Stein Roe Mutual Funds
Semiannual Report
December 31, 1999
[PHOTO OF BRIDGE]
Stein Roe Tax-Exempt Bond Funds
Tax-Exempt Funds
Stein Roe Municipal Money Market Fund
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
LOGO: STEIN ROE MUTUAL FUNDS
Sensible Risks. Intelligent Investments.(R)
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CONTENTS
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FROM THE PRESIDENT................................................ 1
Stephen Gibson's thoughts on the markets and investing
QUESTIONS & ANSWERS
Interviews with the portfolio manager(s) and
a summary of investment activity
STEIN ROE MUNICIPAL MONEY
MARKET FUND.................................................. 6
STEIN ROE INTERMEDIATE
MUNICIPALS FUND.............................................. 9
STEIN ROE MANAGED MUNICIPALS FUND.............................. 13
STEIN ROE HIGH-YIELD MUNICIPALS FUND........................... 17
PORTFOLIOS OF INVESTMENTS......................................... 21
A complete list of investments with market values
FINANCIAL STATEMENTS.............................................. 46
Statements of assets and liabilities, operations
and changes in net assets
NOTES TO FINANCIAL STATEMENTS..................................... 56
FINANCIAL HIGHLIGHTS.............................................. 61
Selected per-share data
Must be preceded or accompanied by a prospectus.
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FROM THE PRESIDENT
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TO OUR SHAREHOLDERS
On November 1, 1999, Tom Butch resigned as president of Stein Roe Mutual Funds.
I would like to take this opportunity to wish him well. As the new president, I
am pleased to present the semiannual report for Stein Roe Municipal Bond Funds
for the six months ended December 31, 1999.
Persistent inflationary worries and rising interest rates made the six-month
period ended December 31, 1999 particularly difficult for bond investors. Signs
that the U.S. economy was growing at a faster-than-expected pace, coupled with
evidence of economic rebound in many economies overseas, sent bond yields higher
early in the period. As yields rose, their prices slumped. Amid continued
worries about inflation, the Federal Reserve Board raised short-term interest
rates in June, August and November of 1999 by one-quarter of a percentage point
each time. Although many observers welcomed those rate hikes as important
preemptive measures, the actions did little to soothe the already jittery bond
market. While municipal bonds were not immune to the effects of rising interest
rates, they outpaced their U.S. Treasury counterparts during the period thanks
to a reduction in supply that resulted as issuers decreased their refunding, or
refinancing, activity.
The following report will provide you with more specific information about
your Fund's performance and the strategies used during the period.
While the tax-exempt market has been weak, we remain confident that municipal
bonds can be a rewarding asset class for tax-sensitive investors. On behalf of
Stein Roe, I thank you for your continued confidence in our organization and for
giving us the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
February 10, 2000
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.
Photo of: Stephen E. Gibson
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FUND PERFORMANCE
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AVERAGE ANNUAL TOTAL RETURNS
Periods Ended December 31, 1999
6 MONTHS
(CUMULATIVE RETURNS)1 YEAR 5 YEARS 10 YEARS
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STEIN ROE MUNICIPAL MONEY
MARKET FUND 1.47% 2.77% 3.04% 3.09%
U.S. Consumer Price Index (Inflation) 1.56% 2.99% 2.43% 2.96%
Lipper Tax-Exempt Money Market
Fund Average 1.40% 2.67% 3.02% 2.82%
Number of Funds in Peer Group 138 134 108 71
STEIN ROE INTERMEDIATE MUNICIPALS FUND (0.13)% (1.41)% 5.62% 6.09%
Lehman Brothers 10-Years Municipal
Bond Index 0.49% (1.25)% 7.12% 7.10%
Lipper Intermediate Municipal
Debt Fund Average (0.38)% (1.65)% 5.55% 5.91%
Numbers of Funds in Peer Group 134 133 97 25
STEIN ROE MANAGED MUNICIPALS FUND (1.97)% (3.43)% 6.15% 6.28%
Lehman Brothers Municipal Bond Index (1.17)% (2.06)% 6.91% 6.89%
Lipper General Municipal Debt
Fund Average (2.86)% (4.63)% 5.76% 6.18%
Number of Funds in Peer Group 279 265 174 79
STEIN ROE HIGH-YIELD MUNICIPALS FUND (2.53)% (2.14)% 6.78% 6.26%
Lehman Brothers Municipal Bond Index (1.17)% (2.06)% 6.91% 6.89%
Lipper High-Yield Municipal Debt
Fund Average (3.75)% (4.16)% 6.06% 6.14%
Number of Funds in Peer Group 60 58 32 15
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PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. An
expense limitation of 0.70% was in effect for Stein Roe Municipal Money Market
Fund and Stein Roe Intermediate Municipals Fund for part of the periods shown.
Returns would have been lower without the limitation. Total return includes
changes in share price and reinvestment of income and capital gains
distributions, if any. Each index shown above is an unmanaged group of
fixed-income securities that differs from the composition of each Stein Roe
fund; they are not available for direct investment. The U.S. Consumer Price
Index is the government's measure of annual changes in the cost of living.
Income may be subject to state or local taxes and the federal alternative
minimum tax. Capital gains, if any, are subject to federal, state and local
taxes. Sources: Lipper, Inc., a monitor of mutual fund performance, and
Bloomberg Business News.
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TOTAL RETURN COMPARISON
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Stein Roe Intermediate Municipals Fund
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GROWTH OF A $10,000 INVESTMENT December 31, 1989 to December 31, 1999
LEHMAN BROTHERS 10-YEAR
INTERMEDIATE MUNICIPALS FUND MUNICIPAL BOND INDEX
12/31/89 10000 10000
12/31/90 10750 10733
12/31/91 11907 12032
12/31/92 12817 13105
12/31/93 14235 14776
12/31/94 13755 14071
12/31/95 15532 16486
12/31/96 16182 17235
12/31/97 17395 18826
12/31/98 18342 20098
12/31/99 18065 19847
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. The line chart assumes a $10,000 investment on
12/31/89, reinvestment of distributions and compares fund performance to an
unmanaged group of fixed income securities that differs from the composition of
any Stein Roe fund; it is not available for direct investment. Source: Lipper,
Inc.
Stein Roe Managed Municipals Fund
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GROWTH OF A $10,000 INVESTMENT December 31, 1989 to December 31, 1999
LEHMAN BROTHERS
MANAGED MUNICIPALS FUND MUNICIPAL BOND INDEX
12/31/89 10000 10000
12/31/90 10697 10729
12/31/91 11968 12032
12/31/92 12962 13094
12/31/93 14423 14702
12/31/94 13647 13941
12/31/95 15916 16376
12/31/96 16521 17101
12/31/97 18059 18676
12/31/98 19052 19887
12/31/99 18385 19476
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. The line chart assumes a $10,000 investment on
12/31/89, reinvestment of distributions and compares fund performance to an
unmanaged group of fixed income securities that differs from the composition of
any Stein Roe fund; it is not available for direct investment. Source: Lipper,
Inc.
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TOTAL RETURN COMPARISON Continued
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Stein Roe High-Yield Municipals Fund
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GROWTH OF A $10,000 INVESTMENT December 31, 1989 to December 31, 1999
HIGH-YIELD LEHMAN BROTHERS
MUNICIPALS FUND MUNICIPAL BOND INDEX
12/31/89 10000 10000
12/31/90 10763 10729
12/31/91 11821 12032
12/31/92 12454 13094
12/31/93 13777 14702
12/31/94 13218 13941
12/31/95 15561 16376
12/31/96 16266 17101
12/31/97 17817 18676
12/31/98 18757 19887
12/31/99 18354 19476
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. The line chart assumes a $10,000 investment on
12/31/89, reinvestment of distributions and compares fund performance to an
unmanaged group of fixed income securities that differs from the composition of
any Stein Roe fund; it is not available for direct investment. Source: Lipper,
Inc.
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TO CONTACT US. . .
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BY PHONE 800-338-2550
You can discuss your investment questions with a Stein Roe account
representative by calling us toll free. We'll be happy to answer questions about
your current account, or to provide you with information about opening a Stein
Roe account, including Stein Roe Traditional, Roth and Education IRAs. We're
available Monday through Friday from 7 a.m. to 7 p.m. CT, and Saturdays and
Sundays from 9 a.m. to 1 p.m. CT.
STEIN ROE'S FUNDS-ON-CALL(R)
24-Hour Service Line
Using a touch-tone phone, call our toll-free number, day or night, for your
current account balance, the latest Stein Roe Fund prices and yields, and other
information. In addition, if you have a Personal Identification Number (PIN),
you may place orders for the following transactions 24 hours a day:
o Exchange shares between your Stein Roe accounts;
o Purchase fund shares by electronic transfer;
o Order additional account statements and money market fund checks;
o Redeem shares by check, wire or electronic transfer.
RETIREMENT PLAN ACCOUNTS
Call us for information about how we can assist you with your defined
contribution plan, including 401(k) plans. You can reach us toll free at
800-322-1130. For information on Traditional, Roth and Education IRA plans, call
us toll free at 800-338-2550.
BY MAIL OR E-MAIL
If you prefer to contact us by mail, please address all correspondence to: P.O.
Box 8900, Boston, MA 02205-8900. To contact us by e-mail, send correspondence
directly to: [email protected] or visit us at www.steinroe.com on the
Internet.
ADDITIONAL REPORTS
The Funds mail one shareholder report to each shareholder address. If you would
like more than one report, please call 800-338-2550 and additional reports will
be sent to you.
Must be preceded or accompanied by a prospectus.
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QUESTIONS & ANSWERS
AN INTERVIEW WITH VERONICA M. WALLACE, PORTFOLIO MANAGER OF STEIN ROE MUNICIPAL
MONEY MARKET FUND AND SR&F MUNICIPAL MONEY MARKET PORTFOLIO
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FUND DATA
INVESTMENT OBJECTIVE:
Stein Roe Municipal Money Market Fund seeks maximum current tax-free income
consistent with safety of capital and maintenance of liquidity by investing
principally in a diversified portfolio of short-term municipal securities.
FUND INCEPTION:
March 15, 1983
NET ASSETS:
$119.5 million
Q: HOW DID YOU MANAGE THE PORTFOLIO IN THE PAST SIX MONTHS?
WALLACE: We let our average maturity drop during the last six months from 45
days to 41 days. We did that partly in anticipation of Federal Reserve
tightening and our concerns for Y2K. We had to focus on liquidity because we did
not know what our needs would be at year-end.
Q: HOW DID THE PORTFOLIO PERFORM DURING THE PERIOD?
WALLACE: The Portfolio's position in variable rate demand notes was increased
from 75% to almost 81%. Variables offer daily and weekly liquidity and are
always priced at par value, giving us the safety we seek. Because of the
tremendous spike in rates at year-end, these holdings helped boost the
Portfolio's 7-day yield to 4.09% as of December 31, 1999. The taxable equivalent
yield during the same period was 6.77%. During most of the period, tax-exempt
funds underperformed taxable funds. Tax-equivalent yields were below those of
taxable funds.
Q: WERE THERE ANY ATTRACTIVE OPPORTUNITIES DURING THE PERIOD?
WALLACE: We did buy some tax-exempt bonds if we were able to get them at 70% of
Treasury bill prices. For example, in October we purchased Lake Community
College District, IL (0.7% of net assets) at 77% of the comparable Treasury
bill; in November, we bought Huntsville, AL bonds (0.6% of net assets) at 72% of
Treasurys.
Photo of: Veronica Wallace
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QUESTIONS & ANSWERS continued
Q: WHAT IS YOUR OUTLOOK FOR THE PORTFOLIO?
WALLACE: We continue to be cautious in light of potential Fed credit tightening.
The Portfolio intends to continue to hold variable notes, even though rates are
expected to drop at the start of 2000. We also have to prepare the Portfolio for
redemptions during income tax season.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. TOTAL RETURN INCLUDES
REINVESTMENT OF INCOME. YIELDS FLUCTUATE AND ARE NOT GUARANTEED. An investment
in the Portfolio is neither insure nor guaranteed by the Federal Deposit
Insurance Corp. (FDIC) or any government agency. Although the Portfolio seeks to
preserve the value of your investment at $1 per share, it is possible to lose
money by investing in the Portfolio . The Advisor currently limits expenses to
.70% of average net assets. Absent these limits, the 7-day current tax-free
yield as of 12/31/99 would have been 3.94% and the total return would have been
less. Tax-free income is exempt from federal taxes but may be subject to the
alternative minimum tax. Current yield is net of all fees and represents
annualization of dividends declared and payable to shareholders for the last
seven days of investment. Portfolio composition is disclosed for SR&F Municipal
Money Market Portfolio. Portfolio holdings are as of 12/31/99 and subject to
change. Source of Lipper data: Lipper, Inc. a monitor of mutual fund
performance.
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PORTFOLIO HIGHLIGHTS
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SR&F Municipal Money Market Portfolio
SECURITY TYPE BREAKDOWN
PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
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Variable-Rate Notes 80.9% 75.0%
Tax-Exempt Bonds 10.9 14.8
Other Tax-Exempt Notes 1.6 4.3
Put Bonds 3.7 3.8
Tax & Revenue Anticipation Notes 2.2 1.4
Commercial Paper 0.7 0.7
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Total Investments 100.0% 100.0%
PORTFOLIO STATISTICS
PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
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7-day Dollar-Weighted Average Maturity 41.1 days 45 days
7-day Current Yield* 4.09% 2.74%
*Net of all fees and expenses and represents an annualization of dividends
declared and payable to shareholders for the last seven days of investment.
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Pie Chart:
MATURITY
As of December 31, 1999 As of June 30, 1999
4.6 Greater than 299 Days 76.9
4.8 180-299 Days 4.7
7.0 90-179 Days 7.8
1.8 30-89 Days 3.5
81.8 1-29 Days 7.1
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QUESTIONS & ANSWERS
AN INTERVIEW WITH JOANNE COSTOPOULOS,
PORTFOLIO MANAGER OF STEIN ROE INTERMEDIATE MUNICIPALS FUND
FUND DATA
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INVESTMENT OBJECTIVE:
Seeks high current yield exempt from federal income tax, consistent with
capital preservation, through investment primarily in the three highest
grades of intermediate-term municipal securities. The dollar-weighted average
maturity of the Fund's portfolio is between three and 10 years.
FUND INCEPTION:
Oct. 9, 1985
NET ASSETS:
$143.6 million
Q: HOW DID THE FUND PERFORM BETWEEN JUNE 1999 AND DECEMBER 1999?
COSTOPOULOS: Rising interest rates put pressure on municipal bonds, and the
Fund's performance reflects the market's difficulties. The Fund provided a total
return of negative 0.13% for the six-month period ended December 31, 1999. This
return outperformed the Lipper Intermediate Municipal Debt Fund peer group
average return of negative 0.38%. The Lehman Brothers 10-Year Municipal Bond
Index, a benchmark of market performance, returned 0.49% for the same period.
Q: WAS THERE ANY "SILVER LINING" TO THE MARKET'S RECENT DOWNDRAFT?
COSTOPOULOS: Higher interest rates and weak municipal bond prices presented us
with the opportunity to do some "tax swapping." I sold some of our
poor-performing bonds at a loss to offset current and future capital gains
incurred elsewhere in the portfolio. I used the proceeds from those sales to buy
bonds at higher, prevailing yields. Not only did these tax swaps help improve
the Fund's tax efficiency, but they also helped boost the Fund's 30-day SEC
yield. As of December 31, 1999, the Fund's 30-day SEC yield was 4.53%, up from
4.08% six months earlier.
Q: WHAT CHANGES DID YOU MAKE IN RESPONSE TO RISING INTEREST RATES?
COSTOPOULOS: I modestly shortened the Fund's duration, which is a measure of its
price sensitivity to interest rate changes, to about 5.7 years as of December
31, 1999. That compared to 5.9 years six months earlier. The shorter a fund's
duration, the less its share price will fall when interest rates rise and vice
versa. Earlier in the year, the Fund's duration was slightly longer than its
Photo of: Joanne Costopoulos
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QUESTIONS & ANSWERS continued
average peers because I believed that interest rates would decline since
inflation was virtually nonexistent. When rates moved higher in response to
stronger-than-expected economic growth, I somewhat shortened duration in order
to reduce the Fund's interest-rate sensitivity.
Q: DID YOU MAKE ANY CHANGES TO THE FUND'S OVERALL CREDIT QUALITY?
COSTOPOULOS: More than 90% of the Fund's assets were in investment-grade
securities throughout the period, as they had been six months ago. When interest
rates rose, credit spreads (the difference in yield between lower-rated and
higher-rated securities) widened, which caused the roughly 10% stake in
lower-quality bonds to underperform. That said, we are currently starting to see
somewhat tighter credit spread relationships. I believe that as demand for
municipal securities increases, spreads should narrow and performance in this
sector should improve.
Q: WHERE HAVE YOU BEEN FINDING THE BEST VALUES LATELY?
COSTOPOULOS: Generally speaking, the longer a municipal bond's maturity, the
more its yield rose in response to rising interest rates. As a result,
intermediate bonds in the 15- to 20-year maturity range increasingly offered
attractive amounts of incremental yield over other maturities. For example, a
15-year AAA-rated general obligation bond carried almost three-quarters of a
percentage point more in yield than a comparably rated 10-year general
obligation bond. I also found compelling values among discount bonds, which
trade below their face, or par, value. The Fund bought some discounts that were
trading at prices well below what I believed to be their fair value, and locked
in attractive yields at the same time.
Q: WHAT CHANGES DID YOU MAKE IN THE WAY THE FUND'S ASSETS ARE DIVIDED AMONG
VARIOUS STATES AND SECTORS?
COSTOPOULOS: I reduced the Fund's stake in California bonds, which had done
quite well throughout 1999. As a result of that strong performance, California
bond yields were below those available from other states. In terms of sectors, I
also reduced the Fund's exposure to health-care bonds, which came under intense
pressure in 1999. Cutbacks in Medicare payments and the well-publicized problems
of a few hospitals have cast doubt on the industry's long-term profitability.
It's our view that the hospital sector has bottomed. Among our remaining
health-care holdings, I emphasized hospitals that I feel will be able to manage
through a more demanding environment.
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QUESTIONS & ANSWERS continued
Q: WHAT IS YOUR OUTLOOK FOR THE YEAR AHEAD?
COSTOPOULOS: I believe that over the short term, the Federal Reserve Board (Fed)
will continue to raise interest rates in response to strong U.S. economic
growth. By the end of 2000, however, I believe that the Fed's rate hikes will
have their intended result of slowing economic growth. If that proves to be the
case, interest rates will likely stabilize and may have room to decline. As for
the municipal market, conditions appear favorable. The supply of municipal bonds
is relatively stable and demand has firmed. If that holds, municipals could
perform well relative to their Treasury counterparts.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of income and capital
gains distributions, if any. Portfolio holdings are as of 12/31/99 and are
subject to change. The Advisor currently limits expenses to 0.70% of average net
assets. Fund return as of 12/31/99 would have been lower without the limit.
Absent past limits, the 30-day SEC and tax-equivalent yield as of 12/31/99 would
have been 4.38% and 7.25%, respectively. Income distributions are exempt from
federal income taxes but may be subject to the federal alternative minimum tax
and state and local taxes. Capital gains, if any, are also taxable. The Lehman
Brothers 10-Year Municipal Bond Index is an unmanaged group of investment grade
municipal bonds; it is not available for direct investment. Source of Lipper
data: Lipper, Inc.
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FUND HIGHLIGHTS
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Stein Roe Intermediate Municipals Fund
TOP FIVE STATES
PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
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New York 13.03% New York 10.7%
Illinois 8.45 Georgia 10.0
Georgia 7.64 Illinois 9.9
Arizona 7.02 Texas 8.6
Michigan 6.25 Arizona 6.7
PORTFOLIO STATISTICS
PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
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Average Duration 5.7 years 5.9 years
Average Weighted Maturity 8.2 years 8.6 years
Average Weighted Coupon 6.25% 6.28%
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Pie Chart:
MATURITY
As of December 31, 1999 As of June 30, 1999
14.1% GREATER THAN 18.9%
15 YEARS
43.0% 10-15 YEARS 40.5%
27.8% 5-10 YEARS 26.6%
15.1% 0-5 YEARS 14.0%
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Pie Chart:
PORTFOLIO QUALITY
As of December 31, 1999 As of June 30, 1999
62.9% AAA 67.6%
9.6% AA 8.2%
1.4% CASH EQUIVALENTS
16.1% A 14.5%
6.4% BBB AND BELOW 9.7%
3.6% NON-RATED
<PAGE>
Questions & Answers
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An Interview with Brian Hartford and Bill Loring,
Portfolio Managers of Stein Roe Managed Municipals Fund
FUND DATA
INVESTMENT OBJECTIVE:
Pursues high tax-free income consistent with capital preservation by
investing in a quality-conscious portfolio of long-term municipal securities.
FUND INCEPTION:
Feb. 23, 1977
NET ASSETS:
$479.2 million
Q: HOW DID THE FUND PERFORM FOR THE FIRST HALF OF FISCAL 2000?
A: Rising interest rates translated into negative returns for Stein Roe Managed
Municipals Fund, although it outpaced its peers during a difficult market
environment. For the six-month period ended December 31, 1999, the Fund posted a
negative 1.97% total return. This was higher than the average return of its
Lipper General Municipal Debt Fund peer group, which was negative 2.86% (see
page 2). The Lehman Brothers Municipal Bond Index, a benchmark of market
performance, returned negative 1.17% for the same period.
Q: WHAT CAUSED INTEREST RATES TO MOVE HIGHER?
A: Stronger U.S economic growth and the turnaround of many foreign economies
triggered inflationary concerns and interest rate worries throughout the period.
The Federal Reserve Board (Fed) raised short-term interest rates by a total of a
half a percentage point during the period, in moves designed to ward off any
potential inflationary pressures. Both Treasury and municipal yields rose in
response to higher interest rates, although municipals proved more resilient and
posted smaller losses as a result.
Q: WHAT HELPED THE FUND OUTPACE ITS PEERS?
A: The main reason the Fund did better than its peers was that its duration-- a
measure of its interest-rate sensitivity -- was shorter than average. The
shorter a fund's duration, the less its share price will fall when interest
rates rise and vice versa. The Fund's shorter duration stemmed from large
weighting in intermediate-maturity bonds in the seven- to 20-year range.
Intermediate-maturity bonds provided some measure of protection against rising
rates.
Photos of: Brian Hartford and Bill Loring
<PAGE>
QUESTIONS & ANSWERS continued
Q: WHAT CHANGES DID YOU MAKE IN RESPONSE TO RISING INTEREST RATES?
A: Rising interest rates and weaker municipal bond prices allowed us to do some
"tax swapping." We sold some of our poorer performers at a loss to offset
current and future capital gains incurred elsewhere in the Portfolio. When the
market presented us with attractive opportunities to do so, we invested the
proceeds in higher-yielding bonds. The benefit of these tax swaps was two-fold.
First, it helped improve the Fund's tax efficiency and second, it helped boost
the Fund's 30-day SEC yield, which was 5.21% on December 31, 1999.
Q: WHERE HAVE YOU BEEN FINDING THE BEST VALUES LATELY?
A: We've found some compelling values among discount bonds, which trade below
their par (face) value. Because of their heightened interest-rate, discount
bonds generally posted bigger losses than par and premium bonds, which trade
above their face value. Given their poor performance during much of 1999, we
were able to add some discounts to the Fund at very attractive prices at year
end.
We also found some attractive values among higher-yielding, lower-quality
municipal bonds. The spread-- or difference in yields-- between lower- and
higher-quality bonds widened quite a bit and high-yield bonds lagged their
investment-grade counterparts. At the end of 1999, a bond rated BBB offered as
much as 85 basis points (0.85%) more in yield than a bond rated AAA.
In choosing high-yielding bonds, we're very selective. As one measure of that
selectivity, we've kept more than 87.8% of the Fund's net assets in bonds rated
A or higher. But the past year presented us with some unique opportunities to
add holdings that we believe have good potential, paying fairly cheap prices for
them while locking in their high yields. One example was bonds issued by New
Jersey Economic Development Authority (0.4% of net assets) for the purpose of
expanding the Continental Airlines' terminal at Newark Airport. We also added
bonds issued by Cedar Sinai Hospital (0.8% of net assets), which has done a good
job managing through a difficult health-care environment.
Q: WHAT IS YOUR OUTLOOK FOR THE YEAR?
A:Over the short-term, we remain cautious. Our outlook calls for continued
strong U.S. economic growth during the first calendar quarter or so, which may
push interest rates somewhat higher. Beyond that, however, we're optimistic. We
think that the Fed's tightening actions will result in
<PAGE>
QUESTIONS & ANSWERS continued
slower economic growth. If growth does slow, interest rates and bond yields
could begin to fall, creating a better backdrop for performance.
As for the municipal market, we see some favorable trends. The supply should
be in line with historical levels in 2000, now that higher interest rates have
stymied much of the refunding activity that took place in 1998 and early 1999.
At the end of 1999, municipals were priced attractively compared to their
Treasury counterparts. Finally, the economic expansion of the 1990s has left
most municipal issuers in reasonably good shape.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of income and capital
gains distributions, if any. Portfolio holdings are as of 12/31/99 and are
subject to change. Income distributions are exempt from federal income taxes but
may be subject to the federal alternative minimum tax and state and local taxes.
Capital gains, if any, are also taxable. The Lehman Brothers Municipal Bond
Index is an unmanaged group of investment grade municipal bonds; it is not
available for direct investment. Source of Lipper data: Lipper, Inc.
<PAGE>
FUND HIGHLIGHTS
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Stein Roe Managed Municipals Fund
TOP FIVE STATES
PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
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Georgia 11.4% Georgia 10.5%
Massachusetts 10.0 Illinois 10.4
Illinois 9.9 Massachusetts 9.9
New York 8.3 New York 9.2
California 5.8 Washington 6.0
PORTFOLIO STATISTICS
PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
- --------------------------------------------------------------------------------
Average Duration 7.6 years 7.8 years
Average Weighted Maturity 16.0 years 16.3 years
Average Weighted Coupon 5.97% 5.90%
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Pie Chart:
MATURITY
As of December 31, 1999 As of June 30, 1999
11.4% GREATER THAN 14.3%
25 YEARS
19.1% 20-25 YEARS 17.0%
20.0% 15-20 YEARS 20.2%
29.1% 10-15 YEARS 29.6%
12.8% 5-10 YEARS 10.2%
7.6% LESS THAN 8.7%
5 YEARS
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Pie Chart:
PORTFOLIO QUALITY
As of December 31, 1999 As of June 30, 1999
33.7% AAA 34.6%
27.8% AA 29.2%
1.0% CASH EQUIVALENTS
26.3% A 25.0%
7.8% BBB AND BELOW 11.2%
3.4% NON-RATED
<PAGE>
QUESTIONS & ANSWERS
AN INTERVIEW WITH MAUREEN NEWMAN, PORTFOLIO MANAGER OF STEIN ROE
HIGH-YIELD MUNICIPALS FUND AND SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
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FUND DATA
INVESTMENT OBJECTIVE:
Seeks a high level of tax-free income consistent with capital preservation by
investing in long-term municipal securities, principally of medium or lower
quality.
FUND INCEPTION:
March 5, 1984
NET ASSETS:
$268.9 million
Q: HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF FISCAL 2000?
NEWMAN: Although it was an extremely difficult period for the municipal bond
market, Stein Roe High-Yield Municipals Fund outperformed the average of its
Lipper peers for the six-month period ended December 31, 1999 (see page 2).
However, because of rising interest rates, the Portfolio had a total return of
negative 2.53%, with dividends reinvested, for the six-month period. The Lehman
Brothers Municipal Bond Index, a broad gauge of the municipal market's
performance, returned negative 1.17% for the same period.
Stronger-than-expected growth in the U.S. and rebounding foreign economies
fanned inflationary concerns and interest rate worries throughout the period. In
efforts designed to stymie any potential inflationary pressures, the Federal
Reserve Board (Fed) raised short-term interest rates by a total of a half a
percentage point during the period. Both Treasury and municipal bonds
experienced rising yields and falling prices in response to inflationary
concerns, although municipals proved more resilient than Treasurys and posted
smaller price declines as a result.
Q: WHAT HELPED THE PORTFOLIO OUTPACE ITS PEERS?
NEWMAN: A number of individual holdings in the Portfolio performed particularly
well, giving the Portfolio much of its performance advantage. We are selling the
underlying assets of a defaulted security. The bids we received represented a
higher value on the security than we had anticipated, so the price of those
bonds increased. Other good performers included bonds issued on behalf of the
Colorado-based housing development known as Briargate (1.4% of net assets).
Those bonds paid out a premium to its bondholders. Another
Photo of: Maureen Newman
<PAGE>
QUESTIONS & ANSWERS continued
factor aiding performance was the Portfolio's below-average stake in
lower-quality securities, which underperformed during the period.
Q: HOW DID YOU MANAGE THE PORTFOLIO'S INTEREST-RATE SENSITIVITY?
NEWMAN: The Portfolio's duration-- a measure of its interest-rate sensitivity --
remained neutral. By that I mean the Portfolio was no more or less sensitive to
rising rates than the overall high-yield municipal market. I chose to maintain a
neutral stance because it was unclear whether the market would welcome potential
interest rate hikes as preemptive strikes against inflation, or whether it would
view tightening actions as an indication that inflationary pressures existed.
Given that the market's reaction to interest rate hikes was mostly negative, the
Portfolio's neutral stance did not detract from performance.
Q: YOU MENTIONED IN THE REPORT TO SHAREHOLDERS SIX MONTHS AGO THAT YOU HAD
EXPANDED THE NUMBER OF HOLDINGS IN THE PORTFOLIO AFTER TAKING IT OVER IN
NOVEMBER 1998. DID YOU CONTINUE TO ADD NEW BONDS OVER THE PAST
SIX MONTHS?
NEWMAN: Yes, but at a slower pace. Total issuers in the Portfolio have increased
to 122, up from 112 six months earlier. My goal was to diversify the Portfolio's
holdings further, adding more high-yielding, lower-rated and non-rated
securities.
In particular, I found some attractive opportunities in the hospital sector,
which had come under pressure due to a combination of cutbacks in Medicare
reimbursements, some well-publicized problems with scattered facilities around
the country, and the pullback on the part of some municipal bond insurers from
lower-rated hospitals. That environment provided the Portfolio with selective
opportunities to add high-yielding hospital bonds at very attractive prices. I
chose well-managed hospitals that were either the sole provider in their
communities or those that had a dominant market share in their service region.
Q: BEYOND THE HEALTH-CARE SECTOR, IN WHAT OTHER AREAS DID YOU FIND THE BEST
OPPORTUNITIES?
NEWMAN: I found attractively priced, high-yielding opportunities among
land-based bonds used to fund single-family residential developments in
California and Florida. I chose projects headed by larger, more experienced
developers who had successfully sold a fair amount of the homes prior to
development.
<PAGE>
QUESTIONS & ANSWERS continued
Q: WHAT IS YOUR OUTLOOK FOR THE YEAR AHEAD?
NEWMAN: We're reasonably optimistic that the interest rate environment will
improve by year-end. Our outlook calls for slower economic growth later this
year in response to rising interest rates. If this anticipated economic slowdown
occurs, we believe that long-term interest rates will stabilize. I expect that
the Fed will continue to hike short-term interest rates during the first half of
2000 in its fight against inflation. Whether the market reacts positively or
negatively to further rate hikes remains uncertain, so it wouldn't be surprising
if the market remains volatile. That's why I plan to keep the Portfolio's
duration neutral for the time being.
As for high-yield municipals, we believe they will do well relative to their
higher-rated counterparts as the supply and demand imbalance that caused them to
underperform in late 1999 abates. Furthermore, we believe municipal bonds are
likely to remain an attractive alternative to taxable fixed-income securities
for investors in high tax brackets. As of December 31, 1999, the Fund's SEC
yield was 5.36%, which translates to a tax-equivalent yield of 8.88% for
investors in the highest 39.6% federal tax bracket.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of income and capital
gains distributions, if any. Portfolio holdings are disclosed as a percentage of
SR&F High-Yield Municipals Portfolio as of 12/31/99 and are subject to change.
Investing in high-yield bonds involves greater credit risks than investing in
higher-quality bonds. Income distributions are exempt from federal income taxes
but may be subject to the federal alternative minimum tax and state and local
taxes. Capital gains, if any, are also taxable. The Lehman Brothers Municipal
Bond Index is an unmanaged group of investment grade municipal bonds; it is not
available for direct investment. Source of Lipper data: Lipper, Inc.
<PAGE>
PORTFOLIO HIGHLIGHTS
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SR&F High-Yield Municipals Portfolio
TOP FIVE STATES
PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
- --------------------------------------------------------------------------------
Pennsylvania 11.8% Indiana 11.9%
Indiana 8.6 Pennsylvania 11.2
Florida 5.9 Colorado 8.0
Colorado 5.1 Texas 5.6
New York 5.1 New York 4.5
PORTFOLIO STATISTICS
PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
- --------------------------------------------------------------------------------
Average Duration 7.1 years 7.9 years
Average Weighted Maturity 16.7 years 17.1 years
Average Weighted Coupon 6.71% 6.68%
- --------------------------------------------------------------------------------
Pie Chart:
MATURITY
As of December 31, 1999 As of June 30, 1999
17.3% GREATER THAN 23.4%
25 YEARS
24.8% 20-25 YEARS 18.4%
18.8% 15-20 YEARS 18.8%
14.3% 10-15 YEARS 13.2%
10.0% 5-10 YEARS 12.3%
14.8% LESS THAN 13.9%
5 YEARS
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Pie Chart:
PORTFOLIO QUALITY
As of December 31, 1999 As of June 30, 1999
13.0% AAA 18.4%
7.3% AA 6.9%
21.3% A 19.5%
1.8% CASH EQUIVALENTS
21.9% BBB
8.0% BB AND BELOW
26.7% NON-RATED
BB AND BELOW/
NOT RATED 31.9%
<PAGE>
SR&F MUNICIPAL MONEY MARKET PORTFOLIO
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Portfolio of Investments at December 31, 1999 (Unaudited)
(All amounts in thousands)
<TABLE>
<CAPTION>
MUNICIPAL SECURITIES 100.4% Par Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ALABAMA - 0.7%
Huntsville, Series 1998 A 4.000% 11/1/00............................... $ 1,000 $ 1,000
ARIZONA - 3.9%
Clark County, Reynolds Metals Co., Series 1992, VRDB 5.600% 8/1/22..... 3,000 3,000
Phoenix Industrial Development Authority, Spring Air Mattress Co.,
Series 1999, (a) VRDB 5.650% 4/1/19................................. 1,870 1,870
Scottsdale, GO Series 1992 C, 7.750% 7/1/00............................ 450 459
-------
5,329
CALIFORNIA - 1.5%
California Higher Education Loan Authority, Series 1994 A, Put 6/1/00 (a)
3.200% 7/1/05....................................................... 1,000 1,000
Los Angeles County Transportation, Series 1999 A 4.000% 6/30/00........ 1,000 1,003
-------
2,003
COLORADO - 5.9%
Colorado Educational & Cultural Facilities Authority:
Naropa University, Series 1999, VRDB5.600% 11/1/24.................. 2,100 2,100
National Cable Television Center, Series 1999, VRDB 5.600% 10/1/06.. 1,700 1,700
Colorado Springs, Catalano Family L.L.P., Series 1998, VRDB (a)
5.600% 7/1/18....................................................... 1,145 1,145
Lowry Economic Redevelopment Authority, Series 1998 B, VRDB
5.350% 12/1/20...................................................... 1,000 1,000
SBC Metropolitan District Colorado, Mandatory Put 12/1/00,
4.000% 12/7/29...................................................... 2,000 2,000
-------
7,945
GEORGIA - 1.8%
Gwinnett County Development Authority, Price Co., Inc.,
Series 1995, VRDB (a) 5.700% 6/1/10................................. 2,400 2,400
ILLINOIS - 28.7%
ABN AMRO Munitops Certificate 1998-14 VR7, VRDB (b)
5.660% 10/4/06...................................................... 1,000 1,000
Chicago, Archer Court Apartments, Series B, VRDB 5.770% 6/1/19......... 1,010 1,010
Chicago, Crane Carton Co., VRDB 5.600% 6/1/12.......................... 2,150 2,150
Chicago, De LaSalle Institute, VRDB 5.600% 4/1/27...................... 900 900
Chicago, Midway Airport, VRDB 5.750% 1/1/29............................ 1,960 1,960
Chicago, PS Greetings, Inc., VRDB 5.650% 5/1/24........................ 1,500 1,500
Chicago, Stockyards Redevelopment Project, VRDB 5.600% 12/1/11......... 1,470 1,470
Chicago School Finance Authority, Series 1992 A, 5.900% 6/1/00......... 1,000 1,009
Chicago Wastewater Transmission, Series 1998 B, 4.250% 1/1/00.......... 500 500
De Kalb County Community United School, District No. 428, Series 1999,
4.100% 12/1/00...................................................... 1,205 1,206
DuPage & Cook Counties United School District, Series 1999,
5.400% 1/1/00....................................................... 767 767
Elgin Corporate Purpose Bonds, Series 1999 5.500% 1/1/00............... 445 445
Glendale Heights IDR, Judy L.L.C. Series 1998, VRDB (a) 5.500% 8/1/28.. 1,540 1,540
Illinois Development Finance Authority Revenue:
American Osteopathic Assoc., VRDB 5.500% 9/15/18.................... 2,100 2,100
Nutrasweet Co., VRDB 5.750% 11/1/23................................. 4,400 4,400
Rest Haven Illiana Christian Convalescent Home, VRDB
5.500% 1/1/27.................................................... 1,000 1,000
Wheaton Academy, VRDB 5.550% 10/1/28................................ 1,000 1,000
<PAGE>
<CAPTION>
SR&F Municipal Money Market Portfolio
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Continued
Par Value
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<S> <C> <C>
ILLINOIS (CONTINUED)
Illinois Educational Facilities Authority Revenue, Aurora University,
Series 1989, VRDB 5.450% 1/1/09..................................... $ 1,200 $ 1,200
Illinois Health Facilities Authority Revenue, University of Chicago,
Series 1985 A, Put 3/30/00, 3.750% 8/1/15........................... 1,000 1,000
Illinois State Toll Highway Authority, Series 1993 A, 4.500% 1/1/00.... 1,000 1,000
Lake County Community College District No. 532, Series 1999 B,
9.000% 11/1/00...................................................... 805 836
Melrose Park, Ninos Enterprises, Inc.,
Series 1999, VRDB, 5.650% 12/1/24................................... 2,500 2,500
Morton, Morton Welding Co., Inc.,
Series 1996 A VRDB, (a) 5.700% 4/1/16.............................. 905 905
Palatine, Series 1998, VRDB, 5.500% 12/1/28............................ 1,000 1,000
Quad Cities Regional Economic Development Authority,
Steel Warehouse Quad Cities:
Series 1997, VRDB, (a) 5.600% 12/1/12............................ 2,000 2,000
Series 1997, VRDB, (a) 5.600% 12/1/13............................ 2,200 2,200
Springfield IDR, Phillips Brothers, Inc., Series 1998, VRDB,
5.600% 6/1/18....................................................... 1,350 1,350
Springfield IDR, Oak Terrace Joint Venture L.P., Series 1999, VRDB, (a)
5.500% 12/1/25...................................................... 1,000 1,000
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38,948
INDIANA - 12.4%
Allen County, Golden Years Homestead, Inc., Series 1996, VRDB,
5.500% 8/1/21....................................................... 1,430 1,430
Crawfordsville Economic Development Revenue, Pedcor Investments,
Series 1995, VRDB, (a) 5.500% 4/1/30................................ 1,558 1,558
Elkhart, Adorn, Inc., Series 1995, VRDB, 5.700% 8/1/05................. 1,200 1,200
Franklin Economic Development Revenue, Lakeview Apartments,
Series 1994, VRDB, (a) 5.500% 9/1/30................................ 2,789 2,789
Indiana Development Finance Authority, Carr Metal Products, Inc.,
Series 1999, VRDB, 5.750% 1/1/09.................................... 1,300 1,300
Indiana Health Facilities Financing Authority, Pathfinder Services, Inc.,
Series 1996, VRDB, 5.500% 11/1/19................................... 2,275 2,275
Indiana University, Series 1990 G, VRDB, Prerefunded 8/1/00,
7.000% 8/1/10....................................................... 300 314
Kokomo Economic Development Revenue, Village Community Partners IV
L.P., Series 1995, VRDB, (a) 5.500% 9/1/30.......................... 2,940 2,940
La Porte County Economic Development Revenue, Woodland Crossing
Apartments, Series 1994, VRDB, (a) 5.500% 10/1/29................... 1,945 1,945
Plymouth Economic Development Revenue, Hillcrest Apartments, Series
1998 A, VRDB, (a) 5.650% 4/1/28..................................... 1,000 1,000
-------
16,751
IOWA - 6.6%
Iowa Higher Education Loan Authority, Briar Cliff College, Series 1999,
VRDB 5.600% 6/1/19.................................................. 430 430
Clinton IDR, Sethness Products Co., Series 1996, VRDB, (a)
5.500% 9/1/11....................................................... 3,400 3,400
Muscatine County, Monsanto Co., Series 1992, VRDB, 5.200% 10/1/07...... 2,100 2,100
Scott County Industrial Waste Revenue, Nichols Aluminum Project,
Series 1999, VRDB, 5.600% 6/1/14.................................... 3,000 3,000
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8,930
<PAGE>
<CAPTION>
SR&F Municipal Money Market Portfolio
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Continued
Par Value
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<S> <C> <C>
KANSAS - 1.1%
Kansas City Industrial Development Authority, Lanter Co., Series 1987 A,
VRDB, 3.350% 2/1/03................................................. $ 680 $ 680
Olathe IDR, Garmin International, Inc., Series 1995, VRDB, (a)
3.250% 1/1/25....................................................... 800 800
-------
1,480
KENTUCKY - 3.5%
Covington Industrial Building Revenue, White Castle Distributing, Inc.,
Series 1991, VRDB, (a) 3.400% 4/1/06................................ 3,205 3,205
Shelby County Industrial Building Revenue Roll Forming Corp.,
Series 1996, VRDB, (a) 3.400% 4/1/16................................ 1,595 1,595
-------
4,800
MARYLAND - 0.9%
Anne Arundel County, Baltimore Gas & Electric Co., Series 1988,
Commercial paper due 3/8/00, (a) 3.800% 12/1/18..................... 1,000 1,000
University of Maryland, Series 1991, Prerefunded 4/1/00, A
6.500% 4/2/07....................................................... 250 257
-------
1,257
MICHIGAN - 2.5%
ABN AMRO Munitops Certificate 1998-13 VR7, VRDB, (b)
5.630% 10/4/06...................................................... 2,000 2,000
Detroit School District:
GO, 4.000% 6/1/00................................................... 1,000 1,003
MBIA Insured, 3.250% 5/1/00......................................... 385 385
-------
3,388
MINNESOTA - 1.7% Minneapolis, MN:
Series 1994 A, VRDB, 5.400% 12/1/05................................. 1,200 1,200
Series 1998 B, VRDB, 5.400% 12/1/16................................. 935 935
Minneapolis Convention Center GO, Series 1999, VRDB,
5.400% 12/1/18...................................................... 200 200
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2,335
MISSOURI - 3.3%
Jefferson County Industrial Development Authority, Sinclair & Rush, Inc.,
Series 1994 A, VRDB, (a) 5.600% 11/1/09............................. 3,445 3,445
St. Louis General Federal Revenue, Series 1999, 4.000% 6/30/00......... 1,000 1,004
-------
4,449
NEBRASKA - 0.1%
Omaha Public Power District, Series 1993 A, 4.850% 2/1/00.............. 125 125
OHIO - 1.6%
Environment Improvement Authority, U.S. Steel Corp. Project, VRDB,
4.150% 12/1/01...................................................... 400 400
Hancock County Multi-Family Revenue, Crystal Glen Apartments Project,
Series 1998 B, VRDB, (a) 5.620% 1/1/31.............................. 750 750
Summit County Bond Anticipation Notes, Series 1999 A, VRDB,
3.800% 6/1/00....................................................... 1,000 1,002
-------
2,152
PENNSYLVANIA - 1.3%
Fayette County Hospital Authority, Uniontown Hospital, Series 1996,
4.700% 6/15/00...................................................... 250 251
Quakertown General Authority, Series 1996 A,VRDB, 5.750% 7/1/26........ 1,513 1,513
-------
1,764
<PAGE>
<CAPTION>
SR&F Municipal Money Market Portfolio
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
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<S> <C> <C>
RHODE ISLAND - 0.2%
Convention Center Authority, Series 1993 B, VRDB, 4.600% 5/15/00....... $ 300 $ 301
SOUTH CAROLINA - 1.7%
Newberry County, Series 1999, 4.250% 9/1/00............................ 310 311
South Carolina Jobs Economic Development Authority Specialty Equipment
Co., Inc., Series 1995 (a) VRDB 5.600% 11/1/10...................... 2,045 2,045
-------
2,356
SOUTH DAKOTA - 0.2%
State Health & Educational Facilities Authority, Prince of Peace Hospital,
Series 1993, 4.600% 7/1/00.......................................... 260 261
TENNESSEE - 2.7%
Clarksville Public Building Authority, Series 1999, VRDB, 5.400% 6/1/29 2,000 2,000
Rutherford County Industrial Development Board, Farmers Project,
Series B, VRDB, 5.600% 11/1/14...................................... 1,000 1,000
Wilson County Industrial Development Board, Briskin Manufacturing Co.,
Series 1999, VRDB, 5.650% 7/1/29.................................... 700 700
-------
3,700
TEXAS - 5.8%
Fort Bend County Industrial Development Corp., W.W. Grainger, Inc.,
Series 1989, VRDB, 5.650% 12/1/02................................... 1,110 1,110
Garland, Series 1992 B, 5.700% 8/15/00................................. 400 405
Grand Prairie Industrial Development Authority, Series 1986, VRDB,
5.900% 12/1/11...................................................... 800 800
Gulf Coast Waste Disposal Authority, Amoco Corp., Series 1995, VRDB, (a)
5.350% 7/1/27....................................................... 300 300
Harris County Industrial Development Authority, Precision General, Inc.,
Series 1991, VRDB, (a) 5.600% 10/1/16............................... 2,060 2,060
Texas Department of Housing & Community Affairs, Series 1999 B-2,
VRDB, 3.900% 1/1/33................................................. 1,000 1,000
Texas Transportation, Series 1999 A, 4.500% 8/31/00.................... 1,000 1,005
Tarrant County Housing Finance Corp., Remington Hill, Series 1998,
VRDB, 5.500% 2/15/28................................................ 800 800
Webb County Certificates of Obligation, Series 1999, 6.000% 2/1/00..... 355 356
-------
7,836
UTAH - 0.8%
Davis County School District, Series 1993, 4.550% 6/1/00............... 250 251
Utah Municipal Power Agency, Series 1993 A, 4.900% 7/1/00.............. 750 754
-------
1,005
WASHINGTON - 0.8%
Washington State Housing Finance Commission, Hamilton Place Senior
Living, Series 1996 A, VRDB, (a) 5.550% 7/1/28...................... 1,125 1,125
WISCONSIN - 10.7%
Campbellsport School District, Series 1999, 3.500% 3/1/00.............. 120 120
Chase IDR, Belgiosio Cheese, Inc., Series 1998, VRDB, (a) 5.600% 4/1/11 1,000 1,000
Fond du Lac IDR, Brenner Tank, Inc., Series 1994, VRDB, (a)
5.600% 11/1/04...................................................... 2,125 2,125
Fox Valley Technical College District, Series 1999 B, 4.100% 6/1/00.... 410 410
Holland IDR, White Clover Dairy, Inc., Series 1994, VRDB, (a)
5.600% 5/1/05....................................................... 2,275 2,275
Kenosha IDR Monarch Plastics, Inc., Series 1994, VRDB, (a)
5.600% 12/1/09...................................................... 1,750 1,750
<PAGE>
<CAPTION>
SR&F MUNICIPAL MONEY MARKET PORTFOLIO
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Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
WISCONSIN (CONTINUED)
Mid-State Technical College District, Series 1999, 4.900% 6/1/00....... $ 100 $ 100
Milwaukee Area Technical College District, Series 1999, 4.750% 6/1/00.. 685 688
Outagamie County, Series 1999, 4.000% 10/1/00.......................... 365 365
Racine, Series 1999 B, 4.600% 12/1/00.................................. 690 694
Wisconsin State Health & Educational Facilities Authority, Grace Lutheran
Foundation, Series 1999, VRDB, 5.700% 7/1/14........................ 2,555 2,555
Wisconsin Housing & Economic Development Authority, Series 1997 H,
4.350% 3/1/00....................................................... 525 526
Wisconsin, Series 1991 D, Prerefunded 5/1/00, 6.600% 5/1/10............ 525 540
Two Rivers GO Series, Series 1999 B, 3.500% 4/1/00..................... 100 100
Whitnall School District GO, Series 1999, 3.900% 4/1/00................ 255 256
Wisconsin Public Power, Inc., Series 1990 A, Prerefunded 7/1/00,
7.500% 7/1/10.................................................... 1,000 1,038
-------
14,542
- ----------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL SECURITIES
(cost of $136,182) (c).............................................. 136,182
OTHER ASSETS, LESS LIABILITIES - (0.4%)................................ (568)
--------
NET ASSETS - 100.0%.................................................... $135,614
========
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Security is subject to federal alternative minimum tax. At December 31,
1999, the aggregated amortized cost of these securities represented 37.7%
of net assets.
(b) Represents private placement securities issued under Rule 144A, which are
exempt from the registration of the Securities Act of 1933. These
securities are generally issued to qualified institutional buyers, such as
the Portfolio, and any resale by the Portfolio must be an exempt
transaction, normally to other qualified institutional investors. At
December 31, 1999, the aggregate amortized cost of the Portfolio's private
placement securities was $3,000 which represented 2.2% of net assets.
(c) Cost for financial statement and federal income tax purposes is the same.
Variable rate demand bonds (VRDB) are securities whose yields are periodically
reset at levels that are generally comparable to tax-exempt commercial paper.
These securities are payable on demand within seven calendar days and normally
incorporate an irrevocable letter or credit or line of credit with a major bank.
Acronym Name
---------- ------------
GO General Obligation
IDR Industrial Development Revenue
See accompanying Notes to Financial Statements.
<PAGE>
STEIN ROE INTERMEDIATE MUNICIPALS FUND
- --------------------------------------------------------------------------------
Portfolio of Investments at December 31, 1999 (Unaduited)
(All amounts in thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS 97.3% Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 2.9%
EDUCATION - 1.4%
CA State Educational Facilities Authority, University of San Francisco,
Series 1996, 5.600% 10/1/10 ..................................... $ 1,000 $ 1,041
FL Miami-Dade County Educational Facilities Authority, University of
Miami, Series 1999 A, 5.250% 4/1/15.............................. 1,000 949
-------
1,990
STUDENT LOANS - 1.5%
ME State Educational Loan Authority, Series 1992 A-2,
6.650% 12/1/02................................................... 515 527
TX State Higher Education Coordinating Board, Texas College,
Series 1991, 7.450% 10/1/06...................................... 1,590 1,644
-------
2,171
HEALTHCARE - 5.9%
HOSPITALS - 5.6%
CA State Health Facilities Financing Authority, Cedars-Sinai Medical
Center, Series 1999 A, 6.125% 12/1/19............................ 1,250 1,231
MA State Health & Educational Facilities Authority, Daughters of
Charity, Series 1990 C, 7.250% 7/1/00............................ 200 203
NJ State Health Care Facilities Financing Authority, Christ Hospital,
Series 1994, 7.000% 7/1/03....................................... 1,730 1,848
PA Dauphin County General Authority, Hapsco Group, Inc.,
Series 1992 B, 5.800% 7/1/02........................................ 1,600 1,640
SC Sumter County, Tuomey Regional Medical Center, Series 1991,
6.625% 11/15/04.................................................. 1,040 1,115
TN Knox City Health Educational & Housing Facilities Board, Baptist
Health Systems of East Tennessee, 5.500% 4/15/11................. 2,000 1,987
-------
8,024
NURSING HOMES - 0.3%
MN New Hope, North Ridge Care Center, Inc., Series 1999,
5.400% 3/1/08.................................................... 500 468
HOUSING - 0.6%
SINGLE FAMILY
CA State Housing Finance Agency, Series B-1, 5.900% 2/1/04.......... 810 837
OTHER - 15.2%
POOL/BOND BANKS - 1.5%
IN Indianapolis Local Public Improvement Bond Bank, Series 1992 D,
6.500% 2/1/06.................................................... 2,100 2,244
REFUNDED/ESCROWED (A) - 13.7%
AZ Maricopa County, Samaritan Health Services, Series 1978,
7.625% 1/1/08.................................................... 1,935 2,137
AZ Phoenix Civic Improvement Corp., Series 1993, 6.000% 7/1/07...... 1,500 1,588
CA Los Angeles County Public Works Financing Authority,
Series 1994 A, 5.800% 10/1/05.................................... 1,500 1,600
IL Chicago, Skyway Toll Bridge, Series 1994, 6.750% 1/1/17.......... 1,500 1,631
IL Metropolitan Pier & Exposition Authority, McCormick Place
Expansion Project, Series 1992 A:
7.250% 6/15/05................................................. 385 425
7.250% 6/15/05................................................. 1,145 1,272
<PAGE>
<CAPTION>
STEIN ROE INTERMEDIATE MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
OTHER - CONT.
REFUNDED/ESCROWED (A) - (CONTINUED)
IN State Toll Road Commission, Series 1980, 9.000% 1/1/15.......... $ 2,240 $ 2,982
IN State Transportation Finance Authority, Series 1992 A,
6.500% 11/1/07................................................... 1,210 1,290
MA State Health & Educational Facilities Authority, Carney Hospital,
Series 1994 D, 6.000% 7/1/09..................................... 1,000 1,052
MI State Hospital Finance Authority, Daughters of Charity and
Providence, Series 1991, 6.500% 11/1/01.......................... 585 599
OH Loveland School District, Series 1992, 7.100% 12/1/09............ 3,000 3,251
PA Westmoreland County Municipal Authority, Municipal Services,
Series 1993-C, (b) 8/15/17....................................... 1,250 428
SC Piedmont Municipal Power Agency, Series 1991 A, 6.125% 1/1/07.... 335 357
SC Sumter County, Tuomey Regional Medical Center, Series 1991,
6.625% 11/15/04.................................................. 960 1,035
-------
19,647
RESOURCE RECOVERY - 4.6%
DISPOSAL - 1.6%
IL Development Finance Authority, Waste Management, Inc., Series
1997, 5.050% 1/1/10.............................................. 615 514
MI State Strategic Fund, United Waste Systems, Inc., Series 1995,
5.200% 4/1/10.................................................... 1,000 866
PA Westmoreland County Industrial Development Authority,
Mid-America Waste Systems, Inc., Series 1993, 5.100% 5/1/18...... 1,000 862
-------
2,242
RESOURCE RECOVERY - 3.0%
MI Greater Detroit Resource Recovery Authority, Series 1996 A,
6.250% 12/13/05.................................................. 2,000 2,135
NJ Bergen County Utilities Authority, Series 1992 A, 6.250% 6/15/06. 2,000 2,140
-------
4,275
TAX-BACKED - 34.3%
LOCAL GENERAL OBLIGATIONS - 17.0%
AZ Cochise County Unified School District No. 68,.Sierra V Project,
Series 1990 B, 9.000% 7/1/01..................................... 1,115 1,187
AZ Maricopa County Unified School District 97, Series 1996 A,
6.250% 7/1/06.................................................... 1,750 1,872
AZ Pima County, Series 1992, 6.300% 7/1/02.......................... 2,500 2,598
AZ Tempe Unified School District No. 213, Series 1994,
7.000% 7/1/08.................................................... 500 565
CA Union Elementary School District, Series 1999 A, (b) 9/1/20..... 1,000 282
CO Adams County, School District Number 12, Series 1995 A, (b)
12/15/12......................................................... 1,300 622
HI Honolulu City & County, Series 1990 A, 7.350% 7/1/06............. 1,000 1,122
IL Chicago Board of Education, Series 1996, 6.250% 12/1/12.......... 2,100 2,248
LA Orleans Levee District, Series 1995 A, 5.950% 11/1/07............ 2,200 2,320
NY New York City:
Series 1996 C, 5.700% 2/1/06..................................... 1,000 1,026
Series 1997 H, 6.000% 8/1/17..................................... 2,000 1,991
Series 1997 J, 6.125% 8/1/11..................................... 5,000 5,261
OH Olmsted Falls School District, Series 1999, 5.500% 12/1/04....... 420 408
TX Round Rock Independent School District, Series 1995 A,
7.500% 8/1/02.................................................... 1,200 1,281
WA Snohomish County School District No. 002, Series 1993,
7.000% 12/1/02................................................... 1,500 1,593
-------
24,376
<PAGE>
<CAPTION>
STEIN ROE INTERMEDIATE MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
TAX-BACKED - CONT.
SPECIAL NON-PROPERTY TAX - 6.5%
IL Metropolitan Pier & Exposition Authority, McCormick Place
Expansion Project, Series 1992 A, 7.250% 6/15/05................. $ 1,220 $ 1,343
MI State, Underground Storage Tank Financial Assistance, Series 1996 I,
6.000% 5/1/05.................................................... 5,000 5,257
NM Santa Fe, Series 1996 A, 6.500% 6/1/06.......................... 2,555 2,765
-------
9,365
SPECIAL PROPERTY TAX - 2.1%
FL Stoneybrook Community Development District, Series 1998 B,
5.700% 5/1/08.................................................... 3,200 3,072
STATE APPROPRIATED - 5.5%
MO State, Regional Convention & Sports Facility Project, Series 1991
A, 6.600% 8/15/03................................................ 830 874
NY Metropolitan Transportation Authority, Series 1993 O,
5.500% 7/1/17.................................................... 1,000 955
NY State Dormitory Authority:
City University of New York, Series 1995, 5.625% 7/1/16.......... 5,000 4,966
Series 1995 A, 6.500% 5/15/05.................................... 1,000 1,063
-------
7,858
STATE GENERAL OBLIGATIONS - 3.2%
GA State, Series 1997 A, 6.250% 4/1/07.............................. 2,000 2,157
MA Massachusetts Bay Transportation Authority, Series 1994 A,
7.000% 3/1/07.................................................... 2,250 2,507
-------
4,664
TRANSPORTATION - 9.0%
AIR TRANSPORTATION - 1.3%
NJ State Economic Development Authority, Continental Airlines, Inc.,
Series 1999, 6.250% 9/15/19...................................... 2,000 1,865
AIRPORTS - 5.2%
GA Atlanta, Airport Facilities, Series 1996, 6.500% 1/1/07.......... 5,000 5,426
IL Chicago, Midway Airport, Series 1994 A, 5.700% 1/1/04............ 1,000 1,028
IN State Transportation Finance Authority, Airport Facilities Lease,
Series 1992 A, 6.500% 11/1/07.................................... 1,040 1,096
-------
7,550
TOLL FACILITIES - 2.5%
KY State Turnpike Authority, Series 1992, 5.800% 1/1/04............. 2,500 2,582
OH State Turnpike Commission, Series 1998 A, 5.500% 2/15/24......... 1,000 943
-------
3,525
UTILITY - 24.8%
INVESTOR OWNED - 1.8%
NH State Business Finance Authority, United Illuminating Co.,
Series 1999, 5.400% 12/1/29...................................... 1,000 998
NV Clark County, Southern California Edison Co., Series 1990 A,
7.125% 6/1/09.................................................... 1,500 1,559
-------
2,557
STEIN ROE INTERMEDIATE MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITY - CONT.
JOINT POWER AUTHORITY - 7.6%
GA Municipal Electric Authority Power, Series 1997 Y, 6.400% 1/1/13. $ 3,000 $ 3,248
NC Eastern Municipal Power Agency:
Catawba No. 1, Series 1992, 5.900% 1/1/03........................ 1,500 1,548
Series 1993 C, 5.500% 1/1/07..................................... 3,100 3,025
NE State Public Gas Agency, Series 1995 A, 5.400% 4/1/04............ 1,000 1,003
SC Piedmont Municipal Power Agency, Series 1991 A, 6.125% 1/1/07.... 2,015 2,123
-------
10,947
MUNICIPAL ELECTRIC - 1.0%
TX Lower Colorado River Authority, Series 1999 A, 5.500% 5/15/21.... 1,500 1,390
WATER & SEWER - 14.4%
AR Beaver Water District, Benton & Washington Counties, Series 1994,
6.000% 11/15/04.................................................. 2,580 2,715
DE State Economic Development Authority, Wilmington Suburban
Water Corp., Series 1992 B, 6.450% 12/1/07....................... 1,165 1,244
IL Chicago, Series 1993, 6.500% 11/1/09............................. 2,155 2,353
IL Du Page County Special Service Area No. 11, Series 1995,
6.750% 1/1/14.................................................... 1,090 1,165
MA State Water Pollution Abatement Trust, Series 1999 A,
6.000% 8/1/19.................................................... 2,500 2,526
NY State Environmental Facilities Corp., Series 1994 D,
6.300% 5/15/05................................................... 3,000 3,204
TN Metropolitan Government of Nashville & Davidson Counties, Series
1993, 6.500% 1/1/10.............................................. 2,750 3,013
TX Houston Water Conveyance System, Series J, 6.125% 12/15/06....... 1,000 1,058
TX San Antonio, Series 1992, 6.000% 5/15/01......................... 2,460 2,509
TX Water Development Board, Series 1996 B, 5.125% 7/15/18........... 1,000 896
-------
20,683
-------
TOTAL MUNICIPAL BONDS
(cost of $136,061) (c).............................................. 139,750
- ----------------------------------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 1.4%
- ----------------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (D)
TX Gulf Coast Waste Disposal Authority, Amoco Oil Co., Series 1998,
4.750% 1/1/26.................................................... 200 200
TX Gulf Coast Waste Disposal Authority, Monsanto Co., Series 1994,
5.650% 4/1/13.................................................... 1,700 1,700
TX Gulf Coast Waste Disposal Authority, Amoco Corp., Series 1995,
5.350% 7/1/27.................................................... 100 100
-------
TOTAL SHORT-TERM OBLIGATIONS........................................... 2,000
- ----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES - 1.3%.................................. 1,829
--------
NET ASSETS - 100.0%.................................................... $143,579
========
- ----------------------------------------------------------------------------------------------------------
<PAGE>
</TABLE>
STEIN ROE INTERMEDIATE MUNICIPALS FUND
- --------------------------------------------------------------------------------
Continued
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The Fund has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
the principal and interest.
(b) Zero coupon bond.
(c) Cost for financial statement and federal income tax purposes is the same.
(d) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of December 31,
1999.
See notes to financial statements.
<PAGE>
STEIN ROE MANAGED MUNICIPALS FUND
- --------------------------------------------------------------------------------
Portfolio of Investments at December 31, 1999 (Unaduited)
(All amounts in thousands)
<TABLE>
<CAPTION>
MUNICIPAL BONDS 97.4% Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 2.2%
EDUCATION - 0.5%
MA State Development Finance Agency, Boston University, Series
1999 P, 5.450% 5/15/59 .......................................... $ 1,000 $ 833
MN Victoria, Holy Family Catholic High School, Series 1999 A,
5.850% 9/1/24 ................................................. 1,000 896
PR Commonwealth of Puerto Rico, Ana G. Mendez University System,
Series 1999, 5.375% 2/1/29....................................... 600 511
-------
2,240
STUDENT LOANS - 1.7%
AK State Student Loan Corp., Series 1994-A, 6.200% 7/1/09 ........ 3,870 4,015
ME State Educational Loan Marketing Corp., Series 1994 B-1,
6.500% 11/1/09 .................................................. 3,000 3,050
TX Brazos Higher Educational Facilities Authority, Series 1993 C-2,
5.875% 6/1/04 ................................................... 1,305 1,315
-------
8,380
HEALTHCARE - 8.3%
CONGREGATE CARE RETIREMENT - 0.9%
OR Clackamas County Hospital Facilities Authority, Willamette View,
Series 1999 A, 7.500% 11/1/29 ................................... 1,000 957
PA Montgomery County Industrial Development Authority, Adult
Communities Total Services, Series 1996 B, 5.750% 11/15/17 ...... 3,500 3,180
-------
4,137
HEALTH SERVICES - 0.6%
MA State Development Finance Agency, Boston Biomedical research
Institute, Series 1999, 5.650% 2/1/19 ........................... 310 266
WI State Health & Educational Facilities Authority, Marshfield Clinic,
Series 1999, 6.250% 2/15/29 ..................................... 2,500 2,415
-------
2,681
HOSPITALS - 6.0%
CA State Health Facilities Financing Authority, Cedars-Sinai Medical
Center, Series 1999 A, 6.125% 12/1/30 ........................... 4,000 3,858
IL State Development Finance Authority, Adventist Health System,
Series 1999, 5.500% 11/15/20 .................................... 3,000 2,495
LA State Public Facilities Authority, Touro Infirmary, Series 1999,
5.625% 8/15/29................................................... 2,900 2,398
MA State Health & Educational Facilities Authority:
Dana Farber Cancer Institute, Series 1995 G-1, 6.250% 12/1/22 ... 6,500 6,285
Massachusetts General Hospital, Series 1992 F, 6.250% 7/1/12 .... 5,750 6,206
South Shore Hospital, Series 1999 F, 5.750% 7/1/29 .............. 2,500 2,217
MI Dickinson County, Series 1999, 5.800% 11/1/24 ................... 1,000 846
NC State Medical Care Commission, Gaston Health Care, Series 1998,
5.000% 2/15/29 .................................................. 1,000 807
NV Henderson, Catholic Healthcare West, Series 1999 A,
6.750% 7/1/20 ................................................... 1,000 968
OH Franklin County, Doctors OhioHealth Corp., Series 1998 A,
5.600% 12/1/28 .................................................. 3,000 2,439
TX Richardson Hospital Authority, Baylor Richardson Medical Center,
Series 1998, 5.625% 12/1/28...................................... 500 407
-------
28,926
<PAGE>
<CAPTION>
STEIN ROE MANAGED MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE - CONT.
INTERMEDIATE CARE FACILITIES - 0.5%
IN State Health Facilities Financing Authority, Hoosier Care, Inc.,
Series 1999 A, 7.125% 6/1/34..................................... $ 2,495 $ 2,264
NURSING HOMES - 0.3%
IN State Health Facilities Financing Authority, Metro Health Indiana,
Inc., Series 1998, 6.400% 12/1/33 ............................... 1,400 1,206
MN Minneapolis, Walker Methodist Senior Services Group, Series
1998 A, 5.875% 11/15/18.......................................... 450 383
-------
1,589
HOUSING - 9.7%
MULTI-FAMILY - 2.6%
Charter Mac Equity Issue Trust, 6.625% 6/30/49 (a).................. 2,000 1,945
CO Housing Financing Authority, Series 1978:
6.000% 10/1/09 .................................................. 1,490 1,492
6.000% 10/1/10 .................................................. 1,590 1,592
6.000% 10/1/11 .................................................. 1,710 1,712
6.000% 10/1/12 .................................................. 1,830 1,832
FL Orange County Housing Finance Authority, Palms at Brentwood
Apartments, Series 1998 K, 6.500% 12/1/34 ....................... 2,000 1,753
IL State Development Finance Authority,
Catholic Charities Housing Development Corp.:
Series 1993 C, 5.950% 1/1/09 .................................. 1,450 1,405
Series 1990 A, 8.000% 6/1/26 .................................. 950 981
-------
12,712
SINGLE FAMILY - 7.1%
IA State Housing Finance Authority, Series 1991 B, 7.450% 7/1/23 ... 630 647
ID State Housing Agency, Series 1990 E, 7.875% 7/1/24 .............. 770 796
IL State Housing Development Authority, Series 1990 A,
7.800% 12/1/12 .................................................. 125 128
KY State Housing Corp., Series 1990 C, 8.100% 1/1/22 ............... 1,195 1,227
MN Minneapolis-St. Paul Housing Finance Board, Series 1991:
7.250% 8/1/21.................................................... 1,725 1,767
7.300% 8/1/31 ................................................... 2,560 2,622
MN State Housing Finance Authority, Series 1991 A, 7.450% 7/1/22 ... 1,335 1,367
MO State Housing Development Commission, Series 1985,
9.375% 4/1/16 ................................................... 15 15
NV State Housing Division, Series 1991 A-2, 7.750% 4/1/22 .......... 2,255 2,326
OK Tulsa County Home Finance Authority, Series 1991 B,
7.550% 5/1/23 ................................................... 1,430 1,467
RI State Housing & Mortgage Finance Corp., Series 1-E,
7.550% 10/1/22 .................................................. 5,650 5,832
SC State Housing Finance & Development Authority, Series 1990 C,
7.750% 7/1/22 ................................................... 4,775 4,896
TN State Housing Development Agency, Series 1990 T,
7.300% 7/1/11 ................................................... 10,000 10,158
TX Travis County Housing Finance Corp., Series 1990,
8.000% 9/1/10 ................................................... 685 706
-------
33,954
INDUSTRIAL - 8.1%
FOOD PRODUCTS - 3.7%
GA Cartersville Development Authority, Anheuser Busch Cos., Inc.,
Series 1999, 7.375% 5/1/09 ...................................... 9,000 10,144
<PAGE>
<CAPTION>
STEIN ROE MANAGED MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL - CONT.
FOOD PRODUCTS - (CONTINUED)
IN Hammond, American Maize Products Co., Series 1994,
8.000% 12/1/24................................................... $ 5,000 $ 5,399
MI State Strategic Fund, Michigan Sugar Co., Carrolton Project:
Series 1998 B, 6.450% 11/1/25 ................................... 700 648
Series 1998 C, 6.550% 11/1/25 ................................... 800 720
PA State Economic Development Financing Authority, USG Corp.,
Series 1999, 6.000% 6/1/31....................................... 1,000 897
-------
17,808
FOREST PRODUCTS - 3.7%
LA De Soto Parish, International Paper Co., Series A, 7.700% 11/1/18 3,250 3,522
SC Richland County, Union Camp Corp., Series 1991 B,
7.125% 9/1/21.................................................... 5,000 5,108
WA Port Longview Industrial Development Corp., Weyerhaeuser Corp.,
Series 1992, 6.875% 10/1/08...................................... 8,750 9,176
-------
17,806
MANUFACTURING - 0.4%
MO State Development Finance Board, Proctor & Gamble Co.,
Series 1999, 5.200% 3/15/29 ..................................... 1,000 853
NM Albuquerque Industrial Development Authority, Motorola, Inc.,
Series 1983 A, 10.000% 6/1/13 ................................... 1,000 1,020
-------
1,873
METALS & MINING - 0.3%
VA Peninsula Ports Authority, Ziegler Coal Project, Series 1997,
6.900% 5/2/22 ................................................... 1,500 1,294
OTHER - 12.1%
REFUNDED/ESCROWED (B)
CA Central Contra Costa Sanitary District, Wastewater Facilities
Improvement Project, Series 1994:
6.250% 9/1/13 ................................................... 2,025 2,199
6.250% 9/1/14 ................................................... 1,295 1,406
CA Foothill/Eastern Transportation Corridor Agency, Series 1995 A, (b)
1/1/18 .......................................................... 10,000 3,438
CA Southern California Public Power Authority, Southern Transmission
Project, Series 1988 A, (c) 7/1/14 .............................. 8,155 3,600
FL State, Jacksonville Transportation Authority, Series 1985,
9.200% 1/1/15 ................................................... 2,000 2,670
GA Fulton County, Series 1992, 6.375% 1/1/14 ....................... 13,270 14,353
IL Chicago, Skyway Toll Bridge, Series 1994, 6.750% 1/1/17 ......... 1,500 1,631
MA Health and Educational Facilities Authority, Brigham and Women's
Hospital, 6.750% 7/1/24 ......................................... 3,000 3,153
MD Washington Suburban Sanitary District, Series 1994:
6.600% 6/1/16 ................................................... 2,795 2,991
6.625% 6/1/17 ................................................... 1,660 1,778
6.625% 6/1/19 ................................................... 2,320 2,485
NC Eastern Municipal Power Agency, Series 1991 A, 6.500% 1/1/18 .... 4,315 4,665
NY New York City, Series 1995 D, 6.000% 2/15/25 ................... 5,165 5,448
SC Calhoun County, Solid Waste Disposal Facilities, Eastman
Kodak Co., Series 1992, 6.750% 5/1/17 ........................... 3,000 3,278
SD State Student Loan Assistance Corp., Series 1989 B, 7.450% 8/1/00 5,000 5,091
-------
58,186
<PAGE>
<CAPTION>
STEIN ROE MANAGED MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
OTHER REVENUE - 2.2%
RECREATION - 2.0%
CA Long Beach Aquarium of the Pacific, Series 1995 A:
6.125% 7/1/15 ................................................... $ 4,000 $ 3,862
6.125% 7/1/23.................................................... 6,000 5,601
-------
9,463
RETAIL - 0.2%
NJ State Economic Development Authority, Glimcher Properties
L.P. Project, 6.000% 11/1/28..................................... 850 752
RESOURCE RECOVERY - 0.2%
DISPOSAL
IL Development Finance Authority, Waste Management, Inc., Series
1997, 5.050% 1/1/10 ............................................. 500 418
MI State Strategic Fund, United Waste Systems, Inc., Series 1995,
5.200% 4/1/10 ................................................... 500 433
-------
851
TAX-BACKED - 24.0%
LOCAL APPROPRIATED - 1.1%
IL Chicago Board of Education, Series 1992 A, 6.000% 1/1/16 ........ 5,000 5,098
LOCAL GENERAL OBLIGATIONS - 7.3%
AK North Slope Borough, Series 1999 B, (c) 6/30/10 ................. 2,515 1,407
CA Golden West School Financing Authority,
Series 1999 A, (c) 8/1/15........................................ 2,500 1,009
CA Union Elementary School District, Series 1999 A, (c) 9/1/17 ..... 2,300 797
FL Broward County, Series 1986:
12.500% 1/1/03 .................................................. 1,000 1,216
12.500% 1/1/04 .................................................. 1,195 1,525
12.500% 1/1/05................................................... 2,000 2,665
HI Honolulu, Series 1998, 4.500% 7/1/28 ............................ 2,000 1,513
IL Champaign County, Series 1999, 8.250% 1/1/20 .................... 1,015 1,266
IL Chicago Board of Education, Series 1996, 6.250% 12/1/12 ......... 2,500 2,676
IL Chicago Public Building Commission, Series 1999 B,
5.250% 12/1/18 .................................................. 2,000 1,829
IL Will County Forest Preservation District, Series 1999, (c) 12/1/16 4,660 1,664
LA New Orleans:
Series 1991, (c) 9/1/12 ......................................... 6,250 3,056
Series 1998, 4.750% 12/1/26 ..................................... 2,000 1,596
MO Springfield School District No. R-12, Series 1991 B,
9.500% 3/1/07.................................................... 600 756
NY New York City, Series 1995 D, 6.000% 2/15/25..................... 7,815 7,607
NY Yonkers, Series 1999 A, 4.500% 12/1/17 .......................... 1,000 813
TX North East Independent School District, Series 1999,
4.500% 10/1/28 .................................................. 2,000 1,514
VA Virginia Beach, Series 1986, 12.750% 7/15/01 .................... 2,000 2,242
-------
35,151
SPECIAL NON-PROPERTY TAX - 3.5%
IL Metropolitan Pier & Exposition Authority, Series 1996 A:
(c) 6/15/12...................................................... 5,000 2,462
(c) 12/15/12..................................................... 8,300 3,972
IL State, Series 1992 Q, 6.000% 6/15/12 ............................ 10,000 10,458
-------
16,892
<PAGE>
<CAPTION>
STEIN ROE MANAGED MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
RESOURCE RECOVERY - CONT.
SPECIAL PROPERTY TAX - 0.5%
CA Capistrano Unified School District, Ladera Community Facilities
District No. 98-2, Series 1999, 5.750% 9/1/29................... $ 1,000 $ 860
CA Santa Margarita Water District, Series 1999, 6.250% 9/1/29 ...... 750 698
FL Indigo Community Development District, Series 1999 B,
6.400% 5/1/06 ................................................... 1,000 988
-------
2,546
STATE APPROPRIATED - 0.9%
KY State Turnpike Authority, Series 1992, (c) 1/1/10 ............... 7,500 4,338
STATE GENERAL OBLIGATIONS - 10.7%
FL State, Broward County Expressway, Series 1984, 9.875% 7/1/09..... 1,100 1,430
IL Chicago Board of Education, Series 1999 A, 5.500% 12/1/26 ....... 2,250 2,078
MA Massachusetts Bay Transportation Authority:
Series 1992 B, 6.200% 3/1/16 .................................... 9,825 10,285
Series 1994 A:
7.000% 3/1/14.................................................. 3,150 3,573
7.000% 3/1/19 ................................................. 2,500 2,811
MA State College Building Authority Project:
Series A, 7.500% 5/1/11.......................................... 1,500 1,778
Series 1994 A, 7.500% 5/1/14 .................................... 3,500 4,135
NJ State General Obligation, Series D, 6.000% 2/15/11 .............. 5,150 5,490
NV Clark County, Series 1998 B, 4.500% 12/1/17 ..................... 2,675 2,177
PA State, Series 1992 2, 6.250% 7/1/12 ............................. 11,200 12,089
WA State, Series 1992 B, 6.000% 6/1/13 ............................. 5,090 5,344
-------
51,190
TRANSPORTATION - 11.9%
AIR TRANSPORTATION - 3.1%
IN Indianapolis Airport Authority, United Airlines Project, Series A,
6.500% 11/15/31 ................................................. 5,000 4,675
NJ State Economic Development Authority, Continental Airlines, Inc.,
Series 1999, 6.400% 9/15/23...................................... 2,000 1,880
NY New York City Industrial Development Agency, Terminal One
Group Assoc. Project, 6.000% 1/1/15.............................. 8,340 8,307
-------
14,862
AIRPORTS - 2.3%
GA Atlanta, Airport Facilities, Series 1996, 6.500% 1/1/10 ......... 2,000 2,184
HI State, Airport System Revenue, Series 1991, 6.900% 7/1/12........ 6,000 6,649
IN State Transportation Finance Authority, Airport Facilities Lease,
Series 1992 A, 6.250% 11/1/16 ................................... 1,475 1,476
MA State Port Authority, Series 1999, 7.750% 7/1/29 ................ 1,000 930
-------
11,239
TOLL FACILITIES - 5.4%
IL State Toll Highway Authority, Series 1992 A, 6.300% 1/1/11 ...... 7,500 8,042
NY Triborough Bridge & Tunnel Authority:
Series 1991 X, 6.625% 1/1/12 .................................... 9,915 11,019
Series 1992 Y, 6.125% 1/1/21..................................... 5,500 5,655
VA Richmond Metropolitan Authority, Series 1998, 5.250% 7/15/22 .... 1,100 992
-------
25,708
<PAGE>
<CAPTION>
STEIN ROE MANAGED MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION - CONT.
TRANSPORTATION - 1.1%
GA Metropolitan Atlanta Rapid Transit Authority, Series 1992 P,
6.250% 7/1/20 ................................................... $ 4,000 $ 4,151
OH Toledo-Lucas County Port Authority, CSX Transportation, Inc.,
Series 1992, 6.450% 12/15/21 .................................... 1,000 975
-------
5,126
UTILITY - 18.7%
INDEPENDENT POWER PRODUCER - 0.1%
NY Suffolk County Industrial Development Agency, Nissequogue Cogen
Partners, Series 1998, 5.500% 1/1/23 ............................ 500 429
INVESTOR OWNED - 3.2%
IN Michigan City, Northern Indiana Public Service Co., Series 1973 A,
5.700% 10/1/03 .................................................. 6,995 7,006
KY Trimble County, Louisville Gas & Electric Co., Series 1990 A,
7.625% 11/1/20 .................................................. 6,670 6,927
MS State Business Finance Corp., Systems Energy Resources, Inc.,
Series 1999, 5.900% 5/1/22 ...................................... 1,600 1,384
-------
15,317
JOINT POWER AUTHORITY - 8.1%
GA Municipal Electric Authority, Series 1991 V, 6.600% 1/1/18 ...... 21,300 22,613
NC Eastern Municipal Power Agency, Series 1991 A, 6.500% 1/1/18 .... 2,185 2,135
NC State Municipal Power Agency, Catawba No. 1, Series 1992, (c)
1/1/09........................................................... 2,360 1,432
TX State Municipal Power Agency, (c) 9/1/08......................... 1,475 926
WA State Public Power Supply System,
Nuclear Project No. 2:
Series 1992 A, 6.300% 7/1/12 .................................. 3,500 3,715
Series 1989 B, (c) 7/1/08 ..................................... 7,000 4,396
Nuclear Project No. 3, Series 1989 B, (c) 7/1/05 ................ 5,000 3,762
-------
38,979
MUNICIPAL ELECTRIC - 2.4%
NC University of North Carolina at Chapel Hill, Series 1997, (c)
8/1/20........................................................... 1,750 498
SD Heartland Consumers Power District, Series 1992, 6.000% 1/1/17... 8,000 8,154
TX Austin, Series 1998, 5.250% 5/15/25 ............................. 3,000 2,687
-------
11,339
WATER & SEWER - 4.9%
DE State Economic Development Authority, Wilmington Suburban
Water Corp.:
Series 1992 B, 6.450% 12/1/07 ................................. 1,160 1,239
Series 1992 A, 6.800% 12/1/23 ................................. 3,500 3,558
FL Jacksonville, General Waterworks Corp., Series 1992,
6.750% 6/1/22 ................................................... 1,500 1,566
GA Fulton County, Series 1992, 6.375% 1/1/14 ...................... 430 463
MA State Water Resources Authority, Series 1998 B, 4.500% 8/1/22 ... 6,000 4,696
PA Allegheny County Sanitation Authority, Series 1991 A, (c) 6/1/07 2,370 1,600
PA Dauphin County Industrial Development Authority,
Dauphin Water Supply Co., Series 1992 A, 6.900% 6/1/24 .......... 3,400 3,702
TX Houston, Series 1991 C:
(c) 12/1/08 ..................................................... 4,000 2,476
(c) 12/1/09 ..................................................... 4,000 2,331
(c) 12/1/10...................................................... 3,750 2,050
-------
23,681
-------
<PAGE>
<CAPTION>
STEIN ROE MANAGED MUNICIPALS FUND
- ----------------------------------------------------------------------------------------------------------
Continued
Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL MUNICIPAL BONDS
(cost of $452,904) ................................................. $466,811
- ----------------------------------------------------------------------------------------------------------
OPTIONS - 0.1% Contracts
- ----------------------------------------------------------------------------------------------------------
March 2000 Treasury Bond Put, Strike Price 91.875, Expiration 02/19/00
(cost of $583) .................................................... 38,500 391
March 2000 Treasury Bond Call, Strike Price 98.000, expiration 02/19/00
(cost of $531) ..................................................... 56,700 35
-------
TOTAL OPTIONS
(cost of $1,114) ................................................... 426
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT - 97.5%
(cost of $454,018)(d)............................................... 467,237
- ----------------------------------------------------------------------------------------------------------
Short-Term Obligations - 1.0% Par
- ----------------------------------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (e)
IL Galesburg, Knox College, Series 1999, 5.500% 7/1/24 ............. $ 900 900
IL Sauget, Monsanto Co., Series 1996, 5.650% 9/1/14 ................ 700 700
IL Will County, Amoco Corp., Series 1998, 5.350% 3/1/28 ............ 1,300 1,300
MN Minneapolis:
Series 1994 A, 5.400% 12/1/05 ................................... 400 400
Series 1999, 5.400% 12/1/18 ..................................... 900 900
TX Gulf Coast Industrial Development Authority, Amoco Oil Co.,
Series 1993, 5.350% 4/1/28 ...................................... 600 600
-------
TOTAL SHORT-TERM OBLIGATIONS........................................... 4,800
- ----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES - 1.5%.................................. 7,171
--------
NET ASSETS - 100.0%.................................................... $479,208
========
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) The security is exempt from registration under Rule 144M of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers at December 31,
1999, the value of this security amounted to $1,945 or 0.4% of net assets.
(b) The Fund has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust, solely for the payment of
the interest and principal.
(c) Zero coupon bond.
(d) Cost for financial statement and federal income tax purposes is the same.
(e) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured either by letters of credit or other credit
support agreements from banks. The rates listed are as of December 31,
1999.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments at December 31, 1999 (Unaudited)
(All amounts in thousands)
MUNICIPAL BONDS - 96.1% Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
EDUCATION - 3.3%
EDUCATION - 0.9%
IL State Development Finance Authority, Latin School of Chicago,
Series 1998, 5.650% 8/1/28....................................... $ 1,725 $ 1,515
MN Victoria, Holy Family Catholic High School, Series 1999-A,
5.875% 9/1/29.................................................... 1,200 1,066
-------
2,581
STUDENT LOANS - 2.4%
NE Nebhelp, Inc., Series 1993 A-6, 6.450% 6/1/18.................... 4,000 4,020
NM State Educational Assistance Foundation, Series 1996 A-2,
6.650% 11/1/25................................................... 1,955 1,955
TX Brazos Higher Educational Facilities Authority, Series 1993 C-2,
5.875% 6/1/04.................................................... 390 393
-------
6,368
HEALTHCARE - 19.7%
CONGREGATE CARE RETIREMENT - 6.7%
FL Orange County Health Facilities Authority, Orlando Lutheran
Towers, Inc., Series 1996, 8.625% 7/1/20......................... 5,000 5,319
MA State Development Finance Agency, Series 1999-A:
5.625% 7/1/15.................................................... 500 436
5.750% 7/1/23.................................................... 250 211
NJ State Economic Development Authority, Winchester Gardens,
Series 1996-A, 8.625% 11/1/25.................................... 5,000 5,381
TN Metropolitan Government, Nashville and Davidson County,
Blakeford at Green Hills, Series 1998, 5.650% 7/1/24............. 1,500 1,215
TX Abilene Health Facilities Development Corp., Sears Methodist
Retirement Obligation Group:
Series 1998-A, 5.900% 11/15/25................................. 2,100 1,748
Series 1999, 6.000% 11/15/29................................... 500 419
WI State Health & Educational Facilities Authority:
Attic Angel Obligated Group, 5.750% 11/15/27..................... 1,250 1,021
Clement Manor, Series 1998, 5.750% 8/15/24....................... 3,000 2,471
-------
18,221
HEALTH SERVICES - 0.1%
MA State Development Finance Agency, Boston Biomedical Research
Institute, Series 1999, 5.650% 2/1/19............................ 250 215
HOSPITALS - 9.4%
AZ Health Facilities Authority, Phoenix Memorial Hospital,Series 1991,
8.125% 6/1/12.................................................... 2,500 2,528
CO La Junta, Arkansas Valley Regional Medical Center, Series 1999,
6.100% 4/1/24.................................................... 500 439
CO State Health Care Facilities Authority, National Jewish Medical &
Research Center, Series 1998, 5.375% 1/1/23...................... 250 200
FL Orange County Health Facilities Authority, Orlando Regional
Healthcare System, Series 1999, 6.000% 10/1/26................... 1,200 1,123
IL Southwestern Illinois Development Authority, Anderson Hospital,
Series 1999:
5.500% 8/15/20................................................. 500 414
5.625% 8/15/29................................................. 250 204
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE - CONT.
HOSPITALS - (CONTINUED)
IN State Health Facilities Financing Authority, Riverview Hospital,
Series 1999, 5.500% 8/1/24....................................... $ 575 $ 475
KS Wichita, CSJ Health System of Wichita, Inc., Series 1991-X,
7.000% 11/15/18.................................................. 2,000 2,123
LA State Public Facilities Authority, Touro Infirmary, Series 1999,
5.625% 8/15/29................................................... 1,500 1,241
MA State Health & Educational Facilities Authority, Dana Farber
Cancer Institute, Series 1995 G-1, 6.250% 12/1/22................ 2,000 1,934
MI Dickinson County, Series 1999, 5.800% 11/1/24.................... 1,300 1,100
MI State Hospital Finance Authority, Detroit Medical Center,
Series 1998-A, 5.250% 8/15/28.................................... 1,000 752
MN Maplewood, Healtheast, Inc., Series 1996, 5.700% 11/15/02........ 500 488
NC State Medical Care Commission, Stanley Memorial Hospital,
Series 1999, 6.375% 10/1/29...................................... 1,000 973
NH State Higher Educational & Health Facilities Authority, Littleton
Hospital Assoc., Inc., Series 1998-A, 6.000% 5/1/28.............. 1,000 843
OH Franklin County, Doctors OhioHealth Corp., Series 1998-A,
5.600% 12/1/28................................................... 2,650 2,155
OH Highland County Joint Township Hospital District, Series 1999,
6.750% 12/1/29................................................... 1,250 1,142
OH Miami County, Upper Valley Medical Center, Inc., Series 1996-A,
6.375% 5/15/26................................................... 1,015 929
PA Philadelphia Hospitals & Higher Education Facilities Authority,
Temple University Hospital, Series 1997, 5.875% 11/15/23......... 3,160 2,686
TX Richardson Hospital Authority, Baylor Richardson Medical Center,
Series 1998, 5.625% 12/1/28...................................... 900 733
TX Tyler Health Facilities Development Corp., Mother Frances Hospital,
Series 1997-A, 5.625% 7/1/13..................................... 1,785 1,585
WA State Health Care Facilities Authority, Sacred Heart Medical Center,
Series 1992, 6.875% 2/15/12...................................... 1,500 1,588
-------
25,655
INTERMEDIATE CARE FACILITIES - 0.6%
IL State Development Finance Authority, Hoosier Care, Inc.,
Series 1999-A, 7.125% 6/1/34..................................... 1,500 1,361
IN State Health Facilities Financing Authority, Hoosier Care, Inc.,
Series 1999-A, 7.125% 6/1/34..................................... 150 136
-------
1,497
NURSING HOMES - 2.9%
AK Juneau, St. Ann's Care Center, Series 1999, 6.875% 12/1/25....... 700 637
CO State Health Facilities Authority, Volunteers of America Care
Facilities, Inc., Series 1999-A, 5.750% 7/1/10................... 1,095 1,001
IN State Health Facilities Financing Authority, Metro Health
Indiana, Inc., Series 1998, 6.400% 12/1/33....................... 1,500 1,292
MA State Development Finance Agency, Alliance Health Care Facilities,
Series 1999, 7.100% 7/1/32....................................... 1,250 1,176
MN Minneapolis, Walker Methodist Senior Services Group,
Series 1998-C, 6.000% 11/15/28................................... 1,300 1,079
MN New Hope, North Ridge Care Center, Inc., Series 1999,
5.875% 3/1/29.................................................... 900 759
MN Sartell, Foundation for Healthcare, Series 1999-A, 6.625% 9/1/29. 2,000 1,782
-------
7,726
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING - 7.8%
ASSISTED LIVING/SENIOR - 1.9%
DE Kent County, Heritage at Dover, Series 1999, 7.625% 1/1/30....... $ 1,500 $ 1,451
GA Columbus Housing Authority, The Gardens at Calvary, Series 1999,
7.000% 11/15/29.................................................. 1,000 918
LA State Public Facilities Authority, Progressive Healthcare Providers,
Inc., Series 1998, 6.375% 10/1/28................................ 2,000 1,740
NC State Medical Care Commission, DePaul Community Facilities
Project, Series 1999, 7.625% 11/1/29............................. 1,250 1,211
-------
5,320
MULTI-FAMILY - 4.0%
Charter Mac Equity Issue Trust, 6.625% 6/30/49 (a).................. 2,000 1,945
CO State Health Facilities Authority, Birchwood Manor Series 1991-A,
7.250% 4/1/11.................................................... 610 623
FL Housing Finance Agency, Palm Aire Retirement Facility Project,
Series 1989-S, 10.000% 1/1/20 (b)................................ 2,731 2,676
GA Clayton County Housing Authority, Magnolia Park Apartments,
Series 1999-A, 6.250% 6/1/30..................................... 1,000 911
IL State Development Finance Authority, Catholic Charities Housing
Development Corp., Series 1993-C, 5.950% 1/1/09.................. 1,400 1,356
IL State Housing Development Authority, Series 1991-C,
7.400% 7/1/23.................................................... 140 146
IN New Castle, Raintree Apartments, Series 1988-B,
(c) 3/1/18 (b) .................................................. 30,655 77
MO State Health & Educational Facilities Authority, Lutheran Senior
Services, Series 1997, 5.750% 2/1/17............................. 2,000 1,830
OH Greater Allen County Housing Development Authority,
Steiner-McBride Apartments, 10.250% 9/1/03....................... 1,260 1,260
-------
10,824
SINGLE FAMILY - 1.9%
IA State Housing Finance Authority, Series 1984-A, (c) 9/1/16....... 9,590 1,515
ID State Housing Agency, Series 1991-B, 7.500% 7/1/24............... 1,465 1,516
MT State Housing Board:
Series 1991 B-1, 7.300% 10/1/17.................................. 300 308
Series 1991 B-2, 7.500% 4/1/23................................... 330 339
UT State Housing Finance Agency:
Series 1991 B-2, 7.750% 1/1/23................................... 60 61
Series 1991 C-3, 7.550% 7/1/23................................... 150 154
WA State Housing Finance Commission, Series 1991-C:
(c) 1/1/22....................................................... 995 195
(c) 7/1/22....................................................... 1,090 205
(c) 1/1/23....................................................... 1,100 200
(c) 7/1/23....................................................... 1,100 193
(c) 1/1/24....................................................... 1,100 186
(c) 7/1/24....................................................... 1,100 179
-------
5,051
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL - 10.4%
FOOD PRODUCTS - 3.3%
GA Cartersville Development Authority, Anheuser Busch Cos., Inc.,
Series 1999, 7.375% 5/1/09....................................... $ 3,000 $ 3,381
IN Hammond, American Maize Products Co., Series 1994,
8.000% 12/1/24................................................... 4,000 4,320
MI State Strategic Fund, Michigan Sugar Co., Carrolton Project,
Series 1998-C, 6.550% 11/1/25.................................... 1,500 1,350
-------
9,051
FOREST PRODUCTS - 4.0%
GA Rockdale County Development Authority, Solid Waste Disposal,
Visy Paper, Inc., Series 1993, 7.500% 1/1/26..................... 1,000 1,030
IN Jasper County, Georgia Pacific Corp., Series 1999, 5.600% 4/1/29. 1,000 844
LA De Soto Parish, International Paper Co., Series-A, 7.700% 11/1/18 2,500 2,710
MS Lowndes County, Weyerhaeuser Corp., Series 1992-A,
6.800% 4/1/22.................................................... 5,995 6,350
-------
10,934
METALS & MINING - 2.2%
IN State Development Finance Authority, Inland Steel, Series A,
5.750% 10/1/11................................................... 5,000 4,312
NV State Department of Business & Industry, Wheeling-Pittsburgh
Steel Corp., Series 1999-A, 8.000% 9/1/14........................ 250 238
VA Greensville County Industrial Development Authority, Wheeling
Steel, Series 1999-A:
6.375% 4/1/04.................................................. 125 120
7.000% 4/1/14.................................................. 555 508
VA Peninsula Ports Authority, Ziegler Coal Project, Series 1997,
6.900% 5/2/22.................................................... 825 712
-------
5,890
OIL & GAS - 0.9%
TX Texas City Industrial Development Corp., Arco Pipe Line Co. Project,
Series 1990, 7.375% 10/1/20...................................... 2,000 2,308
OTHER - 14.6%
OTHER - 0.4%
NY Westchester Tobacco Asset Securitization Corp., Series 2021,
(c) 7/15/29...................................................... 1,250 1,033
REFUNDED/ESCROWED (D) - 14.2% CO Adams County, Series 1991-B:
11.250% 9/1/11.................................................... 325 468
11.250% 9/1/11.................................................... 360 528
11.250% 9/1/11.................................................... 220 329
11.250% 9/1/12.................................................... 1,440 2,183
CO Denver City and County Airport, Series D, 7.750% 11/15/21........ 830 892
CO State Health Facilities Authority, PSL Health Systems, Series 1991-B,
8.500% 2/15/21................................................... 3,250 3,458
FL Leesburg, Leesburg Regional Medical Center, Series 1991-A,
7.375% 7/1/11.................................................... 775 838
IL Chicago, Skyway Toll Bridge, Series 1994, 6.750% 1/1/17.......... 1,500 1,631
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
OTHER - CONT.
REFUNDED/ESCROWED (D) - (CONTINUED)
IL Health Facility Authority, Edward Hospital Association Project,
Series 1992, 7.000% 2/15/22...................................... $ 685 $ 729
IL Health Facility Authority, United Medical Center-Formerly,
Series 1991, 8.125% 7/1/06....................................... 2,015 2,161
IN Indianapolis Local Public Improvement Bond Bank, Series 1999-E,
6.700% 1/1/17 (e)................................................ 5,900 6,241
LA State Public Facilities Authority, Womans Hospital Foundation,
Series 1992, 7.250% 10/1/22...................................... 2,300 2,481
MI Adams County, Jefferson Davis Memorial Hospital, Series 1991,
7.900% 10/1/08................................................... 750 805
NC Eastern Municipal Power Agency, Series 1991-A, 6.500% 1/1/18..... 3,320 3,589
PA Allentown Area Hospital Authority, Sacred Heart Hospital of
Allentown, Series 1991, 7.500% 7/1/06............................ 3,460 3,634
PA Montgomery County Higher Education & Health Authority,
Jeanes Hospital, Series 1990, 8.750% 7/1/20...................... 3,200 3,334
SD State Student Loan Assistance Corp., Series 1989-C,
7.450% 8/1/00.................................................... 2,700 2,749
WA Quincy, Series 1990-I, 9.250% 11/1/10............................ 2,255 2,346
-------
38,396
OTHER REVENUE - 2.0%
RECREATION
CA Long Beach Aquarium of the Pacific, Series 1995-A,
6.125% 7/1/23.................................................... 5,750 5,368
RESOURCE RECOVERY - 0.1%
DISPOSAL
IL Development Finance Authority, Waste Management, Inc.,
Series 1997, 5.050% 1/1/10....................................... 250 209
TAX-BACKED - 10.2%
LOCAL APPROPRIATED - 0.9%
PA Philadelphia Municipal Authority, Series 1993-D,
6.250% 7/15/13................................................... 2,500 2,509
LOCAL GENERAL OBLIGATIONS - 2.5%
NY New York City:
Series 1996-B, 7.250% 8/15/07.................................... 1,000 1,119
Series G, 5.750% 2/1/14.......................................... 5,720 5,665
-------
6,784
SPECIAL NON-PROPERTY TAX - 1.2%
MO St. Louis County Industrial Development Authority, Kiel
Center Arena, Series 1992, 7.875% 12/1/24........................ 3,000 3,154
SPECIAL PROPERTY TAX - 2.5%
CA Orange County Community Facilities District, Ladera Ranch,
Series 1999 A, 6.500% 8/15/21.................................... 1,000 962
FL Heritage Palms Community Development District, Series 1999,
6.250% 11/1/04................................................... 1,000 988
FL Heritage Springs Community Development District, Series 1999-B,
6.250% 5/1/05.................................................... 1,250 1,234
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
TAX-BACKED - CONT.
SPECIAL PROPERTY TAX - (CONTINUED)
FL Indigo Community Development District, Series 1999-B,
6.400% 5/1/06.................................................... $ 1,000 $ 988
FL Northern Palm Beach County Improvement District, Series 1999,
6.000% 8/1/29.................................................... 750 687
FL Orlando, Conroy Road Interchange Project, Series 1998-A:
5.500% 5/1/10.................................................... 200 189
5.800% 5/1/26.................................................... 500 432
FL Stoneybrook Community Development District:
Series 1998-A, 6.100% 5/1/19..................................... 330 309
Series 1998-B, 5.700% 5/1/08..................................... 975 936
-------
6,725
STATE APPROPRIATED - 0.8%
NY Triborough Bridge & Tunnel Authority, Javits Convention Center
Project, Series-E, 7.250% 1/1/10................................. 2,000 2,220
STATE GENERAL OBLIGATIONS - 2.3%
MA Massachusetts Bay Transportation Authority, Series 1992-B,
6.200% 3/1/16.................................................... 5,825 6,098
TRANSPORTATION - 7.0%
AIR TRANSPORTATION - 5.4%
IN Indianapolis Airport Authority, Federal Express Corp., Series 1994,
7.100% 1/15/17................................................... 4,000 4,131
NY New York City Industrial Development Agency, Terminal One
Group Association Project, 6.000% 1/1/15......................... 3,465 3,452
PA Philadelphia Authority for Industrial Development, Aero
Philadelphia, Series 1999, 5.500% 1/1/24......................... 1,000 836
TX Alliance Airport Authority, AMR Corp., Series 1991,
7.000% 12/1/11................................................... 4,070 4,283
TX Houston Airport System, Continental Airline Terminal, Series B,
6.125% 7/15/17................................................... 2,000 1,838
-------
14,540
AIRPORTS - 1.6%
CO Denver City and County Airport, Series D, 7.750% 11/15/21........ 3,170 3,358
IN State Transportation Finance Authority, Airport Facilities Lease,
Series 1992-A, 6.250% 11/1/16.................................... 950 951
-------
4,309
UTILITY - 21.0%
INDEPENDENT POWER PRODUCER - 5.5%
OH State Water Development Authority, Bay Shore Power Project,
Series 1998-A, 5.875% 9/1/20..................................... 3,500 2,971
PA State Economic Development Financing Authority, Northampton
Generating:
Series A, 6.500% 1/1/13........................................ 2,000 1,984
Series 1994-B, 6.750% 1/1/07................................... 3,000 3,061
VA Pittsylvania County Industrial Development Authority, Multitrade
of Pittsylvania, Series 1994-A:
7.450% 1/1/09.................................................. 3,500 3,622
7.550% 1/1/19.................................................. 3,100 3,208
-------
14,846
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
Continued
Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITY - CONT.
INVESTOR OWNED - 6.9%
CT State Development Authority, Connecticut Light & Power Co.,
Series 1993-A, 5.850% 9/1/28..................................... $ 2,900 $ 2,570
LA Calcasieu Parish Industrial Development Board, Entergy Gulf
States, Inc., Series 1999, 5.450% 7/1/10......................... 500 467
LA West Feliciana Parish, Entergy Gulf States, Inc., Series 1999-B,
6.600% 9/1/28.................................................... 250 238
MS State Business Finance Corp., Systems Energy Resources, Inc.,
Series 1999, 5.900% 5/1/22....................................... 1,250 1,081
NM Farmington:
Public Service Co. of New Mexico, Series 1996-A,
6.300% 12/1/16................................................. 5,000 4,830
Tucson Electric Power Co., Series 1997-A, 6.950% 10/1/20......... 2,000 1,945
NV Humboldt County Pollution Control Revenue, Idaho Power Co.
Project, 8.300% 12/1/14.......................................... 2,000 2,239
PA Beaver County Industrial Development Authority, Toledo Edison Co.,
Series 1995, 7.625% 5/1/20....................................... 4,900 5,249
-------
18,619
JOINT POWER AUTHORITY - 5.7%
GA Municipal Electric Authority, Series 1991-V, 6.600% 1/1/18....... 6,065 6,439
NC Eastern Municipal Power Agency, Series 1991-A, 6.500% 1/1/18..... 1,680 1,642
WA State Public Power Supply System, Nuclear Project No. 2:
Series 1991-A, (c) 7/1/07........................................ 6,945 4,630
Series 1992-A, 6.300% 7/1/12..................................... 2,500 2,653
-------
15,364
WATER & SEWER - 2.9%
PA Dauphin County Industrial Development Authority, Dauphin
Water Supply Co., Series 1992-A, 6.900% 6/1/24................... 3,200 3,484
PA Philadelphia, Series 1992-10, 7.350% 9/1/04 (e).................. 4,060 4,357
-------
7,841
-------
TOTAL MUNICIPAL BONDS
(cost of $262,963) (f).............................................. 259,656
-------
- ----------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
Continued
SHORT-TERM OBLIGATIONS - 1.8% Par Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES (g)
MI Flint Hospital Building Authority, Hurley Medical Center,
Series 1995 B, 5.500% 7/1/15..................................... $ 600 $ 600
MN Minneapolis, Series B, 5.500% 12/1/07............................ 3,180 3,180
MO State Environmental Improvement & Energy Resource Authority,
Monsanto Co., Series 1993, 5.500% 6/1/23......................... 200 200
TX Gulf Coast Waste Disposal Authority, Monsanto Co., Series 1996,
4.750% 7/1/01.................................................... 800 800
-------
TOTAL SHORT-TERM OBLIGATIONS........................................... 4,780
- ----------------------------------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 2.1%................................. 5,732
--------
NET ASSETS - 100.0%.................................................... $270,168
========
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) This security is exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1999, the value of this security amounted to $1,945 or 0.1% of net assets.
(b) This issuer is in default of certain debt covenants. Income is not being
accrued.
(c) Zero coupon bond.
(d) The Fund has been informed that each issuer has placed direct obligations
of the U.S. Government in an irrevocable trust solely for the payment of
principal and interest.
(e) These securities, or a portion thereof, with a total market value of
$10,598, are being used to collateralize open futures contracts.
(f) Cost for financial statement and federal income tax purposes is the same.
(g) Variable rate demand notes are considered short-term obligations. Interest
rates change periodically on specified dates. These securities are payable
on demand and are secured by either letters of credit or other credit
support agreements from banks. The rates listed are as of December 31,
1999.
Short futures contracts open at December 31, 1999:
Unrealized
Par value Expiration appreciation
Type covered by contracts month at 12/31/99
---- ---------------- --------- ----------
Municipal Bond 4,900 March $14
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
(All amounts in thousands, except per-share data)
STEIN ROE
MUNICIPAL STEIN ROE STEIN ROE STEIN ROE
MONEY INTERMEDIATE MANAGED HIGH-YIELD
MARKET MUNICIPALS MUNICIPALS MUNICIPALS
FUND FUND FUND FUND
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investment in Portfolio, at value .............................................. $ 119,310 $ -- $ -- $ 270,000
Investments, at market value (cost $136,061 and $454,018, respectively) ........ -- 139,750 467,237 --
Short-term obligations ......................................................... -- 2,000 4,800
Interest receivable ............................................................ -- 2,599 9,133 --
Receivable for investments sold ................................................ -- 160 215 --
Receivable for fund shares sold ................................................ 982 76 2,232 --
Cash ........................................................................... 31 73 51 25
Other assets ................................................................... 19 35 81 42
--------- --------- --------- ---------
Total assets ................................................................ 120,342 144,693 483,749 270,067
--------- --------- --------- ---------
LIABILITIES
Payable for investments purchased .............................................. 469 -- -- --
Dividends payable .............................................................. 291 388 4,437 688
Payable for fund shares repurchased ............................................ -- 686 95 184
Payable to investment Advisor and transfer agent ............................... -- 40 -- 59
Other liabilities .............................................................. -- -- 9 220
--------- --------- --------- ---------
Total liabilities ........................................................... 760 1,114 4,541 1,151
--------- --------- --------- ---------
Net Assets .................................................................. $ 119,582 $ 143,579 $ 479,208 $ 268,916
========= ========= ========= =========
ANALYSIS OF NET ASSETS
Paid-in capital ................................................................ $ 119,541 $ 140,170 $ 467,656 $ 278,214
Undistributed (overdistributed) net investment income .......................... 49 55 (267) (295)
Accumulated net realized loss on investments and futures transactions .......... (8) (335) (1,400) (5,725)
Net unrealized appreciation (depreciation) on investments
and futures transactions..................................................... -- 3,689 13,219 (3,278)
--------- --------- --------- ---------
Net Assets .................................................................. $ 119,582 $ 143,579 $ 479,208 $ 268,916
========= ========= ========= =========
Shares outstanding (unlimited number authorized) ............................... 119,483 13,180 56,064 24,241
========= ========= ========= =========
Net asset value per share ...................................................... $ 1.00 $ 10.89 $ 8.55 $ 11.09
========= ========= ========= =========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands)
STEIN ROE
MUNICIPAL STEIN ROE STEIN ROE STEIN ROE
MONEY INTERMEDIATE MANAGED HIGH-YIELD
MARKET MUNICIPALS MUNICIPALS MUNICIPALS
FUND FUND FUND FUND
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest allocated from Portfolio ............................... $ 2,079 $ -- $ -- $ 9,147
Interest ........................................................ -- 4,309 15,531 --
-------- -------- -------- --------
Total investment income ...................................... 2,079 4,309 15,531 9,147
-------- -------- -------- --------
EXPENSES
Management fees ................................................. -- 346 1,070 --
Expenses allocated from Portfolio ............................... 172 -- -- 726
Transfer agent fees ............................................. 86 113 364 202
Administrative fees ............................................. 144 110 300 191
Accounting fees ................................................. 14 14 18 16
Trustees fees ................................................... 5 6 20 3
Custodian fees .................................................. 1 1 1 --
Audit fees ...................................................... 3 9 10 4
Legal fees ...................................................... 1 2 3 --
Registration fees ............................................... 18 6 16 4
Reports to shareholders ......................................... 3 2 1 4
Other, net ...................................................... 2 -- (133) (72)
-------- -------- -------- --------
Total expenses ............................................... 449 609 1,670 1,078
Reimbursement of expenses by investment Advisor ................. (48) (64) -- --
-------- -------- -------- --------
Net expenses ................................................. 401 545 1,670 1,078
-------- -------- -------- --------
NET INVESTMENT INCOME ........................................ 1,678 3,764 13,861 8,069
-------- -------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FUTURES TRANSACTIONS
Net realized gain (loss) on investments and futures transactions
allocated from Portfolio ..................................... -- -- -- 3,760
Net realized gain (loss) on investments ......................... -- (273) 541 --
Net change in unrealized appreciation/depreciation on investments
and futures transactions ..................................... -- (3,587) (24,508) (18,980)
-------- -------- -------- --------
Net loss on investments and futures transactions ............. -- (3,860) (23,967) (15,220)
-------- -------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS . $ 1,678 $ (96) $(10,106) $ (7,151)
======== ======== ======== ========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(All amounts in thousands)
<TABLE>
<CAPTION>
STEIN ROE STEIN ROE
MUNICIPAL MONEY INTERMEDIATE
MARKET FUND MUNICIPALS FUND
------------------------ ------------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1999 1999 1999 1999
------------------------ ------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income ...................................................... $ 1,678 $ 3,249 $ 3,764 $ 8,888
Net realized gain (loss) on investments .................................... -- -- (273) 1,053
Net realized gain on investments and futures transactions
allocated from Portfolio ................................................ -- -- -- --
Net change in unrealized appreciation/depreciation on investments
and futures transactions ................................................ -- -- (3,587) (5,460)
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting from operations ......... 1,678 3,249 (96) 4,481
--------- --------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income ................................... (1,641) (3,252) (3,760) (8,885)
Distributions from net capital gains ....................................... -- -- (737) (926)
--------- --------- --------- ---------
Total distributions to shareholders ..................................... (1,641) (3,252) (4,497) (9,811)
--------- --------- --------- ---------
SHARE TRANSACTIONS
Subscriptions to fund shares ............................................... 69,586 197,191 11,883 31,678
Value of distributions reinvested .......................................... 1,533 2,897 3,272 6,806
Redemptions of fund shares ................................................. (70,606) (196,332) (35,879) (59,909)
--------- --------- --------- ---------
Net increase (decrease) from share transactions ......................... 513 3,756 (20,724) (21,425)
--------- --------- --------- ---------
Net increase (decrease) in net assets ................................... 550 3,753 (25,317) (26,755)
NET ASSETS
Beginning of period ........................................................ 119,032 115,279 168,896 195,651
--------- --------- --------- ---------
End of period .............................................................. $ 119,582 $ 119,032 $ 143,579 $ 168,896
========= ========= ========= =========
Undistributed (overdistributed) net investment income ...................... $ 49 $ 12 $ 55 $ 51
========= ========= ========= =========
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Subscriptions to fund shares ............................................... 69,586 197,191 1,078 2,720
Issued in reinvestment of distributions .................................... 1,533 2,897 296 586
Redemptions of fund shares ................................................. (70,606) (196,332) (3,236) (5,169)
--------- --------- --------- ---------
Net increase (decrease) in fund shares .................................. 513 3,756 (1,862) (1,863)
Shares outstanding at beginning of period .................................. 118,970 115,214 15,042 16,905
--------- --------- --------- ---------
Shares outstanding at end of period ........................................ 119,483 118,970 13,180 15,042
========= ========= ========= =========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(All amounts in thousands)
STEIN ROE STEIN ROE
MANAGED HIGH-YIELD
MUNICIPALS FUND MUNICIPALS FUND
------------------------ ------------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1999 1999 1999 1999
------------------------ ------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income ...................................................... $ 13,861 $ 28,799 $ 8,069 $ 17,255
Net realized gain on investments ........................................... 541 5,166 -- --
Net realized gain on investments and futures transactions
allocated from Portfolio ................................................ -- -- 3,760 3,655
Net change in unrealized appreciation/depreciation on investments
and futures transactions ................................................ (24,508) (23,858) (18,980) (10,380)
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting from operations ......... (10,106) 10,107 (7,151) 10,530
--------- --------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income ................................... (13,912) (28,945) (8,122) (17,606)
Distributions from net capital gains ....................................... (5,798) -- -- --
--------- --------- --------- ---------
Total distributions to shareholders ..................................... (19,710) (28,945) (8,122) (17,606)
--------- --------- --------- ---------
SHARE TRANSACTIONS
Subscriptions to fund shares ............................................... 14,209 43,856 31,755 57,493
Value of distributions reinvested .......................................... 10,959 16,296 5,452 11,152
Redemptions of fund shares ................................................. (54,466) (86,130) (50,892) (105,475)
--------- --------- --------- ---------
Net decrease from share transactions .................................... (29,298) (25,978) (13,685) (36,830)
--------- --------- --------- ---------
Net decrease in net assets .............................................. (59,114) (44,816) (28,958) (43,906)
NET ASSETS
Beginning of period ........................................................ 538,322 583,138 297,874 341,780
--------- --------- --------- ---------
End of period .............................................................. $ 479,208 $ 538,322 $ 268,916 $ 297,874
========= ========= ========= =========
Undistributed (overdistributed) net investment income ...................... $ (267) $ (216) $ (295) $ (242)
========= ========= ========= =========
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Subscriptions to fund shares ............................................... 1,426 4,661 2,799 4,792
Issued in reinvestment of distributions .................................... 1,438 1,735 479 932
Redemptions of fund shares ................................................. (6,178) (9,176) (4,480) (8,823)
--------- --------- --------- ---------
Net increase (decrease) in fund shares .................................. (3,314) (2,780) (1,202) (3,099)
Shares outstanding at beginning of period .................................. 59,378 62,158 25,443 28,542
--------- --------- --------- ---------
Shares outstanding at end of period ........................................ 56,064 59,378 24,241 25,443
========= ========= ========= =========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
(All amounts in thousands)
SR&F SR&F
MUNICIPAL HIGH-YIELD
MONEY MARKET MUNICIPALS
PORTFOLIO PORTFOLIO
-------- --------
<S> <C> <C>
ASSETS
Investments, at market value (cost $136,182 and $262,963, respectively) ..... $136,182 $259,656
Short-term obligations ...................................................... -- 4,780
Interest receivable ......................................................... 840 5,350
Receivable for investments sold ............................................. 788 427
Cash ........................................................................ -- 35
Variation margin receivable on futures ...................................... -- 1
Other assets ................................................................ 10 --
-------- --------
Total assets ............................................................. 137,820 270,249
-------- --------
LIABILITIES
Payable for investments purchased ........................................... 2,143 --
Payable to investment Advisor ............................................... 1 10
Other liabilities ........................................................... 62 71
-------- --------
Total liabilities ........................................................ 2,206 81
-------- --------
Net assets applicable to investors' beneficial interest .................. $135,614 $270,168
======== ========
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands)
SR&F SR&F
MUNICIPAL HIGH-YIELD
MONEY MARKET MUNICIPALS
PORTFOLIO PORTFOLIO
-------- --------
<S> <C> <C>
INVESTMENT INCOME
Interest .................................................................... $ 2,348 $ 9,164
-------- --------
EXPENSES
Management fees ............................................................. 162 622
Accounting fees ............................................................. 14 16
Transfer agent fees ......................................................... 3 3
Trustees fees ............................................................... 7 10
Custodian fees .............................................................. 3 1
Audit fees .................................................................. 5 8
Other ....................................................................... -- 68
-------- --------
Total expenses ........................................................... 194 728
-------- --------
NET INVESTMENT INCOME .................................................... 2,154 8,436
-------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES TRANSACTIONS
Net realized gain on investments and futures transactions ................... -- 3,731
Net change in unrealized appreciation/depreciation on investments
and futures transactions ................................................. -- (18,977)
-------- --------
Net loss on investments and futures transactions ......................... -- (15,246)
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............. $ 2,154 $ (6,810)
======== ========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
(All amounts in thousands)
<CAPTION>
SR&F
SR&F MUNICIPAL HIGH-YIELD MUNICIPALS
MONEY MARKET PORTFOLIO PORTFOLIO
-------------------------- --------------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1999 1999 1999 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income .......................................... $ 2,154 $ 4,189 $ 8,436 $ 18,389
Net realized gain on investments
and futures transactions .................................... -- -- 3,731 3,631
Net change in unrealized appreciation/
depreciation on investments
and futures transactions .................................... -- -- (18,977) (10,388)
--------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations ................................. 2,154 4,189 (6,810) 11,632
--------- --------- --------- ---------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
CONTRIBUTIONS .................................................. 42,355 101,419 14,929 27,867
WITHDRAWALS .................................................... (42,944) (103,577) (37,614) (83,002)
--------- --------- --------- ---------
Net decrease from transactions in
investors' beneficial interest ............................ (589) (2,158) (22,685) (55,135)
--------- --------- --------- ---------
Net increase (decrease) in net assets ....................... 1,565 2,031 (29,495) (43,503)
NET ASSETS
BEGINNING OF PERIOD ............................................ 134,049 132,018 299,663 343,166
--------- --------- --------- ---------
End of period .................................................. $ 135,614 $ 134,049 $ 270,168 $ 299,663
========= ========= ========= =========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(All amounts in thousands) (Unaudited)
NOTE 1. ORGANIZATION
Stein Roe Municipal Money Market Fund, Stein Roe Intermediate Municipals Fund,
Stein Roe Managed Municipals Fund and Stein Roe High-Yield Municipals Fund (the
"Funds") are series of Liberty-Stein Roe Municipal Trust (the "Trust"), formerly
Stein Roe Municipal Trust, an open-end management investment company organized
as a Massachusetts business trust. Stein Roe Municipal Money Market Fund and
Stein Roe High-Yield Municipals Fund invest substantially all of their assets in
SR&F Municipal Money Market Portfolio and SR&F High-Yield Municipals Portfolio
(the "Portfolios"), respectively.
The Portfolios are series of SR&F Base Trust, a Massachusetts common law
trust organized under an Agreement and Declaration of Trust dated August 23,
1993. SR&F High-Yield Municipals Portfolio commenced operations on February 2,
1998. At commencement, Stein Roe High-Yield Municipals Fund contributed $335,711
in securities and other assets to SR&F High-Yield Municipals Portfolio in
exchange for beneficial ownership of the Portfolio. On February 4, 1998, Stein
Roe Advisor High-Yield Municipals Fund contributed cash of $100 to the
Portfolio. The Portfolios allocate income, expenses, realized and unrealized
gains and losses to each investor on a daily basis, based on methods approved by
the Internal Revenue Service. At December 31, 1999, Stein Roe Municipal Money
Market Fund owned 88.0% of SR&F Municipal Money Market Portfolio; and Stein Roe
High-Yield Municipals Fund owned 99.9% of SR&F High-Yield Municipals Portfolio.
- --------------------------------------------------------------------------------
NOTE 2. SIGNIFICANT
ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Funds and
the Portfolios. 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
<PAGE>
NOTES TO FINANCIAL STATEMENTS continued
investment transactions are reported on an identified cost basis.
Securities purchased on a when-issued or delayed delivery basis may be
settled a month or more after the transaction date. The values of such
securities are subject to market fluctuations during this period. None of the
Funds or the Portfolios had when-issued or delayed delivery the portfolios
purchase commitments as of December 31, 1999.
SECURITY VALUATIONS
Municipal securities are valued at a fair value using a procedure determined
in good faith by the Board of Trustees, which has authorized the use of bid
valuations provided by a pricing service, except for SR&F Municipal Money Market
Portfolio. This 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. In the event that a deviation of 0.50% or
more exists between Stein Roe Municipal Money Market Fund's $1.00 per share net
asset value, calculated at amortized cost, and the net asset value calculated by
reference to market quotations, its Board of Trustees would consider what
action, if any, should be taken. Other securities and assets are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees.
Stein Roe Municipal Money Market Fund attempts to maintain a per-share net
asset value of $1.00, which management believes will be possible under most
conditions.
FUTURES CONTRACTS
Stein Roe Intermediate Municipals Fund, Stein Roe Managed Municipals Fund and
SR&F High-Yield Municipals Portfolio may enter into futures contracts to either
hedge against expected declines of their portfolio securities or as a temporary
substitute for the purchase of individual bonds. Risks of entering into futures
contracts include the possibility that there may be an illiquid market at the
time a fund seeks to close out a contract, and changes in the value of the
futures contract may not correlate with changes in the value of the portfolio
securities being hedged.
Upon entering into a futures contract, the Fund/Portfolio deposits with its
custodian cash or securities in an amount sufficient to meet the initial margin
requirements. Subsequent payments are made or received by the Fund/Portfolio
equal to the daily change in the contract value and
<PAGE>
NOTES TO FINANCIAL STATEMENTS continued
are recorded as unrealized gains or losses. The Fund/Portfolio recognizes a
realized gain or loss when the contract is closed or expires.
FEDERAL INCOME TAXES
No provision is made for federal income taxes since (a) the Funds elect to be
taxed as "regulated investment companies" and make distributions to their
shareholders to be relieved of all federal income taxes under provisions of
current federal tax law; and (b) the Portfolios are treated as partnerships for
federal income tax purposes and all of their income is allocated to their owners
based on methods approved by the Internal Revenue Service. All dividends paid
from net investment income by the Funds constitute tax-exempt interest that is
not taxable for federal income tax purposes; however, a portion of the dividends
paid may be inclusive in the alternative minimum tax calculation.
The Funds intend to utilize provisions of the federal income tax laws, which
allow them to carry a realized capital loss forward up to eight years following
the year of the loss, and offset such losses against any future realized gains.
At June 30, 1999, the Funds had capital loss carryforwards as follows:
Year of
Fund Amount Expiration
- ---- ------ ----------
Stein Roe High-Yield
Municipals Fund $8,575 2005-2006
Stein Roe Municipal
Money Market Fund 8 2002-2005
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
Capital gains distributions, if any, are distributed annually. Dividends are
determined in accordance with income tax principles, which may treat certain
transactions differently than generally accepted accounting principles.
Distributions in excess of tax basis earnings are reported in the financial
statements as a return of capital. Permanent differences in the recognition or
classification of income between the financial statements and tax earnings are
reclassified to paid-in capital.
- --------------------------------------------------------------------------------
NOTE 3. PORTFOLIO COMPOSITION
The Funds and the Portfolios invest in municipal securities including, but not
limited to, general obligation bonds, revenue bonds and escrowed bonds (i.e.,
bonds that have been refinanced, the proceeds of which have been invested in
U.S. or state and local government obligations that are set aside to pay off the
original issue at the first call date or maturity). See Fund Highlights for a
breakdown of securities held by type at December 31, 1999.
The Funds and the Portfolios hold investments that are insured by private
insurers who guarantee the payment of
<PAGE>
NOTES TO FINANCIAL STATEMENTS continued
principal and interest in the event of default. At December 31, 1999,
investments in these securities for Stein Roe Intermediate Municipals Fund,
Stein Roe Managed Municipals Fund and SR&F High-Yield Municipals Portfolio
represented 49.7%, 28.0% and 2.3% of holdings, respectively. SR&F Municipal
Money Market Portfolio invests in certain short-term securities that are backed
by bank letters of credit used to provide liquidity to the issuer and/or
additional security in the event of default. At December 31, 1999, 78.5% of the
Portfolio was backed by bank letters of credit. See the Portfolio of Investments
for each Fund or Portfolio for additional information regarding portfolio
composition.
- --------------------------------------------------------------------------------
NOTE 4. TRUSTEES' FEES AND TRANSACTIONS WITH AFFILIATES
The Funds and the Portfolios pay monthly management and administrative fees,
computed and accrued daily, 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 SR&F
Municipal Money Market Portfolio is computed at an annual rate of 0.25% of
average daily net assets. The management fee for Stein Roe Intermediate
Municipals Fund and SR&F High-Yield Municipals Portfolio is 0.45% of the first
$100 million of average daily net assets, 0.425% of the next $100 million and
0.40% thereafter. The management fee for Stein Roe Managed Municipals Fund is
0.45% of the first $100 million of average daily net assets, 0.425% of the next
$100 million, 0.40% of the next $800 million and 0.375% thereafter.
The administrative fee for the Stein Roe Municipal Money Market Fund is
computed at an annual rate of 0.25% of average daily net assets up to $500
million, 0.20% of average daily net assets for the next $500 million and 0.15%
thereafter. The administrative fee for Stein Roe Intermediate Municipals Fund
and High-Yield Municipals Fund is computed at an annual rate of 0.15% of the
first $100 million of average daily net assets, 0.125% of the next $100 million
and 0.10% thereafter. The administrative fee for Managed Municipals Fund is
0.15% of the first $100 million of average daily net assets, 0.125% of the next
$100 million, 0.10% of the next $800 million and 0.075% thereafter.
The Advisor also provides accounting services to the Funds and the
Portfolios.
The Advisor has agreed to reimburse Stein Roe Municipal
<PAGE>
NOTES TO FINANCIAL STATEMENTS continued
Money Market Fund and Stein Roe Intermediate Municipals Fund for expenses in
excess of 0.70% of average annual net assets. This commitment expires on October
31, 2000, subject to earlier termination by the Advisor on 30 days' notice.
Transfer agent fees are paid to SteinRoe Services, Inc. (SSI) (the Transfer
Agent), an indirect, majority-owned subsidiary of Liberty Mutual Insurance
Company. SSI has entered into an agreement with Liberty Funds Services, Inc.,
also an indirect, majority-owned subsidiary of Liberty Mutual Insurance Company,
to act as subtransfer agent for the Funds. The Transfer Agent provides
shareholder services for a monthly fee equal to 0.14% annually of each Fund's
average net assets except Stein Roe Municipal Money Market which is equal to
0.15% annually and receives reimbursement for certain out-of-pocket expenses.
Certain officers and trustees of the Trust are also officers of the Advisor.
No remuneration was paid to any other trustee or officer of the Trust who is
affiliated with the Advisor.
- --------------------------------------------------------------------------------
NOTE 5. SHORT-TERM DEBT
To facilitate portfolio liquidity, the Funds and the Portfolios maintain
borrowing arrangements under which they can borrow against portfolio securities.
There were no borrowings by any of the Funds or the Portfolios during the six
months ended December 31, 1999.
- --------------------------------------------------------------------------------
NOTE 6. PORTFOLIO INFORMATION
The aggregate cost of purchases and proceeds from sales or maturities of
securities, excluding short-term obligations, for the six months ended December
31, 1999, were as follows:
Purchases Sales
--------- ---------
Stein Roe Intermediate Municipals Fund................. $19,494 $41,795
Stein Roe Managed Municipals Fund...................... 27,487 68,106
SR&F High-Yield Municipals Portfolio................... 16,624 34,670
Unrealized appreciation (depreciation) at December 31, 1999 for both financial
statement and federal income tax purposes was:
<TABLE>
<CAPTION>
Stein Roe Stein Roe SR&F
Intermediate Municipals Managed High-Yield
Fund Municipals Fund Municipal Portfolio
-------------- --------------- -------------------
<S> <C> <C> <C>
Gross unrealized appreciation ...................... $ 4,595 $ 22,960 $ 7,726
Gross unrealized depreciation ...................... (906) (9,741) (11,033)
-------- -------- --------
Net unrealized appreciation (depreciation) ......... $ 3,689 $ 13,219 $ (3,307)
======== ======== ========
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STEIN ROE MUNICIPAL MONEY MARKET FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
DECEMBER 31, YEARS ENDED JUNE 30,
1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------
<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
-------- -------- -------- -------- -------- -------
Net investment
income........... 0.015 0.027 0.031 0.030 0.031 0.030
Distributions from net
investment income (0.015) (0.027) (0.031) (0.030) (0.031) (0.030)
-------- -------- -------- -------- -------- -------
NET ASSET VALUE, END
OF PERIOD........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== =======
Ratio of net expenses to
average net assets (a) 0.70%(b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment
income to average
net assets (c)...... 2.94%(b) 2.69% 3.06% 2.98% 3.09% 2.96%
Total return (c)....... 1.47%(d) 2.73% 3.10% 3.04% 3.13% 3.02%
Net assets, end
of period (000's)... $119,582 $119,032 $115,279 $118,424 $120,432 $146,704
(a) If the Fund had paid all of its expenses and there had been no
reimbursement by the Advisor, this ratio would have been 0.78%, 0.79%,
0.86%, 0.86%, 0.84% and 0.78% for the period ended December 31, 1999 and
the years ended June 30, 1999 through June 30, 1995, respectively.
(b) Annualized.
(c) Computed giving effect to Advisor's expense limitation undertaking.
(d) Not annualized.
</TABLE>
<PAGE>
<TABLE>
SR&F MUNICIPAL MONEY MARKET PORTFOLIO
<CAPTION>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
DECEMBER 31, YEARS ENDED JUNE 30, JUNE 30,
1999 1999 1998 1997 1996(a)
------- ------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED RATIOS
Ratio of net expenses to average net assets............ 0.30%(b) 0.30% 0.34% 0.32% 0.30%(b)
Ratio of net investment income to average
net assets.......................................... 3.34%(b) 3.07% 3.41% 3.36% 3.50%(b)
(a) From commencement of operations on September 28, 1995.
(b) Annualized.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
STEIN ROE INTERMEDIATE MUNICIPALS FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
DECEMBER 31, YEARS ENDED JUNE 30,
1999 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD .......... $ 11.23 $ 11.57 $ 11.38 $ 11.22 $ 11.16 $ 11.00
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income ..................... 0.27 0.54 0.54 0.55 0.55 0.53
Net realized and unrealized
gain (loss) on
investments ............... (0.28) (0.30) 0.22 0.22 0.06 0.16
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations .............. (0.01) 0.24 0.76 0.77 0.61 0.69
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS
Net investment income ........ (0.27) (0.54) (0.54) (0.55) (0.55) (0.53)
Net realized gains ........... (0.06) (0.04) (0.03) (0.06) -- --
----------- ----------- ----------- ----------- ----------- -----------
Total
distributions ........... (0.33) (0.58) (0.57) (0.61) (0.55) (0.53)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE,
End of Period ................ $ 10.89 $ 11.23 $ 11.57 $ 11.38 $ 11.22 $ 11.16
=========== =========== =========== =========== =========== ===========
Ratio of net expenses to
average net assets (a) ....... 0.70%(c) 0.70% 0.70% 0.70% 0.70% 0.74%
Ratio of net investment
income to average
net assets (b) ............... 4.87%(c) 4.58% 4.70% 4.84% 4.82% 4.94%
Portfolio turnover rate ......... 13%(d) 48% 29% 44% 66% 67%
TOTAL RETURN (B) ................ (0.13%)(d) 2.08% 6.84% 7.07% 5.47% 6.59%
Net assets, end
of period (000's) ........... $ 143,579 $ 168,896 $ 195,651 $ 196,006 $ 204,726 $ 212,489
(a) If the Fund had paid all of its expenses and there had been no
reimbursement by the Advisor, this ratio would have been 0.76%, 0.79%,
0.81%, 0.82%, 0.81% and 0.76% for the period ended December 31, 1999 and
the years ended June 30, 1999 through June 30, 1995, respectively.
(b) Computed giving effect to Advisor's expense limitation undertaking.
(c) Annualized.
(d) Not annualized.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS Continued
STEIN ROE MANAGED MUNICIPALS FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
DECEMBER 31, YEARS ENDED JUNE 30,
1999 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ....... $ 9.07 $ 9.38 $ 9.11 $ 8.85 $ 8.79 $ 8.70
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income ..... 0.24 0.47 0.48 0.48 0.48 0.51
Net realized and unrealized
gain (loss) on
investments ............. (0.42) (0.31) 0.27 0.26 0.06 0.09
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations ........... (0.18) 0.16 0.75 0.74 0.54 0.60
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS
Net investment income ..... (0.24) (0.47) (0.48) (0.48) (0.48) (0.51)
Net realized gains ........ (0.10) -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total
distributions ........ (0.34) (0.47) (0.48) (0.48) (0.48) (0.51)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE,
END OF PERIOD ............. $ 8.55 $ 9.07 $ 9.38 $ 9.11 $ 8.85 $ 8.79
=========== =========== =========== =========== ===========
Ratio of net expenses
to average net assets ..... 0.71%(a)(b) 0.72% 0.72% 0.73% 0.72% 0.65%
Ratio of net investment income
to average net assets ..... 5.34%(a)(b) 5.02% 5.14% 5.31% 5.41% 5.85%
Portfolio turnover rate ...... 5%(c) 17% 12% 16% 40% 33%
Total return ................. (1.97%)(c) 1.67% 8.37% 8.56% 6.24% 7.12%
Net assets, end
of period (000's) ........ $ 479,208 $ 538,322 $ 583,138 $ 582,366 $ 606,359 $ 629,730
(a) Annualized.
(b) During the six months ended December 31, 1999, the Fund experienced a
one-time reduction in its expenses of six basis points as a result of
expenses accrued in a prior period. The Fund's ratios disclosed above
reflect the actual rate at which expenses were incurred for the six months
ended December 31, 1999 without the reduction.
(c) Not annualized.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
STEIN ROE HIGH-YIELD MUNICIPALS FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
DECEMBER 31, YEARS ENDED JUNE 30,
1999 1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ....... $ 11.71 $ 11.97 $ 11.67 $ 11.40 $ 11.31 $ 11.06
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income .................. 0.33 0.63 0.65 0.72 0.67 0.66
Net realized and
unrealized gain (loss)
on investments and
future transactions ..... (0.62) (0.25) 0.30 0.27 0.09 0.25
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations ........... (0.29) 0.38 0.95 0.99 0.76 0.91
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS
Net investment
income .................. (0.33) (0.64) (0.65) (0.72) (0.67) (0.66)
----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE,
END OF PERIOD ............. $ 11.09 $ 11.71 $ 11.97 $ 11.67 $ 11.40 $ 11.31
=========== =========== =========== =========== =========== ===========
RATIO OF NET EXPENSES
TO AVERAGE NET ASSETS ..... 0.81%(a)(b) 0.77% 0.75% 0.77% 0.85% 0.86%
Ratio of net investment income
to average net assets ..... 5.64%(a)(b) 5.26% 5.48% 6.20% 5.86% 5.98%
Portfolio turnover rate ...... N/A N/A 8%(c) 11%(c) 34%(c) 23%(c)
Total return ................. (2.53%)(d) 3.18%(e) 8.32% 8.91% 6.83% 8.54%
Net assets, end of
period (000's) ............ $ 268,916 $ 297,874 $ 341,780 $ 306,070 $ 282,956 $ 281,155
(a) Annualized.
(b) During the six months ended December 31, 1999, the Fund experienced a
one-time reduction in its expenses of five basis points as a result of
expenses accrued in a prior period. The Fund's ratios disclosed above
reflect the actual rate at which expenses were incurred for the six months
ended December 31, 1999 without the reduction.
(c) Prior to commencement of operations of the Portfolio.
(d) Not annualized.
(e) 0.50% of the return is attributable to a one-time revaluation of a
portfolio security reflecting the restructuring of this security. Absent
this revaluation the total return would have been 2.68%.
</TABLE>
<TABLE>
SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
<CAPTION>
(UNAUDITED)
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, JUNE 30, JUNE 30,
1999 1999 1998(a)
------------- -------- --------
<S> <C> <C> <C>
SELECTED RATIOS
Ratio of net expenses to average net assets............. 0.51%(b) 0.45% 0.47%(b)
Ratio of net investment income to average net assets.... 5.91%(b) 5.55% 5.72%(b)
Portfolio turnover rate................................. 6%(c) 19% 3%(c)
(a) From commencement of operations on February 2, 1998.
(b) Annualized.
(c) Not annualized.
</TABLE>
<PAGE>
LIBERTY-STEIN ROE FUNDS MUNICIPAL TRUST
- --------------------------------------------------------------------------------
TRUSTEES
John A. Bacon Jr.
Private Investor
William W. Boyd
Chairman and Director, Sterling Plumbing
Group Inc.
Lindsay Cook
Executive Vice President, Liberty Financial
Companies, Inc.
Douglas A. Hacker
Executive Vice President and Chief Financial
Officer, UAL, Inc.
Janet Langford Kelly
Executive Vice President, Secretary and General
-Corporate Development, Kellogg Company
Charles R. Nelson
Van Voorhis Professor of Political Economy,
University of Washington
Thomas C. Theobald
Managing Director, William Blair Capital Partners
OFFICERS
Stephen E. Gibson, President
William D. Andrews, Executive Vice President
Kevin M. Carome, Executive Vice President,
Secretary
Loren A. Hansen, Executive Vice President
Christine Balzano, Vice President
Denise E. Chasmer, Vice President
J. Kevin Connaughton, Vice President, Treasurer
Joanne T. Costopoulos, Vice President
Brian M. Hartford, Vice President
Timothy J. Jacoby, Senior Vice President
Gail D. Knudsen, Vice President, Controller
William C. Loring, Vice President
Mary Dillon McKenzie, Vice President
Nicholas S. Norton, Vice President
Maureen G. Newman, Vice President
Nicolette D. Parrish, Vice President,
Assistant Secretary
Veronica M. Wallace, Vice President
Michael G. Fisher, Assistant Treasurer
AGENTS AND ADVISORS
Stein Roe & Farnham Incorporated
Investment Adviser
State Street Bank and Trust Company
Custodian
Stein Roe Services Inc.
Transfer Agent
Bell, Boyd & Lloyd LLC
Legal Counsel to the Trust
Ernst & Young LLP
Independent Auditors
<PAGE>
The Stein Roe Mutual Funds
FIXED INCOME FUNDS
Cash Reserves Fund
Municipal Money Market Fund
Intermediate Municipals Fund
Managed Municipals Fund
High-Yield Municipals Fund
Intermediate Bond Fund
Income Fund
High Yield Fund
EQUITY FUNDS
Balanced Fund
Growth & Income Fund
Disciplined Stock Fund*
Growth Stock Fund
Growth Investor Fund
Young Investor Fund
Large Company Focus Fund
Midcap Growth Fund**
Capital Opportunities Fund
International Fund
Small Company Growth Fund
* Formerly Special Fund
** Formerly Growth Opportunities Fund
Stein Roe Mutual Funds
P.O. Box 8900
Boston, MA 02205-8900
Financial Advisors call: 800-322-0593
Shareholders call: 800-338-2550
www.steinroe.com
In Chicago, visit our Fund Center at One South Wacker Drive
Liberty Funds Distributor, Inc.
DIR-03/111A-0100 (2/00) 00/120
