STEIN ROE MUTUAL FUNDS
SEMIANNUAL REPORT
DECEMBER 31, 1999
PHOTO OF: ABACUS
STEIN ROE CASH RESERVES
CASH RESERVES FUND
LOGO: STEIN ROE MUTUAL FUNDS
SENSIBLE RISKS. INTELLIGENT INVESTMENTS.(R)
<PAGE>
CONTENTS
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FROM THE PRESIDENT................................................ 1
Stephen Gibson's thoughts on the markets and investing
PERFORMANCE SUMMARY............................................... 2
QUESTIONS & ANSWERS
Interview with the portfolio manager and
a summary of investment activity
CASH RESERVES FUND............................................. 3
PORTFOLIO OF INVESTMENTS.......................................... 5
A complete list of investments with market values
FINANCIAL STATEMENTS.............................................. 7
Statements of assets and liabilities, operations
and changes in net assets
NOTES TO FINANCIAL STATEMENTS..................................... 13
FINANCIAL HIGHLIGHTS.............................................. 16
Selected per-share data
Must be preceded or accompanied by a prospectus.
<PAGE>
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 Cash
Reserves Fund for the six-month period ended December 31, 1999.
Recently, the current United States economic expansion set a record for
longevity. We have experienced nine years of economic growth. Inflation has
risen barely one point from its low rate. National productivity gains continue.
If we have entered a new era of economic growth, our substantial investment
in technology is certainly one reason. The first control on our inflation rate
was the flood of competitive imports from the recession-burdened Pacific Rim
nations. Finally, the sensitive monetary policies of the Federal Reserve System
have helped to keep our economy in order.
During the six-month period ended December 31, 1999, most bonds succumbed to
the pressure of inflation worries and rising interest rates.
Stronger-than-expected U.S. economic growth, combined with the rebound of the
Japanese, European and emerging market economies, prompted the Federal Reserve
Board (the Fed) to raise interest rates in preemptive strikes against potential
inflation. Bond prices, which move in the opposite direction of their yields,
posted significant losses as a result.
As the year 2000 evolves, we believe that the investment environment will
benefit fixed-income investments. Future Fed moves with short-term interest
rates will have both positive monetary and psychological effects on
inflation-wary investors. For those seeking a relatively stable haven for their
dollars and potential for current income, Stein Roe Cash Reserves Fund remains
an attractive option.
Thank you for giving us the opportunity to serve your investment needs.
Sincerely,
Stephen E. Gibson
/s/ Stephen E. Gibson
President
February 10, 2000
Photo of: Stephen E. Gibson
<PAGE>
PERFORMANCE SUMMARY
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AVERAGE ANNUAL TOTAL RETURNS
Periods Ended December 31, 1999
6 MONTH 1 5 10
(CUMULATIVE) YEAR YEARS YEARS
- --------------------------------------------------------------------------------
STEIN ROE CASH RESERVES FUND 4.91% 4.64% 4.99% 4.81%
U.S. Consumer Price Index (Inflation) 1.56 2.99 2.43 2.96
Lehman Brothers Government Bond Index 0.04 -2.23 7.44 7.48
Merrill Lynch High Yield Master II Index 0.24 2.51 9.88 11.20
Lipper Money Market Fund Average 2.46 4.51 4.95 4.79
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PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. TOTAL RETURN INCLUDES
REINVESTMENT OF INCOME. YIELDS FLUCTUATE AND ARE NOT GUARANTEED. An investment
in the Fund is neither insured nor guaranteed by the Federal Deposit Insurance
Corp. (FDIC) or any government agency. Although the Fund seeks to preserve the
value of your investment at $1 per share, it is possible to lose money by
investing in the Fund. The U.S. Consumer Price Index is the government's measure
of retail inflation. Each bond index shown above is unmanaged and does not
represent the performance of any Stein Roe mutual fund; neither is available for
direct investment. Source of Lipper data: Lipper, Inc., a monitor of mutual fund
performance.
<PAGE>
QUESTIONS & ANSWERS
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AN INTERVIEW WITH JANE M. NAESETH, PORTFOLIO MANAGER OF STEIN ROE
CASH RESERVES FUND AND SR&F CASH RESERVES PORTFOLIO
FUND DATA
INVESTMENT OBJECTIVE:
Stein Roe Cash Reserves Fund seeks maximum current income consistent with
capital preservation and maintenance of liquidity by investing in
high-quality money market securities, such as U.S. Treasuries, commercial
paper, bankers acceptances and certificates of deposit.
FUND INCEPTION:
Oct. 2, 1976
TOTAL NET ASSETS:
$563 million
Photo of: Jane Naeseth
Q: HOW DID YOU MANAGE THE PORTFOLIO IN THE PAST SIX MONTHS?
NAESETH: The Federal Reserve raised short-term interest rates three times, each
by 0.25%, starting in late June. This credit tightening has benefited
shareholders by enhancing the income of money market instruments, including
corporate floating rate notes which rates improved late in 1999.
Q: WHAT OTHER PORTFOLIO CHANGES WERE MADE OVER THE YEAR?
NAESETH: We increased holdings of commercial paper from 86.9% of assets to
89.9%. Recently we added a small amount of new federal discount notes to
increase the Portfolio's liquidity at year-end.
As the Federal Reserve flooded markets with cash reserves in anticipation of
Year 2000 needs, we had to roll over commercial paper holdings as well to
maintain liquidity.
Q: WHAT IS YOUR OUTLOOK FOR MONEY MARKET SECURITIES?
NAESETH: We are anticipating that the Federal Reserve will raise interest rates
in one or two moves during the first half of 2000. Our current investment
strategy reflects that belief.
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 insured 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. Source of Lipper data: Lipper, Inc. a
monitor of mutual fund performance.
<PAGE>
FUND HIGHLIGHTS
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Cash Reserves Portfolio
SECURITIES TYPE BREAKDOWN
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PORTFOLIO PORTFOLIO
DECEMBER 31, 1999 JUNE 30, 1999
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Commercial Paper 89.9% 86.9%
Yankee Certificates of Deposit 3.4 7.1
Corporate Notes 5.7 5.5
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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 27.9 days 27.1 days
7-day Current Yield* 5.52% 4.37%
*Net of all fees and expenses and represents an annualization of dividends
declared and payable to shareholders for the last seven days of investments.
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MATURITY
As of December 31, 1999 As of June 30, 1999
PIE CHARTS:
GREATER THAN 59 DAYS 9.0% 11.4%
30-59 DAYS 27.9 12.3
15-29 DAYS 22.7 15.2
5-14 DAYS 30.5 51.5
1-4 DAYS 9.9 9.6
<PAGE>
SR&F CASH RESERVES PORTFOLIO
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Portfolio of Investments at December 31, 1999 (Unaudited)
(All amounts in thousands)
<TABLE>
<CAPTION>
INTEREST MATURITY
COMMERCIAL PAPER - 89.9% RATE RANGE (a) DATE RANGE PAR VALUE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AMERICAN HOME PRODUCTS CORP.,
5.000% 1/5/00(b) $13,695 $ 13,687
ASSET SECURITIZATION CORP.,
6.240% 1/20/00(b) 22,000 21,928
ASSOCIATES FIRST CAPITAL,
4.000% 1/3/00 41,640 41,631
BANCO BRADESCO,
5.510% 2/16/00 30,000 29,796
CARDINAL HEALTH CORP.:
4.250% 1/3/00(b) 15,000 14,997
6.810% 1/7/00(b) 18,000 17,980
CENTRIC CAPITAL,
6.630% 1/10/00(b) 22,350 22,313
COCA-COLA CO.,
6.060% 2/3/00 13,000 12,928
COCA-COLA ENTERPRISES,
5.530% 2/3/00(b) 7,775 7,736
CORPORATE ASSET FUNDING,
6.060% 1/31/00(b) 30,000 29,850
COUNTRYWIDE HOME LOANS,
6.090% 1/21/00 38,000 37,869
DONALDSON LUFKIN CORP.,
6.400% 1/18/00 30,000 29,910
EATON CORP.:
7.030% 1/14/00(b) 13,000 12,967
6.890% 1/19/00(b) 25,000 24,914
ENTERPRISE FUNDING,
6.300% 1/13/00(b) 20,000 19,958
EXPORT DEVELOPMENT CORP.,
5.970% 2/23/00 25,000 24,785
FALCON ASSET SECURITIZATION,
6.200% 1/20/00(b) 6,340 6,319
FEDERAL HOME LOAN MORTGAGE:
5.670% 3/16/00 19,000 18,782
5.760% 3/30/00 35,000 34,509
FINOVA CAPITAL CORP.:
6.550% 1/11/00 10,000 9,982
6.310% 1/19/00 14,000 13,956
GTE CORP.,
5.320% 1/26/00(b) 23,700 23,613
HARLEY-DAVIDSON FUNDING:
6.360% 2/22/00(b) 20,000 19,818
6.110% 2/24/00(b 18,000 17,837
INTERNATIONAL SECURITIZATION,
7.280% 1/14/00(b) 38,000 37,901
MCI WORLDCOM:
6.780% 1/14/00(b) 20,000 19,951
6.650% 1/26/00(b) 15,000 14,931
NORTHERN INDUSTRY PUBLIC SERVICES:
6.540% 1/12/00 10,000 9,980
7.130% 1/14/00 14,780 14,742
OLD LINE FUNDING:
6.370% 1/6/00(b) 18,000 17,984
6.340% 1/13/00(b) 20,000 19,958
<PAGE>
SR&F CASH RESERVES PORTFOLIO Continued
INTEREST MATURITY
RATE RANGE (a) DATE RANGE PAR VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PREFERRED RECEIVABLES FUNDING,
6.530% 1/4/00(b) $30,000 $ 29,984
RECEIVABLES CAPITAL CORP.:
6.840% 1/12/00(b) 20,000 19,958
6.640% 1/13/00(b) 10,000 9,978
SPECIAL PURPOSE ACCOUNTS RECEIVABLES,
6.240% 3/7/00(b) 25,000 25,000
SUPERIOR FUNDING CORP.,
6.180% 2/9/00(b) 20,000 19,868
THAMES ASSET GLOBAL,
6.750% 1/18/00(b) 22,212 22,142
WINDMILL FUNDING CORP.:
6.650% 1/5/00(b) 18,500 18,486
6.840% 1/20/00(b) 2,164 2,156
-------
TOTAL COMMERCIAL PAPER
(cost of $787,993).......... 791,084
-------
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CORPORATE FIXED INCOME BONDS & NOTES - 5.7%
TEXTRON FINANCIAL CORP.,
5.560% 5/15/00 25,000 24,992
GOLDMAN SACHS FLOATING RATE,
5.020% 2/17/00(b) 25,000 25,000
-------
TOTAL CORPORATE FIXED INCOME BONDS & NOTES,
(cost of $49,988)........... 49,992
-------
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YANKEE CERTIFICATES OF DEPOSIT - 3.4%
COMMERZBANK NEW YORK,
(cost of $29,990)........... 5.085% 2/16/00 30,000 29,999
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.0%
(COST OF $867,971)(C)....... 871,075
-------
OTHER ASSETS & LIABILITIES - 1.0% 8,873
-------
TOTAL NET ASSETS - 100.0%...... $879,948
========
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</TABLE>
NOTES TO INVESTMENT PORTFOLIO:
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(a) The interest rate is the effective rate at the date of purchase except for
corporate notes, for which the interest rate represents the investment's
coupon rate.
(b) Represents private placement securities exempt from registration by Section
4(2) of the Securities Act of 1933. These securities are issued to
investors who agree that they are purchasing the securities for investment
and not with a view to public distribution. Any resale by the Fund must be
in an exempt transaction, normally to other institutional investors. At
December 31, 1999, the aggregate value of the Fund's private placement
securities was $537,213, which represented 61.1% of net assets. None of
these securities were deemed illiquid.
(c) The cost for federal income tax purposes was the same.
See accompanying Notes to Financial Statements.
<PAGE>
SR&F CASH RESERVES PORTFOLIO
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STATEMENT OF ASSETS AND LIABILITIES
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands)
ASSETS
Investments, at amortized cost.................................... $871,075
Cash.............................................................. 7,083
Interest receivable............................................... 1,849
---------
Total assets................................................... 880,007
---------
LIABILITIES
Other liabilities................................................. 59
---------
Total liabilities.............................................. 59
---------
Net assets applicable to investors' beneficial interest........ $879,948
=========
See accompanying Notes to Financial Statements.
<PAGE>
SR&F CASH RESERVES PORTFOLIO
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STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands)
INVESTMENT INCOME
Interest......................................................... $22,210
-------
EXPENSES
Management fees.................................................. 979
Transfer agent fees.............................................. 3
Accounting fees.................................................. 22
Trustees' fees................................................... 10
Custodian fees................................................... 2
Audit fees....................................................... 9
Legal fees....................................................... 1
Other............................................................ 11
-------
Total expenses................................................ 1,037
-------
Net investment income......................................... 21,173
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $21,173
-------
REALIZED LOSS ON INVESTMENTS
Net realized loss on investments.............................. (1)
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $21,172
=======
See accompanying Notes to Financial Statements.
<PAGE>
SR&F CASH RESERVES PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands)
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, JUNE 30,
1999 1999
------------ ----------
OPERATIONS
<S> <C> <C>
Net investment income............................. $ 21,173 $ 37,933
Net realized losses on investments................ (1) (4)
---------- ----------
Net increase in net assets resulting
from operations 21,172 37,929
---------- ----------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions..................................... 1,349,923 1,549,789
Withdrawals....................................... (1,263,608) (1,501,534)
---------- ----------
Net increase from transactions in investors'
beneficial interest.......................... 86,315 48,255
---------- ----------
Net increase in net assets..................... 107,487 86,184
TOTAL NET ASSETS
Beginning of period............................... 772,461 686,277
---------- ----------
End of period..................................... $ 879,948 $ 772,461
========== ==========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
STEIN ROE CASH RESERVES FUND
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STATEMENT OF ASSETS AND LIABILITIES
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands, except per-share amount)
ASSETS
Investment in SR&F Cash Reserves Portfolio, at value.............. $ 565,013
Receivable for fund shares sold................................... 2,704
Cash ............................................................. 50
Other assets...................................................... 78
---------
Total assets................................................... 567,845
---------
LIABILITIES
Payable for fund shares repurchased............................... 2,637
Dividends payable................................................. 224
Other liabilities................................................. 38
---------
Total liabilities.............................................. 2,899
---------
Net assets..................................................... $ 564,946
=========
ANALYSIS OF NET ASSETS
Paid-in capital................................................... $ 564,813
Accumulated net realized gains on investments .................... 133
---------
Net assets..................................................... $ 564,946
=========
Shares outstanding (unlimited number authorized).................. 564,824
=========
Net asset value per share......................................... $ 1.00
=========
See accompanying Notes to Financial Statements.
<PAGE>
STEIN ROE CASH RESERVES FUND
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STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands)
INVESTMENT INCOME
Interest allocated from SR&F Cash Reserves Portfolio.............. $14,460
EXPENSES
Administrative fees.............................................. 654
Transfer agent fees.............................................. 427
Expenses allocated from SR&F Cash Reserves Portfolio............. 675
Registration fees................................................ 17
Accounting fees.................................................. 19
Other, net....................................................... (72)
-------
Total expenses................................................ 1,720
-------
Net investment income......................................... 12,740
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $12,740
=======
See accompanying Notes to Financial Statements.
<PAGE>
STEIN ROE CASH RESERVES FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1999 (Unaudited)
(All amounts in thousands)
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, JUNE 30,
1999 1999
------------------------
<S> <C> <C>
OPERATIONS
Net investment income...................................... $ 12,740 $ 22,933
Net realized loss on investments........................... -- (3)
-------- ----------
Net increase in net assets resulting from operations.... 12,740 22,930
-------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income................... (12,740) (22,933)
-------- ----------
SHARE TRANSACTIONS
Subscriptions to fund shares............................... 918,648 1,292,705
Value of distributions reinvested.......................... 12,375 21,281
Redemptions of fund shares................................. (869,763) (1,304,251)
-------- ----------
Net increase from share transactions.................... 61,260 9,735
-------- ----------
Net increase in net assets.............................. 61,260 9,732
TOTAL NET ASSETS
Beginning of period........................................ 503,686 493,954
-------- ----------
End of period.............................................. $564,946 $ 503,686
======== ==========
ANALYSES OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Subscriptions to fund shares .............................. 918,648 1,292,663
Issued in reinvestment of distributions.................... 12,375 21,281
Redemptions of fund shares................................. (869,763) (1,304,251)
-------- ----------
Net increase in fund shares............................. 61,260 9,693
Shares outstanding at beginning of period.................. 503,564 493,871
-------- ----------
Shares outstanding at end of period........................ 564,824 503,564
======== ==========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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(All amounts in thousands) (Unaudited)
NOTE 1. ORGANIZATION
Stein Roe Cash Reserves Fund (the "Fund") is a series of Liberty-Stein Roe
Income Trust (the "Trust"), formally Stein Roe Income Trust, an open-end
management investment company organized as a Massachusetts business trust. The
Fund invests substantially all of its assets in SR&F Cash Reserves Portfolio
(the "Portfolio"), which seeks maximum income consistent with capital
preservation and maintenance of liquidity.
The Portfolio is a series of SR&F Base Trust, a Massachusetts common law
trust organized under an Agreement and Declaration of Trust dated August 23,
1993. The Portfolio commenced operations on March 2, 1998. At commencement,
Stein Roe Cash Reserves Fund contributed $493,224 in securities and other assets
in exchange for beneficial ownership of the Portfolio. The Portfolio allocates
income, expenses and realized gains and losses to each investor on a daily
basis, based on methods approved by the Internal Revenue Service. At December
31, 1999, Stein Roe Cash Reserves Fund owned 64.2% of the Portfolio.
NOTE 2. SIGNIFICANT
ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Fund and the
Portfolio. These policies are in conformity with generally accepted accounting
principles, which require management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
INVESTMENT TRANSACTIONS
AND INVESTMENT INCOME:
Investment transactions are accounted for on trade date. Interest income,
including discount accretion and premium amortization, is recorded daily on the
accrual basis. Realized gains or losses from investment transactions are
reported on an identified cost basis.
The Portfolio is permitted to invest in repurchase agreements involving
securities issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities. The Portfolio requires issuers of repurchase agreements to
transfer the securities underlying those
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
agreements to the Portfolio's custodian at the time of payment.
INVESTMENT VALUATIONS:
The Portfolio utilizes the amortized cost method to value its investments. This
technique approximates market value and involves valuing a security initially at
cost and, thereafter, assuming a constant amortization to maturity of any
discount or premium. In the event that a deviation of 0.50% or more exists
between the Fund's $1.00 per-share net asset value, calculated at amortized
cost, and the net asset value calculated by reference to market quotations, the
Board of Trustees would consider what action, if any, should be taken. Other
assets are valued at fair value as determined in good faith by or under the
direction of the Board of Trustees.
The Fund attempts to maintain a per-share net asset value of $1.00, which
management believes will be possible under most conditions.
FEDERAL INCOME TAXES:
No provision is made for federal income taxes since (a) the Fund elects to be
taxed as a "regulated investment company"and makes distributions to its
shareholders to be relieved of all federal income taxes under provisions of
current federal tax law; and (b) the Portfolio is treated as a partnership for
federal income tax purposes and all of its income is allocated
to its owners based on methods approved by the Internal Revenue Service.
The Fund intends to utilize provisions of the federal income tax law that
allows 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 Fund had capital loss carryforwards totaling $106,000
and expiring in the years 2002 - 2008.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly.
NOTE 3. PORTFOLIO COMPOSITION
Under normal market conditions, the Fund will invest at least 25% of its total
assets in securities of issuers in the financial services industry (which
includes, but is not limited to, banks, consumer and business credit
institutions, and other financial services companies).
See the investment portfolio for information regarding portfolio composition.
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
NOTE 4. TRUSTEES' FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio pays a monthly management fee and the Fund pays a monthly
administrative fee to Stein Roe & Farnham Incorporated (the "Advisor"), an
indirect, majority-owned subsidiary of Liberty Mutual Insurance Company, for its
services as investment Advisor and manager.
The management fee for the Portfolio is computed at an annual rate of 0.25%
of the first $500 million of average daily net assets, and 0.225% over $500
million. The administrative fee for the Fund is computed at an annual rate of
0.25% of the first $500 million of average daily net assets, 0.20% of the next
$500 million, and 0.15% over $1 billion.
Transfer agent fees are paid to SteinRoe Services Inc. (SSI), 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 Fund.
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.
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SR&F CASH RESERVES PORTFOLIO
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, JUNE 30, JUNE 30,
RATIOS TO AVERAGE NET ASSETS 1999 1999 1998 (a)
-------------- -------- --------
<S> <C> <C> <C>
Ratio of net expenses to average net assets ..... 0.25%(b) 0.25% 0.26%(b)
Ratio of net investment income to average net assets 5.21%(b) 4.83% 5.45%(b)
(a) From commencement of operations on March 2, 1998.
(b) Annualized.
</TABLE>
CASH RESERVES FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
DECEMBER 31, YEARS ENDED JUNE 30,
1999 1999 1998 1997 1996
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- -------- -------- -------- --------
Net investment income.......... 0.024 0.045 0.050 0.048 0.050
Distributions from net investment
income....................... (0.024) (0.045) (0.050) (0.048) (0.050)
--------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ======== ======== ======== ========
Ratio of expenses to average net assets 0.67%(a)(b) 0.70% 0.75% 0.77% 0.78%
Ratio of net investment income to average
net assets...................... 4.81%(a)(b) 4.58% 4.98% 4.80% 4.98%
Total return ..................... 2.45%(c) 4.64% 5.09% 4.92% 5.07%
Net assets, end of period (000's). $564,946 $503,686 $493,954 $452,358 $476,840
</TABLE>
(a) Annualized.
(b) During the six months ended December 31, 1999, the Fund experienced a
one-time reduction in its expenses of two 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 throughout the
current six months ended without the reduction.
(c) Not annualized.
<PAGE>
LIBERTY-STEIN ROE FUNDS INCOME TRUST
- --------------------------------------------------------------------------------
TRUSTEES
John A. Bacon, Jr.
Private Investor
William W. Boyd
Chairman and Director, Sterling Plumbing
Group Inc.
Lindsay Cook
Executive Vice President, Liberty Financial
Companies, Inc.
Douglas A. Hacker
Executive Vice President and Chief Financial
Officer, United Airlines
Janet Langford Kelly
Executive Vice President, Secretary and General
Counsel, Kellogg Company
Charles R. Nelson
Van Voorhis Professor of Political Economy,
University of Washington
Thomas C. Theobald
Managing Director, William Blair Capital Partners
OFFICERS
Stephen E. Gibson, President
William D. Andrews, Executive Vice President
Kevin M. Carome, Executive Vice President,
Secretary
Loren A. Hansen, Executive Vice President
Kevin Connaughton, Vice President, Treasurer
Timothy Jacoby, Senior Vice President
Michael T. Kennedy, Vice President
Gail Knudsen, Vice President, Controller
Stephen F. Lockman, Vice President
Lynn C. Maddox, Vice President
Mary D. McKenzie, Vice President
Jane M. Naeseth, Vice President
Nicholas S. Norton, Vice President
Nicolette D. Parrish, Vice President,
Assistant Secretary
Michael G. Fisher, Assistant Treasurer
Christine Balzano, Vice President
Denise E. Chasmer, Vice President
AGENTS AND ADVISORS
Stein Roe & Farnham Incorporated
Investment Advisor
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
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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.
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