<PAGE>
[graphic omitted]
Stein Roe Advisor
Young Investor(SM) Fund
Semiannual Report -- March 31, 1998
The investment that's also an education
<PAGE>
Fund Highlights
The Stein Roe Advisor Young Investor Fund Class A shares returned 15.19% for the
six-month period ended 3/31/98, outperforming its Lipper growth fund peer group
median return of 12.45%.(1)
The Fund's investment in consumer cyclical and consumer staple stocks performed
well, benefitting from a strong economy throughout the period.
(1) The historical performance of Class A shares for the period prior to
1/26/98, is based on the performance of SR&F Growth Investor Portfolio,
restated to reflect the sales charges, 12b-1 fees and other expenses
applicable to that class as set forth in the "Fee Table," without giving
effect to any fee waivers described therein and assuming reinvestment of
dividends and capital gains. Inception date for performance purposes is
4/29/94. Stein Roe Advisor Young Investor Fund is not ranked by Lipper
Analytical Services.
Table of contents
To Our Shareholders ............................................. 1
Portfolio Manager Commentary .................................... 2-4
Portfolio of Investments ........................................ 5-8
Financial Statements ............................................ 8-11
Notes to Financial Statements ................................... 11-13
Financial Highlights ............................................ 13-14
Activity Pages
ages three to five ..................................... 15-16
ages six to eight ..................................... 17-18
ages nine to 12 ........................................ 19-20
- ----------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
- ----------------------------
<PAGE>
To Our Shareholders
[Photo of Thomas W. Butch]
Dear Investor,
We are pleased to present this semiannual report for the Stein Roe Advisor Young
Investor(SM) Fund. This report covers the six months ended March 31, 1998.
An Unprecedented Bull Run Continues
You probably know that many of the products you consume today are made in other
countries. We are linked in many ways to other countries of the world. This is
true in the investment world as well. Sometimes when one of the world's
countries has problems, other countries' stock markets are affected. This
happened last year when countries in Asia suffered from economic problems. Many
of the world's other large markets were affected. Fortunately, though, the U.S.
economy was so strong that it helped our stock markets stay strong and perform
better than most of the world's other stock markets.
The stock market has been on a bull run for quite some time now. In fact, for
the past 10-year period ending March 31, 1998, the S&P 500 Index gained an
average of 18.92 percent per year. Returns like these have never before been
produced by the U.S. stock market. Since no one can predict how the market will
perform, it is possible that the momentum will continue. Then there's always the
possibility the market will begin to act like a bear market rather than a bull.
In fact, experts seem to be divided over these two perspectives.
Eventually, all of us will learn which viewpoint proves to be more accurate.
Meanwhile, we believe it is important that investors focus less on wagering
where the market will go and more on ensuring that their investments remain
appropriate to their investing goals, risk tolerance and time horizon.
Your Stein Roe Advisor Fund
We are, of course, grateful that you have chosen to invest in Stein Roe Advisor
Young Investor Fund. In this report, we seek to provide you useful and
educational information about your investment in the Fund. We hope you will take
the time to learn from your portfolio managers how they are investing your money
and how they view what went on with the Fund over the past six months.
A Reminder
We believe that, as an equity investor, it is important that you maintain a
long-term perspective. The turbulence in worldwide markets caused by problems in
Asia during the fourth quarter of 1997 served as a healthy reminder that markets
can swing rapidly and widely. To investors with long-term horizons, short-term
market fluctuations should be the least important concern about investing. The
bigger risk, in our view, is the risk of losing sight of long-term investment
goals because of market fluctuations.
So whatever happens with the market, it's your investing perspective that can
lead to your success.
As always, thank you for the opportunity to serve your investment needs.
Sincerely,
/s/ Thomas W. Butch
Thomas W. Butch
President
April 30, 1998
Because market conditions change frequently, there can be no assurances that the
trends described in this report will continue.
<PAGE>
Portfolio Manager commentary
Q. HOW DID THE FUND PERFORM?
A. The Fund continued to outperform the Lipper growth fund peer group average
during the six-month period ended March 31, 1998. The Fund generated a total
return of 15.19 percent for Class A shares, while the Lipper growth fund
peer group returned 12.45 percent.
Q. WHAT WORKED WELL FOR THE FUND DURING THE LAST SIX MONTHS?
A. Our investments that provide products and services to consumers performed
well. These companies benefited from a strong economy throughout the period.
Top performing holdings included Outdoor Systems, an outdoor billboard
advertising company, Disney, the operator of amusement parks and maker of
children's movies, and Walgreens drugstores (2.5 percent, 1.6 percent and
1.3 percent of total net assets, respectively).
In a strong economy, people tend to buy more non-essential products and
services. Companies that provide these non-essential products and services are
called cyclical because their success is tied to the strength of the economy.
Q. WHAT DID NOT WORK AS WELL DURING THE PERIOD?
A. The technology and energy investments we owned did not perform well. Our
technology holdings were dragged down by turmoil in Asian markets during the
fourth quarter of 1997, while our energy investments were hurt by lower oil
and gas prices.
We do however, like the long-term outlook for the technology sector.
Technology enables businesses to operate more efficiently. Demand for
technological advances is expected to remain strong and we believe companies
such as Intel and Microsoft will continue to be leaders in providing these
products and services (1.3 percent and 1.8 percent of total net assets
respectively).
The Top Ten Holdings
(as a % of total net assets)
1. OUTDOOR SYSTEMS 2.52
- ----------------------------------
2. CISCO SYSTEMS 2.12
- ----------------------------------
3. FANNIE MAE 1.87
- ----------------------------------
4. MICROSOFT 1.85
- ----------------------------------
5. MATTEL 1.84
- ----------------------------------
6. PFIZER 1.84
- ----------------------------------
7. COCA-COLA 1.83
- ----------------------------------
8. WRIGLEY (WM) JR 1.81
- ----------------------------------
9. MOTOROLA 1.79
- ----------------------------------
10. TRAVELERS GROUP 1.77
- ----------------------------------
Holdings are as of March 31, 1998 and are disclosed as a percentage of SR&F
Growth Investor Portfolio's total net assets. Because the Fund is actively
managed, portfolio composition will change as market conditions change.
<PAGE>
Q. WHAT STOCKS ARE YOU OPTIMISTIC ABOUT GOING FORWARD?
A. In addition to the technology sector, we also favor the consumer sector.
Given our positive outlook for economic growth, we believe stocks in this
sector will continue to perform well.
Economic Sector Breakdown of the Fund
Basic Materials 2%
Energy 1%
Utilities 6%
Technology 23%
Industrial 6%
Financial 20%
Consumer Cyclical 21%
Consumer Noncyclical 21%
Sectors were calculated as a percentage of total equity holdings by Stein Roe &
Farnham, Incorporated. Because the Fund is actively managed, there can be no
guarantee the Fund will continue to invest in these sectors in the future.
The overall market can be broken down into sectors; groupings with similar
characteristics. By knowing what sectors a fund is invested in, you can judge
its performance based upon what you know about these sectors. It also helps you
avoid owning two funds that are invested in the same way.
Q. WHAT WOULD YOU TELL YOUNG INVESTORS TO KEEP IN MIND ABOUT RECENT MARKET
RETURNS?
A. The stock market has been on a record-setting pace over the last three
years. The average annual return of the S&P 500 over that time period was
32.79 percent. Over the last 10 years the S&P 500 has returned an average of
18.92 percent annually. This compares to the long-term average S&P 500
return of 11.16 percent. The market doesn't always go straight up. Investors
should not lose sight of their long-term investment goals during market
fluctuations.
Q. WHAT IS YOUR OUTLOOK?
A. We are cautious about near-term market activity because market valuations
are at historic highs. However, we remain optimistic about the long-term
market potential because many of the factors that have led to the current
market valuations are expected to continue. Economic growth in the United
States remains strong, and inflation and interest rates remain low.
Going forward we will continue to invest in companies that we believe have
the potential to deliver consistent increases in their earnings over the
long term.
Average Annual
Total Returns
(as of 3/31/98 Class A shares)
1 Life of the
Year Fund (4/29/94)
- ----------------------------------------------------
Stein Roe Advisor
Young Investor Fund 47.00% 30.17%
- ----------------------------------------------------
Lipper Growth Fund
Peer Group Median 44.07% 23.45%
- ----------------------------------------------------
Performance shown does not reflect the 2% contingent deferred sales charge
(CDSC) which would be applied if redeemed within the first three years. If the
CDSC had been applied, performance would have been 45.00% for one year.
Performance for Class K shares was 47.22% for one year and 30.31% since
inception.
All information is for Class A shares at net asset value unless otherwise noted.
The Fund commenced operations on 2/14/97, but until 1/26/98 offered only the
shares that are now designated Class K shares. The Adviser currently limits
expenses on Class A and Class K shares to 1.65 percent and 1.50 percent,
respectively, of average annual net assets. Absent this limit, total return
would be less. The historical performance of Class K shares for the period prior
to 2/14/97, and the historical performance of Class A shares for the period
prior to 1/26/98, are based on the performance of SR&F Growth Investor
Portfolio, restated to reflect the sales charges, 12b-1 fees and other expenses
applicable to that class as set forth in the "Fee Table," without giving effect
to any fee waivers described therein and assuming reinvestment of dividends and
capital gains. Inception date for performance purposes is 4/29/94.
Lipper Analytical Services, Incorporated gathers lots of information about
mutual funds and how they perform. Newspapers, magazines, television shows and
individual investors can use this data to compare investments.
Growth of $10,000 Since Inception
on 4/29/94
Apr 29, 94 $10,000
May 31, 94 10,037
Jun 30, 94 9,695
Jul 29, 94 9,853
Aug 31, 94 10,290
Sep 30, 94 10,227
Oct 31, 94 10,644
Nov 30, 94 10,432
Dec 30, 94 10,717
Jan 31, 95 10,754
Feb 28, 95 11,003
Mar 31, 95 11,382
Apr 28, 95 11,510
May 31, 95 11,698
Jun 30, 95 12,679
Jul 31, 95 13,438
Aug 31, 95 13,605
Sep 29, 95 14,334
Oct 31, 95 14,040
Nov 30, 95 14,838
Dec 29, 95 14,936
Jan 31, 96 15,515
Feb 29, 96 15,720
Mar 29, 96 16,372
Apr 30, 96 17,471
May 31, 96 18,309
Jun 28, 96 18,658
Jul 31, 96 17,416
Aug 30, 96 18,191
Sep 30, 96 19,371
Oct 31, 96 19,636
Nov 29, 96 20,400
Dec 31, 96 20,118
Jan 31, 97 21,048
Feb 28, 97 20,495
Mar 31, 97 19,125
Apr 30, 97 19,980
May 30, 97 21,521
Jun 30, 97 22,547
Jul 31, 97 24,108
Aug 31, 97 23,276
Sep 30, 97 24,407
Oct 31, 97 23,693
Nov 30, 97 24,277
Dec 31, 97 25,330
Jan 30, 98 25,599
Feb 27, 98 27,283
Mar 31, 98 28,114
A $10,000 investment in Class K shares made on 4/29/94 (inception), at net asset
value, would have grown to $28,238 on 3/31/98. All results shown assume
reinvestment of dividends and capital gains. Past performance is no guarantee of
future results. Investment returns and principal value will fluctuate, resulting
in a gain or loss on sale.
<PAGE>
SR&F Growth Investor Portfolio
Portfolio of Investments at March 31, 1998
(Dollar amounts in thousands)
(Unaudited)
NUMBER MARKET
COMMON STOCKS (93.6%) OF SHARES VALUE
- -------------------------------------------------------------------------
AUTOMOBILES/VEHICLES (1.2%)
Volvo AB ADRs
(Manufactures cars, trucks,
buses, marine engines and
aerospace equipment) 260,000 $ 8,287
BANKS (3.1%)
Citicorp 75,000 10,650
(Provides a broad range of
financial services)
Texas Regional Bancshares, Class A
(Commercial bank operating in
the Rio Grande Valley of Texas) 310,000 10,404
--------
21,054
COMMERCIAL SERVICES (3.3%)
Cendant Corporation (a)
(Global provider of consumer
and business services) 300,000 11,888
Paychex, Inc.
(Provides computerized payroll
accounting services to businesses) 185,000 10,672
--------
22,560
Computer Software and Services (11.1%)
Altera Corporation (a)
(Designs, develops and markets
programmable logic integrated
circuits and computer engineering
development software and hardware) 175,000 6,606
Analog Devices, Inc. (a)
(Designs, manufactures, and markets
linear, mixed-signal and digital
integrated circuits) 300,000 9,975
Cambridge Technology Partners, Inc. (a)
(Designs, develops, and deploys client/
server and Internet applications) 100,000 4,956
Cisco Systems, Inc. (a)
(Produces, markets and supports
multiprotocol internetworking
systems) 210,000 14,359
Comdisco, Inc.
(Technology service company
which provides solutions that
help organizations reduce
technology cost and risk) 250,000 10,906
Microsoft Corporation (a)
(Manufactures software products) 140,000 12,530
Sterling Commerce Inc. (a)
(Global provider of electronic
commerce software products and
network services) 190,000 8,811
Transaction Systems Architects, Inc. (a)
(Develops, markets and supports a
broad line of software products
and services) 200,000 7,775
--------
75,918
CONSUMER PRODUCTS (4.3%)
The Gillette Company
(Shaving and personal-care products) 100,000 11,869
The Procter & Gamble Company
(Produces personal-care products,
pharmaceuticals, food and beverages) 100,000 8,437
Tupperware Corporation
(Direct seller of food storage
containers) 325,000 8,653
--------
28,959
DISTRIBUTION - RETAIL (4.7%)
Hasbro, Inc.
(Manufactures and sells childrens' toys) 300,000 10,594
Mattel, Inc.
(Designs, manufactures and
markets children's toys) 315,000 12,482
Walgreen Company
(Large retail drugstore chain) 250,000 8,797
--------
31,873
EDUCATIONAL SERVICES (0.6%)
Children's Comprehensive Services (a)
(Provides services for at-risk youth) 200,000 3,800
ELECTRICAL EQUIPMENT (4.4%)
General Electric Company
(Appliances, broadcasting,
communications and transportation) 100,000 8,619
Intel Corp.
(Produces and sells microcomputer
components and related products) 116,000 9,055
Motorola, Inc.
(Producer of electronic and
telecommunications equipment) 200,000 12,125
--------
29,799
ENTERTAINMENT (2.7%)
Cedar Fair L.P.
(Owns and operates amusement
theme parks) 280,000 7,700
Disney (Walt) Company
(Operates theme parks and resorts,
and produces motion pictures) 100,000 10,675
--------
18,375
FINANCIAL INSTITUTIONS (5.9%)
Federal Home Loan Mortgage Corp.
(Purchases mortgages from lenders
and resells in pools or packages) 225,000 10,673
Fannie Mae
(Purchases mortgages and issues
guaranteed mortgage-backed securities) 200,000 12,650
Household International Inc.
(Provides financial and
banking services) 80,000 11,020
Sirrom Capital Corporation
(Makes loans to small private
businesses) 200,000 6,013
--------
40,356
FINANCIAL SERVICES (4.1%)
Alliance Capital Management L.P.
(Provides investment services to
pension funds, endowments,
insurance companies, banks and
individual investors) 100,000 5,188
American Express Company
(Provides a variety of diversified
travel and financial services) 115,000 10,558
Travelers Group Inc.
(Provides investment, consumer
finance, property and casualty
insurance and life insurance services) 200,000 12,000
--------
27,746
FOOD & BEVERAGE (5.8%)
The Coca-Cola Company
(Producer and distributor of soft
drink products) 160,000 12,390
Groupe Danone ADRs
(Produces packaged foods
and beverages) 150,000 7,219
Quaker Oats Company
(An international marketer of
foods & beverages) 125,000 7,156
Wrigley (Wm) Jr. Company
(Chewing gum manufacturer) 150,000 12,262
--------
39,027
HEALTH CARE (2.4%)
Johnson & Johnson
(Manufactures and markets a
broad range of health care and
other products) 150,000 10,997
Orthodontic Centers of America, Inc. (a)
(Provides management and consulting
services to orthodontic practices) 250,000 5,422
--------
16,419
INSURANCE (3.9%)
CMAC Investment Corp.
(Provides private mortgage
insurance coverage) 150,000 10,013
HCC Insurance Holdings, Inc.
(Underwrites property and
casualty insurance) 275,000 6,325
MGIC Investment Corp.
(Provides private mortgage
insurance coverage) 150,000 9,853
--------
26,191
LEISURE PRODUCTS (1.2%)
Callaway Golf Company
(Produces and markets golf clubs) 275,000 7,975
MACHINERY (1.2%)
Thermo Electron Corporation (a)
(Manufactures and sells
environmental monitoring and
analysis instruments, papermaking
and recycling equipment) 200,000 8,075
MEDICAL/PHARMACEUTICAL (6.2%)
ALZA Corporation (a)
(Develops and commercializes
pharmaceutical products) 200,000 8,962
American Home Products Corporation
(Discovers, develops, manufactures,
distributes and sells health
care products) 120,000 11,445
Columbia Laboratories, Inc. (a)
(Develops and markets pharmaceutical
over-the-counter drugs) 250,000 3,453
Eli Lilly & Company
(Creates and delivers pharmaceutical-based
health care solutions) 100,000 5,962
Pfizer Inc.
(Research-based global health care
products provider) 125,000 12,461
--------
42,283
MEDICAL - INSTRUMENTS (1.4%)
Medtronic Inc.
(Manufactures various cardiovascular
medical instruments) 180,000 9,338
OIL - EXPLORATION AND PRODUCTION (2.5%)
EVI, Inc. (a)
(Manufactures engineered oilfield
products) 200,000 9,262
Marine Drilling Companies, Inc. (a)
(Provides offshore contract drilling
services for independent and major oil
and gas companies) 350,000 7,569
--------
16,831
PUBLISHING, BROADCASTING AND MEDIA (7.1%)
Clear Channel
Communications Inc. (a)
(Owns, operates and manages radio
and television stations) 110,000 10,780
Heftel Broadcasting Corp., Class A (a)
(Spanish language radio
broadcasting company) 225,000 10,069
Outdoor Systems Inc. (a)
(Outdoor advertising company) 487,500 17,093
The Petersen Companies, Inc. (a)
(Special-interest magazines,
publishing, and television
programming company) 400,000 10,000
--------
47,942
RESTAURANT/HOTEL (1.5%)
McDonald's Corporation
(Develops, licenses, leases and
services a worldwide system
of restaurants) 175,000 10,500
SPECIALTY CHEMICALS (1.5%)
Minerals Technologies Inc.
(Develops, produces and markets
specialty minerals, mineral-based
and synthetic mineral products) 200,000 10,075
TELECOMMUNICATIONS (12.3%)
ADC Telecommunications, Inc. (a)
(Designs, manufactures and markets
a variety of transmission and
networking systems) 300,000 8,269
CIENA Corporation (a)
(Designs, manufactures and sells
systems for long distance
telecommunications networks) 150,000 6,394
Frontier Corporation
(Offers integrated communications
services for business and residential
customers) 300,000 9,769
Intermedia Communications Inc. (a)
(Provides telecommunications
solutions for business and
government customers) 75,000 5,972
LCI International, Inc. (a)
(Provides a variety of voice and data
telecommunication services in domestic
and international markets) 250,000 9,625
Loral Space & Communications (a)
(High technology company concentrated
on satellite manufacturing and
satellite-based communication services) 400,000 11,175
Lucent Technologies Inc.
(Produces public and private networks,
communication systems and software) 90,000 11,509
Tellabs Inc. (a)
(Designs, assembles, markets and services
voice and data networking products) 150,000 10,069
WorldCom, Inc. (a)
(Provides facilities-based and fully
integrated local, long distance,
international and Internet services) 250,000 10,766
--------
83,548
TRAVEL SERVICES (1.2%)
Sabre Group Holdings Inc. (a)
(Provider of a travel reservation system) 225,000 8,072
--------
TOTAL COMMON STOCKS
(Cost $463,448) 635,003
--------
PRINCIPAL
SHORT-TERM OBLIGATIONS (7.1%) AMOUNT
- -------------------------------------------------------------------------
Commercial Paper (7.1%)
Associates Corp. of
North America 6.050% 4/01/98 $ 33,060 33,060
Conagra 6.150% 4/01/98 15,000 15,000
--------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $48,060) 48,060
--------
TOTAL INVESTMENTS (100.7%)
(Cost $511,508) (b) 683,063
OTHER ASSETS, LESS LIABILITIES (-0.7%) (4,807)
---------
TOTAL NET ASSETS (100%) $ 678,256
=========
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
(b) At March 31, 1998, the cost of investments for federal income tax purposes
was $511,517. Net unrealized appreciation was $171,546, consisting of gross
unrealized appreciation of $180,058 and gross unrealized depreciation of $8,512.
See accompanying Notes to Financial Statements.
<PAGE>
Stein Roe Advisor Young Investor Fund
Statement of Assets and liabilities
March 31, 1998
(All amounts in thousands, except per-share data)
(Unaudited)
ASSETS
Investment in SR&F Growth Investor
Portfolio, at value $ 6,365
Cash 14
Receivable for fund shares sold 1,488
Other assets 11
--------
Total assets 7,878
LIABILITIES
Payable to investment adviser 34
Payable for fund shares redeemed 8
Accrued expenses payable 11
--------
Total liabilities 53
--------
Net assets $ 7,825
========
ANALYSIS OF NET ASSETS
Paid-in capital $ 7,625
Net unrealized appreciation on investments 206
Accumulated net investment loss (4)
Accumulated net realized loss on investments (2)
--------
Net assets $ 7,825
========
CLASS A
Net asset value per share
(based on net assets of $7,649
and 580 shares issued and outstanding) $ 13.19
========
CLASS K
Net asset value per share
(based on net assets of $176 and
13 shares issued and outstanding) $ 13.24
========
See accompanying Notes to Financial Statements.
<PAGE>
Stein Roe Advisor Young Investor Fund
Statement of Operations
For the six months ended March 31, 1998
(All amounts in thousands)
(Unaudited)
INVESTMENT INCOME
Dividend income allocated
from SR&F Growth Investor Portfolio $ 2
Interest income allocated from
SR&F Growth Investor Portfolio 1
--------
Total interest income 3
EXPENSES
Amortization of organization expenses 15
Accounting fees 12
SEC and state registration fees 10
Printing and postage 6
Legal and audit fees 5
Trustees' fees 3
Expenses allocated from
SR&F Growth Investor Portfolio 2
Other 5
--------
Total expenses 58
Reimbursement of expenses by investment adviser (51)
--------
Net expenses 7
--------
Net investment loss (4)
--------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains on investments 7
Net change in unrealized appreciation
or depreciation on investments 182
--------
Net gains on investments 189
--------
Net increase in net assets
resulting from operations $ 185
========
See accompanying Notes to Financial Statements.
<PAGE>
Stein Roe Advisor Young Investor Fund
Statements of Changes in Net Assets
(All amounts in thousands)
(Unaudited)
Six Months Period
Ended Ended
March 31, September 30,
1998 1997 (a)
-------- -------------
OPERATIONS
Net investment loss $ (4) $ --
Net realized gains (losses)
on investments 7 (9)
Net change in unrealized
appreciation or depreciation
of investments 182 24
-------- --------
Net increase in net assets
resulting from operations 185 15
-------- --------
SHARE TRANSACTIONS
Subscriptions to fund shares - Class A 7,497 --
Redemptions of fund shares - Class A (11) --
-------- --------
7,486 --
-------- --------
Subscriptions to fund shares - Class K 61 101
Redemptions of fund shares - Class K (23) --
-------- --------
38 101
-------- --------
Net increase from share transactions 7,524 101
-------- --------
Net increase in net assets 7,709 116
TOTAL NET ASSETS
Beginning of period 116 --
-------- --------
End of period $ 7,825 $ 116
======== ========
ACCUMULATED NET
INVESTMENT LOSS AT
END OF PERIOD $ (4) $ --
======== ========
(a) From commencement of operations on February 14, 1997.
See accompanying Notes to Financial Statements.
<PAGE>
SR&F Growth Investor Portfolio
Statement of Assets and Liabilities
March 31, 1998
(All amounts in thousands)
(Unaudited)
ASSETS
Investments, at market value
(cost $511,508) $683,063
Cash 2
Receivable for investments sold 2,789
Dividends receivable 247
Other assets 5
--------
Total assets 686,106
LIABILITIES
Payable for investments purchased 7,503
Payable to investment adviser 347
--------
Total liabilities 7,850
--------
Net assets applicable to investors'
beneficial interest $678,256
========
See accompanying Notes to Financial Statements.
<PAGE>
SR&F Growth Investor Portfolio
Statement of Operations
For the six months ended
March 31, 1998
(All amounts in thousands)
(Unaudited)
INVESTMENT INCOME
Dividends $ 1,575
Interest 760
--------
Total investment income 2,335
EXPENSES
Management fees 1,603
Accounting fees 19
Trustees' fees 13
Audit and legal fees 9
Custodian fees 3
Other 16
--------
Total expenses 1,663
--------
Net investment income 672
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains on investments 24,940
Net change in unrealized appreciation
or depreciation on investments 68,266
--------
Net gains on investments 93,206
--------
Net increase in net assets resulting
from operations $ 93,878
========
See accompanying Notes to Financial Statements.
<PAGE>
SR&F Growth Investor Portfolio
Statement of Changes in Net Assets
(All amounts in thousands)
(Unaudited)
Six Months Period
Ended Ended
March 31, September 30,
1998 1997 (a)
-------- -------------
OPERATIONS
Net investment income $ 672 $ 1,418
Net realized gains on investments 24,940 5,460
Net change in unrealized
appreciation or depreciation
of investments 68,266 61,915
-------- --------
Net increase in net assets
resulting from operations 93,878 68,793
-------- --------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST
Contributions 136,105 452,937
Withdrawals (27,267) (46,190)
-------- --------
Net increase from transactions
in investors' beneficial interest 108,838 406,747
-------- --------
Net increase in net assets 202,716 475,540
TOTAL NET ASSETS
Beginning of period 475,540 --
-------- --------
End of period $678,256 $475,540
======== ========
(a) From commencement of operations on February 3, 1997.
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(All amounts, except per-share amounts, in thousands)
Note 1. Organization
The Stein Roe Advisor Young Investor Fund (the "Fund") is a multi-class series
of the Stein Roe Advisor Trust (the "Trust"), an open-end management investment
company organized as a Massachusetts business trust. The Fund invests
substantially all of its assets in the SR&F Growth Investor Portfolio (the
"Portfolio"), which seeks to achieve long-term capital appreciation by investing
primarily in common stocks and other equity-type securities that are believed to
have long-term appreciation potential. The Fund also has an educational
objective to teach investors, especially young people, about basic economic
principles and personal finance through a variety of educational materials
prepared and paid for by the Fund. The Fund currently offers two classes of
shares at net asset value: Class A and Class K. Class A shares are subject to a
maximum contingent deferred sales charge of 2.00 percent on redemptions made
within three years of purchase.
The Portfolio is a series of the SR&F Base Trust, a Massachusetts common law
trust organized under an Agreement and Declaration of Trust dated August 23,
1993. The Portfolio commenced operations February 3, 1997. At commencement,
Stein Roe Young Investor Fund contributed $292,104 in securities and other
assets in exchange for beneficial ownership of the Portfolio. At February 14,
1997, Stein Roe Advisor Young Investor Fund contributed cash of $100. The
Portfolio allocates net asset value, income and expenses to each investor on a
daily basis, based on their respective percentage of ownership. At March 31,
1998, Stein Roe Young Investor Fund and Stein Roe Advisor Young Investor Fund
owned 99.06 percent and .94 percent, respectively, of the Portfolio.
Note 2. Significant Accounting Policies
The following summarizes the significant accounting policies of the Fund and
Portfolio. The policies are in conformity with generally accepted accounting
principles, which require management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Certain prior-year amounts have been reclassified to conform to current-year
presentation.
Security Valuations
All securities are valued as of March 31, 1998, the last business day of the
period. Securities traded on national securities exchanges are valued at the
last reported sales price or, if there are no sales, at the latest bid
quotation. Each over-the-counter security for which the last sale price is
available from NASDAQ is valued at that price. All other over-the-counter
securities for which reliable quotations are available are valued at the latest
bid quotation. Securities and other assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Trustees.
Investment Transactions and
Investment Income
Investment transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date, and interest income is recorded on the accrual
basis. Interest income includes discount accretion on fixed income securities.
Realized gains and losses from investment transactions are reported on an
identified cost basis.
Federal Income Taxes
No provision is made for federal income taxes since (a) the Fund elects to be
taxed as a "regulated investment company" and make distributions to its
shareholders to be relieved of all federal income taxes under provisions of
current federal tax law; and (b) the Portfolio is treated as a partnership for
federal income tax purposes and all of its income is allocated to its owners
based on respective percentages of ownership.
The Fund intends to utilize provisions of the federal income tax law, which
allow the fund to carry a realized capital loss forward up to eight years
following the year of the loss, and offset such losses against any future
realized gains. At September 30, 1997, the Fund had a capital loss carryforward
of $9, which expires in 2005.
Distribution to Shareholders
The Fund declares and pays dividends of any net investment income and net
realized capital gains annually, which are recorded on the ex-dividend date.
Dividends are determined in accordance with income tax principles, which may
treat certain transactions differently from generally accepted accounting
principles. 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 that
result in temporary overdistributions are classified as distributions in excess
of net investment income or net realized gains. Permanent differences are
reclassified to paid-in capital.
Note 3. Trustees' Fees and Transactions with Affiliates
The Portfolio pays a monthly management fee and the Fund pays a monthly
administrative fee to Stein Roe & Farnham Incorporated (the "Adviser"), an
indirect, majority-owned subsidiary of Liberty Mutual Insurance Company, for its
services as investment adviser and manager.
The management fee for the Portfolio is computed at an annual rate of .60 of 1
percent of average daily net assets up to $500 million, .55 of 1 percent of the
next $500 million, and .50 of 1 percent thereafter. The administrative fee for
the Fund is computed at an annual rate of .20 of 1 percent of average daily net
assets up to $500 million, .15 of 1 percent of the next $500 million, and .125
of 1 percent thereafter.
The Adviser also provides certain accounting services. For the period ended
March 31, 1998, the Fund and Portfolio incurred charges of $12 and $19,
respectively.
The administrative agreement provides that the Adviser will reimburse the Fund
to the extent that its annual expenses, excluding certain expenses, exceed the
applicable limits prescribed by any state in which the Fund's shares are offered
for sale. In addition, the Adviser has agreed to reimburse the fund to the
extent that its expenses exceed 1.65 percent of average annual net assets for
Class A shares and 1.50 percent of average annual net assets for Class K shares
through January 31, 1999, subject to earlier termination by the Adviser on 30
days notice.
Shares of the Fund are distributed by Liberty Financial Investments, Inc. (the
"Distributor"), an indirect, majority-owned subsidiary of Liberty Mutual
Insurance Company. The trustees of the Trust have adopted a plan of distribution
and service pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Plan"). The Plan provides that, as compensation for the personal service and/or
maintenance of shareholder accounts, the Distributor receives from the Fund a
service fee not to exceed 0.25 percent of average annual net assets attributed
to Class A shares. The Plan also provides that, as compensation for expenses
related to the promotion and distribution of Fund shares, the Distributor
receives a distribution fee not to exceed 0.10 percent of average annual net
assets for Class A shares and 0.25 percent of average annual net assets for
Class K shares. The Distributor currently limits the Class A distribution fee to
0.05 percent of average annual net assets, subject to termination at any time
without shareholder approval. For the period ended March 31, 1998, the Fund
incurred Rule 12b-1 distribution and service charges of $1.
Transfer agent fees are paid to Colonial Investors Service Center, Inc.
("CISC"), an indirect, majority-owned subsidiary of Liberty Mutual Insurance
Company. Prior to October 15, 1997, transfer agent fees were paid to SteinRoe
Services Inc., also an indirect, majority-owned subsidiary of Liberty Mutual
Insurance Company. Transfer agent fees for the Fund for the period ended March
31, 1998, were $1.
Certain officers and trustees of the Trust are also officers of the Adviser. The
compensation of trustees not affiliated with the Adviser for the Fund and the
Portfolio for the period ended March 31, 1998, was $3 and $13, respectively. No
remuneration was paid to any other trustee or officer of the Trust.
Note 4. Short-Term Debt
To facilitate portfolio liquidity, the Fund and Portfolio maintain borrowing
arrangements under which they can borrow against portfolio securities. Neither
the Fund nor the Portfolio had borrowings during the period ended March 31,
1998.
Note 5. Investment Transactions
The Portfolio's aggregate cost of purchases and proceeds from sales other than
short-term obligations for the period ended March 31, 1998, were $243,635 and
$155,470, respectively.
Note 6. Capital Share Transactions
The following table summarizes Fund share activity during the reporting period:
Period Ended
March 31,
CLASS A SHARES 1998 (a)
------------
Subscriptions to fund shares 581
Redemptions of fund shares (1)
------------
Net increase in fund shares 580
============
Six Months Period
Ended Ended
March 31, September 30,
CLASS K SHARES 1998 1997(b)
------------ -------------
Subscriptions to fund shares 5 10
Redemptions of fund shares (2) --
------------ -------------
Net increase in fund shares 3 10
============ =============
(a) From commencement of multi-class offering on January 26, 1998.
(b) From commencement of operations on February 14, 1997.
<PAGE>
Financial Highlights
Stein Roe Advisor Young Investor Fund
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
Period
Ended
March 31,
1998(a)
CLASS A (Unaudited)
-----------
Net Asset Value, Beginning of Period $ 11.67
-----------
Income From Investment Operations
Net investment loss (0.02)
Net realized and unrealized gains on investments 1.54
-----------
Total from investment operations 1.52
-----------
Net Asset Value, End of Period $ 13.19
===========
Ratio of net expenses to average net assets(b) 1.65%(d)
Ratio of net investment income to
average net assets (c) (0.87%)(d)
Total return (c) 13.02%
Net assets, end of period (000's) $ 7,649
(a) From commencement of multi-class offering on January 26, 1998.
(b) If the Fund had paid all of its expenses and there had been no reimbursement
by the investment adviser, this ratio would have been 4.19 percent for the
period ended March 31, 1998.
(c) Computed giving effect to the investment adviser's expense limitation
undertaking.
(d) Annualized.
<PAGE>
Financial Highlights
Stein Roe Advisor Young Investor Fund
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
Six Months
Ended Period
March 31, Ended
1998 September 30,
(Unaudited) 1997(a)
----------- --------
CLASS K
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.49 $ 10.00
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.04) (0.02)
Net realized and unrealized
gains on investments 1.80 1.51
-------- --------
Total from investment operations 1.76 1.49
-------- --------
DISTRIBUTIONS
Net investment income (0.01) --
Net realized gains -- --
-------- --------
Total distributions (0.01) --
-------- --------
NET ASSET VALUE, END OF PERIOD $ 13.24 $ 11.49
======== ========
Ratio of net expenses to average
net assets (b) 1.50%(d) 1.50%(d)
Ratio of net investment income to
average net assets (c) (0.66%)(d) (0.24%)(d)
Total return (c) 15.32% 14.90%
Net assets, end of period (000's) $ 176 $ 116
(a) From commencement of operations on February 14, 1997.
(b) If the Fund had paid all of its expenses and there had been no reimbursement
by the investment adviser, this ratio would have been 62.06 percent and
89.45 percent for the periods ended March 31, 1998, and September 30, 1997,
respectively.
(c) Computed giving effect to the investment adviser's expense limitation
undertaking.
(d) Annualized
<PAGE>
Financial Highlights
SR&F Growth Investor Portfolio
Six Months
Ended Period
March 31, Ended
1998 September 30,
(Unaudited) 1997(a)
----------- -------------
Ratio of net expenses to
average net assets 0.62%(b) 0.63%(b)
Ratio of net investment income
to average net assets 0.25%(b) 0.54%(b)
Portfolio turnover rate 60% 38%
Average commissions (per share) $0.0586 $0.0583
(a) From commencement of operations on February 3, 1997.
(b) Annualized
<PAGE>
Activity Pages
Puzzles and Games
(ages three to five)
With a mutual fund, you can own a part of lots of companies
[graphic omitted]
What is your favorite?
Toy
---------------------------------
Game
---------------------------------
Soda
---------------------------------
Candy
---------------------------------
Comic
---------------------------------
[graphic omitted]
color me
<PAGE>
I can earn money by doing chores at home
Today, Melissa's job is to rake the leaves. Can you help her find her rake?
[graphic omitted]
color me
<PAGE>
Puzzles and Games
(ages six to eight)
[graphic omitted]
Design a dollar
The dollar bill is used more often than any other bill. It is printed with
special paper and ink by the U.S. Mint -- the part of the government in charge
of printing money. If the U.S. Mint asked you to design a new dollar bill, what
would it look like? Whose picture would you use? What colors would it be? Look
at the top picture and then draw your own dollar bill.
color me
<PAGE>
Money and investing word games
These games can help young investors learn more about the world of money and
investing. Words hidden in the puzzles can go forward, backward, up, down or on
an angle. If you don't know what a word means, see the definitions on this page.
A parent or other adult can help explain them to you.
E V A S T D I M E
BEAR N Y L D U L L U B JOB
BOND T S E V N I E L W LEND
BROKER B O N D D X W H L OWE
BULL R P D B S T O C K PENNY
DIME J O Q E S H P I E SAVE
DOW W O A A E D A R T SHARE
INVEST O R B R O K E R S STOCK
A S Y N N E P C E TRADE
Definitions
Bear -- An investor who thinks prices will fall, or a market in which prices are
falling.
Bond -- A debt security. Investors who buy bonds are loaning money to the
corporation or government that issues the bond.
Broker -- Someone who is licensed to buy and sell stocks, bonds or other
securities for other people.
Bull -- An investor who thinks prices will rise, or a market in which prices are
rising.
Dow -- The nickname for the Dow Jones Industrial Average, a group of stocks used
to track the stock market.
Owe -- An obligation to give or pay something to someone else.
Share -- Part ownership of a company usually bought as an investment. See
Stocks.
Stocks -- Units of ownership of a business, often called shares. Your shares
give you certain priveleges and rights to participate in the running of the
business.
Trade -- In investing, the act of buying or selling stocks, bonds or other
securities.
<PAGE>
Puzzles and Games
(ages nine to 12)
Brain teaser
How many words of four letters or more can you make from the word INVESTMENT?
(Hint: there are at least 30.)
Answers: We thought of invest, vest, tent, intent, time, mine, nine, vine,
event, intense, vent, mint, tint, sent, stem, invent, nest, tense, test, teen,
teem, mist, meet, site, vein, seven, sentiment, seem, seen, stint and tennis.
How did you do?
Scrambled famous sayings
Can you make sense of these scrambled sayings?
1. EVERYTHING MONEY ISN'T
2. NOT NOT WANT WASTE
3. BETTER HEALTH WEALTH THAN IS
4. PENNY A EARNED IS SAVED A PENNY
5. FREE THINGS ARE IN THE BEST LIFE
6. GO AROUND THE MAKES MONEY WORLD
Answers: 1. Money isn't everything. 2. Waste not, want not. 3. Health is better
than wealth. 4. A penny saved is a penny earned. 5. The best things in life are
free. 6. Money makes the world go around.
Brain teaser
Q: Paper money eventually wears out and must be replaced. According to the
Federal Reserve Bank of Atlanta, the average life of a $5 bill is just 15
months. The average life for $1 and $10 bills is 18 months and the average for a
$20 bill is two years. A $50 bill, which doesn't circulate as much, has an
average life of five years. If you started with one brand-new $1, $5, $10, $20
and $50 bill today, and you replaced these bills at the end of their average
lives, how much money would have touched your hands at the end of seven years?
[graphic omitted]
A: You started with a total of $86 in new bills. To this you would add $4 in $1
bills, $25 in $5 bills, $40 in $10 bills, $60 in $20 bills and $50 in $50 bills.
That's a total of $265.
<PAGE>
[graphic omitted]
Currency crossword
Across
2. President whose face is on the $5 bill
4. Government department that prints money
(hint: its seal appears on the front of a dollar)
6. City where coins marked "D" beside the president's head are made
7. What we call a 5-cent coin
9. Name for a 10-cent coin
11. President whose face is on the quarter
13. Another term for money
14. Fiber used in paper money
Down
1. Place where coins are produced
2. Fake (as in money)
5. President whose face is on the $20 bill
8. Building on the back of the $20 bill (two words)
10. Bird on the back of the quarter (two words)
12. President on the $50 bill
Answers: Across 2. Lincoln. 4. Treasury. 6. Denver. 7. Nickel. 9. Dime. 11.
Washington. 13. Currency. 14. Linen.
Down 1. Mint. 3. Counterfeit. 5. Jackson. 8. White House. 10. Bald eagle. 12.
Grant.
<PAGE>
Trustees
[graphic omitted]
THOMAS W. BUTCH
President, Mutual Fund Division and Director,
Stein Roe & Farnham Incorporated
WILLIAM W. BOYD
Chairman and Director, Sterling Plumbing
Group Inc.
LINDSAY COOK
Senior Vice President, Liberty Financial
Companies, Inc.
DOUGLAS A. HACKER
Senior Vice President and Chief Financial
Officer, United Airlines
JANET LANGFORD KELLY
Senior Vice President, Secretary and General
Counsel, Sara Lee Corporation
CHARLES R. NELSON
Van Voorhis Professor of Political Economy,
University of Washington
THOMAS C. THEOBALD
Managing Partner, William Blair Capital Partners
Important information about this report
The Transfer Agent for Stein Roe Advisor Young Investor Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The Fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call 1-800-426-3750 and additional reports
will be sent to you.
This report has been prepared for shareholders of Stein Roe Advisor Young
Investor Fund. This report may also be used as sales literature when preceded or
accompanied by the current prospectus which provides details of sales charges,
investment objectives and operating policies of the Fund.
<PAGE>
[graphic omitted]
Our "family" of mutual funds
Stein Roe Advisor Young Investor Fund is part of a family of funds distributed
by Liberty Financial Investments, Inc. Liberty Financial Investments offers a
wide spectrum of funds, from conservative tax-free bonds to more aggressive
international funds. Each fund within the Liberty family follows a consistent
investment style and adheres to its stated investment objective. For more
information on Liberty-distributed funds, including Colonial Funds, Stein Roe
Advisor Funds and Newport Funds, please consult your investment advisor or call
1-800-426-3750.
Stein Roe Advisor Young Investor(SM) Fund Semiannual Report -- March 31, 1998
[graphic omitted] LIBERTY FINANCIAL INVESTMENTS, INC. (C)1998
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com
-------------
BULK RATE
U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
-------------
YI-03/244F-0498 (5/98) 98/526
