<PAGE>
[graphic omitted]
STEIN ROE ADVISOR GROWTH STOCK FUND SEMIANNUAL REPORT
Managed by Stein Roe & Farnham Incorporated
March 31, 1998
-----------------------------
Not FDIC May Lose Value
Insured No Bank Guarantee
-----------------------------
<PAGE>
PRESIDENT'S MESSAGE
TO OUR SHAREHOLDERS
[Photo of Thomas W. Butch]
We are pleased to present this semiannual report for Stein Roe Advisor Growth
Stock Fund. This report covers the six months ended March 31, 1998.
AN UNPRECEDENTED BULL RUN CONTINUES
U.S. equity markets blinked temporarily in the fourth quarter of 1997 when many
Asian markets struggled with currency devaluations and political and economic
turmoil. By the end of October, the S&P 500 had fallen more than 68 points from
its October high of 983.12. Starting in November, however, the S&P rebounded
sharply, completing its third straight year of gains in excess of 20%. Moreover,
this momentum carried into the first part of 1998 when, despite many predictions
of slowing equity market returns, the Dow Jones Industrial Average surged
11.75%, eclipsing 9000 for the first time.
By all measures, the strength and duration of the current bull market is
unprecedented. The S&P 500's average annual gain of more than 18.94% for the
10-year period ended March 31, 1998, is the largest such gain for any 10-year
period. Obviously, this period has been uniquely prosperous for stock investors.
A NEW ERA?
There remains a considerable division of opinion in the financial community as
to the sustainability of returns of this magnitude. Some market observers
suggest that, based on historical data and traditional market measures, returns
of these levels simply cannot continue. Others believe we have entered a new era
of unbridled equity market growth in which a variety of economic and demographic
factors may render traditional beliefs and measurements obsolete.
Eventually, all of us will learn which of these perspectives proves to be more
accurate. Meanwhile, we believe it is important that investors focus less on
guessing where the market will go and more on ensuring that their investments
remain appropriate to their investing goals, risk tolerance and time horizon.
YOUR FUND
We seek, in this report, to provide you useful and approachable information
about your Fund. We hope you will take the time to learn from your portfolio
managers how they are investing your money and how they assess their Fund's
performance over the past six months.
A REMINDER
We believe that, as an equity investor, what's important above all else is that
you maintain a long-term perspective. The events in Asia during the fourth
quarter of 1997 -- and their brief but pronounced effect on domestic equity
markets -- served as a healthy reminder that markets can swing rapidly and
violently, and that volatility is a risk inherent in equity investing. To
investors with long-term horizons, volatility should not be as important a
consideration, since historically risk has diminished over time. The more
genuine risk, in our view, is the risk of losing sight of long-term investment
goals because of market fluctuations.
So, whatever the market's course, your perspective is your best ally.
As always, we look forward to serving your investment needs.
Sincerely,
/s/ Thomas W. Butch
Thomas W. Butch
President
April 30, 1998
<PAGE>
PORTFOLIO MANAGEMENT REPORT
FIRST SIX MONTHS OF FUND'S FISCAL YEAR PROVIDED STRONG PERFORMANCE
The Fund generated a return of 17.20% for Class A shares, at NAV, for the past
six months. It outperformed the 12.45% return of the Lipper peer group
median(1), and nearly matched the 17.21% return of the S&P 500 Index.
CONSUMER NON-DURABLE AND HEALTH CARE SECTORS LED PORTFOLIO PERFORMANCE
We invest in large companies that tend to react to the market's ups and downs.
Large-cap stocks performed exceedingly well in the fourth quarter, outperforming
all relative indexes by substantial margins. Conversely, these stocks returned
mixed performance in the first quarter and our holdings followed suit. Our
investments in consumer non-durable global consumer franchise companies such as
Gillette, Procter & Gamble and Disney (3.09%, 2.75% and 2.08% of total net
assets, respectively), and our health care holdings such as Merck, Johnson &
Johnson and Pfizer (2.51%, 2.39% and 3.24% of total net assets, respectively),
supported the Fund's performance throughout the period. However, strong
performance among these stocks was offset by the Fund's oil services holdings
which suffered from the downward trend in oil prices. Performance of the
portfolio's technology holdings was mixed, with Motorola and Intel lagging in
performance (2.37% and 2.03% of total net assets, respectively).
TECHNOLOGY COMPANIES LAG IN THE FIRST QUARTER OF 1998
The first quarter is usually tough for technology companies, but this year's
seasonal slowness was exacerbated by the turmoil in Asia. However, our long-term
outlook for the technology sector continues to be favorable. Companies will have
to purchase new technology to be able to compete globally. We invest in
technology companies that we believe will benefit from this trend. For example,
we own Microsoft, Cisco Systems and Tellabs (2.62%, 3.34% and 3.06% of total net
assets, respectively), because they have excellent product lines, and because we
believe these companies are less susceptible to any economic downturn because of
their market dominance. Another example is Intel, a company with a ninety
percent market share in microprocessors worldwide. Despite lagging performance
recently, we like this company because it is as globally dominant in its
industry as Coca-Cola and Gillette are in theirs.
TOP TEN HOLDINGS
- ------------------------------------
1. Cendant 4.13%
2. Travelers Group 3.52%
3. Cisco Systems 3.34%
4. Lucent Technologies 3.33%
5. Fannie Mae 3.29%
6. Pfizer 3.24%
7. General Electric 3.14%
8. Gillette 3.09%
9. WorldCom 3.08%
10. Tellabs 3.06%
- ------------------------------------
Portfolio holdings are disclosed as a percentage of the SR&F Growth Stock
Portfolio's total net assets as of March 31, 1998, and are subject to change.
PORTFOLIO HOLDINGS BOUGHT AND SOLD
We established positions in Time Warner, NationsBank and Peoplesoft during the
period (2.81%, 2.14% and 2.40% of total net assets, respectively).
We sold our position in McDonald's after it experienced continued decreases in
same-store sales growth. We also sold Wells Fargo, Baker-Hughes and Thermo
Electron due to weaker-than-expected earnings.
SEEKING STOCKS THAT SHOULD BENEFIT FROM RISING GLOBAL DEMAND AND AGING BABY
BOOMERS
Due to the trend toward global democracy, we will continue to look for companies
that should benefit from increased global consumer demand. Greater disposable
income leads to consumer demand for products. Global consumer franchises that
perfect their businesses in multiple markets stand to benefit tremendously from
this opportunity. We continue to hold companies like Procter & Gamble because
they are the most globally dominant companies within their respective markets.
SECTOR BREAKDOWN
- --------------------------------------
Basic materials: 1%
Consumer Cyclical: 11%
Consumer Non-Cyclical: 27%
Energy: 4%
Financial: 20%
Industrial: 9%
Technology: 25%
Utilities: 3%
- --------------------------------------
Portfolio sectors are disclosed as a percentage of SR&F Growth Stock Portfolio's
total equity holdings as of March 31, 1998 and are subject to change.
We also will continue to focus on companies that stand to benefit from the aging
baby boomer market segment. As these 80 million consumers age, they're going to
demand more and better health care, so we own health care companies that we
believe stand to profit from this demographic trend such as Pfizer, Eli Lilly,
Merck, and Medtronic (3.24%, 2.52%, 2.51% and 2.70% of total net assets,
respectively). Pharmaceutical maker Eli Lilly, for example, will be driven by
sales of Evista, which is their osteoporosis drug for post-menopausal women. As
market segments change, product demand will change. Therefore, we will continue
to monitor the market and invest in companies that are best positioned to
leverage this trend.
OUTLOOK POSITIVE DESPITE SPECTER OF SLOWING GROWTH
Our long-term outlook for large-cap companies remains positive despite the
possibility that growth may decelerate sometime in the future due to the Asian
crisis. Therefore, we will focus on companies that have delivered consistent
earnings despite the overall strength or weakness of the general market.
(1) Source: Lipper Analytical Services, Inc. Lipper rankings are based on the
Lipper Growth Funds category. For the six-month period ended March 31, 1998,
the Fund's Class K shares ranked in the 1st quartile (158 out of 934 funds).
<PAGE>
STEIN ROE ADVISOR GROWTH STOCK FUND VS.
THE STANDARD & POOR'S 500 INDEX
Change in Value of $10,000 from 3/31/88 -- 3/31/98
CLASS A SHARES BASED ON NAV AND POP
DATE NAV POP S&P 500 INDEX
- ----------- ------ ------ -------------
Mar. 31, 88 9,425 10,000 10,000
Jun. 30, 88 9,720 10,312 10,664
Sep. 30, 88 9,404 9,978 10,701
Dec. 31, 88 9,447 10,023 11,030
Mar. 31, 89 10,160 10,780 11,812
Jun. 30, 89 11,231 11,917 11,853
Sep. 30, 89 12,603 13,371 14,227
Dec. 31, 89 12,762 13,541 14,519
Mar. 31, 90 12,468 13,229 14,083
Jun. 30, 90 14,450 15,332 14,966
Sep. 30, 90 12,042 12,776 12,912
Dec. 31, 90 12,842 13,625 14,068
Mar. 31, 91 14,913 15,823 16,108
Jun. 30, 91 15,059 15,978 16,070
Sep. 30, 91 16,405 17,406 16,927
Dec. 31, 91 18,694 19,834 18,345
Mar. 31, 92 17,877 18,967 17,882
Jun. 30, 92 17,568 18,639 18,221
Sep. 30, 92 18,707 19,848 18,796
Dec. 31, 92 20,174 21,404 19,740
Mar. 31, 93 19,718 20,921 20,602
Jun. 30, 93 19,262 20,437 20,701
Sep. 30, 93 19,602 20,797 21,234
Dec. 31, 93 20,684 21,946 21,726
Mar. 31, 94 19,474 20,662 20,903
Jun. 30, 94 18,893 20,045 20,991
Sep. 30, 94 19,953 21,170 22,015
Dec. 31, 94 19,844 21,055 22,011
Mar. 31, 95 21,266 22,563 24,152
Jun. 30, 95 23,174 24,588 26,454
Sep. 30, 95 25,499 27,055 28,555
Dec. 31, 95 26,835 28,472 30,272
Mar. 31, 96 28,078 29,791 31,897
Jun. 30, 96 29,929 31,755 33,327
Sep. 30, 96 30,772 32,649 34,357
Dec. 31, 96 32,356 34,330 37,219
Mar. 31, 97 32,251 34,219 38,218
Jun. 30, 97 38,712 41,074 44,884
Sep. 30, 97 40,836 43,327 48,246
Dec. 31, 97 43,115 45,745 49,631
Mar. 31, 98 47,861 50,780 56,549
A $10,000 investment in Class B shares made on 3/31/88 at net asset value (NAV)
would have grown to $47,381 on 3/31/98.
A $10,000 investment in Class C shares made on 3/31/88 at NAV would have grown
to $47,200 on 3/31/98.
A $10,000 investment in Class K shares made on 3/31/88 at NAV would have grown
to $50,914 on 3/31/98.
The S&P 500 is an unmanaged group of stocks that differs from the composition of
Stein Roe Advisor Growth Stock Fund. Unlike mutual funds, indexes do not incur
fees or expenses and are not available for direct investment.
AVERAGE ANNUAL TOTAL RETURNS
As of March 31, 1998
CLASS A CLASS B CLASS C CLASS K
Inception 10/15/97 10/15/97 10/15/97 2/14/97
NAV POP NAV w/CDSC NAV w/CDSC NAV
1 Year 48.40% 39.87% 47.50% 42.50% 46.94% 45.94% 47.98%
5 Years 19.41 18.00 18.59 18.39 18.50 18.50 19.41
10 Years 17.64 16.95 16.99 16.99 16.79 16.79 17.67
Past performance is no guarantee of future results. Share price and investment
returns will vary, so you may have a gain or loss when you sell shares. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. Performance for different share classes will
vary based on differences in sales charges and fees associated with each class.
Stein Roe Advisor Growth Stock Fund invests all of its investable assets in SR&F
Growth Stock Portfolio, which has the same investment objective and
substantially the same investment policies as the Fund. The Fund commenced
operations on 2/14/97, but until 10/15/97 offered only the shares that are now
designated as Class K shares. The historical performance of Class K shares for
the period prior to 2/14/97, and the historical performance of each other class
of shares for the period prior to 10/15/97, is based on the performance of SR&F
Growth Stock Portfolio and its predecessor, restated to reflect the sales
charges, the 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 all dividends and capital gains.
Public offering price (POP) performance reflects the maximum initial sales
charge applicable to Class A shares. The applicable contingent deferred sales
charge (CDSC) for Class B shares is 5% for 6 months and 1 year, 2% for 5 years
and 0% for 10 years. The CDSC for Class C shares is 1% for 6 months and 1 year,
and 0% for 5 and 10 years.
<PAGE>
STEIN ROE ADVISOR GROWTH STOCK FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998 (IN THOUSANDS)
COMMON STOCKS - 96.7% SHARES VALUE
- ------------------------------------------------------------------------------
BANKS & SAVINGS AND LOANS - 4.9%
Citicorp 150 $ 21,300
NationsBank 225 16,411
--------
37,711
--------
- ------------------------------------------------------------------------------
BUSINESS SERVICES - 3.0%
Paychex 400 23075
- ------------------------------------------------------------------------------
CHEMICALS - 1.4%
Monsanto 200 10,400
- ------------------------------------------------------------------------------
COMPUTERS AND COMPUTER SOFTWARE - 10.4%
Cisco Systems 375 25,641
Intel 200 15,613
Microsoft (a) 225 20,136
Peoplesoft (a) 350 18,441
--------
79,831
--------
- ------------------------------------------------------------------------------
CONSUMER NON-DURABLES - 10.0%
Cendant (a) 800 31,700
Gillette 200 23,738
Procter & Gamble 250 21,094
--------
76,532
--------
- ------------------------------------------------------------------------------
DISTRIBUTION - RETAIL - 5.3%
Home Depot 300 20,231
Kohl's (a) 250 20,438
--------
40,669
--------
- ------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.1%
General Electric 280 24,132
- ------------------------------------------------------------------------------
FINANCIAL SERVICES - 7.8%
American Express 235 21,576
Charles Schwab 350 13,300
Fannie Mae 400 25,300
--------
60,176
--------
- ------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO - 5.2%
Coca-Cola 270 20,908
Philip Morris 450 18,759
--------
39,667
- ------------------------------------------------------------------------------
HEALTH CARE - 2.4%
Johnson & Johnson 250 18,328
- ------------------------------------------------------------------------------
INSURANCE - 6.4%
American International Group 175 22,039
Travelers Group 450 27,000
--------
49,039
--------
- ------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 4.9%
Walt Disney 150 16,013
Time Warner 300 21,600
--------
37,613
--------
- ------------------------------------------------------------------------------
MEDICAL SUPPLIES - 2.7%
Medtronic 400 20,750
- ------------------------------------------------------------------------------
OIL/GAS - 3.8%
R & B Falcon (a) 350 10,369
Schlumberger Limited 250 18,937
--------
29,306
--------
- ------------------------------------------------------------------------------
PHARMACEUTICAL - 8.3%
Eli Lilly & Company 325 19,378
Merck & Company 150 19,256
Pfizer 250 24,922
--------
63,556
--------
- ------------------------------------------------------------------------------
RUBBER, PLASTIC & RELATED - 2.5%
Illinois Tool Works 300 19,425
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS - 14.6%
LM Ericsson Telecommunications ADRs, class B 450 21,403
Lucent Technologies 200 25,575
Motorola 300 18,188
Tellabs (a) 350 23,494
Worldcom (a) 550 23,684
--------
112,344
--------
TOTAL COMMON STOCKS (cost of $380,800) (b) 742,554
--------
SHORT-TERM OBLIGATIONS - 3.3% PAR
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - 3.3%
Associates Corp. of North America
6.050% 4/01/98 (Cost of $25,255) $ 25,255 25,255
--------
TOTAL INVESTMENTS (cost of $406,055) (b) 767,809
--------
- ------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 0.0% $ 267
- ------------------------------------------------------------------------------
NET ASSETS - 100% 768,076
========
NOTES TO INVESTMENT PORTFOLIO:
- ------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At March 31, 1998, the cost of investments for federal income tax was
$406,055. Net unrealized appreciation and gross unrealized appreciation
were $361,754. There was no gross unrealized depreciation.
Acronym Name
ADR American Depositary Receipt
See notes to financial statements.
<PAGE>
STEIN ROE ADVISOR GROWTH STOCK FUND
STATEMENT OF ASSETS & LIABILITIES
MARCH 31, 1998
(in thousands except for per-share amounts)
(unaudited)
ASSETS
Investment in SR&F Growth Stock Portfolio, at value $ 81,746
Receivable for:
Fund shares sold $ 1,518
Expense reimbursement due
from Adviser/Administrator 71
-------
$ 1,589
Other 25
--------
Total Assets 83,360
LIABILITIES
Payable for:
Fund shares repurchased 81
Accrued:
Transfer agent fee 44
Distribution and service fee 40
Other 58
-------
Total Liabilities 223
--------
NET ASSETS $ 83,137
--------
Net asset value price per share -
Class A ($35,292/2,692) $ 13.11
--------
Maximum offering price per share - Class A
($13.11/0.9425) $ 13.91
--------
Net asset value & offering price per share -
Class B ($39,509/3,021) $ 13.08
--------
Net asset value & offering price per share -
Class C ($7,104/545) $ 13.03
--------
Net asset value & offering price per share -
Class K ($1,232/93) $ 13.17
--------
COMPOSITION OF NET ASSETS
Capital paid in $ 74,741
Net unrealized appreciation 9,306
Accumulated net investment loss (132)
Accumulated net realized loss (778)
--------
$ 83,137
========
See notes to financial statements.
<PAGE>
STEIN ROE ADVISOR GROWTH STOCK FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1998
(in thousands)
(unaudited)
INVESTMENT INCOME
Dividends from SR&F Growth Stock Portfolio $ 155
Interest from SR&F Growth Stock Portfolio 46
Expenses from SR&F Growth Stock Portfolio (112)
--------
Investment Income 89
EXPENSES
Distribution and service fees $ 128
SEC and state registration fees 51
Transfer agent fees 44
Administrative fees 28
Amortization of organization expenses 15
Printing and postage 14
Accounting fees 13
Legal and audit fees 10
Trustees' fees 3
Other 43
-------
349
Fees and expenses waived or borne
by the Adviser/Administrator (128) 221
------- --------
Net Investment Loss (132)
--------
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (770)
Change in net unrealized appreciation
during the period 9,272
-------
Net Gain 8,502
--------
Net Increase in Net Assets from Operations $ 8,370
========
See notes to financial statements.
<PAGE>
STEIN ROE ADVISOR GROWTH STOCK FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Period
(in thousands) Ended Ended
(unaudited) March 31, September 30,
INCREASE (DECREASE) IN NET ASSETS 1998 1997 (a)
-------- --------
Operations:
Net investment loss $ (132) $ --
Net realized loss (770) (8)
Net unrealized appreciation 9,272 34
-------- --------
Net Increase from Operations 8,370 26
-------- --------
Fund Share Transactions:
Receipts for shares sold - Class A 33,083 --
Cost of shares repurchased - Class A (1,463) --
-------- --------
31,620 --
-------- --------
Receipts for shares sold - Class B 36,355 --
Cost of shares repurchased - Class B (840) --
-------- --------
35,515 --
-------- --------
Receipts for shares sold - Class C 6,682 --
Cost of shares repurchased - Class C (191) --
-------- --------
6,491 --
-------- --------
Receipts for shares sold - Class K 1,132 260
Cost of shares repurchased - Class K (242) (35)
-------- --------
890 225
-------- --------
Net Increase from Fund Share
Transactions 74,516 225
-------- --------
Total Increase 82,886 251
NET ASSETS
Beginning of period 251 --
-------- --------
End of period (including accumulated
net investment loss of $132 and $ -,
respectively) $ 83,137 $ 251
======== ========
NUMBER OF FUND SHARES
Sold - Class A 2,814 --
Repurchased - Class A (122) --
-------- --------
2,692 --
-------- --------
Sold - Class B 3,091 --
Repurchased - Class B (70) --
-------- --------
3,021 --
-------- --------
Sold - Class C 561 --
Repurchased - Class C (16) --
-------- --------
545 --
-------- --------
Sold - Class K 91 25
Repurchased - Class K (20) (3)
-------- --------
71 22
-------- --------
(a) From commencement of operations on February 14, 1997.
See notes to financial statements.
<PAGE>
SR&F GROWTH STOCK PORTFOLIO
STATEMENT OF ASSETS & LIABILITIES
MARCH 31, 1998
(in thousands)
(unaudited)
ASSETS
Investments at value (cost $406,055) $ 767,809
Dividends receivable 687
Cash 5
---------
Total Assets 768,501
LIABILITIES
Payable for:
Management and accounting fees $ 385
Other 40
----------
Total Liabilities 425
---------
NET ASSETS applicable to
investors' beneficial interest $ 768,076
=========
See notes to financial statements.
<PAGE>
SR&F GROWTH STOCK PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1998
(in thousands)
(unaudited)
INVESTMENT INCOME
Dividends $ 2,629
Interest 815
---------
Total Investment Income 3,444
EXPENSES
Management fee $ 1,943
Accounting fees 20
Trustees' fees 15
Audit and legal fees 10
Other 55
---------
2,043
---------
Net Investment Income 1,401
---------
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 7,841
Change in net unrealized appreciation
during the period 95,912
---------
Net Gain 103,753
---------
Increase in Net Assets from Operations $ 105,154
=========
See notes to financial statements.
<PAGE>
SR&F GROWTH STOCK PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Period
(in thousands) Ended Ended
(unaudited) March 31, September 30,
INCREASE IN NET ASSETS 1998 1997(a)
---------- -------------
Operations:
Net investment income $ 1,401 $ 1,842
Net realized gain from investments 7,841 26,585
Change in unrealized appreciation from
investments 95,912 53,294
--------- ---------
Increase from Operations 105,154 81,721
--------- ---------
Transactions in investors' beneficial interest:
Contributions 86,443 571,598
Withdrawals (31,892) (44,948)
--------- ---------
Net transactions in investors'
beneficial interest 54,551 526,650
--------- ---------
Total Increase 159,705 608,371
--------- ---------
NET ASSETS
Beginning of period 608,371 -
--------- ---------
End of period $ 768,076 $ 608,371
========= =========
(a) From commencement of operations on February 3, 1997.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(All amounts, except per-share amounts, in thousands)
(unaudited)
NOTE 1. ORGANIZATION
- --------------------------------------------------------------------------------
The Stein Roe Advisor Growth Stock 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 Stock 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 currently offers four classes of
shares: Class A, Class B, Class C and Class K. Class A shares are offered at net
asset value plus a sales charge imposed at the time of purchase; Class B shares
are offered at net asset value and are subject to a declining contingent
deferred sales charge on redemptions made within six years after purchase; Class
C share are offered at net asset value and are subject to a contingent deferred
sales charge on redemptions made within one year after purchase; and Class K
shares are offered at net asset value only through certain intermediaries as
disclosed in the prospectus. Class B shares automatically convert to Class A
after approximately eight years. Class C and Class K shares do not convert.
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 Growth Stock Fund contributed $474,861 in securities and other assets
in exchange for beneficial ownership of the Portfolio. At February 14, 1997,
Stein Roe Advisor Growth Stock 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 Growth Stock Fund and Stein Roe Advisor Growth Stock Fund owned 89.36
percent and 10.64 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.
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 $8, 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. Permanent differences in the
recognition or classification of income between the financial statements and tax
earnings 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 .15 of 1 percent of average daily net
assets up to $500 million, .125 of 1 percent of the next $500 million, and .10
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 $13 and $20,
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 1.40 percent of average annual net assets for
Class A shares, 2.10 percent of average annual net assets for Class B and Class
C shares, and 1.35 percent 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
each class of shares other than Class K 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 exceeding 0.10 of 1
percent of average annual net assets attributed to Class A shares, and 0.75 of 1
percent of average annual net assets attributed to each of its Class B and Class
C shares. The Plan further provides that, as compensation for services and/or
distribution, the Distributor receives a fee at an annual rate not to exceed
0.25 of 1 percent of the average annual net assets attributable to Class K
shares. The Distributor has voluntarily agreed to limit the Class A distribution
fee to 0.05 of 1 percent annually, subject to termination at any time without
shareholder approval. For the period ended March 31, 1998, the Fund incurred
12b-1 distribution and service charges of $128.
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 $44.
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 $15, respectively. No
renumeration 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 $173,110 and
$115,795 respectively.
<PAGE>
STEIN ROE ADVISOR GROWTH STOCK FUND
FINANCIAL HIGHLIGHTS
(unaudited)
Selected data for a share of each class outstanding throughout the period
is as follows:
<TABLE>
<CAPTION>
Period ended March 31,
---------------------------------------------------
1998
Class A (a) Class B (a) Class C (a) Class K
---------------------------------------------------
Net asset value -
<S> <C> <C> <C> <C>
Beginning of period $ 11.59 $ 11.59 $ 11.59 $ 11.26
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.02) (0.06) (0.06) (0.02)
Net realized and
unrealized gain (b) 1.54 1.55 1.50 1.93
---------- ---------- ---------- ----------
Net asset value -
End of period $ 13.11 $ 13.08 $ 13.03 $ 13.17
========== ========== ========== ==========
Total return (c)(d)(e) 13.11% 12.86% 12.42% 16.96%
========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS
Expenses (f) 1.40% 2.10% 2.10% 1.35%
Net investment income(loss) (f) (0.32)% (1.02)% (1.02)% (0.30)%
Fees and expenses
waived or borne by the
Adviser/Administrator (f) 0.67% 0.65% 0.65% 3.01%
Net assets at end
of period (000) $ 35,292 $ 39,509 $ 7,104 $ 1,232
(a) From commencement of multi-class offering on October 15, 1997.
(b) Per-share data was calculated using average shares outstanding during the period.
(c) Total return at net asset value assuming no initial sales charge or contingent deferred
sales charge.
(d) Had the Adviser/Administrator not waived or reimbursed a portion of expenses, total return
would have been reduced.
(e) Not annualized
(f) Annualized
(g) From the commencement of operations on February 3, 1997.
</TABLE>
<PAGE>
STEIN ROE ADVISOR GROWTH STOCK FUND
FINANCIAL HIGHLIGHTS - CONT.
Period ended September 30,
--------------------------
1997
Class K (g)
-----------
Net asset value -
Beginning of period $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(loss) (b) (0.01)
Net realized and
unrealized gain (b) 1.27
-------
Net asset value -
End of period $ 11.26
=======
Total return (c)(d)(e) 12.60%
=======
RATIOS TO AVERAGE NET ASSETS
Expenses (f) 1.35%
Net investment income(loss)(f) (0.22)%
Fees and expenses
waived or borne by the
Adviser/Administrator (f) 54.75%
Net assets at end
of period (000) $ 251
<PAGE>
SR&F GROWTH STOCK PORTFOLIO
FINANCIAL HIGHLIGHTS
Six Months Period
Ended Ended
March 31, September 30,
---------- -------------
(Unaudited) 1998 1997(a)
RATIOS TO AVERAGE NET ASSETS
Expenses (b) 0.62% 0.63%
Net investment income (b) 0.42% 0.52%
Portfolio turnover 18% 22%
Average commissions per share $0.0566 $0.0575
(a) From commencement of operations on February 3, 1997.
(b) Annualized
<PAGE>
IMPORTANT INFORMATION ABOUT THIS REPORT
The Transfer Agent for Stein Roe Advisor Growth Stock Fund is:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
Stein Roe Advisor Growth Stock 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 Growth Stock
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>
TRUSTEES
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
[logo] LIBERTY FINANCIAL INVESTMENTS, INC. (C) 1998
Distributor for Colonial Funds, Stein Roe Advisor Funds and Newport Funds
One Financial Center, Boston, MA 02111-2621
Visit us at www.libertyfunds.com
SG-03/197F-0398 (5/98) 98/544
