<PAGE>
Invest for the long term in a fund
managed with an uncompromising
approach to investing in recognized
corporate leaders.
[graphic omitted]
- ---------------------------------------------------
STEIN ROE ADVISOR GROWTH STOCK FUND ANNUAL REPORT
- ---------------------------------------------------
SEPTEMBER 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
[Photo of Stephen E. Gibson]
Dear Shareholders:
On November 1, 1999, Tom Butch resigned as president of Stein Roe Advisor Mutual
Funds. I would like to take this opportunity to wish him well. As the new
president, I am pleased to present the annual report for the Stein Roe Advisor
Growth Stock Fund for the 12-month period ended September 30, 1999.
Despite higher inflation and rising interest rates, the Fund provided favorable
results during the period. We attribute this strong performance to a positioning
in technology and telecommunication stocks. Perhaps more than in any decade
since the 1920s, advances in technology and telecommunications are
revolutionizing American business. Consider that five years ago, hardly anyone
used the Internet. Now it is becoming the communication tool of choice. For the
12 months ended September 30, 1999, the Fund's Class A shares returned 35.19%,
without a sales charge, outperforming the S&P 500 Index.
On the pages that follow, your portfolio managers detail the Fund's strategy and
provide an outlook for the year ahead. We encourage you to carefully review this
report and visit us on the Internet at www.libertyfunds.com for monthly updates
on the Fund's progress.
As always, we thank you for the opportunity to serve your investment needs.
Respectfully,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
November 15, 1999
TABLE OF CONTENTS
1 HIGHLIGHTS
2 PORTFOLIO MANAGERS' REPORT
4 PERFORMANCE
5 PORTFOLIO OF INVESTMENTS
6 FINANCIAL STATEMENTS
9 NOTES TO FINANCIAL STATEMENTS
11 FINANCIAL HIGHLIGHTS
---------------------------
Not FDIC May Lose Value
Insured No bank Guarantee
---------------------------
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
<PAGE>
- --------------------------------------------------------------------------------
HIGHLIGHTS
- --------------------------------------------------------------------------------
o LARGE-CAP GROWTH STOCKS DOMINATED MARKET EARLY ON
During the first half of the period, a select group of large-capitalization
growth stocks dominated the market. However, in early spring, investors
shifted their assets into value stocks as signs of improving global economic
conditions and continued U.S. economic growth renewed investors' confidence
about cyclical companies.
o THE FEDERAL RESERVE BOARD REVERSED BIAS ON INTEREST RATES
After a series of interest rate cuts in the fall of 1998, the Federal
Reserve Board (the Fed) adopted a neutral stance on the direction of rates.
However, continued economic strength prompted a bias towards raising rates,
causing stock prices to fall. Subsequently, the Fed increased rates twice,
in June and in August. Growth stocks managed to recover faster than the rest
of the market as prices stabilized late in the period.
o FUND PERFORMED WELL DURING PERIOD
An overweighting in technology and telecommunication stocks helped the
Fund's Class A shares outpace the S&P 500 Index.Net asset value per share as
of 9/30/1999
STEIN ROE ADVISOR GROWTH STOCK FUND OUTPERFORMS INDEX
9/30/1998 - 9/30/1999
STEIN ROE ADVISOR GROWTH STOCK FUND CLASS A 35.19%
S&P 500 INDEX 27.79%
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held large-capitalization growth stocks. Unlike mutual funds, indexes are
not investments and do not incur fees or expenses. It is impossible to invest in
an index.
Past performance cannot predict future results. Returns and values of an
investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions.
NET ASSET VALUE PER SHARE
AS OF 9/30/1999
----------------------------
Class A $15.98
----------------------------
Class B $15.76
----------------------------
Class C $15.74
----------------------------
Class K $15.97
----------------------------
<PAGE>
ANNUAL REPORT: STEIN ROE ADVISOR GROWTH STOCK FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS' REPORT
- --------------------------------------------------------------------------------
SECTOR BREAKDOWN
9/30/1999 VS. 9/30/1998
FUND AS OF FUND AS OF
9/30/1999 9/30/1998
- --------------------------------------------------------------------------------
TECNOLOGY 34% 27%
CONSUMER CYCLICAL 20% 13%
CONSUMER NON-CYCLICAL 16% 25%
FINANCIAL 10% 19%
INDUSTRIAL 10% 10%
UTILITIES 6% 4%
ENERGY/BASIC MATERIALS 4% 2%
Sector breakdowns are calculated as a percentage of the total holdings in SR&F
Growth Stock Portfolio. Because the Portfolio is actively managed, there can be
no guarantee the Portfolio will continue to maintain this breakdown.
BOUGHT
- --------------------------------------------------------------------------------
CORNING INCORPORATED
We bought Corning (1.5% of net assets), a premier provider of optical fiber,
cable and photonic products for the telecommunication and semiconductor
industries. Corning has done well as a result of continued growth in the
domestic economy, as well as accelerating growth in emerging markets.
FUND PERFORMED WELL IN VOLATILE MARKET
The Fund performed well in a choppy market, providing a total return for Class A
shares of 35.19%, without a sales charge, for the 12-month period ended
September 30, 1999. This outperformed the S&P 500 Index, which generated a
return of 27.79% for the same period.
RISING INTEREST RATES IMPACTED GROWTH STOCKS
Typically, growth stocks perform best in a low inflation, low interest rate
environment. But the interest rate environment was called into question by the
Federal Reserve's two rate increases -- in June and August. Investor fears of
further rate increases triggered a sell-off that sent stock prices downward.
In our opinion, the Fed simply took back what it gave the markets last October,
which was more liquidity (i.e., lower interest rates) in response to a world
market that was very vulnerable. On a positive note, growth stocks managed to
recover faster than the rest of the market as prices stabilized late in the
period.
Many of our new technology stocks hung in well amidst the rising interest rate
environment. However, stocks of financial services companies did not perform
well for us as interest rate fears grew in the second half of the period.
TECHNOLOGY AND INDUSTRIAL COMPANIES PROVIDED STRONG PERFORMANCE
Technology was the best performing sector in the portfolio. It was also the
Portfolio's largest sector weighting at 34% of the portfolio at the end of the
period. We emphasized companies that build and manage data networks and which
make systems to transmit, retrieve and store data. In an information age
economy, corporate America is forced to spend on technology infrastructure to
stay ahead of the competition. As a result, market dominant technology companies
including Cisco Systems, EMC, Microsoft and Sun Microsystems (6.0%, 4.3%, 3.6%
and 1.3% of net assets, respectively) have done exceedingly well.
Within our technology allocation, semiconductor companies generated the
strongest returns. We aggressively added to the Portfolio's holdings with
positions in Motorola, Applied Materials, Texas Instruments and Micron
Technology (3.5%, 2.5%, 2.0% and 1.6% of net assets, respectively). After four
years in a down cycle, semiconductor companies have entered what we believe is
another upward cycle. An increased penetration of semiconductors in everything
from cell phones and Internet applications to manufactured auto parts and
machinery is driving this growth surge trend. As semiconductor demand has begun
to outstrip supply, prices have soared.
Another source of strong performance in the portfolio during the period was our
focus on growth industrial companies. Our positions in General Electric, Tyco
International and a new holding in Corning (3.8%, 4.5% and 1.5% of net assets,
respectively) have done well as a result of continued growth in the domestic
economy as well as accelerating growth in emerging markets.
OUTLOOK REMAINS FAVORABLE FOR LARGE-CAP STOCKS
We remain confident in large-cap growth companies' ability to expand earnings
and sales given economic conditions. The per-share earnings growth of companies
in the S&P 500 has been remarkable since the spring and we think it has the
potential to continue going forward.
We expect the economy to continue to grow at a moderate pace. Until the interest
rate issue is resolved, we think markets will continue to be volatile. We
believe financial stocks will ultimately rebound given our outlook for rates to
stabilize and perhaps move lower over the next six months. As we move into the
second half of the fourth quarter of calendar year 1999, we expect stocks to
move upward once again.
/s/ Erik Gustafson /s/ David Brady
ERIK GUSTAFSON is a senior vice president of the Advisor and has managed the
Portfolio since its inception. DAVID BRADY, senior vice president of the
Advisor, serves as associate portfolio manager.
HELD
- --------------------------------------------------------------------------------
CISCO SYSTEMS, INC.
We increased our position in Cisco Systems (6.0% of net assets), the Portfolio's
largest holding and worldwide leader in networking for the Internet. Cisco
continues to do well, as companies continue to invest in technology
infrastructure to stay ahead of the competition.
TOP TEN HOLDINGS
AS OF 9/30/1999
Cisco Systems, Inc. 6.0%
- ----------------------------------
Tyco International Ltd. 4.5%
- ----------------------------------
EMC Corp. 4.3%
- ----------------------------------
General Electric Co. 3.8%
- ----------------------------------
MCI WorldCom, Inc. 3.7%
- ----------------------------------
Citigroup, Inc. 3.7%
- ----------------------------------
Microsoft Corp. 3.6%
- ----------------------------------
Home Depot, Inc. 3.6%
- ----------------------------------
Motorola, Inc. 3.5%
- ----------------------------------
American Int'l Group, Inc. 3.5%
- ----------------------------------
Holdings are calculated as a percentage of the total net assets in SR&F Growth
Stock Portfolio. Because the Portfolio is actively managed, there can be no
guarantee the portfolio will continue to maintain these holdings in the future.
<PAGE>
ANNUAL REPORT: STEIN ROE ADVISOR GROWTH STOCK FUND
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
PERFORMANCE OF A $10,000
INVESTMENT IN ALL SHARE CLASSES
FROM 9/30/1989 - 9/30/1999
WITHOUT WITH SALES
SALES CHARGE CHARGE
- --------------------------------------------
Class A $46,323 $43,640
- --------------------------------------------
Class B $43,768 $43,768
- --------------------------------------------
Class C $43,111 $43,111
- --------------------------------------------
Class K $46,136 $46,136
- --------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT IN CLASS A SHARES 9/30/1989 - 9/30/1999
WITHOUT SALES CHARGE WITH SALES CHARGE S&P 500 INDEX
9/89 $10,000 $ 9,425 $10,000
9/90 9,555 9,006 9,076
9/91 13,017 12,269 11,898
9/92 14,851 13,997 13,211
9/93 15,555 14,661 14,925
9/94 15,841 14,930 15,474
9/95 20,240 19,077 20,071
9/96 24,423 23,019 24,150
9/97 32,438 30,573 33,914
9/98 34,267 32,296 36,993
9/99 46,323 43,640 47,270
The Standard & Poor's 500 Index is an unmanaged index that tracks the
performance of 500 widely held, large-capitalization U.S. stocks. Unlike mutual
funds, indexes are not investments and do not incur fees or expenses. It is not
possible to invest in an index.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/1999
Share Class A B C K
Inception 10/15/1997 10/15/1997 10/15/1997 2/14/1997
- -------------------------------------------------------------------------------
Without With Without With Without With Without
Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge
- -------------------------------------------------------------------------------
1 year 35.19% 27.43% 34.24% 29.24% 34.30% 33.30% 34.65%
- -------------------------------------------------------------------------------
5 years 23.94 22.48 23.08 22.90 23.04 23.04 23.79
- -------------------------------------------------------------------------------
10 years 16.57 15.87 15.91 15.91 15.73 15.73 16.52
Past performance cannot predict future investment results. Returns and value of
an investment will vary, resulting in a gain or loss on sale. All results shown
assume reinvestment of distributions. The "with sales charge" returns include
the maximum 5.75% charge for Class A shares and the contingent deferred sales
charge (CDSC) maximum charge of 5% for one year and 2% for five years for Class
B shares and 1% for one year for Class C shares. 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 2/14/1997, but until 10/15/1997,
only offered the shares that are now designated as Class K shares. Performance
for the periods prior to the inception of the Fund's share classes is based on
the performance of SR&F Growth Stock Portfolio, restated to reflect sales
charges, 12b-1 fees and other expenses applicable to that class as set forth in
the prospectus "Fee Table," without giving effect to any fee waivers described
therein and assuming reinvestment of dividends and capital gains. The Advisor
currently limits expenses on Class A shares to 1.40% of average annual net
assets. Absent this limit, total returns would have been lower. Historical
performance as restated should not be interpreted as indicative of the Fund's
future performance.
<PAGE>
<TABLE>
- --------------------
INVESTMENT PORTFOLIO
- --------------------
September 30, 1999
(All amounts in thousands)
SR&F GROWTH STOCK PORTFOLIO
<CAPTION>
- ------------------------------------------------------------------------------------------------
MARKET
COMMON STOCKS (96.0%) SHARES VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES (3.5.%)
America Online, Inc. 150 $ 15,600
Omnicom Group 350 27,716
----------
43,316
----------
COMPUTER AND COMPUTER SOFTWARE (17.8%)
Applied Materials (a) 400 31,150
Cisco Systems, Inc. (a) 1,100 75,419
EMC Corp. (a) 750 53,578
Microsoft Corp.(a) 500 45,281
Sun Microsystems (a) 175 16,275
----------
221,703
----------
CONSUMER-RELATED (5.1%)
Gillette Co. 500 16,969
Johnson & Johnson 250 22,969
Procter & Gamble Co. 250 23,438
----------
63,376
----------
DISTRIBUTION - RETAIL (8.2%)
Home Depot, Inc. 650 44,606
Kohl's Corp. (a) 500 33,063
Walgreen Co. 950 24,106
----------
101,775
----------
ELECTRICAL EQUIPMENT (7.4%)
General Electric Co. 400 47,425
Micron Technology, Inc. 300 19,969
Texas Instruments, Inc. 300 24,675
----------
92,069
----------
FINANCIAL SERVICES (6.4%)
Citigroup, Inc. 1,050 46,200
Fannie Mae 550 34,478
----------
80,678
----------
FOOD, BEVERAGE AND TOBACCO (1.2%)
Coca-Cola Co. 300 14,419
----------
INSURANCE (3.5%)
American International Group, Inc. 500 43,469
----------
LEISURE AND ENTERTAINMENT (2.8%)
Time Warner, Inc. 575 34,931
----------
MANUFACTURING (4.5%)
Tyco International Ltd. 550 56,787
----------
MEDICAL SUPPLIES (5.9%)
Cardinal Health, Inc. 600 32,700
Medtronic, Inc. 1,150 40,825
----------
73,525
----------
OIL AND GAS (3.9%)
Enron Corp. 650 26,812
Schlumberger Ltd. 350 21,809
----------
48,621
----------
PHARMACEUTICAL (2.9%)
Pfizer, Inc. 1,000 35,937
----------
SEMI-CONDUCTOR MANUFACTURER (1.5%)
Corning, Inc. 275 18,855
----------
TELECOMMUNICATIONS (18.4%)
AT&T Corp. 500 21,750
AT&T - Liberty Media Group (a) 250 9,281
Comcast Corp. 800 31,900
Lucent Technologies, Inc. 650 42,169
MCI WorldCom, Inc. (a) 650 46,719
Motorola, Inc. 500 44,000
Tellabs, Inc. (a) 600 34,162
----------
229,981
----------
TOYS (3.0%)
Mattel 2,000 38,000
----------
TOTAL COMMON STOCKS
(Cost $709,595) 1,197,442
----------
PRINCIPAL
SHORT-TERM OBLIGATIONS (4.3%) AMOUNT
- -------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (4.3%)
Associates Corp. of North America 5.600% 10/01/99 $49,020 49,020
Limited Inc 5.700% 10/01/99 5,000 5,000
----------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $54,020) 54,020
----------
TOTAL INVESTMENTS (100.3%)
(Cost $763,615) 1,251,462
----------
OTHER ASSETS, LESS LIABILITIES (-0.3%) (3,309)
----------
NET ASSETS (100.0%) $1,248,153
==========
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
(b) At September 30, 1999, the cost of investments for federal income tax purposes was $767,503.
Net unrealized appreciation was $483,959, consisting of gross unrealized appreciation of
$513,865 and gross unrealized depreciation of $29,906.
See notes to financial statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
September 30, 1999
(All amounts in thousands)
SR&F GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
ASSETS
Investments, at market value (cost $763,615) $1,251,462
Dividends receivable 676
Cash 4
----------
Total assets 1,252,142
----------
LIABILITIES
Payable for investments purchased 3,365
Payable to Advisor 596
Other liabilities 28
----------
Total liabilities 3,989
----------
Net assets applicable to investors' beneficial
interest $1,248,153
==========
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended September 30, 1999
(All amounts in thousands)
SR&F GROWTH STOCK PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 5,817
Interest 2,496
---------
Total investment income 8,313
---------
EXPENSES
Management fees 6,076
Accounting fees 50
Transfer agent fees 6
Trustees' fees 24
Audit and legal fees 18
Custodian fees 30
Other, net (55)
---------
Total net expenses 6,149
---------
Net investment income 2,164
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 76,399
Net change in unrealized appreciation or
depreciation on investments 189,808
---------
Net gain on investments 266,207
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 268,371
---------
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------
(All amounts in thousands)
SR&F GROWTH STOCK PORTFOLIO
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
YEARS ENDED SEPTEMBER 30,
1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 2,164 $ 2,268
Net realized gain (loss) on investments 76,399 (7,814)
Net change in unrealized appreciation or depreciation on
investments 189,808 32,197
---------- --------
Net increase in net assets resulting from operations 268,371 26,651
---------- --------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 680,228 151,248
Withdrawals (431,989) (54,727)
---------- --------
Net increase from transactions in investors' beneficial
interest 248,239 96,521
---------- --------
Net increase in net assets 516,610 123,172
NET ASSETS
Beginning of year 731,543 608,371
---------- --------
End of year $1,248,153 $731,543
========== ========
See notes to financial statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
September 30, 1999
(In thousands except for per share amounts and footnotes)
STEIN ROE ADVISOR GROWTH STOCK FUND
- --------------------------------------------------------------------------------
ASSETS
Investment in SR&F Growth Stock Portfolio,
at value $416,690
Receivable for fund shares sold 10,240
Receivable from Advisor 133
--------
Total assets 427,063
--------
LIABILITIES
Payable for fund shares redeemed 170
Payable to Advisor and transfer agent 169
Payable to Distributor 44
Other liabilities 69
--------
Total liabilities 452
--------
Net assets $426,611
========
ANALYSIS OF NET ASSETS
Paid-in capital $387,044
Accumulated net realized loss on investments (9,311)
Net unrealized appreciation on investments 48,878
--------
Net assets $426,611
========
CLASS A
Net asset value per share (based on net assets of $93,835 and
5,873 shares issued outstanding) $ 15.98
--------
Maximum offering price per share (includes 5.75% initial
sales charge) $ 16.95
--------
CLASS B
Net asset value per share (based on net assets of $304,754 and
19,334 shares issued outstanding) $ 15.76
--------
CLASS C
Net asset value per share (based on net assets of $26,373 and
1,676 shares issued outstanding) $ 15.74
--------
CLASS K
Net asset value per share (based on net assets of $1,649 and
103 shares issued outstanding) $ 15.97
--------
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended September 30, 1999
(In thousands)
STEIN ROE ADVISOR GROWTH STOCK FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends allocated from SR&F Growth Stock Portfolio $ 1,408
Interest allocated from SR&F Growth Stock Portfolio 569
-------
Total income 1,977
-------
EXPENSES
Expenses allocated from SR&F Growth Stock Portfolio 1,486
Service fees - Class A 163
Service fees - Class B 450
Service fees - Class C 46
Distribution fees - Class A 64
Distribution fees - Class B 1,326
Distribution fees - Class C 136
Distribution fees - Class K 8
Administrative fees 394
Transfer agent fees 624
SEC and state registration fees 85
Accounting fees 31
Legal and audit fees 12
Trustees' fees 10
Printing and postage 10
Other 109
-------
Total Expenses 4,954
Fee waived by the Distributor - Class A (32)
-------
Net Expenses 4,922
-------
Net investment loss (2,945)
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS ALLOCATED FROM
SR&F GROWTH STOCK PORTFOLIO
Net realized loss on investments (2,382)
Net change in unrealized appreciation or depreciation on investments 46,504
-------
Net gain on investments 44,122
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $41,177
-------
See notes to financial statements.
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------
(All amounts in thousands)
STEIN ROE ADVISOR GROWTH STOCK FUND
<CAPTION>
- --------------------------------------------------------------------------------------------
YEARS ENDED SEPTEMBER 30,
1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment loss $ (2,945) $ (647)
Net realized loss on investments allocated from SR&F Growth
Stock Portfolio (2,382) (6,921)
Change in unrealized appreciation or depreciation on investments
allocated from SR&F Growth Stock Portfolio 46,504 2,340
--------- --------
Net increase (decrease) in net assets resulting from
operations 41,177 (5,228)
--------- --------
SHARE TRANSACTIONS
Subscriptions to fund shares -- Class A 136,994 46,829
Redemptions of fund shares -- Class A (95,861) (6,434)
--------- --------
41,133 40,395
--------- --------
Subscriptions to fund shares -- Class B 250,089 71,665
Redemptions of fund shares -- Class B (32,938) (3,980)
--------- --------
217,151 67,685
--------- --------
Subscriptions to fund shares -- Class C 15,395 12,370
Redemptions of fund shares -- Class C (2,877) (1,334)
--------- --------
12,518 11,036
--------- --------
Subscriptions to fund shares -- Class K 2,058 3,500
Redemptions of fund shares -- Class K (4,335) (730)
--------- --------
(2,277) 2,770
--------- --------
Net increase from share transactions 268,525 121,886
--------- --------
Net increase in net assets 309,702 116,658
NET ASSETS
Beginning of year 116,909 251
--------- --------
End of year $ 426,611 $116,909
========= ========
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF YEAR $ -- $ --
--------- --------
See notes to financial statements.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
September 30, 1999
(All amounts in thousands)
NOTE 1. ORGANIZATION
Stein Roe Advisor Growth Stock Fund (the "Fund") is a multi-class series of
Liberty-Stein Roe Advisor Trust (the "Trust"), formerly Stein Roe Advisor
Trust, an open-end management investment company organized as a Massachusetts
business trust. The Fund invests substantially all of its assets in 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 may issue an unlimited number of shares. 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 shares 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 shares after approximately eight years. Class
C and Class K shares do not convert. The Fund commenced offering Class A,
Class B and Class C shares on October 15, 1997.
The Portfolio is a series of SR&F Base Trust, a Massachusetts common law trust
organized under an Agreement and Declaration of Trust dated August 23, 1993.
The Portfolio commenced operations 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 to the Portfolio.
The Portfolio allocates income, expenses, realized and unrealized gains and
losses to each investor on a daily basis based on methods approved by the
Internal Revenue Service. At September 30, 1999, Stein Roe Advisor Growth
Stock Fund owned 33.4% of the Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Fund and
the 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
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.
MULTI-CLASS ALLOCATIONS
All income, expenses (other than transfer agent fees and 12b-1 distribution
and service fees), realized and unrealized gains and losses are allocated to
each class of Fund shares proportionately on a daily basis for purposes of
determining the net asset value of each class.
FEDERAL INCOME TAXES
No provision is made for federal income taxes since (a) the Fund elects to be
taxed as a "regulated investment company" and makes distributions to its
shareholders to be relieved of all federal income taxes under provisions of
current federal tax law; and (b) the Portfolio is treated as a partnership for
federal income tax purposes and all of its income is allocated to its owners
based on methods approved by the Internal Revenue Service.
The Fund intends to utilize provisions of 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, 1999, the Fund had capital loss carryforwards of $8,
$10 and $7,995, which expires in 2005, 2006 and 2007, respectively.
DISTRIBUTIONS 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 to Stein Roe & Farnham
Incorporated (the "Advisor"), an indirect, wholly-owned subsidiary of Liberty
Financial Companies, Inc. ("Liberty") and the Fund pays a monthly
administrative fee to Colonial Management Associates, Inc. (CMA), an affiliate
of the Advisor for its services as investment advisor and administrator.
The management fee for the Portfolio is computed at an annual rate of 0.60% of
the Portfolio's average daily net assets up to $500 million, 0.55% of the next
$500 million, and 0.50% thereafter. The administrative fee for the Fund is
computed at an annual rate of 0.15% of the Fund's average daily net assets up
to $500 million, 0.125% of the next $500 million, and 0.10% thereafter.
The Advisor also provides fund accounting services.
The Advisor has agreed to reimburse the Fund to the extent that its annual
expenses, including expenses allocated to the Fund by the Portfolio exceed
1.40% of average daily net assets for Class A shares, 2.10% of average daily
net assets for Class B and Class C shares, and 1.35% of average daily net
assets for Class K shares through January 31, 2000, subject to earlier
termination by the Advisor on 30 days notice. For the year ended September 30,
1999, the Fund's operating expenses did not exceed the expense limits.
Shares of the Fund are distributed by Liberty Funds Distributor, Inc. (the
"Distributor"), an indirect, wholly-owned subsidiary of Liberty. 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 at
an annual rate not to exceed 0.25% of average daily net assets attributable to
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 at an annual rate not to
exceed 0.10% of average daily net assets attributable to Class A shares, and
0.75% of the average daily net assets attributable 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 the average daily net assets attributable to Class K shares.
The Distributor currently limits the Class A annual distribution fee to 0.05%
of average daily net assets, subject to termination at any time without
shareholder approval.
Transfer agent fees are paid to Liberty Funds Services, Inc., an indirect,
wholly-owned subsidiary of Liberty. Transfer agent fees for Class A, Class B
and Class C shares are computed at an annual rate of 0.236% of average daily
net assets. Transfer agent fees for Class K shares are computed an annual rate
of 0.30% of average daily net assets.
Certain officers and trustees of the Trust and SR&F Trust are also officers of
the Advisor. No remuneration was paid to any trustee or officer of either
Trust who is affiliated with the Advisor.
NOTE 4. SHORT-TERM DEBT
To facilitate portfolio liquidity, the Fund and the Portfolio maintain
borrowing arrangements under which they can borrow against portfolio
securities. Neither the Fund nor the Portfolio had borrowings during year
ended September 30, 1999.
NOTE 5. INVESTMENT TRANSACTIONS
The Portfolio's aggregate cost of purchases and proceeds from sales other than
short-term obligations for the year ended September 30, 1999, were $849,891
and $582,611, respectively.
NOTE 6. CAPITAL SHARE TRANSACTIONS
The following table summarizes fund share activity during the reporting
period:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
CLASS A SHARES 1999 1998(a)
------------- -------------
<S> <C> <C>
Subscriptions to fund shares 8,524 3,848
Redemptions of fund shares (5,996) (503)
------------- -------------
Net increase in fund shares 2,528 3,345
============= =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
CLASS B SHARES 1999 1998(a)
------------- -------------
<S> <C> <C>
Subscriptions to fund shares 15,980 5,778
Redemptions of fund shares (2,109) (315)
------------- -------------
Net increase in fund shares 13,871 5,463
============= =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
CLASS C SHARES 1999 1998(a)
------------- -------------
<S> <C> <C>
Subscriptions to fund shares 974 998
Redemptions of fund shares (192) (104)
------------- -------------
Net increase in fund shares 782 894
============= =============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
CLASS K SHARES 1999 1998
------------- -------------
<S> <C> <C>
Subscriptions to fund shares 139 268
Redemptions of fund shares (269) (57)
------------- -------------
Net increase (decrease) in fund shares (130) 211
============= =============
(a) From commencement of multi-class offering on October 15, 1997.
- --------------------------------------------------------------------------------------------------
</TABLE>
NOTE 7. RELATED PARTY AND SIGNIFICANT SHAREHOLDERS
At September 30, 1999, Stein Roe Advisor Growth Stock Fund had one related
party, Liberty Financial Companies, Inc., and one shareholder who each owned
greater than 5% of the Fund's outstanding shares, totaling 15%.
CHANGE IN INDEPENDENT ACCOUNTANTS
Based on the recommendation of the Audit Committee of the Stein Roe Advisor
Growth Stock Fund and the SR&F Growth Stock Portfolio, on August 3, 1999 the
Board of Trustees determined not to retain Arthur Andersen LLP as the Fund's and
the Portfolio's independent accountant and voted to appoint
PricewaterhouseCoopers LLP for the year ended September 30, 1999. During the two
most recent fiscal years, Arthur Andersen LLP audit reports contained no adverse
opinion or disclaimer of opinion; nor were its reports qualified or modified as
to uncertainty, audit scope, or accounting principle. There were no
disagreements in accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which if not resolved to the
satisfaction of Arthur Andersen LLP would have caused it to make reference to
the disagreement in its report on the financial statements for such years.
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------
STEIN ROE ADVISOR GROWTH STOCK FUND
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
CLASS A 1999 1998 (a)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.82 $ 11.59
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (0.09)(c) (0.04)
Net realized and unrealized gain on investments allocated from SR&F
Growth Stock Portfolio 4.25 0.27
------- -------
Total from Investment Operations 4.16 0.23
------- -------
NET ASSET VALUE, END OF PERIOD $ 15.98 $ 11.82
------- -------
Ratio of net expenses to average net assets 1.35%(c)(d) 1.40%(e)(g)
Ratio of net investment loss to average net assets (0.60)%(c) (0.50)%(f)(g)
Total return 35.19% 1.98%(f)(h)
Net assets, end of period (000's) $93,835 $39,521
(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) Net of fees waived by the Distributor which amounted to $0.008 per share and 0.05%.
(d) For the year ended September 30, 1999, the Fund's operating expenses did not exceed the 1.40%
expense limit.
(e) If the Fund had paid all of its expenses and there had been no reimbursement by the Advisor, this
ratio would have been 1.63% for the period ended September 30, 1998.
(f) Computed giving effect to the Advisor's expense limitation undertaking.
(g) Annualized.
(h) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
CLASS B 1999 1998 (a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.74 $ 11.59
-------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (0.20) (0.08)
Net realized and unrealized gain on investments allocated from
SR&F Growth Stock Portfolio 4.22 0.23
-------- -------
Total from Investment Operations 4.02 0.15
-------- -------
NET ASSET VALUE, END OF PERIOD $ 15.76 $ 11.74
-------- -------
Ratio of net expenses to average net assets 2.05%(c) 2.10%(d)(f)
Ratio of net investment loss to average net assets (1.30)% (1.20)%(e)(f)
Total return 34.24% 1.29%(e)(g)
Net assets, end of period (000's) $304,754 $64,148
(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) For the year ended September 30, 1999, the Fund's operating expenses did not exceed the 2.10%
expense limit.
(d) If the Fund had paid all of its expenses and there had been no reimbursement by the Advisor, this
ratio would have been 2.31% for the period ended September 30, 1998.
(e) Computed giving effect to the Advisor's expense limitation undertaking.
(f) Annualized.
(g) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
CLASS C 1999 1998 (a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.72 $ 11.59
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (0.20) (0.08)
Net realized and unrealized gain on investments allocated from SR&F
Growth Stock Portfolio 4.22 0.21
------- -------
Total from Investment Operations 4.02 0.13
------- -------
NET ASSET VALUE, END OF PERIOD $ 15.74 $ 11.72
------- -------
Ratio of net expenses to average net assets 2.05%(c) 2.10%(d)(f)
Ratio of net investment loss to average net assets (1.30)% (1.21)%(e)(f)
Total return 34.30% 1.12%(e)(g)
Net assets, end of period (000's) $26,373 $10,472
(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) For the year ended September 30, 1999, the Fund's operating expenses did not exceed the 2.10%
expense limit.
(d) If the Fund had paid all of its expenses and there had been no reimbursement by the Advisor, this
ratio would have been 2.30% for the period ended September 30, 1998.
(e) Computed giving effect to the Advisor's expense limitation undertaking.
(f) Annualized.
(g) Not annualized.
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
CLASS K 1999 1998(a) 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.86 $11.26 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (0.09) (0.03) (0.01)
Net realized and unrealized gain on investments allocated
from SR&F Growth Stock Portfolio 4.20 0.63 1.27
------ ------ ------
Total from Investment Operations 4.11 0.60 1.26
------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.97 $11.86 $11.26
------ ------ ------
Ratio of net expenses to average net assets 1.30%(c) 1.35%(d) 1.35%(d)(f)
Ratio of net investment loss to average net assets (0.55)% (0.47)%(e) (0.22)%(e)(f)
Total return 34.65% 5.33%(e) 12.60%(e)(g)
Net assets, end of period (000's) $1,649 $2,768 $ 2.51
(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) For the year ended September 30, 1999, the Fund's operating expenses did not exceed the 1.35%
expense limit.
(d) If the Fund had paid all of its expenses and there had been no reimbursement by the Advisor, this
ratio would have been 2.07% for the year ended September 30, 1998 and 56.10% for the period ended
September 30, 1997.
(e) Computed giving effect to the Advisor's expense limitation undertaking.
(f) Annualized.
(g) Not annualized.
</TABLE>
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------
Selected per-share data (for a share outstanding throughout each period), ratios and supplemental data.
SR&F GROWTH STOCK PORTFOLIO
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997 (a)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ratio of net expenses to average net assets 0.58%(b) 0.61% 0.63%(c)
Ratio of net investment income to average net assets 0.20%(b) 0.31% 0.52%(c)
Portfolio turnover rate 57% 39% 22%
(a) From commencement of operations on February 3, 1997.
(b) During the year ended September 30, 1999, the Portfolio experienced a one-time reduction in its
expenses as a result of expenses accrued in a prior period. The adjustment was not large enough to
change the Portfolio's ratios.
(c) Annualized.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF LIBERTY-STEIN ROE ADVISOR TRUST, STEIN ROE
ADVISOR GROWTH STOCK FUND, SR&F BASE TRUST AND STEIN ROE GROWTH STOCK PORTFOLIO
In our opinion, the accompanying statements of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Stein Roe Advisor Growth Stock Fund
(the "Fund") (a series of Liberty-Stein Roe Advisor Trust, formerly Stein Roe
Advisor Trust) and Stein Roe Growth Stock Portfolio (the "Portfolio") (a series
of SR&F Base Trust) at September 30, 1999, the results of each of their
operations, the changes in each of their net assets and the financial highlights
for the period then ended, in conformity with generally accepted accounting
principles. These financial statements and the financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's and
the Portfolio's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of portfolio positions at September 30, 1999 by correspondence with
the custodian, provide a reasonable basis for the opinion expressed above. The
financial statements of the Fund and the Portfolio for periods prior to October
1, 1998 were audited by other independent accountants whose report dated
November 16, 1998 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 15, 1999
<PAGE>
TRUSTEES & TRANSFER AGENT
- --------------------------------------------------------------------------------
TRUSTEES
JOHN A. BACON, JR.
Private Investor
WILLIAM W. BOYD
Chairman and Director, Sterling Plumbing Group, Inc.
LINSDAY 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 - Corporate Development, Secretary and General Counsel,
Kellogg Co.
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 Growth Stock Fund is:
Liberty Funds Services, 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 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 and with the most
recent copy of the Liberty Funds Distributor, Inc. Performance Update.
<PAGE>
Liberty offers the independent thinking and collective strength of six financial
specialists. Our distinguished product line helps financial advisors and their
clients build diversified investment portfolios for long-term financial goals.
- --------------------------------------------------------------------------------
L I B E R T Y
- ---------------
F U N D S
- --------------------------------------------------------------------------------
ALL-STAR Institutional money management approach for individual investors.
COLONIAL Fixed-income and value style equity investing.
CRABBE
HUSON A contrarian approach to fixed-income and equity investing.
NEWPORT A leader in international investing.
STEIN ROE Growth style equity investing.
ADVISOR
[graphic omitted]
KEYPORT A leading provider of innovative annuity products.
Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
BEFORE YOU INVEST, CONSULT YOUR FINANCIAL ADVISOR.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
- ---------------------------------------------------
STEIN ROE ADVISOR GROWTH STOCK FUND ANNUAL REPORT
- ---------------------------------------------------
[Graphic
Omitted] L I B E R T Y
-----------------
F U N D S
ALL-STAR o COLONIAL o CRABBE HUSON o NEWPORT o STEIN ROE ADVISOR
SG-02/965H-1099 (11/99) 99/1410
