0000891804-95-000214.txt : 19950926 0000891804-95-000214.hdr.sgml : 19950926 ACCESSION NUMBER: 0000891804-95-000214 CONFORMED SUBMISSION TYPE: ARS PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950922 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEINROE MUNICIPAL TRUST CENTRAL INDEX KEY: 0000773757 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: ARS SEC ACT: 1934 Act SEC FILE NUMBER: 811-04367 FILM NUMBER: 95575463 BUSINESS ADDRESS: STREET 1: 300 W ADAMS ST STREET 2: 11TH FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3123685612 MAIL ADDRESS: STREET 1: 300 WEST ADAMS STREET 2: 11TH FLOOR CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: STEINROE INTERMEDIATE MUNICIPALS INC DATE OF NAME CHANGE: 19880114 ARS 1 STEINROE TAX-EXEMPT BOND FUNDS 6/30/95 ANNUAL REPT 1Annual Report June 30, 1995 SteinRoe Tax-Exempt Bond Funds Municipal Money Market Fund Intermediate Municipals Managed Municipals High-Yield Municipals Photographic image of a man and woman. Graphic: SteinRoe Logo SteinRoe Mutual Funds Building Wealth for GenerationsSM Contents From the President 1 Tim Armour's thoughts on the markets and investing Performance 3 How the SteinRoe Tax-Exempt Funds have done over time Q&A Municipal Money Market Fund 7 Intermediate Municipals 10 Managed Municipals 13 High-Yield Municipals 15 Interviews with the portfolio managers and a summary of major shifts in the Funds' investments over the past 12 months Investments 20-43 A complete list of each Fund's investments with market values Financial Statements 44-51 Balance sheets, statements of operations, and changes in net assets Notes to Financial Statements 52-57 Financial Highlights 58-65 Selected per-share data Report of Independent Auditors 66 General Information 67-72 A guide to products and services From the President To Our Shareholders We are pleased to present this annual report for the SteinRoe Tax-Exempt Funds -- SteinRoe Municipal Money Market Fund, SteinRoe Intermediate Municipals, SteinRoe Managed Municipals and SteinRoe High-Yield Municipals. We never forget our relationship with you is built both on investment management capabilities and performance and on service and communication. That's why we have redesigned our annual report to make it simpler for you to evaluate your fund's performance. We hope you find it easier to read and understand. The Market Fixed income investors have weathered both the best and the worst of times during the past 12 months. The first half of our fiscal year saw many fixed income issues -- and the funds that invest in them -- struggle after the Federal Reserve, in a bid to dampen inflation after the torrid economic growth of 1994, pushed up short-term rates seven times in the 12-month period between February 1994 and February 1995. These sharp rate spikes caused bond prices to plummet, and contributed to what will long be remembered as one of the worst bond markets in history. Then, as economic data indicated the economy was slowing, the fixed income markets began to rally in the second half of our fiscal year. Adding to the strength of that rally were the many investors who, sobered by market-shattering events like the devaluation of the Mexican peso and the failure of one of Britain's oldest and most venerable investment banks, returned to the relative safety of U.S. Treasury and corporate issues. Municipal bonds also benefited from the rally, but not to the same extent as taxables. With investors remaining skittish after reports of flat tax proposals in Congress and the bankruptcy of one of California's wealthiest counties, the past year has been especially trying for the municipal markets. In addition, rising interest rates in the first half of the fiscal year spurred a dramatic decline in new bond and note issues. That situation eased somewhat as interest rates fell in the second half of our fiscal year, but sales of new bonds and notes still remain at their lowest levels in five years. Photographic image of Tim Armour So, what's ahead for the fixed income market? We anticipate weak economic activity through the third quarter, which may squeeze corporate profits. Lower corporate profits would put pressure on stock prices and make fixed income investments look attractive relative to equities. After the third quarter, however, we are forecasting firmer, steady, noninflationary economic growth throughout 1996. We also think that, following a cautious easing move early in the third quarter of 1995, the Federal Reserve will respond further to slow growth and improving inflation by reducing short-term interest rates in a few more steps. Long-term interest rates, on the other hand, can be expected to trade in a range centered on roughly 6.6 percent. We expect to hear about flat tax proposals through the next election, and, as a result, municipal bond investors can look for some uncertainties in the market until 1997. You'll find a brief discussion of flat tax issues elsewhere in the report, and I encourage you to call our account representatives if you'd like more information about how -- and when -- these proposals could affect your tax-exempt investments. The Basics While past performance is no guarantee of future results, and no one can predict what might happen to bond funds or the markets in the future, we believe investors must understand the factors that move the markets, not just to profit from them, but to gain the patience to ride out short-term volatility in their investments. As always, no matter what direction you think the economy is heading, it is important to remember the basics. Think long term and re-evaluate your investment portfolio from time to time to make sure it continues to match your goals, risk tolerance and time horizon. And try to follow a regular investment plan. By investing a certain amount of money each month or quarter, you can take advantage of dollar-cost averaging. Of course, not everyone is in a position to follow a regular investment plan. And it neither ensures a profit nor protects against a loss in a declining market. This simple strategy, however, can help you turn market volatility to your advantage. Please call us at 1 800 338-2550 with your comments and suggestions. As always, we look forward to serving your investment needs. Sincerely, Timothy K. Armour President August 14, 1995 Fund Performance There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual return percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (net investment income) and capital gains (the profits the fund earns when it sells fixed income securities that have grown in value). Average Annual Total Returns Periods ended June 30, 1995
Past 1 Past 3 Past 5 Past 10 Year Years Years Years Municipal Money Market Fund 3.02% 2.29% 2.97% 3.90% Past 1 Past 3 Past 5 From Year Years Years Inception* Intermediate Municipals 6.59% 6.15% 7.38% 7.26% Lehman 10-Year Municipal Bond Index 8.78 7.34 8.51 9.15 Past 1 Past 3 Past 5 Past 10 Year Years Years Years Managed Municipals 7.12% 5.77% 7.61% 9.21% High-Yield Municipals 8.54 5.74 6.99 8.97 Lehman Municipal Bond Index 8.82 6.87 8.26 9.17 Total return performance includes changes in share price and reinvestment of income and capital gains distributions. This 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. * Inception Date: Intermediate Municipals -- October 9, 1985. Because index returns are calculated on a monthly basis, the index returns marked "from inception" are calculated from the month-end results that fall closest to the Funds' inception dates.
Investment Comparison Comparison of change in value of $10,000 investment for the years ended June 30. This graph compares performance of SteinRoe Intermediate Municipals to the Lehman 10-Year Municipal Bond Index, an unmanaged group of intermediate-term municipal bonds that differs in composition from each SteinRoe Fund. Graph:
Year Ended Intermediate Lehman 10-Year 6/30 Municipals Municipal Bond Index 10/31/85 10000 10000 6/30/86 10756 11203 87 11454 12351 88 12093 13205 89 12922 14475 90 13818 15504 91 14950 16937 92 16500 18854 93 18304 21226 94 18516 21436 95 19736 23318 Comparison of change in value of $10,000 investment for the years ended June 30. This graph compares performance of SteinRoe Managed Municipals to the Lehman Municipal Bond Index, an unmanaged group of municipal bonds that differs in composition from each SteinRoe Fund. Graph: Year Ended Managed Lehman 6/30 Municipals Municipal Bond Index 85 10000 10000 86 12083 11652 87 13032 12656 88 14004 13595 89 15741 15144 90 16724 16175 91 18217 17633 92 20389 19709 93 22591 22066 94 22526 22103 95 24130 24053
Investment Comparison Comparison of change in value of $10,000 investment for the years ended June 30. This graph compares performance of SteinRoe High-Yield Municipals to the Lehman Municipal Bond Index, an unmanaged group of municipal bonds that differs in composition from each SteinRoe Fund.
Graph: Year Ended High-Yield Lehman 6/30 Municipals Municipal Bond Index 85 10000 10000 86 11833 11652 87 12684 12656 88 13774 13595 89 15670 15144 90 16867 16175 91 18352 17633 92 19998 19709 93 21574 22066 94 21780 22103 95 23643 24053
Investment Comparison Continued Making the Most of Performance The wide assortment of performance data available today can be a mixed blessing. On one hand, a fund's performance results can be a valuable source of information when considering an investment. On the other hand, even seasoned investors may find the wide array of data and the different methods of interpretation confusing. That's why one of the most important pieces of advice we can give you is to remember that a fund's past performance is just that -- past. While a fund's past performance is not a guarantee of how it will perform in the future, it can help you make rational decisions about the funds you currently hold or about funds you might be considering. Owning bond funds, for example, can help to reduce overall risks in a well-diversified portfolio. And because they have an income component, bonds tend to reduce portfolio fluctuations when stocks are down. Nonetheless, bond fund share prices will fluctuate as interest rates change. The price and total return of a mutual fund will change daily and if you sell your shares during a downturn in the market, you might lose money. But, if you can ride out the market's ups and downs, your fund might achieve a gain. No one can make your financial decisions better than you. We hope this annual report helps you to better understand and evaluate your fund's performance, and serves as a helpful aid in making intelligent, appropriate investment decisions. If you have any questions, please call a SteinRoe account representative at 1 800 338-2550. Q&A An Interview with Jill Netzel, Portfolio Manager of Municipal Money Market Fund Photographic image of Jill Netzel Fund Data Investment Objective: 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 Total Net Assets: $146.7 million Q: How did the Fund perform? A: For the fiscal year, Municipal Money Market Fund posted a return of 3.02 percent, nearly matching the performance of its Lipper tax-exempt money market peer group return of 3.04 percent, while the Fund's seven-day yield on June 30 was 3.52 percent. That translates into a taxable equivalent yield of 5.84 percent.1 Q: How did the Fund respond to the fluctuations in rates this year? A: Any movement in short-term interest rates will have a roughly corresponding effect on a money market fund's seven-day yield. We saw a spike in rates earlier in our fiscal year, as the Federal Reserve finished the period of tightening that it began in February 1994 -- rates rose more than one and three quarter points during the first half of the year. More recently, however, rates began drifting lower as economic growth slowed and investors began to assume that the Fed would begin easing interest rates. Q: What factors have contributed to the Fund's performance? A: Thanks to a high concentration in variable rate notes -- these notes "float up" with increases in interest rates -- our return was boosted in the first half of our fiscal year, when rates were rising. And, during the second half of the year, when rates began to fall, we began to lock in those earlier, higher rates by purchasing one-year notes. The Fund's performance also was positively affected by our position in alternative minimum tax (AMT) paper. Because investors in these higher-yielding securities may be subject to the alternative minimum tax, many money market funds do not own a large percentage of AMT paper in their portfolios. We believe that the majority of our shareholders are not subject to the alternative minimum tax, so we've sought to capture AMT paper's higher potential for yield by expanding our holdings over the past year. Our holdings of AMT paper increased from 18.5 percent on June 30, 1994, to 43.4 percent on June 30, 1995. Q: With merger activity picking up and many foreign banks reporting problems, banks have had a volatile year. Have you made any changes to your weighting in notes backed by bank letters of credit? A: On June 30, 44.3 percent of the portfolio was held in municipal notes backed by bank letters of credit. During the past year, we've concentrated our purchases of letter of credit-backed notes in those issued by U.S. banks, which reflects our concern about the credit quality of many foreign banks -- particularly those in Japan, where the banking system is heavily burdened by bad loans. Q: What are your expectations for the coming months? A: After the Federal Reserve's quarter-point easing move early in the third quarter, we'll look for indications of a second easing of short-term rates. If we think a second easing move is likely, you'll see us begin to modestly extend the Fund's average maturity to take advantage of the fact that rates are dropping. We'll do that by selling some portion of our variable rate issues and purchasing six- and nine-month notes and commercial paper. (1) Total return performance includes changes in share price and reinvestment of income and capital gains distributions. The Fund's adviser currently limits expenses to 0.70 percent of average net assets, subject to termination upon 30 days' notice. Absent past limits, the Fund's total return would have been less. Past performance is no guarantee of future results. The Fund strives to maintain a $1 per share net asset value. An investment in the Fund, however, is neither insured nor guaranteed by the U.S. government, and there is no assurance that the Fund will be able to maintain a stable net asset value of $1 per share. Taxable equivalent yield is shown in the 39.6 percent tax bracket, which applies to investors with incomes higher than $250,000 per year. Tax-free income is exempt from most federal taxes, but may be subject to state and local taxes and federal alternative minimum tax. According to Lipper Analytical Services, Inc., an independent monitor of mutual fund performance, the Fund's peer group invests in high-quality municipal obligations with dollar-weighted average maturities of less than 90 days. There were 123 funds in this peer group for the year ended June 30, 1995. Share price and investment return will vary, so you may have a gain or a loss when you sell shares. Fund Highlights Municipal Money Market Fund Securities Type Breakdown
Portfolio Portfolio June 30, 1994 June 30, 1995 General Obligation 5.0% 2.4% Revenue: Industrial 23.0 25.8 Utility 18.0 25.2 Other Revenue 14.0 12.4 Oil 3.0 8.8 Education 5.0 6.5 Hospital 5.0 5.8 Housing -- 5.3 Waste Disposal 9.0 4.5 Toll 2.0 1.3 Electric 4.0 1.0 Student Loan 8.0 -- Mortgage 3.0 -- Escrowed 1.0 1.0 Total 100% 100% Maturity Pie chart: As of June 30, 1994 As of June 30, 1995 0-29 Days 62.3% 0-29 Days 65.6% 30-59 Days 8.8% 30-59 Days 8.2% 60-89 Days 14.9% 60-89 Days 11.6% 90-119 Days 3.1% 90-119 Days 4.9% 120-179 Days 2.4% 120-179 Days 2.1% 180-375 Days 8.5% 180-375 Days 7.6% Shareholders Approve New Agreements At a special meeting on June 27, 1995, shareholders of SteinRoe Municipal Money Market Fund voted to approve a proposal that replaced the Fund's investment advisory agreement with two new agreements. These new agreements essentially carry forward the services Stein Roe & Farnham already provides to shareholders, separating into two agreements the provision of administrative and investment management services. The new agreements will take effect on September 28, 1995. The outcome of the vote was as follows: Record date share position: 143,533,391 Total share position voted: 76,381,518 FOR 72,857,995 AGAINST 1,561,407 ABSTENTIONS 1,962,116
Q&A An Interview with Joanne Costopoulos, Portfolio Manager of Intermediate Municipals Photographic Image of Joanne Costopoulos Fund Data Investment Objective: Seeks high current yield exempt from federal income tax, consistent with capital preservation, through investments 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 ten years. Fund Inception: October 9, 1985 Total Net Assets: $212.5 million Q: How did the Fund perform? A: We ended the year with a 6.59 percent return, which just trailed the 6.86 percent median return of the Fund's Lipper intermediate municipal debt peer group. The Fund's 4.44 percent standardized yield translates into a taxable equivalent yield of 7.36 percent.1 We underperformed the Lehman 10-Year Municipal Bond Index return of 8.8 percent, primarily because, for most of the year, the Fund's duration (a measure of volatility) was shorter than that of the Index. The Index tends to have an average maturity of eight to 12 years and a duration that averages around seven. In contrast, the Fund's average maturity tends to be about eight years, and its average duration tends to center around six. To extend our maturity, and, thus, our duration, would require selling a great deal of our shorter-term paper and realizing a significant amount of capital gains -- a move that we believe would not be in the best interests of our shareholders. In addition, we maintained a portfolio that is higher in average credit quality than the Index -- lower-quality issues significantly outperformed higher-quality issues during the last half of the year. We try to keep the Fund at a relatively high quality level because we believe that the risk tolerance of investors in an intermediate fund tends to be of a more conservative nature. Obviously, neither of these are ongoing situations -- portfolio quality is subject to change, as is the Fund's maturity profile. Q: How much does the portfolio's credit quality change during any given year? A: We try to manage this Fund conservatively, and higher-quality issues, by definition, carry less risk. We do move the credit quality of the portfolio up or down according to whether higher- or lower-quality securities are looking attractive during a given period. But, on balance, we tend to keep the bulk of the portfolio in the higher grades -- A- to AAA-rated securities -- concentrating on the higher end of the quality spectrum. Q: What affected performance? A: We've benefited from the strong performance of general obligation bonds (GOs). We've also kept a significant portion (56.2 percent on June 30) of the portfolio in revenue bonds, particularly water and sewer issues, which have consistently outperformed many of the other types of revenue projects this year. We weren't expecting rates to drop as quickly as they did in the latter half of the year, and because the portfolio was positioned conservatively, with a relatively short duration, we were not able to participate in the recent bond rally to the extent that we could have. Q: What's your outlook? A: While investors have been skittish, we believe the intermediate tax-exempt market is poised for a comeback for a number of reasons: First, concerns over the effect of tax reform on municipal bonds seem to have subsided as investors realize that any changes in the tax laws will take time to implement. Municipal bonds are currently outperforming the taxable market, so investors who want to be in municipals, but think that tax reform is unlikely before the end of the decade, will probably avoid committing themselves to too much uncertainty by choosing intermediates over longer-term municipals. Second, the relationship of municipals to Treasuries has recently been at attractive levels, and should draw those investors who, until recently, have been on the sidelines. (1) Total return performance includes changes in share price and reinvestment of income and capital gains distributions. Tax-free income is exempt from most federal taxes, but may be subject to state and local taxes and federal alternative minimum tax. Capital gains are subject to federal, state and local taxes. Past performance is no guarantee of future results. Share price and investment return will vary, so you may have a gain or a loss when you sell shares. Taxable equivalent yield is shown in the 39.6 percent tax bracket, which applies to investors with incomes higher than $250,000 per year. Lipper Analytical Services, Inc., an independent monitor of mutual fund performance, defines the Fund's peer group as investing in municipal debt issues with dollar-weighted average maturities of five to ten years. There were 103 funds in this peer group for the year ended June 30, 1995. The Lehman 10-Year Municipal Bond Index is an unmanaged group of intermediate-term municipal bonds that differs from the composition of each SteinRoe Fund; the Lehman 10-Year Municipal Bond Index is not available for direct investment. Fund Highlights Intermediate Municipals Securities Type Breakdown
Portfolio Portfolio June 30, 1994 June 30, 1995 General Obligation 25.1% 30.9% Revenue: Water & Sewer 12.6 16.5 Electric 9.9 5.4 Toll 8.4 5.5 Airport 7.7 6.3 Student Loan 5.3 4.5 Hospital 4.6 5.9 Other Revenue 15.2 12.1 Escrowed 8.9 9.1 Lease/Miscellaneous 2.3 3.8 Total 100% 100% Maturity Pie charts: As of June 30, 1994 As of June 30, 1995 Less Than 1 Year (2.5%) Less Than 1 Year (2.1%) 1-5 Years (12.7%) 1-5 Years (15.8%) 5-10 Years (58.5%) 5-10 Years (48.6%) 10-15 Years (22.6%) 10-15 Years (20.8%) Over 15 Years (3.7%) Over 15 Years (12.7%) Portfolio Quality As of June 30, 1994 As of June 30, 1995 AAA (56.2%) AAA (58.6%) AA (22.8%) AA (21.9%) A (21.0%) A (18.7%) BBB (0.8%)
Q&A An Interview with Jane McCart, Portfolio Manager of Managed Municipals and High-Yield Municipals Photographic image of Jane McCart Managed Municipals 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: February 23, 1977 Total Net Assets: $629.7 million Jane McCart, portfolio manager of Managed Municipals since 1991, was named portfolio manager of High-Yield Municipals in January. Managed Municipals Q&A Q: How did the Fund perform? A: At 7.12 percent for the year, the Fund's one-year return lagged the Lipper general municipal debt peer group's median return of 7.63 percent and underperformed the Lehman Municipal Bond Index return of 8.82 percent. The Fund's June 30 tax-exempt standardized yield was 5.20 percent, which translates into a taxable equivalent standardized yield of 8.61 percent.1 We underperformed the Index primarily because the Fund contains a larger weighting in housing-related bonds and a lower weighting in general obligation bonds than does the Index. While general obligation bonds performed well during the year -- outperforming the housing sector in particular -- we continue to overweight the Fund in housing securities because they offer the potential for a high level of income and yield. One of the more positive factors in the Fund's performance was our position in noncallable bonds. A 30-year high-coupon callable bond that can be called out of the market in 10 years, for example, will generally trade as if it were a 10-year bond, and that will be reflected in its price, which will be lower. Because a noncallable bond cannot be called out of the market, its price movement is not obstructed by call features -- more particularly, its price tends not to be hindered from moving upward in a strong market, such as we are now experiencing. During the past two years, we have consistently added to the Fund's noncallable position -- more than 30 percent of the portfolio is now held in noncallable paper. Finally, some purchases of paper company securities (2 percent of the portfolio) paid off recently when strong corporate earnings for paper companies boosted the value of these bonds. Q: How does duration affect your performance? A: Duration -- or, more correctly, adjusted duration -- is a measure of a bond fund's sensitivity to interest rates. If a bond has a duration of five, for example, and interest rates fall by one percent, then the bond's price should rise by approximately 5 percent. The higher the duration, the more sensitive a bond's price will be to changes in interest rates. A shorter duration tends to help a bond fund's performance when interest rates are rising -- as they were during the first half of the year -- and hinders performance when interest rates are falling. We'd like to have lengthened our duration more than we did in the latter half of the year, when interest rates were falling, but lengthening duration has been a continuing challenge for us, mainly because new issue supply has been scarce in the municipal market. New municipal bond issues take two forms: new-money issues for general purposes or for a special project, such as a toll road or pollution control plant; or refundings, which take advantage of falling interest rates to replace old debt, issued at higher rates, with new debt issued at current, lower rates -- much like refinancing a mortgage. Recently, taxpayer revolt has killed many new-money issues, while refundings typically don't occur when rates are high or rising. The result has been fewer new issues coming to market. The scarcity of appropriate long-term market discount bonds -- bonds that are already on the market -- is another factor. Buying long discount bonds tends to help performance -- especially if they are lower-coupon bonds that have call features, because these bonds are less likely to be called out of market and replaced with new debt issued at a lower interest rate. Consequently, lower-coupon discount bonds have greater potential for appreciation. But the gains generated by many discount bonds are taxed as ordinary income. Simply put, to avoid passing on ordinary income to our shareholders, we have to pass up many market discount bonds, and the alternatives -- new issues -- are limited. Q: With talk of a flat tax in Congress, what are your expectations for the Fund? A: There are a number of different opinions, but we think that a flat tax is likely at some point in the future only under certain political circumstances. It's difficult to say what effect a flat tax would have on the market, as both tax laws and flat tax proposals may change significantly in the next few years. Is a flat tax something investors need to worry about in the near term? We don't think so. We believe that the flat tax won't be an issue until after 1997. And recent inflows into municipal bond funds suggest that investors are starting to agree with us. (1) Total return performance includes changes in share price and reinvestment of income and capital gains distributions. Tax-free income is exempt from most federal taxes, but may be subject to state and local taxes and federal alternative minimum tax. Capital gains are subject to federal, state and local taxes. Past performance is no guarantee of future results. Share price and investment return will vary, so you may have a gain or a loss when you sell shares. Taxable-equivalent yield is shown in the 39.6 percent tax bracket, which applies to investors with incomes higher than $250,000 per year. Lipper Analytical Services, Inc., an independent monitor of mutual fund performance, defines the Fund's peer group as investing at least 65 percent of assets in municipal debt issues in the top four credit ratings. There were 201 funds in this peer group for the year ended June 30, 1995. The Lehman Municipal Bond Index is an unmanaged group of municipal bonds that differs from the composition of each SteinRoe Fund; the Lehman Municipal Bond Index is not available for direct investment. High-Yield Municipals Fund Data Investment Objective: Seeks a high level of tax-free income consistent with capital preservation by investing in longer-term municipal securities, principally of medium and lower quality. Fund Inception: March 5, 1984 Total Net Assets: $281.1 million High-Yield Municipals Q&A Q: Are there any differences in the investment process between Managed Municipals and High-Yield Municipals? A: Managed Municipals is a higher-grade, long-term fund, while High-Yield Municipals, as its name suggests, seeks higher yield and is willing to take on higher credit risk in order to find it. We're careful about what we buy for both Funds, but research -- always important in investment management -- is critical when it comes to buying below investment-grade and unrated issues for High-Yield Municipals. For obvious reasons, both are inherently more risky than higher-grade municipal bonds. SteinRoe has a number of sector specialists and analysts to quantify potential risks and returns. In addition, because some municipal issues -- those for industrial development or pollution control, for example -- are actually backed by taxable corporations, both tax-exempt and taxable bond analysts are an important part of the research process. Q: Did you change your investment strategy during the year? A: The Fund has had good performance over the long term, and we wanted to maintain that record. Of course, past performance is no guarantee of future results, but we believe that, by taking advantage of our credit research capabilities, we can be more aggressive than we have been in the past in seeking higher yields -- without taking undue risk. Good research is key to this approach, and, fortunately, that's one of SteinRoe's strengths. Since taking over the Fund in January, we've added a number of high-yield projects to the portfolio -- a paper de-inking plant (2.19 percent of holdings), the Denver airport (1.52 percent of holdings) and an independent power project (1.07 percent of holdings), all of which have performed nicely. Still, new issue supply in the municipal bond market has been lower than usual during the past year, so boosting the Fund's yield is taking a little longer than we would like. Q: How did the Fund perform this year? A: The Fund finished the year with an 8.54 percent return, outperforming its Lipper high-yield municipal debt peer group's median return of 7.97 percent, and trailing just behind the 8.82 percent return of the Lehman Municipal Bond Index. As of June 30, the Fund's standardized yield was 5.51 percent, a taxable equivalent yield of 9.12 percent.1 Lower interest rates in the past six months have benefited the portfolio, as has the high-yield sector's solid performance. We made some astute purchases of airline and paper company securities during the year, and those holdings paid off as strong corporate earnings -- particularly for airlines and paper companies -- boosted the value of these bonds. Several nonperforming holdings have been a drag on the Fund's performance during the year. In January, however, we received proceeds from certain outstanding claims, and more recently we have begun seeing positive inflows from some of those nonperforming projects. Q: Municipal investors heard a lot about Orange County this year. What happened? A: The Orange County bankruptcy was an extreme example of what can go wrong when municipalities use -- and occasionally misuse -- leveraged investing. Leveraging tends to magnify the effect of interest rate moves. In the late 1980s and early 1990s, the yield on longer-term bonds was several points higher than short-term interest rates, and many investors felt it was safe to borrow money (at lower three- and six-month rates) and purchase intermediate- and long-term bonds paying higher yields. This strategy seemed to work well: not only did it make it possible to capture higher yields, but, as more and more people adopted the same strategy, the increased demand helped to raise the prices of longer-term securities. But, like all good things, it came to an end. As soon as the Fed raised short-term interest rates, everything went into a tailspin. Rampant borrowing -- and the resulting leveraged buying -- exaggerated the effect of rate increases, forcing many investors to sell securities at lower prices to repay outstanding loans. The result: still-higher rates and lower prices. Orange County's financial advisers got caught in this vicious circle, incurring losses so massive that it forced the municipality to declare bankruptcy in December 1994. Could it happen again? If leveraged investors misplace their bets, any change in interest rates can expose them to losses. That's why we put so much emphasis on our own, internal credit research. Doing our own research allows us to decide independently whether or not a municipality is creditworthy, as well as whether its investment policies are sound. Q: How did the Fund weather the crisis? A: Long before Orange County defaulted on its bonds, our analysts decided that California municipalities were being asked to shoulder an increasingly heavy burden for public services from the California state government, and because of recent changes to the state constitution, municipalities had but limited power to raise taxes to pay for those services. Consequently, our analysts recommended that we avoid investing in California until the situation eased. That turned out to be a very perceptive recommendation, for when Orange County's crisis hit, we had very little exposure to the state and none at all to Orange County itself. (1) Total return performance includes changes in share price and reinvestment of income and capital gains distributions. Tax-free income is exempt from most federal taxes, but may be subject to state and local taxes and federal alternative minimum tax. Capital gains are subject to federal, state and local taxes. Past performance is no guarantee of future results. Share price and investment return will vary, so you may have a gain or a loss when you sell shares. Taxable equivalent yield is shown in the 39.6 percent tax bracket, which applies to investors with incomes higher than $250,000 per year. According to Lipper Analytical Services, Inc., an independent monitor of mutual fund performance, this Fund's peer group may invest at least 50 percent of assets in lower-rated municipal debt issues. There were 34 funds in this peer group for the year ended June 30, 1995. The Lehman Municipal Bond Index is an unmanaged group of municipal bonds that differs from the composition of each SteinRoe Fund; the Lehman Municipal Bond Index is not available for direct investment. Fund Highlights Managed Municipals Securities Type Breakdown
Portfolio Portfolio June 30, 1994 June 30, 1995 General Obligation 14.5% 18.3% Lease/Miscellaneous 9.9 14.5 Escrowed 17.6 13.2 Revenue: Housing 13.4 12.0 Electric 9.9 8.6 Water & Sewer 6.8 8.3 Toll 6.1 6.8 Hospital 5.2 6.0 Airport 2.9 4.1 Other Revenue 13.7 8.2 Total 100% 100% Maturity Pie Charts: As of June 30, 1994 As of June 30, 1995 Over 25 Years 18.6% Over 25 Years 20.5% 20-25 Years 21.1% 20-25 Years 23.9% 15-20 Years 23.6% 15-20 Years 26.0% 10-15 Years 13.1% 10-15 Years 12.0% 5-10 Years 10.5% 5-10 Years 3.7% 1-5 Years 11.9% 1-5 Years 7.9% Less Than 1 Year 1.2% Less Than 1 Year 6.0% Portfolio Quality As of June 30, 1994 As of June 30, 1995 AAA (37.4%) AAA (38.8%) AA (36.1%) AA (33.9%) A (24.0%) A (24.5%) BBB and Below (2.5%) BBB and Below (2.8%)
Fund Highlights High-Yield Municipals Securities Type Breakdown
Portfolio Portfolio June 30, 1994 June 30, 1995 Lease/Miscellaneous 14.1% 22.4% Escrowed 11.5 10.0 General Obligation 5.8 5.9 Revenue: Hospital 18.3 17.8 Housing 13.9 11.5 Electric 9.9 8.5 Toll 4.8 5.6 Water & Sewer 4.5 3.6 Airport 3.6 2.3 Student Loan 0.7 0.0 Other Revenue 12.9 12.4 Total 100% 100% Maturity Pie Charts: As of June 30, 1994 As of June 30, 1995 Over 25 Years 24.4% Over 25 Years 28.7% 20-25 Years 36.3% 20-25 Years 34.1% 15-20 Years 12.9% 15-20 Years 10.9% 10-15 Years 10.4% 10-15 Years 10.7% 5-10 Years 7.5% 5-10 Years 9.5% 1-5 Years 4.6% 1-5 Years 2.4% Less Than 1 Year 3.9% Less Than 1 Year 3.7% Portfolio Quality As of June 30, 1994 As of June 30, 1995 AAA (15.9%) AAA (18.2%) AA (16.2%) AA (12.7%) A (32.0%) A (27.0%) BBB (17.2%) BBB (21.3%) BB (2.3%) BB (3.2%) NR* (16.4%) NR* (17.6%) *Nonrated
Municipal Money Market Fund Investments as of June 30, 1995 (Dollar Amounts In Thousands)
Principal Market Municipal Securities (103.5%) Amount Value Alabama (5.6%) *Alabama I.D.A. Solid Waste Disposal Revenues (Pine City Fiber Company L.O.C. Barclays Bank Plc) V.R.D.B. 4.150% $ 6,750 $ 6,750 *Ardmore I.D.R. (Group Dekko L.O.C. Bank One, Indianapolis) V.R.D.B. 4.350% 1,465 1,465 -------- 8,215 Arizona (0.7%) *Cochise County Pollution Control Corporation Solid Waste Disposal Revenue (Arizona Electric Power Cooperative gtd. by National Rural Utilities Cooperative Finance Corp.) 4.450% Optional Put 9/01/95 1,000 1,000 California (5.6%) City of Orange T.R.A.N. 4.750% 8/01/95 2,000 2,001 Los Angeles School District Tax & Revenue T.R.A.N. 4.500% 7/10/95 Series 94-95 1,400 1,400 4.500% 7/03/96 Series 95-96 2,750 2,771 San Diego T.A.N. Series A 4.750% 7/03/96 2,000 2,016 -------- 8,188 Colorado (1.4%) Arapahoe County Capital Improvement Highway Revenue Series L (gtd. by Swiss Bank Corp.) 4.450% Optional Put 8/31/95 2,000 2,000 District of Columbia (2.1%) District of Columbia Revenue Series 1985 (American University L.O.C. National Westminister Bank) V.R.D.B. 4.300% 3,100 3,100 Florida (8.6%) Martin County P.C.R. (Florida Power & Light Co.) Series 1994 V.R.D.B. 4.200% 400 400 Orlando Utilities Commission Water & Electric Revenue (pre-refunded to 10/01/95) 8.100% 10/01/96 1,500 1,542 Putnam County Development Authority P.C.R. Series 1984 S (Seminole Electric Cooperative, Inc. gtd. by National Rural Utilities Cooperative Finance Corp.) V.R.D.B. 4.300% 4,100 4,100 St. Lucie County P.C.R. Series 1993 (Florida Power and Light) 4.200% V.R.D.B. 900 900 3.750% Mandatory Put 9/18/95 1,000 1,000 3.900% Mandatory Put 9/18/95 3,000 3,000 4.050% Mandatory Put 11/16/95 1,600 1,600 -------- 12,542 Idaho (2.1%) Idaho T.A.N. 4.500% 6/27/96 3,000 3,020 Illinois (5.6%) City of Chicago G.O. Tender Notes Series A (L.O.C. Morgan Guarantee Trust Co., New York) 4.600% Mandatory Put 10/31/95 1,620 1,620 *Illinois Development Finance Authority Revenue Refunding (L.O.C. Swiss Bank Corporation) V.R.D.B. 4.350% (Brookdale) 1,000 1,000 4.350% (River Oaks) 865 865 Illinois Health Facilities Authority Revenue (University of Chicago Hospital) 4.500% Optional Put 8/17/95 3,500 3,500 Municipal Money Market Fund Continued Principal Market Amount Value Illinois (continued) *Southwestern Development Authority Solid Waste Disposal Revenue (Shell Oil Co.) 4.350% V.R.D.B. $ 600 $ 600 4.350% V.R.D.B. 700 700 -------- 8,285 Indiana (9.1%) Fort Wayne Hospital Authority Revenue (Parkview Memorial Hospital L.O.C. Fuji Bank, Ltd.) V.R.D.B. 4.200% Series B 3,000 3,000 4.200% Series C 2,300 2,300 *Franklin Economic Development Revenue Refunding (L.O.C. Federal Home Loan Bank, Indianapolis) V.R.D.B. 4.300% 3,000 3,000 *LaPorte County Economic Development Revenue (Woodland Project) (L.O.C. Federal Home Loan Bank) V.R.D.B. 4.300% 2,000 2,000 Mt. Vernon P.C.R. (General Electric Co.) 3.900% Mandatory Put 8/28/95 2,000 2,000 Tipton Economic Development Revenue (Tipton Apartments Project L.O.C. Bank One, Indianapolis) V.R.B.D. 4.200% 1,105 1,105 -------- 13,405 Iowa (2.7%) Iowa School Corporations Warrant Certificates (Capital Guaranty Insured) 4.250% 7/17/95 1994-95 Series A 2,000 2,000 4.750% 6/28/96 1995-96 Series A 2,000 2,017 -------- 4,017 Kentucky (3.6%) *Covington I.D.R. Series 1991 (White Castle Distributing L.O.C. Bank One, Columbus) V.R.D.B. 4.350% 4,255 4,255 Pendelton County Multiple County Lease Revenue (Kentucky Association of Counties L.O.C. PNC of Kentucky) 3.750% Mandatory Put 7/01/95 1,000 1,000 -------- 5,255 Louisiana (3.3%) *Lake Charles Harbor & Terminal District P.C.R. (E.I. DuPont gtd. by Conoco Inc.) V.R.D.B. 4.400% 1,400 1,400 *Parish of St. Charles P.C.R. (Shell Oil Co.) V.R.D.B. 4.350% 3,400 3,400 -------- 4,800 Maryland (4.8%) Ann Arundel County E.D.R. (Baltimore Gas and Electric Company) *4.200% Mandatory Put 7/26/95 2,000 2,000 *4.250% Mandatory Put 7/26/95 2,000 2,000 *3.750% Mandatory Put 9/01/95 1,000 1,000 3.750% Mandatory Put 10/24/95 2,000 2,000 ------- 7,000 Michigan (4.1%) Michigan Job Development Authority P.C.R. Series 1985 (Mazda Motor Manufacturing USA Corp. L.O.C. Sumitomo Bank, Ltd.) V.R.D.B. 4.250% 4,000 4,000 Michigan Strategic Fund I.D.R. (Michigan Sugar Co. - Croswell Project L.O.C. Trust Company Bank) V.R.D.B. 4.150% 2,000 2,000 -------- 6,000 Municipal Money Market Fund Continued Principal Market Amount Value Missouri (3.1%) Jefferson County (GHF Holdings L.O.C. Bank One, Indianapolis) V.R.D.B. 4.350% $ 4,500 $ 4,500 New Hampshire (4.8%) New Hampshire I.D.R. (New England Power Co.) 4.350% Mandatory Put 7/31/95 3,000 3,000 *4.250% Mandatory Put 10/16/95 1,000 1,000 *4.100% Mandatory Put 10/18/95 3,000 3,000 -------- 7,000 North Carolina (0.3%) Yancey County Industrial Facility and Pollution Control Finance Authority Revenue Series 1988 (Avondale Mills Inc. L.O.C. Trust Company Bank) V.R.D.B. 4.150% 490 490 Oregon (1.0%) Klamath Falls Electric Revenue Salt Caves Hydroelectric Series D 4.400% Mandatory Put 5/01/96 1,500 1,500 Pennsylvania (6.6%) *Carbon County I.D.R. Series B (Panther Crest Creek Partners L.O.C. National Westminster Bank) 4.200% Mandatory Put 7/31/95 2,000 2,000 *Pennsylvania Energy Development Authority (B&W Ebensburg Project L.O.C. Swiss Bank Corporation) Series 87 & 88 V.R.D.B. 4.350% 3,350 3,350 Schuykill County I.D.A. Resource Recovery Revenue (Westwood Energy Properties Limited Partnership L.O.C. Fuji Bank, Ltd.) V.R.D.B. 4.450% 4,360 4,360 -------- 9,710 South Carolina (2.0%) *South Carolina Economic Development Authority (Specialty Equipment Companies L.O.C. Barclays Bank PLC) V.R.D.B. 4.350% 3,000 3,000 Texas (9.5%) Harris County Industrial Development Corp. (Exxon Corp.) 4.250% V.R.D.B. 800 800 *4.350% V.R.D.B. 2,860 2,860 Southwest Higher Education Authority Texas (Southern Methodist University) V.R.D.B. 4.200% 700 700 Texas Association of School Boards T.A.N. Series A 4.750% 8/31/95 4,000 4,004 Texas T.R.A.N. 5.000% 8/31/95 5,600 5,606 -------- 13,970 Wisconsin (13.0%) *Carlton P.C.R. Series 1988 (Wisconsin Power and Light) V.R.D.B. 4.300% 7,000 7,000 Fond Du Lac I.D.R. (Brenner Tank Inc. L.O.C. Bank One, Milwaukee) V.R.D.B. 4.350% 4,250 4,250 Fox Lake I.D.A. Revenue Bonds Series 1994 (L.O.C. Bank One, Milwaukee) V.R.D.B. 4.350% 2,025 2,025 *Holland I.D.R. (White Clover Daily Inc. L.O.C. Bank One, Milwaukee) V.R.D.B. 4.350% 3,250 3,250 *Kenosha I.D.R. (Monarch Plastics Inc. L.O.C. Bank One, Milwaukee) V.R.D.B. 4.350% 2,600 2,600 -------- 19,125 Municipal Money Market Fund Continued Principal Market Amount Value Wyoming (3.9%) *Lincoln County P.C.R. (Exxon Corp.) 4.250% V.R.D.B. $ 2,100 $ 2,100 4.350% V.R.D.B. 3,600 3,600 -------- 5,700 Total Municipal Securities (103.5%) (Amortized Cost $151,822) 151,822 Other Assets, Less Liabilities (-3.5%) (5,118) -------- Total Net Assets (100.0%) $146,704 ======== * These securities are subject to alternative minimum tax. At June 30, 1995 these securities represented 43.0 percent of net assets. See accompanying notes to financial statements.
Intermediate Municipals Investments as of June 30, 1995 (Dollar Amounts In Thousands)
Principal Market Municipal Securities (97.0%) Amount Value Alaska (2.3%) Kenai Peninsula Borough G.O. Refunding (AMBAC Insured) 8.300% 1/01/99 $ 1,500 $ 1,676 North Slope Borough G.O. 8.350% 6/30/98 3,000 3,273 -------- 4,949 Arizona (7.6%) Arizona Transportation Board Highway Revenue Subordinated Series A 6.000% 7/01/00 1,000 1,050 Cochise County Unified School District No. 68 Series B (FGIC Insured) 9.000% 7/01/01 1,115 1,361 Flagstaff G.O. Series A (FGIC Insured) 6.250% 7/01/99 1,500 1,594 Maricopa County Refunding G.O. Unlimited Tax (FGIC Insured) 6.250% 7/01/00 2,000 2,134 Maricopa County Hospital Revenue (Samaritan Health Services) (Escrowed in U.S. Treasury Securities) 7.625% 1/01/08 2,050 2,407 Phoenix Civic Improvement Wastewater System Lease Revenue (Escrowed in U.S. Treasury Securities) (pre-refunded to 7/01/03) 6.000% 7/01/07 2,500 2,731 Pima County Refunding G.O. 6.300% 7/01/02 2,500 2,694 Pima County Unified School District No. 1 (Tucson Project) (MBIA Insured) 8.000% 7/01/01 1,400 1,626 Tempe Unified High School District No. 213 Refunding and Improvement (FGIC Insured) 7.000% 7/01/08 500 570 -------- 16,167 Arkansas (1.3%) Beaver Water District Benton & Washington Counties Water Revenue Refunding (MBIA Insured) 6.000% 11/15/04 2,580 2,752 California (6.1%) *California Housing Finance Agency Revenue Home Mortgage Series B-1 5.900% 2/01/04 1,000 1,002 Central Coast Water Authority Revenue (AMBAC Insured) 5.950% 10/01/03 2,000 2,115 East Bay Municipal Utility District Water System Revenue (Escrowed in U.S. Treasury Securities) (AMBAC Insured) 7.000% 6/01/00 1,400 1,552 Escondido Joint Powers Financing Authority Lease Revenue (California Center for the Arts) Zero Coupon (Effective Yield 6.015%) 9/01/08 2,070 922 Los Angeles County Public Works Authority (Regional Parks and Open Space Revenue) 5.800% 10/01/05 1,500 1,538 Los Angeles Department of Water & Power Electric Revenue Crossover Refunding 9.000% 9/01/03 2,500 3,127 Oakland Unified School District G.O. Series A (FGIC Insured) Zero Coupon (Effective Yield 6.250%) 08/01/16 1,700 437 Vallejo Revenue Series B (Water Improvement Project) (FGIC Insured) 6.000% 11/01/01 2,030 2,156 -------- 12,849 Delaware (0.6%) Delaware Economic Development Authority Water Development Revenue Refunding (General Waterworks Corp.-Wilmington Suburban Water Corp.) 6.450% 12/01/07 1,165 1,241 Intermediate Municipals Continued Principal Market Amount Value Florida (0.7%) Florida Division Board Finance Department of General Services Revenue (Department of Natural Resources) (MBIA Insured) 6.000% 7/01/03 $ 1,000 $ 1,072 *Greater Orlando Aviation Authority Airport Facilities Revenue (Escrowed in U.S. Treasury Securities)(pre-funded to 10/01/98) 8.250% 10/01/08 270 305 -------- 1,377 Georgia (5.6%) Atlanta Airport Facilities Revenue Refunding Series A (AMBAC Insured) 6.500% 1/01/07 1,000 1,096 Cobb County & Marietta Water Authority Revenue Refunding Series B 6.900% 11/01/98 1,000 1,075 Fulton County Water & Sewer Revenue Refunding (FGIC Insured) 5.625% 1/01/01 1,000 1,045 Georgia G.O. Series C 7.700% 4/01/00 1,250 1,420 Metropolitan Atlanta Rapid Transit Authority Sales Tax Revenue Refunding (AMBAC Insured) 6.050% 7/01/01 1,600 1,708 5.800% 7/01/02 1,000 1,053 Municipal Electric Authority of Georgia Power Revenue (Escrowed in U.S. Treasury Securities) (pre-refunded to 1/01/98) 8.200% 1/01/04 1,250 1,387 Municipal Electric Authority of Georgia Special Obligation Fifth Crossover Series (AMBAC Insured) 6.400% 1/01/13 3,000 3,182 -------- 11,966 Hawaii (0.5%) Honolulu (City & County) Refunding G.O. Series 1990 A 7.350% 7/01/06 1,000 1,162 Illinois (5.7%) *Chicago Midway Airport Revenue Series A (MBIA Insured) 5.700% 1/01/04 1,000 1,012 Chicago Skyway Toll Bridge Revenue Refunding Series 1994 6.750% 1/01/17 1,500 1,498 Chicago Water Revenue Refunding (FGIC Insured) 6.500% 11/01/09 2,130 2,286 Cook County Community College District #508 (FGIC Insured) 8.750% 01/01/03 1,000 1,219 DuPage County Forest Preserve District G.O. 8.650% 11/01/97 1,000 1,091 Metropolitan Pier & Exposition Authority Dedicated State Tax Revenue Series 1992 A (McCormick Place Expansion Project) 5.900% 6/15/03 1,500 1,569 7.250% 6/15/05 1,750 2,002 *Southwestern Development Authority Solid Waste Disposal Revenue (Shell Oil Co.) V.R.D.B. 4.350% 1,500 1,500 -------- 12,177 Indiana (4.4%) Indiana Toll Road Commission Toll Road Revenue (Escrowed in U.S. Treasury Securities) 9.000% 1/01/15 2,655 3,560 Indiana Transportation Finance Authority Airport Facilities Lease Revenue Series A (United Airlines) 5.600% 11/01/99 1,125 1,154 6.500% 11/01/07 2,250 2,359 Intermediate Municipals Continued Principal Market Amount Value Indiana (Continued) Indianapolis Local Public Improvement Bond Bank Series 1992 D 6.500% 2/01/06 $ 2,100 $ 2,226 -------- 9,299 Iowa (0.7%) Iowa School Corporations Warrant Certificates 1995-96 Series A (Capital Guaranty Insured) 4.750% 6/28/96 1,500 1,514 Kentucky (3.5%) Kentucky Turnpike Authority Economic Development Revenue Refunding (Revitalization Projects) 5.800% 1/01/04 2,500 2,604 6.500% 7/01/07 (AMBAC Insured) 2,000 2,197 *Kenton County Airport Board Airport Revenue 8.250% 3/01/15 2,430 2,642 -------- 7,443 Louisiana (1.6%) Lafayette Public Power Authority Electric Revenue 9.000% 11/01/96 1,000 1,044 Louisiana Public Facilities Authority Student Loan Revenue Series A-1 5.900% 9/01/99 2,000 2,037 *Parish of St. Charles P.C.R. (Shell Oil Co.) V.R.D.B. 4.350% 200 200 -------- 3,281 Maine (0.4%) *Maine Educational Loan Authority Educational Loan Revenue Supplemental Education Loan Series A-2 6.650% 12/01/02 845 874 Maryland (1.5%) Washington Suburban Sanitation District Water Supply G.O. 5.100% 6/01/09 950 899 5.125% 6/01/10 650 612 5.200% 6/01/11 940 885 5.250% 6/01/12 925 869 -------- 3,265 Massachusetts (5.2%) Massachusetts Bay Transportation Authority Mass Refunding General Transportation System 7.000% 3/01/07 Series A 2,250 2,539 Massachusetts Health and Educational Facilities Authority Revenue 7.250% 7/01/00 Series C (Daughters of Charity Carney Hospital) 1,000 1,059 6.000% 7/01/09 Series D (Daughters of Charity Carney Hospital) 1,000 998 6.250% 12/01/14 (Dana Farber Cancer Institution) 1,000 968 Massachusetts Water Resources Authority Refunding Series C 6.000% 12/01/11 3,410 3,441 New England Educational Loan Marketing Corp. Student Loan Revenue Refunding Series 1985 A 5.800% 3/01/02 2,0002,054 -------- 11,059 Michigan (1.8%) Michigan Hospital Finance Authority Revenue (Daughters of Charity) 6.500% 11/01/01 (Providence Hospital) 1,780 1,875 10.000% 11/01/15 (St. Mary's Hospital) 500 519 Michigan Building Authority Revenue Refunding Series I (AMBAC Insured) 6.000% 10/01/02 1,400 1,488 -------- 3,882 Minnesota (0.4%) *Minneapolis St. Paul Metropolitan Airport G.O. Common Series 7.800% 1/01/03 685 758 Intermediate Municipals Continued Principal Market Amount Value Missouri (0.4%) Missouri Regional Convention & Sports Complex Authority 6.600% 8/15/03 $ 830 $ 900 Nevada (2.0%) *Clark County P.C.R. Series 1990 A (Southern California Edison Co.) 7.125% 6/01/09 1,500 1,585 Clark County Passenger Facility Charge Revenue Series A (McCarran International Airport)(AMBAC Insured) 5.700% 7/01/02 1,500 1,557 Las Vegas Valley Water District G.O. Limited Tax (AMBAC Insured) (Escrowed in U.S. Treasury Securities)(pre-refunded to 8/01/00) 7.000% 8/01/08 1,000 1,121 -------- 4,263 New Jersey (2.4%) Bergen County Utility Authority Solid Waste System Revenue Refunding Series A (FGIC Insured) 6.250% 6/15/06 2,000 2,150 New Jersey Health Care Facilities Finance Authority Revenue 6.100% 7/01/01 (Hackensack Medical Center)(FGIC Insured) 1,000 1,065 7.000% 7/01/03 (Christ Hospital Group)(Connie Lee Insured) 1,730 1,935 -------- 5,150 New Mexico (1.8%) Gallup P.C.R. (Plains Electric Transmission & Generating Cooperative Inc.)(MBIA Insured) 6.100% 8/15/02 2,0002,134 Rio Rancho Water & Wastewater System Revenue Series A (FSA Insured) 8.000% 5/15/03 1,350 1,599 -------- 3,733 New York (2.6%) *New York City Individual Development Agency Special Facility Revenue (Terminal One Group Association Project) 6.000% 1/01/19 2,265 2,134 New York Environmental Facility Corp. P.C.R. State Water Series D 6.300% 5/15/05 3,000 3,265 -------- 5,399 North Carolina (0.7%) North Carolina Municipal Power Agency No. 1 Catawba Electric Revenue Refunding 5.900% 1/01/03 1,500 1,542 Ohio (3.5%) Columbus G.O. Sewer Improvement No. 26 6.750% 9/15/04 1,000 1,085 Hamilton County Sewer System Revenue Refunding and Improvement Series A 6.300% 12/01/01 1,000 1,083 Loveland School District G.O. (MBIA Insured) 7.100% 12/01/09 3,000 3,343 *The Student Loan Funding Corp. Cincinnati Student Loan Revenue Refunding Series 93A 5.750% 8/01/03 2,000 1,995 -------- 7,506 Oklahoma (0.5%) Oklahoma Baptist University Authority Revenue Refunding (FGIC Insured) 6.300% 12/01/01 1,030 1,113 Oregon (4.6%) Lane County Area Education District G.O. 5.200% 6/01/05 2,850 2,866 Lincoln County School District G.O. (FGIC Insured) 6.000% 6/15/07 2,855 2,994 Intermediate Municipals Continued Principal Market Amount Value Oregon (Continued) Portland Sewer System Revenue Refunding Series B (FGIC Insured) 5.400% 4/01/02 $ 2,500 $ 2,592 Oregon Department of Transportation Revenue (MBIA Insured) 5.700% 6/01/02 1,220 1,290 -------- 9,742 Pennsylvania (2.9%) Dauphin County Hospital Authority Revenue Refunding Series B (Hapsco Group Inc.)(MBIA Insured) 5.800% 7/01/02 1,600 1,673 Pennsylvania Higher Education Assistance Agency Student Loan Revenue Refunding Series 1985 A (FGIC Insured) 6.800% 12/01/00 2,110 2,220 Washington County Hospital Authority Lease Revenue (Escrowed in U.S. Treasury Securities) (pre-refunded to 6/15/00) 7.450% 12/15/18 2,000 2,297 -------- 6,190 South Carolina (2.6%) Piedmont Municipal Power Agency Electric Revenue (FGIC Insured) 6.125% 1/01/07 2,065 2,180 *South Carolina Ports Authority Revenue (AMBAC Insured) 6.200% 7/01/01 1,000 1,058 Sumter County Hospital Facilities Revenue Refunding (Tuomey Regional Medical Center) (MBIA Insured) 6.625% 11/15/04 2,000 2,213 -------- 5,451 Tennessee (1.4%) Metropolitan Nashville & Davidson County Water & Sewer Revenue (FGIC Insured) 6.500% 1/01/10 2,750 2,984 Texas (12.9%) Alief Independent School District G.O. (gtd. by Permanent School Funding) 8.000% 2/15/99 1,305 1,457 Dallas-Fort Worth Regional Airport Joint Revenue Refunding Series B 5.750% 11/01/99 1,000 1,037 Dallas Waterworks & Sewer System Revenue Refunding Series 1988 7.000% 4/01/98 2,000 2,122 Fort Bend Independent School District Unlimited Tax (gtd. by Permanent School Funding) 7.500% 2/15/00 1,010 1,121 Fort Worth Limited Tax 8.350% 3/01/00 1,250 1,435 Houston Hotel Occupancy Tax Revenue Refunding (FSA Insured) 6.000% 7/01/06 2,170 2,254 Houston Water Conveyance System Contract Certificates of Participation (AMBAC Insured) 7.000% 12/15/03 Series C 1,000 1,124 6.125% 12/15/06 Series J 1,000 1,060 Northside Independent School District G.O. 9.400% 4/01/98 1,850 2,079 Plano Independent School District G.O. Unlimited Tax (FGIC Insured) 8.625% 2/15/99 1,900 2,160 Round Rock Independent School District G.O. Unlimited Tax School Building and Refunding Series 1991 8.625% 8/15/00 Series 1991 (MBIA Insured) 1,270 1,481 7.500% 8/01/02 Series 1995 A (PSF Insured) 1,200 1,385 San Antonio Electric & Gas Revenue Refunding Series 1983 A (Escrowed in U.S. Treasury Securities)(pre-refunded to 2/01/98) 10.500% 2/01/13 1,000 1,166 Intermediate Municipals Continued Principal Market Amount Value Texas (Continued) San Antonio Water System Revenue Refunding (FGIC Insured) 6.000% 5/15/01 $ 3,000 $ 3,178 *Texas Veterans Land G.O. 7.625% 12/01/13 3,975 4,320 -------- 27,379 Utah (0.5%) Utah Housing Finance Agency Single Family Mortgage Issue E Series 1986 A 8.300% 7/01/00 465 484 8.400% 7/01/01 600 625 -------- 1,109 Virginia (1.4%) *Virginia Housing Development Authority Commonwealth Mortgages Series A 6.700% 7/01/05 Subseries A-1 1,280 1,338 6.200% 7/01/12 Subseries A-4 (MBIA Insured) 1,670 1,650 -------- 2,988 Washington (6.3%) Snohomish County School District No. 2 Refunding G.O. (Everett) (MBIA Insured) 7.250% 12/01/00 2,540 2,833 7.000% 12/01/01 2,230 2,485 7.000% 12/01/02 1,500 1,685 Washington Multiple Purpose G.O. Series C 6.500% 07/01/04 3,800 4,143 Washington Motor Vehicle Fuel Unlimited Tax G.O. Series D 6.500% 9/01/01 2,000 2,170 -------- 13,316 Wisconsin (0.6%) Carlton P.C.R. Series 1991 (Wisconsin Power & Light) V.R.D.B. 4.650% 1,200 1,200 Total Municipal Securities (97.0%) (Amortized Cost $198,906) 205,980 Other Assets, Less Liabilities (3.0%) 6,509 -------- Total Net Assets (100.0%) $212,489 ======== * These securities are subject to alternative minimum tax. At June 30, 1995, these securities represented 10.5 percent of net assets. See accompanying notes to financial statements.
Managed Municipals Investments as of June 30, 1995 (Dollar Amounts In Thousands)
Principal Market Municipal Securities (98.8%) Amount Value Arizona (0.5%) Phoenix G.O. Utility Refunding Series 1995A 6.000% 7/01/11 $ 1,480 $ 1,522 6.250% 7/01/17 1,800 1,873 ------- 3,395 Arkansas (0.4%) Arkansas Development Financing Authority Single Family Mortgage Revenue Series D (FHA Insured) 8.125% 8/01/14 2,575 2,681 California (3.6%) California Health Facilities Finance Authority Revenue (Daughters of Charity)(Escrowed in U. S. Treasury Securities) (pre-refunded to 5/01/96) 9.250% 11/01/15 2,000 2,125 California Public Works Board Lease Revenue Series A 5.625% 5/01/20 3,000 2,782 Central Contra Costa Sanitation District Revenue Waste Water Facilities Improvement Project (MBIA Insured) 6.250% 9/01/13 2,025 2,065 6.250% 9/01/14 1,295 1,320 Foothill Eastern Transportation Corridor Agency Toll Road Revenue Sr. Lien Series 1995A Zero Coupon (Effective Yield 7.200%) 1/01/18 10,0002,107 6.000% 1/01/34 4,600 4,146 Northern California Power Agency Public Power Revenue Refunding Series B-1 (Hydroelectric Project #1)(Escrowed in U.S. Treasury Securities)(pre-refunded to 7/01/98) 8.000% 7/01/24 2,000 2,209 San Francisco Bay Area Rapid Transportation District Sales Tax Revenue (FGIC Insured) 5.500% 7/01/20 2,800 2,586 Southern California Public Power Authority Revenue Refunding 5.000% 7/01/17 Series A (Power Project) 2,500 2,134 5.500% 7/01/23 (Transmission Project) 1,490 1,338 ------- 22,812 Colorado (1.4%) Colorado Housing Finance Authority Multifamily Mortgage Revenue 6.000% 10/01/09 1,490 1,475 6.000% 10/01/10 1,590 1,565 6.000% 10/01/11 1,715 1,679 6.000% 10/01/12 1,835 1,786 Municipal Subdistrict Northern Colorado Water Conservancy District Revenue Series D 6.000% 12/01/15 2,500 2,502 ------- 9,007 Connecticut (0.5%) Connecticut Special Tax Obligation Revenue (Transportation Infrastructure Project) 6.125% 9/01/12 Series 1992 B 3,000 3,091 Delaware (0.8%) Delaware Economic Development Authority Water Development Revenue Refunding (General Waterworks Corp. - Wilmington Suburban Water Corp.) 6.450% 12/01/07 Series 1992 B 1,160 1,236 *6.800% 12/01/23 Series 1992 A 3,500 3,592 ------- 4,828 Managed Municipals Continued Principal Market Amount Value Florida (2.6%) Broward County Public Improvement Revenue Refunding G.O. Series 1986 12.500% 1/01/03 $ 1,000 $ 1,453 12.500% 1/01/04 1,195 1,792 12.500% 1/01/05 2,000 3,078 Florida G.O. (Jacksonville Transportation Authority Project) (Escrowed in U.S. Treasury Securities) 9.200% 1/01/15 2,000 2,830 *Jacksonville Water and Sewer Development Revenue (Jacksonville Suburban Utilities-General Waterworks Corp.) 6.750% 6/01/22 1,500 1,569 Manatee County P.C.R. (Florida Power & Light) Series 1994 V.R.D.B. 4.200% 1,000 1,000 Putnam County Development Authority P.C.R. (Florida Power & Light) V.R.D.B. 4.200% 300 300 Saint Lucie County P.C.R. Series 1993 (Florida Power and Light) V.R.D.B. 4.200% 4,600 4,600 ------- 16,622 Georgia (10.6%) Atlanta Airport Facility Revenue Series 1994 A (AMBAC Insured) 6.500% 1/01/08 2,750 3,005 6.500% 1/01/10 2,000 2,164 *Cartersville Development Authority Revenue Water & Waste Works Facilities (Anheuser-Busch) 7.375% 5/01/09 9,000 10,258 Columbia County School District G.O. (MBIA Insured) 6.750% 4/01/09 1,900 2,106 7.000% 4/01/10 2,125 2,408 7.000% 4/01/11 2,370 2,686 Fulton County Water & Sewer Revenue Refunding (FGIC Insured) 6.375% 1/01/14 13,700 14,569 Metropolitan Atlanta Rapid Transit Authority Sales Tax Revenue Refunding Series P (AMBAC Insured) 6.250% 7/01/20 4,000 4,215 Municipal Electric Authority of Georgia Power Revenue Series V 6.600% 1/01/18 14,100 14,903 Municipal Electric Authority of Georgia Special Obligation First Crossover Series (Crossover refunded to 1/01/98) 8.125% 1/01/17 3,100 3,398 Paulding County Georgia School District (MBIA Insured) 6.000% 2/01/10 4,235 4,379 6.000% 2/01/13 2,360 2,411 ------- 66,502 Idaho (0.3%) *Idaho Housing Agency Single Family Mortgage Revenue (FHA/VA Insured) 7.875% 7/01/24 2,050 2,133 Illinois (10.3%) Chicago Board of Education Refunding G.O. Lease Certificates Series A (MBIA Insured) 6.000% 1/01/16 5,000 4,947 Chicago (City of) Gas Supply Revenue Series 1985 D (Peoples Gas Light & Coke Company) 7.500% 3/01/15 4,500 4,943 10.250% 3/01/15 550 565 Chicago (City of) Skyway Toll Bridge Revenue Series 1994 6.750% 1/01/17 1,500 1,498 Managed Municipals Continued Principal Market Amount Value Illinois (Continued) Illinois Development Finance Authority **5.950% 1/01/09 (Catholic Charities Housing Development) $ 1,450 $ 1,363 7.600% 9/01/13 P.C.R. (Central Illinois Public Service) 3,000 3,320 Illinois Health Facilities Authority Revenue Refunding Series 1992 A (Evangelical Hospitals) 6.250% 4/15/22 1,000 992 Illinois Housing Development Authority Series A (FHA Insured) 7.800% 12/01/12 1,080 1,103 8.000% 6/01/26 8,095 8,264 Illinois Sales Tax Revenue Refunding Series Q 6.000% 6/15/12 10,000 10,029 Illinois Toll Highway Authority Priority Revenue Series A 6.300% 1/01/11 7,500 7,847 Metropolitan Fair & Exposition Authority Dedicated State Tax Revenue (Escrowed in U.S. Treasury Securities) (pre-refunded to 6/01/96) 8.000% 6/01/10 16,600 17,498 *Southwestern Illinois Development Authority Solid Waste Disposal Revenue (Shell Oil Co.) V.R.D.B. 4.350% 100 100 University of Illinois University Revenue Auxiliary Facilities (MBIA Insured) Zero Coupon (Effective Yield 6.120%) 4/01/12 5,795 2,089 ------- 64,558 Indiana (5.4%) *Hammond Sewer & Solid Waste Disposal Revenue (American Maize Products Co.) 8.000% 12/01/24 5,000 5,297 Indiana Transportation Finance Authority Airport Facilities Lease Revenue Series A 6.250% 11/01/16 11,950 11,740 Indianapolis Local Public Improvement Bond Bank Series 1991 C 6.700% 1/01/17 8,285 8,474 Michigan City P.C.R. (Northern Indiana Public Service Company) 5.700% 10/01/03 8,795 8,775 -------- 34,286 Iowa (0.2%) *Iowa Finance Authority Single Family Mortgage Revenue Series B (collateralized by Government & Federal National Mortgage Association Securities) 7.450% 7/01/23 1,255 1,310 Kansas (0.5%) Kansas Department of Transportation Highway Revenue (Escrowed in U.S. Treasury Securities)(pre-refunded to 3/01/02) 6.500% 3/01/12 3,000 3,322 Kentucky (3.2%) *Kentucky Housing Corp. Revenue Series C (FHA/VA Insured) 8.100% 1/01/22 2,735 2,911 Kentucky Turnpike Authority Economic Development Revenue Refunding Series 1992 (Revitalization Project)(FGIC Insured) Zero Coupon (Effective Yield 6.600%) 1/01/10 13,500 5,773 Kentucky Turnpike Authority Revenue (Escrowed in U.S. Treasury Securities) (pre-refunded to 7/01/97) 13.125% 7/01/09 2,425 2,829 *Trimble County P.C.R. Series A (Louisville Gas & Electric Co.) 7.625% 11/01/20 6,670 7,282 7.625% 11/01/20 (Escrowed in U.S. Treasury Securities) (pre-refunded to 11/01/00) 1,330 1,522 ------- 20,317 Managed Municipals Continued Principal Market Amount Value Louisiana (2.1%) *De Soto Parish Environmental Impact Revenue (International Paper Co.) Series A 7.700% 11/01/18 $ 3,250 $ 3,622 Louisiana Public Facility Authority Hospital Revenue (Hotel Dieu Daughters of Charity Health System)(Escrowed in U.S. Treasury Securities)(pre-refunded to 2/01/96) 9.750% 2/01/15 1,000 1,051 New Orleans G.O. (AMBAC Insured) Zero Coupon (Effective Yield 6.125%) 9/01/12 6,250 2,203 *Parish of St. Charles P.C.R. (Shell Oil Co.) V.R.D.B. 4.200% 1,100 1,100 4.350% 1,700 1,700 Shreveport Water & Sewer Revenue Series 1994 A (FGIC Insured) 5.250% 12/01/12 2,005 1,864 5.250% 12/01/13 2,115 1,950 ------- 13,490 Maine (1.2%) *Maine Educational Loan Marketing Corporation Student Loan Revenue Series 1994 B-1 6.500% 11/01/09 3,000 3,043 *Maine Housing Authority Mortgage Revenue Series D-5 7.550% 11/15/19 2,520 2,584 7.550% 11/15/22 1,750 1,794 ------- 7,421 Maryland (1.1%) Washington Suburban Sanitation District G.O. 6.600% 6/01/16 2,795 2,924 6.625% 6/01/17 1,660 1,733 6.625% 6/01/19 2,320 2,423 ------- 7,080 Massachusetts (8.5%) Massachusetts Bay Transportation Authority Refunding 7.000% 3/01/14 Series 1994 A 3,150 3,527 6.200% 3/01/16 Series 1992 B 9,825 10,077 7.000% 3/01/19 Series 1994 A 2,500 2,804 Massachusetts College Building Authority Project Refunding Series A 7.500% 5/01/11 1,500 1,756 7.500% 5/01/14 3,500 4,118 Massachusetts Health & Educational Facilities Authority Revenue 6.250% 7/01/12 (Massachusetts General Hospital Project)(AMBAC Insured) 5,750 5,969 6.750% 7/01/24 (Brigham & Women's Hospital) 7,365 7,755 6.250% 12/01/22 (Dana Farber Cancer) 6,500 6,181 Massachusetts Water Resources Authority Refunding 5.500% 11/01/15 Series 1992 B 7,500 6,888 5.250% 12/01/20 Series 1993 C 4,500 3,951 ------- 53,026 Michigan (1.7%) Michigan Hospital Finance Authority Providence Hospital Revenue Refunding (Daughters of Charity Health Systems Inc.) 10.000% 11/01/15 7,260 7,539 7.000% 11/01/21 3,000 3,168 ------- 10,707 Managed Municipals Continued Principal Market Amount Value Minnesota (1.7%) *Minneapolis St. Paul Housing Finance Board Single Family Mortgage Revenue (collateralized by Government National Mortgage Association Securities) 7.250% 8/01/21 $ 2,495 $ 2,625 7.300% 8/01/31 3,685 3,849 *Minnesota Housing Finance Agency Single Family Mortgage Series A 7.450% 7/01/22 3,990 4,249 ------- 10,723 Mississippi (0.5%) Biloxi Mortgage Revenue Refunding Series 1987 (Biloxi Regional Medical Center)(Escrowed in U.S. Treasury Securities) 19.000% 8/15/98 2,000 2,804 Missouri (0.3%) Little Blue Valley Sewer District Revenue Refunding (AMBAC Insured)(Escrowed in U.S. Treasury Securities)(pre-refunded to 10/01/98) 9.000% 10/01/07 1,000 1,138 Missouri Housing Community Development Single Family Mortgage Revenue 9.375% 4/01/16 115 121 St. Louis County Single Family Mortgage Revenue (MBIA Insured) 9.750% 4/01/10 5 5 Springfield School District Refunding G.O. Series B (FGIC Insured) 9.500% 3/01/07 600 799 ------- 2,063 Nevada (1.4%) Clark County School District Series 1995A (MBIA Insured) 5.500% 6/15/16 5,000 4,663 *Nevada Housing Division Single Family Mortgage (FHA/VA Insured) 7.750% 4/01/22 4,050 4,168 ------- 8,831 New Jersey (0.8%) New Jersey G.O. Series D 6.000% 2/15/11 5,150 5,290 New Mexico (0.2%) Albuquerque I.D.R. (Motorola Inc.) 10.000% 6/01/13 1,000 1,040 New York (6.9%) Erie County Water Authority Water Revenue Refunding Series 1992 (AMBAC Insured) Zero Coupon (Effective Yield 7.300%) 12/01/17 660 132 New York City G.O. Series A (Escrowed in U.S. Treasury Securities) (pre-refunded to 11/01/97) 8.750% 11/01/17 1,000 1,115 New York Environmental Facilities Corporation P.C.R. Water Revolving Fund - New York City Municipal Water 5.750% 6/15/10 10,000 10,067 *New York I.D.A. Special Facility Revenue Series 1994 (Terminal One Group, Associate L.P. Project) 6.000% 1/01/15 8,340 7,943 6.000% 1/01/19 5,490 5,174 New York Medical Care Facilities Finance Agency Revenue Mental Health Series A (FGIC Insured) 5.250% 08/15/23 3,000 2,685 Triborough Bridge & Tunnel Authority General Purpose Revenue 6.625% 1/01/12 Series X 8,715 9,432 6.125% 1/01/21 Series Y 6,890 7,011 ------- 43,559 Managed Municipals Continued Principal Market Amount Value North Carolina (1.1%) North Carolina Eastern Municipal Power Agency Power Systems Revenue 6.500% 1/01/18 Series 1991 A (Escrowed in U.S. Treasury Securities) $ 4,315 $ 4,686 6.500% 1/01/18 Series 1991 A 2,185 2,190 8.000% 1/01/21 (Escrowed in U.S. Treasury Securities) (pre-refunded to 1/01/98) 240 265 ------- 7,141 North Dakota (0.0%) North Dakota Housing Finance Agency Single Family Program Revenue 9.125% 7/01/16 30 31 Ohio (1.3%) Franklin County Hospital Revenue Refunding and Improvement (Riverside Hospital) (Escrowed in U.S. Treasury Securities) (pre-refunded to 5/15/00) 7.600% 5/15/20 3,900 4,466 Greater Ohio Housing Assistance Corporation Mortgage Revenue Refunding (FHA Insured - Section 8)(Escrowed in U.S. Treasury Securities)(pre-refunded to 8/01/95) 10.430% 7/01/22 3,370 3,485 ------- 7,951 Oklahoma (0.3%) *Tulsa County Home Finance Authority Mortgage Revenue Series 1991 B (collateralized by Government National Mortgage Association Securities) 7.550% 5/01/23 1,825 1,923 Oregon (0.2%) Port Morrow Revenue Refunding (Portland General Electric- Boardman Project L.O.C. Industrial Bank of Japan) V.R.D.B. 4.250% 1,360 1,360 Pennsylvania (2.5%) Allegheny County Sanitation Authority Sewer Revenue (FGIC Insured) Zero Coupon (Effective Yield 6.800%) 6/01/07 2,370 1,211 *Dauphin County I.D.A. Water Development Revenue (Dauphin Consolidated Water Supply General Waterworks Corp.) 6.900% 6/01/24 2,400 2,584 Pennsylvania G.O. 6.250% 7/01/12 11,200 11,749 ------- 15,544 Puerto Rico (0.7%) Puerto Rico Electric Power Authority Revenue Series S 7.000% 7/01/07 2,000 2,201 University of Puerto Rico University Revenue Series M (MBIA Insured) 5.250% 6/01/25 2,000 1,829 ------- 4,030 Rhode Island (0.9%) *Rhode Island Housing & Mortgage Finance Corporation 7.550% 10/01/22 5,650 5,857 Managed Municipals Continued Principal Market Amount Value South Carolina (2.1%) *Calhoun County Solid Waste Disposal Facilities Revenue (Eastman Kodak Co.) 6.750% 5/01/17 $ 3,000 $ 3,210 *Richland County Solid Waste Disposal Facilities Revenue Series 1991 B (Union Camp Corp.) 7.125% 9/01/21 5,000 5,237 *South Carolina Housing Finance Agency Single Family Mortgage Revenue Series C 7.750% 7/01/22 4,775 4,958 ------- 13,405 South Dakota (1.1%) Heartland Consumers Power District Electric Revenue Refunding (FSA Insured) 6.000% 1/01/17 7,000 7,016 Tennessee (1.6%) *Tennessee Housing Development Agency (Homeownership Project) 7.300% 7/01/11 10,000 10,341 Texas (12.0%) Dallas-Fort Worth Regional Airport Joint Revenue Refunding *** 5.625% 11/01/15 (FGIC Insured) 6,750 6,423 9.125% 11/01/15 (Escrowed in U. S. Treasury Securities) (pre-refunded to 11/01/95) 1,000 1,039 *Harris County Industrial Development Corp. (Exxon Corp.) Series A V.R.D.B. 4.350% 1,000 1,000 Houston Hotel Occupancy Tax Revenue Refunding (FSA Insured) 5.500% 7/01/15 5,500 5,127 Houston Water & Sewer Systems Revenue Refunding Zero Coupon (Effective Yield 6.800%) 12/01/08 Jr. Lien (AMBAC Insured) 4,000 1,825 Zero Coupon (Effective Yield 6.8125%) 12/01/09 Jr. Lien (AMBAC Insured) 4,000 1,697 Zero Coupon (Effective Yield 6.850%) 12/01/10 Jr. Lien (AMBAC Insured) 3,750 1,488 8.200% 12/01/15 Prior Lien (Escrowed in U.S. Treasury Securities)(pre-refunded to 12/01/96) 2,915 3,130 8.200% 12/01/16 Prior Lien (Escrowed in U.S. Treasury Securities)(pre-refunded to 12/01/96) 4,500 4,832 Hurst Euless Bedford Independent School District Refunding (PSF guaranteed) 6.500% 8/15/24 7,825 8,104 Sabine River Authority P.C.R. (Southwestern Electric Power Company) Series 1986 8.200% 7/01/14 6,000 6,313 Texas G.O. Veteran's Welfare Fund 8.300% 12/01/16 (Escrowed in U.S. Treasury Securities) (pre-refunded to 12/01/99) 15,275 17,516 8.300% 12/01/16 9,725 10,054 Texas Municipal Power Agency Revenue Refunding (AMBAC Insured) Zero Coupon (Effective Yield 6.840%) 9/01/07 9,435 4,687 Zero Coupon (Effective Yield 6.900%) 9/01/08 1,475 683 *Travis County Housing Finance Agency Single Family Mortgage (collateralized by Government National Mortgage Association Securities)(FGIC Insured) 8.000% 9/01/10 1,450 1,515 ------- 75,433 Vermont (0.2%) *Vermont Housing Finance Agency Single Family Mortgage Revenue Series A 8.150% 5/01/25 1,095 1,160 Managed Municipals Continued Principal Market Amount Value Virginia (1.0%) Hanover County I.D.A. Hospital Revenue Series 1995 (Memorial Regional Medical Center) (MBIA Insured) 5.500% 8/15/25 $ 3,500 $ 3,216 Virginia Beach G.O. Refunding Series B 12.750% 7/15/01 2,000 2,790 -------- 6,006 Washington (5.4%) *Port of Longview Industrial Development Corporation Solid Waste Disposal Revenue (Weyerhaeuser Company) 6.875% 10/01/08 8,250 8,734 Washington G.O. 5.750% 9/01/10 Refunding Series R 3,0002,983 6.000% 6/01/13 Series B 7,280 7,357 Washington Public Power Supply Systems Revenue Refunding Zero Coupon (Effective Yield 6.700%) 7/01/05 Series 1991 B (FGIC Insured) (Nuclear Project #3) 5,000 2,885 Zero Coupon (Effective Yield 6.950%) 7/01/08 Series B (Nuclear Project #3) 7,000 3,175 6.300% 7/01/12 Series 1992 A (Nuclear Project #2) 3,500 3,539 6.500% 7/01/18 Series 1991 C (Nuclear Project #3) 5,000 5,078 -------- 33,751 Wisconsin (1.4%) Wisconsin G.O. Series G (Escrowed in U.S. Treasury Securities) (pre-refunded to 5/01/99) 6.750% 5/01/11 5,000 5,433 Wisconsin Housing and Economic Development Authority Home Ownership Revenue 7.750% 9/01/10 2,985 3,134 -------- 8,567 Wyoming (0.3%) Lincoln County P.C.R. (Exxon County) V.D.R.B. 4.250% 1,700 1,700 Total Municipal Securities (98.8%) (Amortized Cost $593,248) 622,114 Other Assets, Less Liabilities (1.2%) 7,616 -------- Total Net Assets (100.0%) $629,730 ======== * These securities are subject to alternative minimum tax. At June 30, 1995, these securities represented 19.7 percent of net assets. ** This security is subject to contractual or legal restrictions on its resale. At June 30, 1995, the value of this security represented 0.2 percent of net assets. *** Security purchased on a when-issue or delayed delivery basis for which the Fund had not taken delivery as of June 30, 1995. See accompanying notes to financial statements.
High-Yield Municipals Investments as of June 30, 1995 (Dollar Amounts In Thousands)
Principal Market Municipal Securities (97.9%) Amount Value Arizona (0.9%) Arizona Health Facilities Hospital System Revenue Refunding (Phoenix Memorial Hospital) 8.125% 6/01/12 $ 2,500 $ 2,661 California (1.6%) Foothill/Eastern Transportation Corridor Agency Toll Road Revenue Sr. Lien Series 1995 A 6.500% 1/01/32 3,550 3,408 6.000% 1/01/34 1,175 1,059 ------- 4,467 Colorado (4.7%) Adams County Single Family Mortgage Revenue Series B (Escrowed in U.S. Treasury Securities) 11.250% 9/01/11 (pre-refunded to 9/01/09) 325 502 11.250% 9/01/11 (pre-refunded to 9/01/10) 360 563 11.250% 9/01/11 220 348 11.250% 9/01/12 1,440 2,295 **Briargate Public Building Authority Landowner's Assessment Lien Revenue 10.250% 12/15/00 Series 1985 A 611 195 9.500% 12/15/07 Series 1986 A 2,185 699 Colorado Health Facilities Authority Revenue 7.250% 4/01/11 (Birchwood Manor Apartments) (collateralized by Government National Mortgage Association Securities) 730 757 8.500% 2/15/21 Series B (PSL Health Systems) 3,250 3,567 *Denver City and County Airport Revenue Series D 7.750% 11/15/21 4,000 4,272 ------- 13,198 Florida (1.2%) **Florida Housing Finance Agency Multi-Family ** Housing Revenue (Palm-Aire) 10.000% 1/01/20 2,835 1,701 Leesburg Capital Improvement Hospital Revenue Series 1991 A (Leesburg Regional Medical Center) (Escrowed in U.S. Treasury Securities) (pre-refunded to 7/01/01) 7.375% 7/01/11 775 906 Putnam County Development Authority P.C.R. (Florida Power & Light) V.R.D.B. 4.200% 100 100 **Sarasota County Health Facilities Authority Revenue (North Trail Retirement Center) 9.250% 10/01/21 2,950 649 ------- 3,356 Georgia (5.0%) *Cartersville Development Authority Water and Waste Water Facilities Revenue (Anheuser Busch) 7.375% 5/01/09 5,000 5,699 Municipal Electric Authority of Georgia Power Revenue 6.600% 1/01/18 6,065 6,410 Savannah Hospital Authority Revenue Refunding and Improvement (Candler Hospital) 7.000% 1/01/23 2,000 1,993 ------- 14,102 Idaho (1.4%) *Idaho Housing Agency Single Family Mortgage Revenue Series B (FHA Insured) 7.500% 7/01/24 3,675 3,827 High-Yield Municipals Continued Principal Market Amount Value Illinois (3.6%) Chicago (City of) Skyway Toll Bridge Revenue Series 1994 6.750% 1/01/17 $ 1,500 $ 1,498 Illinois Development Finance Authority (Catholic Charities Housing Development) 5.950% 1/01/09 1,400 1,316 Illinois Health Facilities Authority Revenue Refunding 8.125% 7/01/06 Series 1991 (United Medical Center) 2,760 3,235 7.000% 2/15/22 Series 1992 (Edward Hospital Association) 685 713 Illinois Housing Development Authority Multi- Family Housing Series C 7.400% 7/01/23 140 146 Regional Transportation Authority Series A (AMBAC Insured) 8.000% 6/01/17 1,500 1,855 *Southwestern Development Authority Solid Waste Disposal Revenue (Shell Oil Co.) V.R.D.B 4.350% 1,300 1,300 ------- 10,063 Indiana (15.3%) East Chicago P.C.R. (Inland Steel Company) Series B (Project #8) 10.750% 12/01/12 425 440 *Hammond Sewer & Solid Waste Disposal Revenue (American Maize Products Co.) 8.000% 12/01/24 4,000 4,237 Indiana Health Facilities Financing Authority Hospital Revenue Refunding 6.875% 8/01/17 (Riverview Hospital) Series 1993 1,500 1,484 7.000% 10/01/17 Series A (St. Anthony Medical Center) 1,000 1,036 7.200% 10/01/22 (Fayette Memorial Hospital) 2,200 2,171 Indiana Transportation Finance Authority Airport Facilities Lease Revenue Series A 6.250% 11/01/16 9,500 9,333 *Indianapolis Airport Authority Revenue Special Facilities 6.500% 11/15/31 (United Airlines) 2,000 1,925 7.100% 1/15/17 (Federal Express Corp.) 5,000 5,161 **Indianapolis Economic Development Revenue First Lien 9.375% 8/01/19 (The Home Place I Project) 1,457 656 9.500% 2/01/21 (The Home Place II Project) 780 351 Indianapolis Local Public Improvement Bond Bank Series 1991 C 6.700% 1/01/17 8,900 9,103 Marion County Hospital Authority (Daughters of Charity Health System St. Vincent's Hospital and Health Care Center, Inc.) 10.125% 11/01/15 2,125 2,203 New Castle Economic Development Revenue (Raintree Square Project) 8.650% 4/01/17 Series 1988 A (FHA Insured) 2,860 3,206 **Zero Coupon 3/01/18 Series 1988 B 30,655 77 **Westfield Economic Development Revenue First Lien (Sanders Glen Project) 9.375% 8/01/19 2,455 1,719 ------- 43,102 Iowa (1.5%) Iowa Housing Finance Authority Single Family Housing Revenue Zero Coupon (Effective Yield 10.262%) 9/01/16 43,655 4,142 Kansas (0.7%) CSJ Health Systems of Wichita Revenue 7.000% 11/15/18 2,000 2,058 High-Yield Municipals Continued Principal Market Amount Value Kentucky (0.8%) Carroll County Collateralized P.C.R. Revenue (Kentucky Utility Co.) 7.450% 9/15/16 $ 2,000 $ 2,252 Louisiana (2.0%) *De Soto Parish Environmental Impact Revenue (International Paper Co.) Series A 7.700% 11/01/18 2,500 2,786 Louisiana Public Facilities Authority Hospital Revenue (Women's Hospital Foundation) 7.250% 10/01/22 2,300 2,334 *Parish of St. Charles P.C.R. (Shell Oil Co.) V.R.D.B. 4.350% 600 600 ------- 5,720 Maryland (0.5%) *Ann Arundel County E.D.R. (Baltimore Gas and Electric Company) Mandatory Put 7/26/95 4.200% 1,500 1,501 Massachusetts (6.8%) Massachusetts Bay Transportation Authority Refunding Series B 6.200% 3/01/16 5,825 5,975 Massachusetts G.O. Refunding Series A 6.500% 8/01/11 3,000 3,114 Massachusetts Health & Educational Facilities Authority Revenue (Dana Farber Cancer Institution) 6.250% 12/01/22 4,000 3,804 *Massachusetts Housing Finance Agency Series A 9.000% 12/01/18 850 892 Massachusetts Water Resources Authority Series A 5.500% 7/15/22 6,000 5,416 -------- 19,201 Michigan (0.3%) Michigan Hospital Finance Authority Revenue Series A (Brighton Hospital) 8.625% 10/01/18 850 849 Mississippi (3.6%) Adams County Hospital Revenue (Jefferson Davis Memorial Hospital) 7.900% 10/01/08 750 810 Claiborne County P.C.R. (Systems Energy) 9.500% 12/01/13 Series A 750 856 9.875% 12/01/14 Series C 1,000 1,152 7.300% 5/01/25 2,000 2,023 Lowndes County Solid Waste Disposal & P.C.R. Refunding (Weyerhaeuser Company) 6.800% 4/01/22 4,995 5,398 ------- 10,239 Missouri (1.1%) *St. Louis I.D.A. Revenue Refunding (Kiel Center Multipurpose Arena) 7.875% 12/01/24 3,000 3,154 Montana (0.4%) Montana Board of Housing Single Family Mortgage Revenue (FHA/VA Insured) 7.300% 10/01/17 Series B-1 475 491 *7.500% 4/01/23 Series B-2 520 533 ------- 1,024 Nevada (0.8%) Humboldt County P.C.R. (Idaho Power Company) 8.300% 12/01/14 2,000 2,326 New Jersey (0.8%) New Jersey Health Care Facilities Financing Authority Revenue Refunding (Raritan Bay Medical Center) 7.250% 7/01/27 2,200 2,167 High-Yield Municipals Continued Principal Market Amount Value New York (0.8%) Erie County Water Authority Revenue Refunding (AMBAC Insured) Zero Coupon (Effective Yield 7.300%) 12/01/17 $ 660 $ 132 Triborough Bridge & Tunnel Authority General Purpose Revenue Series E 7.250% 1/01/10 2,000 2,233 ------- 2,365 North Carolina (1.9%) North Carolina Eastern Municipal Power Agency Power Systems Revenue 6.500% 1/01/18 Series 1991 A 1,680 1,684 6.500% 1/01/18 Series 1991 A (Escrowed in U.S. Treasury Securities) 3,320 3,606 ------- 5,290 Ohio (3.2%) Cleveland G.O. (Escrowed in U.S. Treasury Securities) (pre-refunded to 11/01/95) 9.875% 11/01/02 950 991 9.875% 11/01/04 100 104 *Greater Allen County Housing Development Corp. Revenue First Lien (Steiner-McBride Apartments Project) 10.250% 9/01/03 1,385 1,411 *Ohio Water Development Facilities Authority P.C.R. (Cleveland Electric Illuminating Company) Mandatory Put 11/01/97 9.750% 5,060 5,405 Oxford Hospital Facilities Revenue Series 1986 (McCullough-Hyde Memorial Hospital) 8.000% 5/01/17 1,000 1,029 ------- 8,940 Pennsylvania (11.8%) Allentown Area Hospital Authority Revenue (Sacred Heart Hospital of Allentown) 7.500% 7/01/06 3,460 3,667 Beaver County I.D.A. P.C.R. Revenue Refunding (Toledo Edison Company)7.625% 05/01/20 2,400 2,459 *Dauphin County I.D.A. Revenue Series A (Dauphin Consolidated Water Supply General Waterworks Corp.) 6.900% 6/01/24 2,700 2,907 Delaware County Hospital Authority Revenue Series A (Mercy Catholic Medical Center) (Escrowed in U.S. Treasury Securities) (pre-refunded to 11/01/97) 7.375% 11/01/12 1,100 1,196 Montgomery County Higher Education & Health Authority Hospital Revenue 8.750% 7/01/20 (Jeanes Health Systems) (Escrowed in U.S. Treasury Securities) (Pre-refunded to 7/01/00) 3,200 3,824 6.875% 11/15/20 (Pottstown Memorial Medical Center) 1,000 990 North Hampton County I.D.A. P.C.R. Series A (Metropolitan Edison Company)10.500% 9/01/95 1,500 1,514 *Pennsylvania Economic Development Financing Authority Recycling Revenue (Ponderosa Fibres Project) Series 1995 A 9.250% 01/01/22 6,000 6,182 *Pennsylvania Economic Development Financing Authority Resource Recovery Revenue Refunding (Northhampton) Series 1995 B 6.750% 1/01/07 3,000 3,011 Philadelphia Municipal Lease Revenue Refunding Series 1993 D 6.250% 7/15/13 2,500 2,438 Philadelphia Water & Sewer Revenue Tenth Series (Escrowed in U.S. Treasury Securities) 7.350% 9/01/04 4,155 4,777 High-Yield Municipals Continued Principal Market Amount Value Pennsylvania (Continued) Schuykill County I.D.A. Resource Recovery Revenue (Westwood Energy Properties L.O.C. Fuji Bank Ltd.) V.R.D.B. 4.500% $ 100 $ 100 ------- 33,065 Puerto Rico (2.2%) Puerto Rico Highway & Transportation Authority Highway Revenue Refunding 6.625% 7/01/12 Series V 2,000 2,076 6.625% 7/01/18 Series T 3,200 3,311 6.625% 7/01/18 (Escrowed in U.S. Treasury Securities) (pre-refunded to 7/01/02) 800 907 ------- 6,294 South Carolina (0.8%) *Calhoun County Solid Waste Disposal Facilities Revenue (Eastman Kodak Co.) 6.750% 5/01/17 2,000 2,140 Tennessee (0.8%) Knox County Health, Educational and Housing Facilities Revenue (Baptist Health Systems of East Tennessee) 8.600% 4/15/16 2,005 2,112 Texas (13.8%) *Alliance Airport Authority Special Facilities Revenue Series 1991 (American Airlines) 7.000% 12/01/11 4,000 4,144 Austin Combined Utility Systems Revenue Refunding (Escrowed in U.S. Treasury Securities) (Pre-refunded to 11/15/95) 10.250% 11/15/12 1,000 1,042 Austin Utility System Revenue (AMBAC Insured) Zero Coupon (Effective Yield 6.450%) 11/15/09 5,000 2,124 *Bexar County Housing Financing Corp. Revenue Series B (collateralized by Government National Mortgage Association Securities) 9.250% 4/01/16 530 556 Harris County Housing Finance Corp. Single Family Housing Revenue Series 1983 9.250% 3/15/96 225 227 9.625% 3/15/03 345 349 Houston Independent School District Refunding G.O. (AMBAC Insured) Zero Coupon (Effective Yield 6.450%) 8/15/09 4,390 1,917 Houston Water & Sewer Systems Revenue Refunding Jr. Lien Series C (AMBAC Insured) Zero Coupon (Effective Yield 6.400%) 12/01/08 9,260 4,225 Montgomery County Health Facilities Development Corp. Hospital Mortgage Revenue Refunding (Woodlands Medical Center) 8.850% 8/15/14 2,555 2,761 North Central Health Facilities Development Corporation Hospital Revenue (Tri-City Health Center) 9.500% 5/01/21 8,300 9,026 Port Corpus Christi Industrial Development Corporation Revenue Series A (Valero Refining & Marketing) 10.250% 6/01/17 4,280 4,760 San Antonio Electric & Gas Revenue Refunding Series B (FGIC Insured) Zero Coupon (Effective Yield 6.100%) 2/01/05 12,325 7,236 *Texas Housing Agency Residential Mortgage Revenue Series D 8.400% 1/01/21 335 352 ------- 38,719 High-Yield Municipals Continued Principal Market Amount Value Utah (0.7%) *Utah Housing Finance Agency Single Family Mortgage 7.750% 1/01/23 Series B-2 (FHA Insured) $ 1,130 $ 1,174 7.550% 7/01/23 Siers C-3 (FHA/VA Insured) 815 850 -------- 2,024 Washington (6.2%) Quincy Water and Sewer Revenue Series I 9.250% 11/01/10 2,735 3,317 Washington G.O. Series B 6.400% 6/01/17 5,000 5,273 Washington Health Care Facilities Authority Revenue (Sacred Heart Medical Center, Spokane) 6.875% 2/15/12 1,500 1,577 *Washington Housing Finance Commission Single Family Mortgage Revenue Series C (collateralized by Government and Federal National Mortgage Association Securities) Zero Coupon (Effective Yield 7.750%) 1/01/22 1,720 232 Zero Coupon (Effective Yield 7.750%) 7/01/22 1,905 247 Zero Coupon (Effective Yield 7.750%) 1/01/23 1,905 238 Zero Coupon (Effective Yield 7.750%) 7/01/23 1,910 230 Zero Coupon (Effective Yield 7.750%) 1/01/24 1,920 223 Zero Coupon (Effective Yield 7.750%) 7/01/24 1,910 213 Washington Public Power Supply Systems Revenue (Nuclear Project #2) Zero Coupon (Effective Yield 6.888% ) 7/01/07 6,945 3,367 6.300% 7/01/12 Series 1992 A 2,500 2,528 -------- 17,445 Wisconsin (1.1%) *Wisconsin Housing and Economic Development Authority Home Ownership Revenue 7.850% 3/01/24 2,950 3,097 Wyoming (1.6%) Lincoln County P.C.R. (Exxon County) V.R.D.B. 4.250% 500 500 4.350% 2,100 2,100 Wyoming Community Development Authority Single Family Mortgage Revenue Series A (FHA Insured) 7.375% 6/01/17 1,730 1,821 -------- 4,421 Total Municipal Securities (97.9%) (Amortized Cost $274,668) 275,321 Other Assets, Less Liabilities (2.1%) 5,834 -------- Total Net Assets (100.0%) $281,155 ======== *These securities are subject to the alternative minimum tax. At June 30, 1995 these securities represented 25.0 percent of net assets. **Non-income producing securities.
Balance Sheets June 30, 1995 (All Amounts In Thousands)
Municipal Money Market Intermediate Managed High-Yield Fund Municipals Municipals Municipals -------- -------- -------- -------- Assets Investments, at value $151,822 $205,980 $622,114 $275,321 Receivable for investments sold 115 5,332 16,658 1,462 Receivable for fund shares sold 734 182 2,243 20 Accrued interest receivable 1,246 3,646 11,294 4,932 Cash and other assets 1,020 884 661 321 -------- -------- -------- -------- Total Assets $154,937 $216,024 $652,970 $282,056 ======== ======== ======== ======== Liabilities Payable for investments purchased $ 7,807 $ 3,020 $ 21,692 $ -- Payable for fund shares redeemed 201 49 76 60 Dividends payable 140 289 962 487 Payable to investment adviser and transfer agent 35 92 362 167 Other liabilities 50 85 148 187 -------- -------- -------- -------- Total Liabilities 8,233 3,535 23,240 901 -------- -------- -------- -------- Capital Paid-in capital 146,706 206,504 608,776 285,513 Net unrealized appreciation of investments -- 7,074 28,866 653 Accumulated net realized gains (losses) on investments (2) (1,089) (7,912) (5,011) -------- -------- -------- -------- Total Capital (Net Assets) 146,704 212,489 629,730 281,155 -------- -------- -------- -------- Total Liabilities and Capital $154,937 $215,765 $652,858 $282,056 ======== ======== ======== ======== Shares Outstanding (Unlimited Number Authorized) 146,631 19,035 71,653 24,855 ======== ======== ======== ======== Net Asset Value (Capital) Per Share $ 1.00 $ 11.16 $ 8.79 $ 11.31 ======== ======== ======== ======== See accompanying notes to financial statements.
Statements of Operations For the Year Ended June 30, 1995 (All Amounts In Thousands)
Municipal Money Market Intermediate Managed High-Yield Fund Municipals Municipals Municipals ------ ------- ------- ------- Investment Income Tax-exempt interest $5,757 $12,492 $42,167 $19,673 ------ ------- ------- ------- Expenses Management fees 787 1,249 3,392 1,588 Transfer agent fees 215 192 521 279 Printing and postage 41 40 95 63 Custodian fees 50 30 42 35 Registration fees 29 23 23 22 Legal and audit fees 30 27 27 237 Trustees' fees 19 21 34 25 Accounting fees 16 17 23 18 Other expenses 35 71 75 221 ------ ------- ------- ------- 1,222 1,670 4,232 2,488 Reimbursement of expenses by investment adviser (120) (36) -- -- ------ ------- ------- ------- Total Expenses 1,102 1,634 4,232 2,488 ------ ------- ------- ------- Net Investment Income 4,655 10,858 37,935 17,185 ------ ------- ------- ------- Realized and Unrealized Gains (Losses) on Investments Net realized gains (losses) on investments -- 28 (1,062) (974) Net realized losses on futures transactions -- (963) (1,686) (1,686) Net change in unrealized appreciation or depreciation of investments -- 3,694 7,348 7,892 ------ ------- ------- ------- Net Gains on Investments -- 2,759 4,600 5,232 ------ ------- ------- ------- Net Increase in Net Assets Resulting from Operations $4,655 $13,617 $42,535 $22,417 ====== ======= ======= ======= See accompanying notes to financial statements.
Statements of Changes in Net Assets For the Years Ended June 30, 1994 and 1995 (All Amounts In Thousands)
Municipal Money Intermediate Market Fund Municipals 1994 1995 1994 1995 --------- --------- -------- --------- Operations Net investment income $ 3,754 $ 4,655 $ 11,722 $ 10,858 Net realized gains (losses) on investments (15) -- 59 (935) Net change in unrealized appreciation or depreciation of investments -- -- (8,963) 3,694 --------- --------- -------- --------- Net Increase in Net Assets Resulting from Operations 3,739 4,655 2,818 13,617 --------- --------- -------- --------- Distributions To Shareholders Dividends from net investment income (3,754) (4,655) (11,722) (10,858) Distributions from realized gains -- -- (3,978) -- Distributions in excess of realized gains -- -- (74) -- --------- --------- -------- --------- Total Distributions to Shareholders (3,754) (4,655) (15,774) (10,858) --------- --------- -------- --------- Share Transactions Subscriptions of fund shares 316,484 239,238 84,781 65,416 Investment income dividends reinvested 3,276 4,001 7,601 6,688 Capital gain distributions reinvested -- -- 3,393 -- Redemptions of fund shares (349,812) (262,355) (90,207) (100,427) --------- --------- -------- --------- Net Increase (Decrease) from Share Transactions (30,052) (19,116) 5,568 (28,323) --------- --------- -------- --------- Net (Decrease) in Net Assets (30,067) (19,116) (7,388) (25,564) Total Net Assets Beginning of year 195,887 165,820 245,441 238,053 --------- --------- -------- --------- End of year $ 165,820 $ 146,704 $238,053 $ 212,489 ========= ========= ======== ========= Analyses of Changes in Shares of Beneficial Interest Subscriptions to fund shares 316,484 239,238 7,360 6,010 Investment income dividends reinvested 3,276 4,001 663 611 Capital gain distributions reinvested -- -- 293 -- --------- --------- -------- --------- 319,760 243,239 8,316 6,621 Redemptions of fund shares (349,813) (262,355) (7,882) (9,229) --------- --------- -------- --------- Net increase (decrease) in fund shares (30,053) (19,116) 434 (2,608) Shares outstanding at beginning of year 195,800 165,747 21,209 21,643 --------- --------- -------- --------- Shares outstanding at end of year 165,747 146,631 21,643 19,035 ========= ========= ======== ========= See accompanying notes to financial statements. Statements of Changes in Net Assets For the Years Ended June 30, 1994 and 1995 (All Amounts In Thousands) Managed High-Yield Municipals Municipals 1994 1995 1994 1995 --------- --------- -------- --------- Operations Net investment income $ 41,313 $ 37,935 $ 19,543 $ 17,185 Net realized gains (losses) on investments (800) (2,748) 631 (2,660) Net change in unrealized appreciation or depreciation of investments (41,521) 7,348 (15,935) 7,892 --------- --------- -------- --------- Net Increase (Decrease) in Net Assets Resulting from Operations (1,008) 42,535 4,239 22,417 --------- --------- -------- --------- Distributions To Shareholders Dividends from net investment income (41,313) (37,935) (19,543) (17,185) Distributions from realized gains (8,848) -- (4,738) -- Distributions in excess of realized gains (4,888) -- (2,171) -- --------- --------- -------- --------- Total Distributions to Shareholders (55,049) (37,935) (26,452) (17,185) --------- --------- -------- --------- Share Transactions Subscriptions of fund shares 66,157 79,659 36,146 61,571 Investment income dividends reinvested 24,661 21,933 11,040 9,681 Capital gain distributions reinvested 11,376 -- 5,379 -- Redemptions of fund shares (135,579) (163,714) (81,274) (103,510) --------- --------- -------- --------- Net Decrease from Share Transactions (33,385) (62,122) (28,709) (32,258) --------- --------- -------- --------- Net Decrease in Net Assets (89,442) (57,522) (50,922) (27,026) Total Net Assets Beginning of year 776,694 687,252 359,103 308,181 --------- --------- -------- --------- End of year $ 687,252 $ 629,730 $308,181 $ 281,155 ========= ========= ======== ========= Analyses of Changes in Shares of Beneficial Interest Subscriptions to fund shares 7,135 9,297 3,124 5,657 Investment income dividends reinvested 2,676 2,544 950 879 Capital gain distributions reinvested 1,221 -- 458 -- --------- --------- -------- --------- 11,032 11,841 4,532 6,536 Redemptions of fund shares (14,771) (19,210) (7,011) (9,536) --------- --------- -------- --------- Net decrease in fund shares (3,739) (7,369) (2,479) (3,000) Shares outstanding at beginning of year 82,761 79,022 30,334 27,855 --------- --------- -------- --------- Shares outstanding at end of year 79,022 71,653 27,855 24,855 ========= ========= ======== ========= See accompanying notes to financial statements.
Notes To Financial Statements Note 1. Significant Accounting Policies The following are the significant accounting policies of SteinRoe Municipal Money Market Fund, SteinRoe Intermediate Municipals, SteinRoe Managed Municipals, and SteinRoe High-Yield Municipals (the "Funds"), each a series of SteinRoe Municipal Trust (a Massachusetts business trust). Security Valuations All securities are valued as of June 30, 1995. 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 the Municipal Money Market Fund. Municipal securities of the Municipal Money Market Fund are valued at amortized cost, which approximates market value. This method involves valuing an instrument at cost on the purchase date and thereafter assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument and does not take into account unrealized securities gains or losses. In the event that a deviation of 1/2 of 1 percent 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 securities and assets of the Funds are valued by a method that the Board of Trustees believes represents a fair value. Futures Contracts During the year ended June 30, 1995, Intermediate Municipals, Managed Municipals and High-Yield Municipals entered into futures contracts to either hedge against expected declines in the market value of its 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 the 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 deposits with its custodian cash or securities in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as unrealized gains or losses. The Fund 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 the Funds elect to be taxed as "regulated investment companies" and make such distributions to their shareholders as to be relieved of all Federal income taxes under provisions of current Federal tax law. 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 includable 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 for eight years following the year of the loss and offset such losses against any future realized gains. At June 30, 1995, the Funds had capital loss carry forwards as follows:
Year of Fund Amount Expiration Intermediate Municipals $ 839 2003 Managed Municipals 4,436 2003 High Yield Municipals 1,715 2003
Distributions to Shareholders Dividends from net investment income are declared daily and paid monthly. Capital gain distributions, if any, are distributed annually. Distributions in excess of tax basis earnings are reported in the financial statements as a return of capital. Differences in the recognition or classification of income between the financial statements and tax earnings which result in temporary over-distributions are classified as distributions in excess of net investment income or net realized gains, and any permanent differences are reclassified to paid-in-capital. The amounts reclassified as of June 30, 1995 for Municipal Money Market Fund, Intermediate Municipals, Managed Municipals and High-Yield Municipals were $74, $81, $276 and $180, respectively. Distributions in excess of net realized gains for Intermediate Municipals, Managed Municipals and High-Yield Municipals are primarily the result of differences in the treatment of futures transactions or losses incurred subsequent to when a Fund was required to make a distribution to meet excise tax requirements. Other Information Realized gains or losses from sales of securities are determined on the specific identified cost basis. Securities purchased on a when-issued or delayed delivery basis may be settled a month or more after transaction date. These securities are subject to market fluctuation during this period. When-issued or delayed delivery purchase commitments of Managed Municipals as of June 30, 1995, amounted to $6,470. The Municipal Money Market Fund attempts to maintain its net asset value per share at $1.00, which it believes will be possible under most conditions. Original issue discounts and premiums on municipal securities of Intermediate Municipals, Managed Municipals, and High-Yield Municipals are amortized. A maturity date is not shown for municipal securities bearing variable or floating interest rates that are adjusted periodically to minimize fluctuations in the value of such securities. All amounts, except per-share amounts, are shown in thousands. Note 2. Trustees' Fees and Transactions with Affiliates The Funds pay a monthly management fee to Stein Roe & Farnham Incorporated (the "Adviser"), an indirect subsidiary of Liberty Mutual Insurance Company, for its services as investment adviser and manager. The management fee is computed at an annual rate for the Municipal Money Market Fund of .50 of 1 percent of average daily net assets and for Intermediate Municipals and High-Yield Municipals at .60 of 1 percent of the first $100 million of average daily net assets, .55 of 1 percent of the next $100 million, and .50 of 1 percent thereafter. For Managed Municipals, the management fee is computed at an annual rate of .60 of 1 percent of the first $100 million of average daily net assets, .55 of 1 percent of the next $100 million, .50 of 1 percent of the next $800 million, and .45 of 1 percent thereafter. The investment advisory agreements of the Funds provide that the Adviser will reimburse each Fund to the extent that its annual expenses, excluding certain expenses, exceed the applicable limits prescribed by any state in which each Fund's shares are offered for sale. In addition, the Adviser has agreed to reimburse Municipal Money Market Fund and Intermediate Municipals (effective May 1, 1995) for expenses in excess of .70 of 1 percent of average daily net assets. These expense limitations expire on October 31, 1995, subject to earlier termination by the Adviser on 30 day's notice. The transfer agent fees of the Funds are paid to SteinRoe Services, Inc., an indirect subsidiary of Liberty Mutual Insurance Company. Pursuant to an agreement with the Funds, the Adviser provides certain accounting services. For the year ended June 30, 1995, the Municipal Money Market Fund, Intermediate Municipals, Managed Municipals and High-Yield Municipals incurred charges of $16, $17, $23 and $18, respectively. Certain officers and trustees of the Trust are also officers of the Adviser. The compensation of trustees not affiliated with the Adviser for Municipal Money Market Fund, Intermediate Municipals, Managed Municipals and High-Yield Municipals for the year ended June 30, 1995, was $19, $21, $34 and $25, respectively. No remuneration was paid to any other trustee or officer of the Trust. Note 3. Short-Term Debt To facilitate portfolio liquidity, Intermediate Municipals, Managed Municipals and High-Yield Municipals maintain borrowing arrangements under which they can borrow against portfolio securities. There were no borrowings for any of these Funds during the year ended June 30, 1995. Notes To Financial Statements Continued Note 4. Investment Transactions The aggregate cost of purchases and proceeds from sales or maturities of securities (excluding short-term obligations for Intermediate Municipals, Managed Municipals and High-Yield Municipals) for the year ended June 30, 1995, were as follows:
Fund Purchases Sales --------- -------- Municipal Money Market Fund $411,026 $346,515 Intermediate Municipals 140,039 170,223 Managed Municipals 204,488 264,757 High-Yield Municipals 63,271 94,830 At June 30, 1995, the cost of investments for financial reporting purposes and for Federal income tax purposes were equal. Unrealized appreciation and depreciation of investments on a tax basis were as follows: Net Appreciation Fund Appreciation Depreciation (Depreciation) ------------ ------------ -------------- Municipal Money Market Fund $ -- $ -- $ -- Intermediate Municipals 7,490 416 7,074 Managed Municipals 30,277 1,411 28,866 High-Yield Municipal 15,167 14,514 653
Note 5. Portfolio Composition The Funds invest in municipal securities including, but not limited to, general obligation bonds, revenue bonds and escrowed bonds (which are bonds that have been refinanced, the proceeds of which have been invested in U.S. Government or agency obligations and set aside to pay off the original issue at the first call date or maturity). See Fund Highlights for each Fund's security type breakdown. The Funds' investments include certain municipal securities that are insured by private insurers who guarantee the payment of principal and interest in the event of default. At June 30, 1995, investments in these securities for Intermediate Municipals and Managed Municipals represented 44.6 and 22.9 percent of the portfolio, respectively. Municipal Money Market Fund's investments include 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 by the issuer. At June 30, 1995, 44.3 percent of the portfolio was backed by bank letters of credit. See each Fund's schedule of investments for additional information on portfolio composition and Fund Highlights for each Fund's portfolio quality (unaudited). Financial Highlights Continued Municipal Money Market Fund Selected per-share data (for a share outstanding throughout each period), ratios and supplemental data.
Six Months Years Ended Ended Years Ended Dec. 31, June 30, June 30, 1985 1986 1987 1988 1989 -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 -------- -------- -------- -------- -------- Net investment income .047 .041 .040 .021 .056 Distributions from net investment income (.047) (.041) (.040) (.021) (.056) -------- -------- -------- -------- -------- Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 ======== ======== ======== ======== ======== Ratio of net expenses to average net assets (a) 0.60% 0.60% 0.69% 0.67%* 0.67% Ratio of net investment income to average net assets (b) 4.74% 4.05% 4.08% 4.25%* 5.57% Total return (b) 4.82% 4.22% 4.11% 4.29%* 5.74% Net assets, end of period (000s) $152,277 $251,465 $306,971 $294,116 $254,261 Years Ended June 30, 1990 1991 1992 1993 1994 1995 -------- -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 -------- -------- -------- -------- -------- -------- Net investment income .054 .046 .032 .020 .019 .030 Distributions from net investment income (.054) (.046) (.032) (.020) (.019) (.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) 0.67% 0.68% 0.70% 0.70% 0.70% 0.70% Ratio of net investment income to average net assets (b) 5.40% 4.66% 3.19% 1.96% 1.88% 2.96% Total return (b) 5.52% 4.74% 3.25% 1.97% 1.90% 3.02% Net assets, end of period (000s) $255,953 $237,403 $199,037 $195,887 $165,820 $146,704 *Annualized (a) If the Fund had paid all of its expenses and there had been no reimbursement of expenses by the investment adviser, this ratio would have been 0.72, 0.70 and 0.78 percent for the years ended December 31, 1985 and 1986, and June 30, 1995, respectively. (b) Computed giving effect to investment adviser's expense limitation undertaking.
Financial Highlights Continued Intermediate Municipals Selected per-share data (for a share outstanding throughout each period), ratios and supplemental data.
Six Period Months Years Ended Years Ended Ended Ended Dec. 31, December 31, June 30, June 30, 1985(a) 1986 1987 1988 1989 ------- -------- ------- ------- ------- Net Asset Value, Beginning of Period $ 10.00 $ 10.14 $ 10.76 $ 10.37 $ 10.43 ------- -------- ------- ------- ------- Income From Investment Operations Net investment income .12 .58 .57 .29 .62 Net realized and unrealized gains (losses) on investments .14 .62 (.38) .06 .07 ------- -------- ------- ------- ------- Total from investment operations .26 1.20 .19 .35 .69 Distributions Net investment income (.12) (.58) (.57) (.29) (.62) Net realized gains -- -- (.01) -- -- In excess of realized gains -- -- -- -- -- ------- -------- ------- ------- ------- Total distributions (.12) (.58) (.58) (.29) (.62) ------- -------- ------- ------- ------- Net Asset Value, End of Period $ 10.14 $ 10.76 $ 10.37 $ 10.43 $ 10.50 ======= ======== ======= ======= ======= Ratio of net expenses to average net assets (b) 0.80%* 0.80% 0.80% 0.80%* 0.80% Ratio of net investment income to average net assets (c) 5.82%* 5.45% 5.47% 5.66%* 5.96% Portfolio turnover rate 0% 10% 49% 22%** 83% Total return (c) 2.61%** 12.09% 1.93% 3.45%** 6.85% Net assets, end of period (000s) $22,973 $104,750 $96,143 $97,308 $91,304 Years Ended June 30, 1990 1991 1992 1993 1994 1995 ------- -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period $ 10.50 $ 10.54 $ 10.73 $ 11.06 $ 11.57 $ 11.00 ------- -------- -------- -------- -------- -------- Income From Investment Operations Net investment income .63 .62 .57 .54 .53 .53 Net realized and unrealized gains (losses) on investments .07 .22 .50 .63 (.39) .16 ------- -------- -------- -------- -------- -------- Total from investment operations .70 .84 1.07 1.17 .14 .69 Distributions Net investment income (.63) (.62) (.57) (.54) (.53) (.53) Net realized gains (.03) (.03) (.17) (.12) (.17) -- In excess of realized gains -- -- -- -- (.01) -- ------- -------- -------- -------- -------- -------- Total distributions (.66) (.65) (.74) (.66) (.71) (.53) ------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $ 10.54 $ 10.73 $ 11.06 $ 11.57 $ 11.00 $ 11.16 ======= ======== ======== ======== ======== ======== Ratio of net expenses to average net assets (b) 0.80% 0.80% 0.79% 0.72% 0.71% 0.74% Ratio of net investment income to average net assets (c) 5.96% 5.79% 5.23% 4.79% 4.63% 4.94% Portfolio turnover rate 141% 96% 109% 96% 55% 67% Total return (c) 6.85% 8.18% 10.31% 10.92% 1.16% 6.59% Net assets, end of period (000s) $98,918 $118,651 $165,401 $245,441 $238,053 $212,489 * Annualized ** Not annualized (a) The Fund commenced operations on October 9, 1985. (b) If the Fund had paid all of its expenses and there had been no reimbursement of expenses by the investment adviser in connection with the expense limitation which expired October 31, 1993, this ratio would have been 2.38 percent for the period ended December 31, 1985, 0.94 and 0.83 percent for the years ended December 31, 1986 and 1987, respectively, 0.87 percent for the six months ended June 30, 1988, 0.82, 0.81 and 0.81 percent for the years ended June 30, 1989 through 1991, respectively, and 0.76 percent for the year ended June 30, 1995. (c) Computed giving effect to investment adviser's expense limitation undertaking.
Financial Highlights Continued Managed Municipals Selected per-share data (for a share outstanding throughout each period), ratios and supplemental data.
Six Months Years Ended Ended Years Ended December 31, June 30, June 30, 1985 1986 1987 1988 1989 -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period $ 7.89 $ 8.93 $ 9.22 $ 8.50 $ 8.61 -------- -------- -------- -------- -------- Income From Investment Operations Net investment income .68 .67 .61 .30 .61 Net realized and unrealized gains (losses) on investments 1.07 1.21 (.59) .11 .44 -------- -------- -------- -------- -------- Total from investment operations 1.75 1.88 .02 .41 1.05 Distributions Net investment income (.68) (.67) (.61) (.30) (.61) Net realized gains (.03) (.92) (.13) -- (.03) In excess of realized gains -- -- -- -- -- -------- -------- -------- -------- -------- Total distributions (.71) (1.59) (.74) (.30) (.64) -------- -------- -------- -------- -------- Net Asset Value, End of Period $ 8.93 $ 9.22 $ 8.50 $ 8.61 $ 9.02 ======== ======== ======== ======== ======== Ratio of expenses to average net assets 0.65% 0.65% 0.65% 0.65%* 0.65% Ratio of net investment income to average net assets 8.11% 7.04% 6.99% 7.03%* 7.00% Portfolio turnover rate 113% 92% 113% 28%** 102% Total return 23.00% 21.70% 0.39% 4.90%** 12.69% Net assets, end of period (000s) $357,360 $523,947 $458,170 $467,595 $514,898 Years Ended June 30, 1990 1991 1992 1993 1994 1995 -------- -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period $ 9.02 $ 8.71 $ 8.85 $ 9.11 $ 9.38 $ 8.70 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net investment income .59 .56 .55 .52 .50 .51 Net realized and unrealized gains (losses) on investments (.06) .19 .46 .42 (.51) .09 -------- -------- -------- -------- -------- -------- Total from investment operations .53 .75 1.01 .94 (.01) .60 Distributions Net investment income (.59) (.56) (.55) (.52) (.50) (.51) Net realized gains (.25) (.05) (.20) (.15) (.11) -- In excess of realized gains -- -- -- -- (.06) -- -------- -------- -------- -------- -------- -------- Total distributions (.84) (.61) (.75) (.67) (.67) (.51) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $ 8.71 $ 8.85 $ 9.11 $ 9.38 $ 8.70 $ 8.79 ======== ======== ======== ======== ======== ======== Ratio of expenses to average net assets 0.66% 0.66% 0.64% 0.64% 0.65% 0.65% Ratio of net investment income to average net assets 6.66% 6.39% 6.17% 5.65% 5.45% 5.85% Portfolio turnover rate 95% 203% 94% 63% 36% 33% Total return 6.15% 8.92% 11.95% 10.79% (0.29%) 7.12% Net assets, end of period (000s) $584,081 $655,930 $725,472 $776,694 $687,252 $629,730 * Annualized ** Not annualized
Financial Highlights Continued High-Yield Municipals Selected per-share data (for a share outstanding throughout each period), ratios and supplemental data.
Six Months Years Ended Ended Years Ended December 31, June 30, June 30, 1985 1986 1987 1988 1989 ------- -------- -------- -------- -------- Net Asset Value, Beginning of Period $ 10.02 $ 11.10 $ 12.06 $ 11.06 $ 11.37 ------- -------- -------- -------- -------- Income From Investment Operations Net investment income .94 .90 .87 .44 .88 Net realized and unrealized gains (losses) on investments 1.08 1.11 (.89) .31 .63 ------- -------- -------- -------- -------- Total from investment operations 2.02 2.01 (.02) .75 1.51 Distributions Net investment income (.94) (.90) (.87) (.44) (.88) Net realized gains -- (.15) (.11) -- (.03) In excess of realized gains -- -- -- -- -- ------- -------- -------- -------- -------- Total distributions (.94) (1.05) (.98) (.44) (.91) ------- -------- -------- -------- -------- Net Asset Value, End of Period $ 11.10 $ 12.06 $ 11.06 $ 11.37 $ 11.97 ======= ======== ======== ======== ======== Ratio of net expenses to average net assets (a) 0.80% 0.76% 0.73% 0.76%* 0.73% Ratio of net investment income to average net assets (b) 8.89% 7.77% 8.20% 7.87%* 7.54% Portfolio turnover rate 46% 34% 110% 53%** 208% Total return 20.96% 18.64% (0.16%) 6.89%** 13.79% Net assets, end of period (000s) $99,796 $225,883 $181,600 $201,274 $277,620 Years Ended June 30, 1990 1991 1992 1993 1994 1995 -------- -------- -------- -------- -------- -------- Net Asset Value, Beginning of Period $ 11.97 $ 11.78 $ 11.79 $ 11.83 $ 11.84 $ 11.06 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net investment income .85 .82 .80 .71 .67 .66 Net realized and unrealized gains (losses) on investments .02 .17 .22 .18 (.54) .25 -------- -------- -------- -------- -------- -------- Total from investment operations .87 .99 1.02 .89 .13 .91 Distributions Net investment income (.85) (.82) (.80) (.71) (.67) (.66) Net realized gains (.21) (.16) (.18) (.17) (.17) -- In excess of realized gains -- -- -- -- (.07) -- -------- -------- -------- -------- -------- -------- Total distributions (1.06) (.98) (.98) (.88) (.91) (.66) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $ 11.78 $ 11.79 $ 11.83 $ 11.84 $ 11.06 $ 11.31 ======== ======== ======== ======== ======== ======== Ratio of net expenses to average net assets (a) 0.71% 0.71% 0.69% 0.73% 0.76% 0.86% Ratio of net investment income to average net assets (b) 7.22% 7.00% 6.75% 6.04% 5.76% 5.98% Portfolio turnover rate 261% 195% 88% 75% 36% 23% Total return 7.59% 8.79% 9.01% 7.88% 0.95% 8.54% Net assets, end of period (000s) $310,582 $373,948 $410,613 $359,103 $308,181 $281,155 * Annualized ** Not annualized (a) If the Fund had paid all of its expenses and there had been no reimbursement of expenses by the investment adviser in connection with the expense limitation which expired December 31, 1986, this ratio would have been 0.81 percent for the year ended December 31, 1985. (b) Computed giving effect to investment adviser's expense limitation undertaking.
Report of Independent Auditors To the Shareholders and Board of Trustees of SteinRoe Municipal Trust SteinRoe Municipal Money Market Fund SteinRoe Intermediate Municipals SteinRoe Managed Municipals SteinRoe High-Yield Municipals We have audited the accompanying balance sheets, including the schedules of investments, of SteinRoe Municipal Money Market Fund, SteinRoe Intermediate Municipals, SteinRoe Managed Municipals, and SteinRoe High-Yield Municipals, as of June 30, 1995, and the related statements of operations for the year then ended and changes in net assets for each of the two years in the period then ended, and the financial highlights of SteinRoe Municipal Money Market Fund and SteinRoe High-Yield Municipals since inception, and the financial highlights of SteinRoe Intermediate Municipals and SteinRoe Managed Municipals for the periods subsequent to December 31, 1987. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of SteinRoe Municipal Money Market Fund, SteinRoe Intermediate Municipals, SteinRoe Managed Municipals, and SteinRoe High-Yield Municipals at June 30, 1995, and the results of their operations, the changes in their net assets, and their financial highlights for the periods referred to above, in conformity with generally accepted accounting principles. Ernst & Young LLP Chicago, Illinois August 14, 1995 A Guide to SteinRoe Services We encourage you to take advantage of our free shareholder services. If you would like additional information about how to establish or use a SteinRoe service, just call us at 1 800 338-2550. Purchases In addition to sending us a check or wire to purchase additional fund shares, you can take advantage of these convenient automatic services: * Automatic Investment Plan -- Make regular investments ($50 minimum) in your SteinRoe account directly from your bank checking account. You select monthly, quarterly, semiannual or annual purchases. * Special Investments -- Purchase shares by telephone and pay for them by electronic transfer from your bank checking account. Exchanges * Telephone Exchange -- Call us to exchange $1,000 or more from your account in one SteinRoe Fund to an identically registered account in another SteinRoe Fund. You receive this service when you open a SteinRoe Fund account, unless you elect not to.* * Automatic Exchange -- SteinRoe will regularly exchange shares from your account in one SteinRoe Fund to your account in another. You select twice-monthly, monthly, quarterly, semiannual or annual exchanges. Redemptions * Telephone Redemption by Check -- Call to redeem $1,000 or more from your account. A check will be sent to your registered address. You automatically receive this service when you open a SteinRoe account, unless you elect not to. * Telephone Redemption by Wire -- Redeem shares by phone from your Money Market Fund account ($1,000 minimum) and wire the proceeds to your bank checking account. A small fee for wiring proceeds will be deducted from the amount wired. * Special Redemption Option -- If you do not want to pre-schedule your redemptions, you can redeem shares by telephone ($50 minimum/ $100,000 maximum) and have the proceeds sent directly to your bank checking account. * Automatic Redemption Plan -- Redeem either a fixed dollar or share amount, or a fixed percentage of your account automatically on a schedule you establish. You select monthly, quarterly, semiannual or annual withdrawals ($50 minimum/ $100,000 maximum), and the proceeds are sent either to your bank checking account or to an address you specify. * Money Market Fund Check Writing -- Write checks for $50 or more on your Money Market Fund account. Distributions Most investors like to reinvest their dividends and capital gains distributions and put them back to work. If, however, you do not want them reinvested, consider these alternatives: * Dividend Purchase Option -- Use the distributions from one SteinRoe Fund account ($25 minimum) to automatically purchase shares in your account with another SteinRoe Fund. * Automatic Dividend Deposit -- Instead of receiving your dividends by check, your distributions are deposited automatically into your bank checking account. Recordkeeping * Summary of Investments -- Consolidates quarterly transaction and investment information for any or all of your household's SteinRoe accounts on one easy-to-read statement. At year end, SteinRoe provides a complete summary of all account activity for the year. *SteinRoe reserves the right to discontinue or modify the exchange privilege, and certain restrictions apply. Please refer to your prospectus for details. Funds for Every Investment Objective The SteinRoe family of 100 percent no-load mutual funds offers a variety of funds so you can select the right fund, or combination of funds, to meet your investment objectives. Call us at 1 800 338-2550 for a prospectus and more complete information on any of the funds, including management fees and expenses. Please read the prospectus carefully before you invest or send money. Money Market Funds Money market funds seek to provide income while preserving principal and maintaining liquidity. These funds offer free check writing. * Government Reserves -- Invests primarily in securities issued or guaranteed by the U.S. government and its agencies and instrumentalities.* * Cash Reserves -- Invests in high-quality, short-term money market securities such as certificates of deposit, banker's acceptances and commercial paper.* Bond Funds Bond funds seek high current income by investing primarily in fixed income securities. * Limited Maturity Income Fund -- Invests primarily in U.S. government and other high-quality debt securities. The dollar-weighted average effective maturity will not exceed three years. * Government Income Fund -- Invests primarily in securities issued or guaranteed by the U.S. government and its agencies.* * Intermediate Bond Fund -- Invests primarily in marketable debt securities with an average life of three to ten years. * Income Fund -- Pursues a higher level of current income by investing primarily in medium- and lower-quality bonds. Tax-Exempt Funds These funds help investors keep more of their earnings by investing in instruments that earn income free from federal income tax. Income may be subject to federal alternative minimum tax and state and local taxes; capital gains are subject to state, local and federal taxes. * Municipal Money Market Fund -- Seeks to provide the liquidity and stability of a money market fund plus current tax-free income. Free check writing available.* * Intermediate Municipals -- Seeks high current yield through investments primarily in the three highest grades of intermediate-term municipal securities. * Managed Municipals -- Pursues high tax-free income by investing in a quality-conscious portfolio of long-term municipal bonds. * High-Yield Municipals -- Seeks a higher level of tax-free income from long-term municipal securities, primarily of medium or lower quality. Growth and Income Funds These funds seek to provide a conservative investment that is well positioned for long-term growth and current income. Each fund's approach is designed to limit the effects of market volatility. * Total Return Fund -- Strives for maximum total return consistent with reasonable investment risk by investing in stocks, bonds and convertible securities. * Prime Equities -- Pursues long-term capital growth by investing primarily in large, well-established companies. Growth Funds Growth funds offer long-term capital appreciation potential by investing primarily in various types of stocks. * Growth Stock Fund -- Pursues long-term capital appreciation from stocks with strong growth potential. * Special Fund -- Invests in securities believed to have limited downside risk relative to their potential for above-average growth, including securities of undervalued, underfollowed or out-of-favor companies. * Special Venture Fund -- Seeks capital appreciation through equity securities of entrepreneurially managed companies. * Young Investor Fund -- Invests in securities of companies that affect the lives of children or teenagers. * Capital Opportunities Fund -- Takes a long-term approach to emerging growth by selecting quality companies with the potential to generate high levels of earnings growth over a three- to five-year period. * International Fund -- Invests in a diversified portfolio of foreign securities. *Money market mutual funds strive to maintain a $1 per share net asset value, but there is no assurance that the fund will be able to maintain a stable net asset value. The net asset value of a fund that invests in securities issued or guaranteed by the U.S. government is not guaranteed. To Contact Us. . . By Phone 1 800 338-2550 You can discuss your investment questions with a SteinRoe 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 SteinRoe Fund account, including SteinRoe IRAs. We're available seven days a week, from 7 a.m. to 8 p.m. weekdays and from 8 a.m. to 5 p.m. Saturday and Sunday (central time). SteinRoe'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 SteinRoe 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: * Exchange shares between your SteinRoe accounts; * Purchase Fund shares by electronic transfer; * Order additional account statements and Money Market Fund checks; * Redeem shares by check, wire or electronic transfer. Please contact an account representative if you would like to apply for a PIN. 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 1 800 322-1130. By Mail If you prefer to contact us by mail, please address all correspondence to: P.O. Box 804058, Chicago, IL 60680. In Person If you are in the Chicago area, please visit our Investor Center located in downtown Chicago at One South Wacker Drive, 32nd Floor. Our account representatives can answer questions about your current fund investments or provide you information about any of the SteinRoe Funds and retirement plans. Stop by weekdays between 8 a.m. and 5:15 p.m. This report must be preceded or accompanied by a prospectus. Municipal Trust Trustees Timothy K. Armour President of Mutual Fund Division and Director of Stein Roe & Farnham Incorporated Kenneth L. Block Chairman Emeritus, A. T. Kearney, Inc. William W. Boyd Chairman and Director of Sterling Plumbing Group, Inc. Lindsay Cook Senior Vice President of Liberty Financial Companies, Inc. Francis W. Morley Chairman, Employer Plan Administrators and Consultants Co. Charles R. Nelson Van Voorhis Professor of Political Economy, University of Washington Gordon R. Worley Private investor Officers Timothy K. Armour, President Jilaine H. Bauer, Executive Vice President, Secretary N. Bruce Callow, Executive Vice President Hans P. Ziegler, Executive Vice President Gary A. Anetsberger, Senior Vice President, Chief Financial Officer Thomas W. Butch, Vice President Joanne T. Costopoulos, Vice President Philip D. Hausken, Vice President Stephen P. Lautz, Vice President Lynn C. Maddox, Vice President Anne E. Marcel, Vice President M. Jane McCart, Vice President Jill K. Netzel, Vice President Nicolette D. Parrish, Vice President, Assistant Secretary Thomas P. Sorbo, Vice President Sharon R. Robertson, Controller Margaret O. Zwick, Treasurer Janet B. Rysz, Assistant Secretary Agents and Advisers Stein Roe & Farnham Incorporated Investment Adviser State Street Bank and Trust Company Custodian SteinRoe Services Inc. Transfer Agent Bell, Boyd & Lloyd Legal Counsel to the Trust Ernst & Young LLP Independent Auditors Graphic SteinRoe Logo The SteinRoe Funds SteinRoe Government Reserves SteinRoe Cash Reserves SteinRoe Limited Maturity Income Fund SteinRoe Government Income Fund SteinRoe Intermediate Bond Fund SteinRoe Income Fund SteinRoe Municipal Money Market Fund SteinRoe Intermediate Municipals SteinRoe Managed Municipals SteinRoe High-Yield Municipals SteinRoe Total Return Fund SteinRoe Prime Equities SteinRoe Young Investor Fund SteinRoe Growth Stock Fund SteinRoe Capital Opportunities Fund SteinRoe Special Fund SteinRoe Special Venture Fund SteinRoe International Fund P.O. Box 804058 Chicago, Illinois 60680 1 800 338-2550 In Chicago, visit our Investor Center at One South Wacker Drive Liberty Securities Corporation, Distributor Member, SIPC 8/95 20040