F Cash Reserves Portfolio, a money market fund managed
by Stein Roe & Farnham Incorporated. Prior to this transition, approximately
two-thirds of the portfolio holdings represented a selection of short-term
U.S. government agency securities. The Fund no longer invests primarily in
U.S. government securities, but rather in the Portfolio, which has
flexibility to search for the highest relative yield among a variety of money
market instruments.
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| 1
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<PAGE>
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SR&F Cash Reserves Portfolio
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June 30, 2000
(In thousands)
<TABLE>
<CAPTION>
Commercial Paper (a) -- 87.9% Par Value
------------------------------------------------------------
<S> <C> <C>
Asset Securitization Corp.,
6.570% 7/13/00 (b) $20,000 $19,956
Associates First Capital,
6.950% 7/3/00 41,000 40,984
Caterpillar Financial Service Corp.,
6.260% 8/22/00 35,000 34,693
Citic Pacific Finance (LOC Bank of
America), 6.650% 7/3/00 20,000 19,993
Cooper Industries, Inc.,
7.060% 7/5/00 14,000 13,989
Corporate Asset Funding,
6.810% 7/5/00 (b) 37,000 36,972
Countrywide Home Loans,
6.810% 7/10/00 37,000 36,937
CSN Overseas (LOC Barclays),
6.280% 8/31/00 24,927 24,671
Eaton Corp.,
6.760% 7/5/00 (b) 38,000 37,972
Enterprise Funding Corp.,
6.810% 7/6/00 (b) 25,000 24,976
Falcon Asset Securitization,
6.640% 7/14/00 (b) 35,000 34,917
General Dynamics,
6.770% 9/11/00 (b) 5,000 4,934
Goldman Sachs & Co.,
6.580% 7/17/00 24,000 23,930
GTE Corp.,
6.630% 7/5/00 (b) 25,000 24,982
Harley-Davidson Funding:
6.590% 7/10/00 (b) 15,135 15,110
6.770% 7/18/00 (b) 15,000 14,952
International Securitization,
6.680% 7/12/00 (b) 10,587 10,566
Northern Industrial Public Services,
6.700% 7/14/00 35,000 34,916
Old Line Funding,
6.660% 7/7/00 (b) 38,000 37,958
7-Eleven Corp.,
6.570% 7/6/00 17,000 16,985
Special Purpose Accounts Receivable,
6.600% 7/13/00 (b) 35,000 34,923
Superior Funding,
6.640% 7/7/00 (b) 35,000 34,962
Target Corp.,
6.630% 7/11/00 27,000 26,951
Textron Financial,
6.650% 7/6/00 24,000 23,978
Thames Asset Global,
6.750% 8/30/00 (b) 35,000 34,611
US West Communications,
6.830% 7/18/00 28,000 27,910
-------
Total Commercial Paper
(cost of $693,728) 693,728
-------
</TABLE>
<TABLE>
<CAPTION>
Par Value
------------------------------------------------------------
<S> <C> <C>
Corporate Notes -- 4.2%
--------------------------------------
GTE Corp.,
9.375% 12/1/00 $13,000 $ 13,135
WorldCom, Inc.,
6.940% 8/17/00 (b) 20,000 20,037
--------
Total Corporate Notes
(cost of $33,172) 33,172
--------
Yankee Certificates of Deposit -- 7.6%
--------------------------------------
ABN--AMRO Canada,
6.240% 8/8/00 30,000 29,808
Canadian Imperial Holdings,
7.060% 12/27/00 30,000 30,000
--------
Total Yankee Certificates of Deposit
(cost of $59,808) 59,808
--------
Total Investments
(cost of $786,708)(c) 786,708
--------
Other Assets & Liabilities, Net -- 0.3% 2,055
--------
Net Assets -- 100% $788,763
========
</TABLE>
Notes to Investment Portfolio:
(a) The interest rate is the effective rate at the date of purchase except for
variable rate notes, for which the interest rate represents the current
rate as of the most recent dates.
(b) Represents private placement securities exempt from registration by Section
4(2) Securities Act of 1933. These securities are issued to investors who
agree that they are purchasing the securities for investment and not with
a view to public distribution. Any resale by the Fund must be in an exempt
transaction, normally to other institutional investors. At June 30, 2000,
the aggregate value of the Fund's private placement securities was
$387,828, which represented 49.2% of net assets. None of these securities
were deemed illiquid.
(c) At June 30, 2000, the cost of investments for financial reporting and
federal income tax purposes was identical.
|
2 | See notes to financial statements.
|
<PAGE>
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SR&F Cash Reserves Portfolio
-------------------------------------------------
(In thousands)
Statement of Assets & Liabilities
----------------------------------------------------------------------
June 30, 2000
<TABLE>
<S> <C>
Assets
Investments at value (cost $786,708) $786,708
Cash 2,127
Interest receivable 89
--------
Total Assets 788,924
--------
Liabilities
Accrued:
Management fee 135
Bookkeeping fee 7
Transfer agent fee 1
Other 18
--------
Total liabilities 161
--------
Net assets applicable to investors' beneficial interests $788,763
========
</TABLE>
Statement of Operations
--------------------------------------------------------------------------------
Year ended June 30, 2000
<TABLE>
<S> <C>
Investment Income
Interest $ 47,208
--------
Expenses
Management fees 1,943
Bookkeeping fees 44
Trustees' fees 25
Audit fee 17
Legal fees 4
Transfer agent fees 6
Custodian fees 2
--------
2,041
--------
Net investment income 45,167
--------
Net Realized Loss on Investments
Net realized loss (2)
--------
Increase in Net Assets from Operations $ 45,165
========
</TABLE>
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year
Ended Ended
June 30, June 30,
2000 1999
------------------------------------------------------ -----------
<S> <C> <C>
Increase in Net Assets
Operations
Net investment income $ 45,167 $ 37,933
Net realized loss (2) (4)
----------- -----------
Net increase from operations 45,165 37,929
----------- -----------
Transactions in Investors' Beneficial
Interests
Contributions 3,386,150 1,549,789
Withdrawals (3,415,013) (1,501,534)
----------- -----------
Net transactions in investors'
beneficial interest (28,863) 48,255
----------- -----------
Net increase in net assets 16,302 86,184
Net Assets
Beginning of period 772,461 686,277
----------- -----------
End of period $ 788,763 $ 772,461
----------- ===========
</TABLE>
Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year Period
Ended Ended Ended
June 30, June 30, June 30,
2000 1999 1998 (a)
--------------------------------------- -------- --------
<S> <C> <C> <C>
Ratios to Average Net Assets
Expenses 0.25% 0.25% 0.26%(b)
Net investment income 5.52% 4.83% 5.45%(b)
</TABLE>
(a) From commencement of operations on March 2, 1998.
(b) Annualized.
|
See notes to financial statements. | 3
|
<PAGE>
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SR&F Cash Reserves Portfolio Notes to Financial Statements
--------------------------------------------------------------------------------
June 30, 2000
(In thousands)
Note 1. Organization of the SR&F Cash Reserves Portfolio
SR&F Cash Reserves Portfolio (the "Portfolio") is a separate series of SR&F
Base Trust, a Massachusetts common law trust organized under an Agreement and
Declaration of Trust dated August 23, 1993. The Declaration of Trust permits
the Trustees to issue non-transferable interests in the Portfolio. The
investment objective of the Portfolio is to seek maximum current income
consistent with capital preservation and maintenance of liquidity.
The Portfolio commenced operations on March 2, 1998. At commencement, Stein Roe
Cash Reserves Fund and Liberty Money Market Fund (formerly Colonial Money
Market Fund) contributed $493,224 and $187,537, respectively, in securities and
other assets in exchange for beneficial ownership of the Portfolio. The
Portfolio allocates income, expenses and realized gains and losses to each
investor on a daily basis, based on methods approved by the Internal Revenue
Service. At June 30, 2000, Stein Roe Cash Reserves Fund and Liberty Money
Market Fund owned 65.3% and 34.7% respectively, of the Portfolio.
Note 2. Significant Accounting Policies
The following summarizes the significant accounting policies of the Portfolio.
These policies are in conformity with generally accepted accounting principles,
which require management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Investment Transactions and Investment Income:
Investment transactions are accounted for on trade date. Interest income,
including discount accretion and premium amortization, is recorded daily on the
accrual basis. Realized gains or losses from investment transactions are
reported on an identified cost basis.
The Portfolio is permitted to invest in repurchase agreements involving
securities issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities. The Portfolio requires issuers of repurchase agreements to
transfer the securities underlying those agreements to the Portfolio's
custodian at the time of payment.
Security Valuations:
The Portfolio utilizes the amortized cost method to value its investments. This
technique approximates market value and involves valuing a security initially
at cost and, thereafter assuming a constant amortization to maturity of any
discount or premium. Other assets are valued at fair value as determined in
good faith by or under the direction of the Board of Trustees.
Federal Income Taxes:
No provision is made for federal income taxes because 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.
Note 3. Portfolio Composition
Under normal market conditions, the Portfolio will invest a least 25% of its
total assets in securities of issuers in the financial services industry (which
includes, but is not limited to, banks, consumer and business credit
institutions, and other financial services companies). At June 30, 2000, 72% of
the Portfolio's net assets were invested in the financial services industry.
See the portfolio of investments for additional information regarding portfolio
composition.
Note 4. Trustees Fees and Transactions With Affiliates
Management Fee:
The Portfolio pays monthly management fees to Stein Roe & Farnham Incorporated
(the "Advisor"), an indirect, majority-owned subsidiary of Liberty Mutual
Insurance Company, for its services as investment Advisor and manager. The
management fee for the Portfolio is computed at an annual rate of 0.25% of the
first $500 million of average daily net assets, and 0.225% thereafter.
Bookkeeping Fee:
The Advisor provides bookkeeping and pricing services for a monthly fee equal
to $25 annually plus 0.0025% of the Funds average net assets over $50 million.
Other:
Certain officers and trustees of the Trust are also officers of the Advisor.
Compensation is paid to trustees not affiliated with the Advisor. No
remuneration was paid to any other trustee or officer of the Trust, who is
affiliated with the Advisor.
Note 5. Line of Credit
The Liberty-Stein Roe Municipals Trust, the Liberty Stein-Roe Investment Trust
and the SR&F Base Trust (collectively, the "Trusts"), participate in unsecured
line of credit agreements provided by the custodian bank consisting of two
components. The committed line of credit entitles the Trusts to borrow from the
custodian at any time upon notice from the Trusts. The uncommitted line of
credit permits the Trusts to borrow from the custodian at the custodian's sole
discretion. The aggregate borrowings available to the Trusts for the committed
and uncommitted lines of credit are $200 million and $100 million,
respectively. Borrowing may be made to temporarily finance the repurchase of
Fund shares. Interest is charged to each Trust and, ultimately, the Fund based
on its borrowings at a rate equal to the Federal Funds Rate plus 5% per year.
In addition, a commitment fee of 0.10% per annum on each Fund's borrowings
shall be paid quarterly by the Fund based on the relative asset size of the
Fund. For the year ended June 30, 2000, the Trusts had no borrowings under the
agreement.
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4 |
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<PAGE>
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Liberty Money Market Fund -- Statement of Assets and Liabilities
--------------------------------------------------------------------------------
June 30, 2000
(In thousands except for per share data)
<TABLE>
<S> <C> <C>
Assets
Investment in Portfolio, at value $ 273,857
Receivable for:
Fund shares sold $1,197
Other 11 1,208
------ ---------
Total Assets 275,065
Liabilities
Payable for:
Fund shares repurchased 22,703
Distributions 393
Accrued:
Administration fee 13
Bookkeeping fee 6
Transfer agent fees 71
Deferred Trustees' fees 3
Other 34
------
Total Liabilities 23,223
=========
Net Assets $ 251,842
=========
Net asset value:
Class A ($178,678/178,664) $ 1.00(a)
=========
Class B ($69,214/69,266) $ 1.00(a)
=========
Class C ($3,950/3,952) $ 1.00(a)
=========
Composition of Net Assets
Capital paid in $ 251,880
Overdistributed net investment income (34)
Accumulated net realized loss (4)
---------
$ 251,842
=========
</TABLE>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
|
See notes to financial statements. | 5
|
<PAGE>
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Liberty Money Market Fund -- Statement of Operations
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For the Year Ended June 30, 2000
(In thousands)
<TABLE>
<S> <C> <C>
Investment Income
Interest allocated from Portfolio $16,503
-------
Expenses
Expenses allocated from Portfolio $ 713
Administration fee 714
Service fee -- Class B 229
Service fee -- Class C 5
Distribution fee -- Class B 685
Distribution fee -- Class C 26
Transfer agent fee 668
Bookkeeping fee 73
Trustees' fee 17
Custodian fee 2
Audit fee 19
Legal fee 4
Registration fee 89
Reports to shareholders 19
Other 94
------
3,357
Fee waived by the Administrator (543)
Fee waived by the Distributor -- Class C (21) 2,793
------ -------
Net Investment Income 13,710
-------
Net Realized Loss on Investments allocated from Portfolio
Net realized loss (1)
-------
Increase in Net Assets from Operations $13,709
=======
</TABLE>
|
6 | See notes to financial statements.
|
<PAGE>
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Liberty Money Market Fund -- Statement of Changes in Net Assets
--------------------------------------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
Year Year
ended ended
June 30, June 30,
----------- -----------
Increase (Decrease) in Net Assets 2000 1999
--------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 13,710 $ 10,912
Net realized loss (1) (2)
----------- -----------
Net Increase from Operations 13,709 10,910
Distributions:
From net investment income -- Class A (9,826) (7,849)
From net investment income -- Class B (3,755) (2,956)
From net investment income -- Class C (170) (125)
----------- -----------
(42) (20)
----------- -----------
Fund Share Transactions:
Receipts for shares sold -- Class A 2,794,677 1,246,973
Receipts for shares issued in the
acquisition of Crabbe Huson
Money Market Fund -- 87,134
Value of distributions reinvested --
Class A 7,768 7,069
Cost of shares repurchased -- Class A (2,781,572) (1,312,028)
----------- -----------
20,873 29,148
----------- -----------
Receipts for shares sold -- Class B 194,295 230,456
Value of distributions reinvested --
Class B 3,150 2,569
Cost of shares repurchased -- Class B (221,997) (201,012)
----------- -----------
(24,552) 32,013
----------- -----------
Receipts for shares sold -- Class C 15,151 7,368
Value of distributions reinvested --
Class C 139 114
Cost of shares repurchased -- Class C (13,532) (8,591)
----------- -----------
1,758 (1,109)
----------- -----------
Net Increase (Decrease) from Fund
Share Transactions (1,921) 60,052
----------- -----------
Total Increase (Decrease) (1,963) 60,032
Net Assets
Beginning of period 253,805 193,773
----------- -----------
End of period (net of overdistributed and
including undistributed net investment
income of $34 and $7, respectively) $ 251,842 $ 253,805
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Year Year
ended ended
June 30, June 30,
----------- -----------
Number of Funds Shares 2000 1999
--------------------------------------------------------------------------
<S> <C> <C>
Sold -- Class A 2,794,677 1,246,974
Issued in the acquisition of Crabbe Huson
Money Market Fund -- 87,140
Issued for distributions reinvested --
Class A 7,768 7,069
Repurchased -- Class A (2,781,572) (1,312,028)
----------- -----------
20,873 29,155
----------- -----------
Sold -- Class B 194,295 230,455
Issued for distributions reinvested --
Class B 3,150 2,569
Repurchased -- Class B (221,997) (201,012)
----------- -----------
(24,552) 32,012
----------- -----------
Sold -- Class C 15,151 7,368
Issued for distributions reinvested --
Class C 139 114
Repurchased -- Class C (13,532) (8,592)
----------- -----------
1,758 (1,110)
----------- -----------
</TABLE>
|
See notes to financial statements. | 7
|
<PAGE>
--------------------------------------------------------------------------------
Liberty Money Market Fund -- Notes to Financial Statements
--------------------------------------------------------------------------------
June 30, 2000
Note 1. Accounting Policies
Organization:
Liberty Money Market Fund (formerly Colonial Money Market Fund) (the Fund), a
series of Liberty Funds Trust II 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 invests all of
its investable assets in interests in the SR&F Cash Reserves Portfolio (the
Portfolio), a Massachusetts common trust, having the same investment objective
as the Fund. The value of the Fund's investment in the Portfolio reflects the
Fund's proportionate interest in the net assets of the Portfolio (34.7% at June
30, 2000). The performance of the Fund is directly affected by the performance
of the Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The Fund may issue an
unlimited number of shares. The Fund offers three classes of shares: Class A,
Class B, and Class C shares. Class A shares are sold at net asset value. A
1.00% contingent deferred sales charge is assessed to Class A shares purchased
without an initial sales charge on redemptions made within eighteen months on
an original purchase of $1 million to $25 million. Class B shares are subject
to an annual distribution fee and a contingent deferred sales charge. Effective
February 1, 2000, Class B shares will convert to Class A shares as follows:
<TABLE>
<CAPTION>
Converts to
Original Purchase Class A Shares
----------------- --------------
<S> <C>
Less than $250,000 8 years
$250,000 to less than $500,000 4 years
$500,000 to less than $1,000,000 3 years
</TABLE>
Class C shares are subject to a contingent deferred sales charge on redemptions
made within one year after purchase and a continuing service and distribution
fee.
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 reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
Security valuation and transactions:
Valuation of securities by the Portfolio is discussed in Note 2 of the
Portfolio's Notes to Financial Statements which are included elsewhere in this
report.
The Fund attempts to maintain a per-share net asset value of $1, which
management believes will be possible under most conditions.
In the event that a deviation of 0.50% or more exists between the Fund's $1.00
per-share net asset value, calculated at amortized cost, and the net asset
value calculated by reference to market quotations, the Board of Trustees would
consider what action, if any, should be taken.
Determination of class net asset values and financial highlights:
All income, expenses (other than Class B and Class C 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.
Class B and Class C per share data and ratios are calculated by adjusting the
net investment income per share data and ratios for the Fund for the entire
period by the service fee and distribution fee applicable to Class B and Class
C shares only.
Federal income taxes:
Consistent with the Funds 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:
The Fund declares and records distributions daily and pays monthly.
Capital Loss Carryforwards:
At June 30, 2000, capital loss carryforwards available (to the extent provided
in regulations) to offset future realized gains were approximately as follows:
<TABLE>
<CAPTION>
Capital loss
Year of Expiration Carryforward
------------------ ------------
<S> <C>
2008 $ 583
2007 1,424
2003 1,327
</TABLE>
Note 2. Fees and Compensation Paid to Affiliates
Administration fee:
Colonial Management Associates, Inc. (the Administrator) provides accounting
and other services and office facilities for a monthly fee equal to 0.25%
annually of the Fund's average net assets. The Administrator has voluntarily
agreed to waive a portion of the administration fee so that it does not exceed
0.06% annually.
Bookkeeping fee:
The Advisor provides bookkeeping and pricing services for a monthly fee equal
to $18,000 annually plus 0.0233% of the Funds average net assets over $50
million.
Transfer agent:
Liberty Funds Services, Inc., (the Transfer Agent), an affiliate of the
Administrator, provides shareholder services for a monthly fee equal to 0.20%
annually of the Funds average net assets and receives reimbursement for certain
out-of-pocket expenses through December 31, 1999.
Effective January 1, 2000, the Transfer Agent fee was changed to a fee
comprised of 0.07% annually of average net assets plus charges based on the
number of shareholder accounts and transactions. The Transfer Agent continues
to receive reimbursement for certain out-of-pocket expenses.
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8 |
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<PAGE>
--------------------------------------------------------------------------------
Liberty Money Market Fund -- Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
June 30, 2000
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 year ended June 30,
2000, the Fund has been advised that the Distributor received contingent
deferred sales charges (CDSC) of $72,263 $778,355 and $17,335 on Class A, Class
B, and Class C shares 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 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 0.75% annually of the average net assets
attributable to Class B and Class C shares. The Distributor has voluntarily
agreed to waive a portion of the Class C share distribution fee so that it does
not exceed 0.15% annually.
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 Administrator has agreed, until further notice, to waive fees and bear
certain Fund expenses to the extent that total expenses (inclusive of the
Fund's proportionate share of the Portfolio's expenses and exclusive of service
and distribution fees, brokerage commissions, interest, taxes and extraordinary
expenses, if any) exceed 1.00% annually of the Fund's average net assets.
For the year ended June 30, 2000, the Fund's total expenses, as defined above,
did not exceed the 1.00% expense limit.
Other:
The Fund pays no compensation to its officers, all of whom are employees of the
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 3. Other Related Party Transactions
At June 30, 2000, Colonial Management Associates, Inc. owned 8% of the Fund's
shares outstanding.
Note 4. Merger
On October 16, 1998, Crabbe Huson Money Market Fund (CHMMF) was merged into the
Fund by a non-taxable exchange of 87,140,110 Class A shares of the Fund (value
at $87,133,699) for the 87,140,110 CHMMF shares outstanding. The aggregate net
assets of the Fund and CHMMF immediately after the merger were $858,822,519.
Change in Independent Auditor (Unaudited)
Based on the recommendation of the Audit Committee of the Fund on June 18,
1999, the Board of Trustees determined not to retain PricewaterhouseCoopers LLP
as the Fund's independent auditor and voted to appoint Ernst & Young LLP for
the fiscal year ended June 30, 2000. During the two most recent fiscal years,
PricewaterhouseCoopers LLP audit reports contained no adverse opinion or
disclaimer of opinion; nor were its reports qualified or modified as to
uncertainty, audit scope, or accounting principle. Further, in connection with
its audits for the two most recent fiscal years and through August 11, 1999
there were no disagreements between the Fund and PricewaterhouseCoopers LLP on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which if not resolved to the
satisfaction of PricewaterhouseCoopers LLP would have caused it to make
references to the disagreements in its report in the financial statements for
such years.
|
| 9
|
<PAGE>
--------------------------------------------------------------------------------
Liberty Money Market Fund -- Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Year ended June 30, 2000
-------------------------------------------
Class A Class B Class C
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value -- Beginning of period $ 1.000 $ 1.000 $ 1.000
-------- -------- -------
Income From Investment Operations:
Net investment income (a)(b) 0.052 0.041 0.048(c)
-------- -------- -------
Less Distributions Declared to Shareholders:
From net investment income (0.052) (0.041) (0.048)
-------- -------- -------
Net asset value -- End of period $ 1.000 $ 1.000 $ 1.000
======== ======== =======
Total return (d)(e) 5.26% 3.99% 4.71%
======== ======== =======
Ratios to Average Net Assets
Expenses (a)(b)(f) 0.65% 1.65% 1.05%(c)
Net investment income (a)(b)(f) 5.13% 4.13% 4.73%(c)
Net assets at end of period (000) $178,678 $ 69,214 $ 3,950
</TABLE>
(a) Net of fees waived by the Administrator which amounted to $0.002 per share
and 0.19%.
(b) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Cash Reserves Portfolio.
(c) Net of fees waived by the Distributor which amounted to $0.006 per share and
0.60%.
(d) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(e) Had the Administrator and Distributor not waived a portion of expenses,
total return would have been reduced.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
<TABLE>
<CAPTION>
Year ended June 30, 1999
-------------------------------------------
Class A Class B Class C
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value -- Beginning of period $ 1.000 $ 1.000 $ 1.000
-------- -------- ----------
Income From Investment Operations:
Net investment income (a)(b) 0.046 0.036 0.042(c)
-------- -------- ----------
Less Distributions Declared to Shareholders:
From net investment income (0.046) (0.036) (0.042)
-------- -------- ----------
Net asset value -- End of period $ 1.000 $ 1.000 $ 1.000
======== ======== ==========
Total return (d)(e) 4.70% 3.68% 4.30%
======== ======== ==========
Ratios to Average Net Assets
Expenses (a)(b)(f) 0.68% 1.68% 1.08%(c)
Net investment income (a)(b)(f) 4.61% 3.61% 4.21%(c)
Net assets at end of period (000) $157,790 $ 93,821 $ 2,194
</TABLE>
(a) Net of fees waived by the Administrator which amounted to $0.002 per share
and 0.19%.
(b) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Cash Reserves Portfolio.
(c) Net of fees waived by the Distributor which amounted to $0.006 per share and
0.60%.
(d) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(e) Had the Administrator and Distributor not waived a portion of expenses,
total return would have been reduced.
(f) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
|
10 |
|
<PAGE>
--------------------------------------------------------------------------------
Liberty Money Market Fund -- Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period is
as follows:
<TABLE>
<CAPTION>
Year ended June 30, 1998 (a)(b)
-----------------------------------------------------------
Class A Class B Class C
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value -- Beginning of period $ 1.000 $ 1.000 $ 1.000
-------- ------- -------
Income From Investment Operations:
Net investment income 0.041(c)(d) 0.032(c)(d) 0.037(c)(d)(e)
-------- ------- -------
Less Distributions Declared to Shareholders:
From net investment income (0.041) (0.032) (0.037)
-------- ------- -------
Net asset value -- End of period $ 1.000 $ 1.000 $ 1.000
======== ======= =======
Total return (f)(g)(h) 4.17% 3.28% 3.81%
======== ======= =======
Ratios to Net Assets
Expenses (c)(d)(i)(j) 0.69% 1.69% 1.09%(e)
Net investment income (c)(d)(i)(j) 4.93% 3.93% 4.53%(e)
Net assets at end of period (000) $128,658 $61,811 $ 3,304
</TABLE>
(a) The Fund changed its fiscal year end from August 31 to June 30. Information
presented is for the period September 1, 1997 through June 30, 1998.
(b) Effective March 2, 1998, SR&F became the investment Advisor of the Fund.
(c) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Cash Reserves Portfolio.
(d) Net of fees waived by the Administrator which amounted to $0.001 per share
and 0.19% (annualized).
(e) Net of fees waived by the Distributor which amounted to $0.005 per share and
0.60% (annualized).
(f) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(g) Not annualized.
(h) Had the Administrator and Distributor not waived a portion of expenses,
total return would have been reduced.
(i) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(j) Annualized.
<TABLE>
<CAPTION>
Year ended August 31,
-----------------------------------------------------------------------------
1997 1996
-----------------------------------------------------------------------------
Class A Class B Class C(a) Class A Class B Class C
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
Income From Investment Operations:
Net investment income 0.048 0.038 0.039 0.048 0.038 0.038
-------- -------- -------- -------- -------- --------
Less Distributions Declared to Shareholders:
From net investment income (0.048) (0.038) (0.039) (0.048) (0.038) (0.038)
-------- -------- -------- -------- -------- --------
Net asset value -- End of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total return (b) 4.90% 3.82% 3.97% 4.93% 3.86% 3.85%
======== ======== ======== ======== ======== ========
Ratios to Average Net Assets
Expenses (c) 0.72% 1.72% 1.64% 0.70% 1.70% 1.70%
Net investment income (c) 4.73% 3.73% 3.81% 4.76% 3.76% 3.76%
Net assets at end of period (000) $144,076 $ 70,242 $ 2,904 $115,063 $ 76,539 $ 4,435
</TABLE>
(a) Effective July 1, 1997, Class D shares were redesignated Class C shares.
(b) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
|
| 11
|
<PAGE>
--------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
--------------------------------------------------------------------------------
To the Shareholders, Holders of Investors' Beneficial Interests and Board of
Trustees of Liberty Funds Trust II and SR&F Base Trust
Liberty Money Market Fund
SR&F Cash Reserves Portfolio
We have audited the accompanying statement of assets and liabilities of Liberty
Money Market Fund (formerly, Colonial Money Market Fund, a series of Liberty
Funds Trust II), as of June 30, 2000, and the related statement of operations,
statement of changes in net assets and the financial highlights for the year
then ended, and the accompanying statement of assets and liabilities, including
the portfolio of investments, of SR&F Cash Reserves Portfolio (a series of SR&F
Base Trust) as of June 30, 2000, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Trusts' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The statement of changes in net assets for the period ended June
30, 1999, and the financial highlights for each of the four years in the period
then ended for the Liberty Money Market Fund were audited by other auditors
whose report dated August 11, 1999 expressed an unqualified opinion on that
financial statement and those financial highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of June 30, 2000, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
aforementioned series of Liberty Funds Trust II and SR&F Base Trust at June 30,
2000, the results of their operations, the changes in their net assets, and
their financial highlights for each of the periods referred to above, in
conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
August 18, 2000
|
12 |
|
<PAGE>
[START SIDE BAR]
Trustees & Transfer Agent
[END SIDE BAR]
<TABLE>
<S> <C>
Tom Bleasdale James L. Moody, Jr.
Retired (formerly Chairman of the Board Retired (formerly Chairman of the Board,
and Chief Executive Officer, Shore Bank Chief Executive Officer and Director
& Trust Company) Hannaford Bros. Co.)
Lora S. Collins John J. Neuhauser
Attorney (formerly Attorney, Kramer, Academic Vice President and Dean of
Levin, Naftalis & Frankel) Faculties, Boston College (former Dean,
Boston College School of Management)
James E. Grinnell
Thomas E. Stitzel
Private Investor (formerly Senior Vice
President-Operations, The Rockport Business Consultant and Chartered
Company) Financial Analyst (formerly Professor of
Finance, College of Business, Boise
Richard W. Lowry State University)
Private Investor (formerly Chairman and Anne-Lee Verville
Chief Executive Officer, U.S. Plywood
Corporation) Consultant (formerly General Manager,
Global Education Industry, and
Salvatore Macera President, Applications Solutions
Division, IBM Corporation)
Private Investor (formerly Executive
Vice President of Itek Corp. and
President of Itek Optical & Electronic
Industries, Inc.)
William E. Mayer
Partner, Park Avenue Equity Partners
(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)
</TABLE>
--------------------------------------------------------------------------------
Important Information About This Report
The Transfer Agent for Liberty Money Market Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The 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 Liberty Money Market Fund.
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.
Annual Report:
Liberty Money Market Fund
<PAGE>
--------------------------------------------------------------------------------
Choose Liberty
--------------------------------------------------------------------------------
Because no single investment manager can be all things to all investors.(SM)
--------------------------------------------------------------------------------
L I B E R T Y
-----------------
F U N D S
--------------------------------------------------------------------------------
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 Innovative solutions for growth and income investing.
ADVISOR
--------------------------------------------------------------------------------
[LOGO KEYPORT] A leading provider of innovative annuity products.
--------------------------------------------------------------------------------
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.
---------------------------------------------------------
LIBERTY MONEY MARKET FUND Annual report
---------------------------------------------------------
[LOGO] L I B E R T Y
-----------------
F U N D S
ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
757-02/251C-0700 (8/00) 00/1453
