<PAGE>
[Graphic Omitted]
Stein Roe Advisor
Young Investor(SM) Fund
Annual Report -- September 30, 1999
The investment that's also an education
<PAGE>
Fund Highlights
Stein Roe Advisor Young Investor Fund Class A
shares returned 21.17% with a sales charge for
the 12-month period ended 9/30/99. The Fund
benefited from investments in technology and
telecommunications stocks.
Table of contents
To Our Shareholders ................ 1
Portfolio Managers' Commentary ..... 2-5
Portfolio of Investments ........... 6-9
Financial Statements ............... 9-12
Notes to Financial Statements ...... 12-14
Financial Highlights ............... 14-15
Activity Pages
Ages three to five .............. 16
Ages six to eight ............... 17-18
Ages nine to 12 ................. 19-20
All information is for Class A shares
unless otherwise noted. Performance,
including sales charge, reflects the 2%
- ------------------------------- contingent deferred sales charge (CDSC)
Not FDIC May Lose Value which would be applied if shares are
Insured No Bank Guarantee redeemed within three years. Stein Roe
- ------------------------------- Advisor Young Investor Fund invests all
investable assets in SR&F Growth Investor
Portfolio, which has the same investment
objective and substantially the same
investment policies as the Fund.
Past performance is not a guarantee of
future results. Share price and
investment returns will vary, resulting
in a gain or loss when you sell shares.
<PAGE>
To Our Shareholders
Dear Investor,
[Photo of Stephen E. Gibson]
On November 1, 1999, Tom Butch resigned as president of Stein Roe Mutual
Funds. I would like to take this opportunity to wish him well. As the new
president, I am pleased to present the annual report for Stein Roe Advisor
Young Investor Fund for the 12 months ended September 30, 1999.
Five years ago when the Fund was incepted, fear of higher inflation and
rising interest rates dominated the news. Now, at the threshold of a new
century, inflation and interest rates are again at the top of Wall
Street's worries. Market volatility has returned, and the returns from
many large-cap growth stocks during the period were modest. Stocks of
mid-size and smaller companies generally lagged.
Still, by investing in companies of all sizes, Stein Roe Advisor Young
Investor Fund's Class A shares provided an attractive total return of
23.17%, without a sales charge, for the 12 months ended September 30,
1999.
Technology and Telecommunications
Helped Results
The Fund benefited early on from a strong positioning in technology and
telecommunication stocks that performed well. From the Fund's inception,
its investment portfolio has reflected a consistent belief in the power of
technology. For example, Microsoft and MCI WorldCom (then MCI
Communications) were top 10 holdings five years ago and still remain among
the top 10 as of September 30, 1999 (2.8% and 2.7% of Portfolio net
assets, respectively).
Intelligent Investing In Growth Stocks
Stein Roe Advisor Young Investor Fund's management has a commitment to a
disciplined, research intensive approach to stock selection that has the
potential to help you meet your long-term investment goals. On the pages
that follow, your Fund's managers detail the strategy that has generated
the Fund's returns. As always, we thank you for choosing Stein Roe Advisor
Young Investor Fund and for giving us the opportunity to serve your
investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
November 15, 1999
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>
Portfolio Managers'
commentary
- ------------------------- ----------------------
[Photo of Eric Gustafson] [Photo of David Brady]
- ------------------------- ----------------------
Eric Gustafson and David Brady (right) are senior vice
presidents of Stein Roe & Farnham Incorporated and
are co-portfolio managers of Stein Roe Advisor Young
Investor Fund.
Q: How did the Fund perform during the period?
A: A positive market environment helped lift the Fund's returns during the
first half of the period, while concern about possible higher inflation
depressed the Fund's results between April and September. The Fund
fully participated in the stock market's recovery last fall and winter,
but underperformed the unmanaged S&P 500 Index this past spring and
summer as interest rates rose.
Q: What contributed to the Fund's performance?
A: We held an above-average weighting in technology and telecommunications
stocks to participate in the growth potential of the Internet. While
these sectors provided strong double-digit returns between October 1998
and March 1999, this positioning hurt the Fund's performance this past
summer. Prices of some of our holdings in these two sectors dropped
sharply.
Some of the Portfolio's holdings in small- and mid-cap stocks also
hindered the Fund's results during the period. Both the unmanaged S&P
MidCap 400 Index and S&P 600 Index rose less than the S&P 500 for the
12 months ended September 30, 1999.
We believe that technology and telecommunications represent the fastest
growing sectors of the U.S. economy, and have weighted the portfolio to
try to benefit from long-term growth and deregulation trends in these
areas. We feel our positioning provides the opportunity for investors
to benefit from the growth potential of all segments of the market.
Average Annual Total Returns (As of 9/30/99)
Class A Class K
without with without
sales sales sales
charge charge charge
- --------------------------------------------------------------------------------
One year 23.17% 21.17% 23.40%
- --------------------------------------------------------------------------------
Five years 23.86 23.86 24.05
- --------------------------------------------------------------------------------
Since inception (4/29/94) 22.33 22.33 22.47
- --------------------------------------------------------------------------------
Past performance is not a guarantee of future results. Investment returns and
principal value will fluctuate, resulting in a gain or loss on sale. Stein Roe
Advisor Young Investor Fund invests all of its investable assets in SR&F Growth
Investor 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 1/26/98, only offered the shares that are now designated as
Class K shares. The historical performance of both share classes, prior to
inception, is based on the performance of SR&F Growth Investor 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. Historical performance as restated should not be interpreted as
indicative of the Fund's future performance.
<PAGE>
Q: How did the Fund's technology holdings perform?
A: During the period, the Portfolio held many large company stocks such as
America Online and MCI WorldCom (2.1% and 2.7% of net assets,
respectively) that were among the top performing stocks in the S&P 500
Index for the first half of the year. However, during the second half,
some of these stocks' prices weakened amid concerns about product
pricing.
Certain Internet-related technology and telecommunications stocks
provided strong positive returns throughout the period. Cisco Systems,
EMC Corp. and Hispanic Broadcasting were among the Fund's top
performers (4.4%, 2.2% and 2.5% of net assets, respectively) this past
summer.
Sector Breakdown as of 9/30/99
Basic Materials/Energy 1%
Technology 35%
Consumer Cyclical 21%
Consumer Non-cyclical 15%
Financial 12%
Utilities 9%
Industrial 7%
Sector breakdowns are calculated as a precentage of the total holdings in SR&F
Growth Investor Portfolio. Because the Portfolio is actively managed, there can
be no guarantee the Portfolio will continue to maintain this breakdown or these
holdings.
One technology stock we've held for more than five years is Microsoft
(2.7% of net assets). Its performance was strong for most of the year
and has had a consistent record of strong earnings growth. We're
excited about sales prospects for Microsoft's planned Windows 2000
operating system upgrade in the coming months.
Q: What caused the stock market to be so volatile in the past year?
A: After one of the strongest surges, from October 1998 to April 1999, the
U.S. stock market treaded water. In particular, the third calendar
quarter of 1999 was a period of weakness for growth stocks, with some
companies' shares dropping as much as 30% after reporting earnings
disappointments.
Last fall, investors became much more confident in corporate earnings
prospects after the Federal Reserve Board (Fed) reduced short-term
interest rates. Consumer prices remained low and international
financial markets began to stabilize. U.S. economic growth was better
than expected. However, investor perceptions began to change
dramatically beginning in the late spring. Oil prices rose to $25 a
barrel, GDP (gross domestic product, or the amount of goods and
services made each year in the United States) accelerated and the Fed
raised short-term interest rates, all of which hurt stock prices.
<PAGE>
Q: Were there any disappointments during the period?
A: Stocks of toy makers generally did not do well. During the period we
owned Hasbro and Mattel (1.5% and 1.9% of net assets, respectively)
because both companies had outstanding fundamentals. We retained our
positions because we thought each company's brands were well
established. While each has the potential to overcome the industry's
current challenges, Mattel's acquisitions have disappointed investors
and led to lower company profits.
This past spring we purchased Excite@Home on the belief that it had
strong potential as an Internet service provider. As larger companies
such as Microsoft announced plans to move aggressively in this area,
the company's earnings prospects began to look less attractive, so we
sold the Portfolio's position. We also sold Kellogg Corp. and Quaker
Oats as increased competition in the breakfast foods section of
supermarkets appeared to have limited both companies' growth prospects.
Health care stocks generally did not fare well amid concerns about
government plans to fund prescription drugs under the Medicare program
for retirees. We sold Eli Lilly, but retained our position in Johnson &
Johnson (1.9% of net assets), a stock that held up well during this
past summer's market volatility.
Top Ten Holdings*
(as a percentage of net assets)
-------------------------------------
1. CISCO SYSTEMS 4.4%
-------------------------------------
2. MICROSOFT 2.8%
-------------------------------------
3. MCI WORLDCOM 2.7%
-------------------------------------
4. GENERAL ELECTRIC 2.6%
-------------------------------------
5. TYCO INTERNATIONAL 2.6%
-------------------------------------
6. HISPANIC BROADCASTING 2.5%
-------------------------------------
7. INTERPUBLIC GROUP 2.5%
-------------------------------------
8. CLEAR CHANNEL COMM. 2.4%
-------------------------------------
9. AES 2.4%
-------------------------------------
10. LUCENT TECHNOLOGIES 2.4%
-------------------------------------
*Holdings are calculated as a percentage of the total holdings in SR&F Growth
Investor Portfolio. Because the Portfolio is actively managed, there can be
no guarantee the Portfolio will continue to maintain these holdings.
Growth of $10,000 Since Inception on 4/29/94
[Plot Points to Come]
Illustration is based on a hypothetical $10,000 investment in the Fund. A
$10,000 investment in Class K shares made on 4/29/94 (inception), without sales
charge, would have grown to $30,028 on 9/30/99. 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. The S&P 500 Index is an unmanaged index of 500 U.S.
stocks. It is not possible to invest directly in an index. Performance for
different share classes will vary with fees associated with each class.
Performance results reflect any voluntary waivers or reimbursements of fund
expenses by the Advisor or its affiliates. Absent these waivers or
reimbursements, performance results would have been lower.
<PAGE>
Q: In addition to technology and telecommunications, what other sectors
appear to be attractive?
A: We have been exploring opportunities in the financial services sector,
which has had a difficult time over the past year as interest rates
have risen. We believe certain companies offer good growth prospects
and that interest rates are unlikely to move much higher from current
levels.
Recent government economic data has confirmed a healthy U.S. economy.
Retail sales and personal income are rising. Consumer confidence is
high and consumer credit trends remain positive, in our view. Looking
ahead, we believe the investment environment we anticipate will unfold
over the next several months -- continued favorable inflation and
moderate growth -- will lead to a more stable interest rate
environment, and this should benefit financial stocks such as Citigroup
(2.3% of net assets).
Past performance is no guarantee of future results. Share price and investment
return will vary, so you may have a gain or loss when you sell shares. Total
return includes changes in share price and reinvestment of distributions.
Portfolio holdings are as of 9/30/99 and are subject to change. Investments in
mid-cap and smaller companies may experience greater volatility.
The Companies We Invest In
Did you know it took 13 years from the time that Thomas Edison invented
the light bulb in 1879 to form the company we know today as General
Electric Co. (GE)?
Edison sued to protect his light bulb patent. His company went through
several mergers. The business branched out into new directions such as
electric locomotives, transformers and turbines. Industrial technology
was changing rapidly, offering enormous growth potential.
Today, the Internet and telecommunications are America's leading growth
engines. Companies are trying to capitalize on bright ideas to sell
products and services through electronic commerce.
In selecting stocks for Stein Roe Advisor Young Investor Fund's
portfolio, the managers look for businesses in sectors that they think
are likely to stand the test of time. They carefully analyze the risks
of investing in rapidly growing companies and learn as much as they can
about how companies are managed.
As of September 30, 1999, four of the Portfolio's top 10 holdings were
technology and telecommunications companies. The Portfolio's largest
holding was Cisco Systems (4.4% of net assets), a company that helps
link computer networks to the Internet.
The Portfolio also holds shares of GE (2.6% of net assets). GE still
makes light bulbs and locomotives, and today also makes medical devices
and airplane engines, provides financial services and operates the NBC
television network.
<PAGE>
SR&F Growth Investor Portfolio
PORTFOLIO OF INVESTMENTS AT SEPTEMBER 30, 1999
(All amounts in thousands)
Number Market
COMMON STOCKS (96.5%) of Shares Value
- -------------------------------------------------------------------------------
Advertising (2.5%)
Interpublic Group Cos., Inc.
(Owns and operates
advertising agencies) 600 $ 24,675
--------
Banks (0.9%)
Texas Regional Bancshares, Class A
(Commercial bank operating in
the Rio Grande Valley of Texas) 375 9,281
--------
Commercial Services (1.6%)
Paychex, Inc.
(Provides computerized payroll
accounting services to businesses) 450 15,356
--------
Computer Software and Services (17.3%)
America Online, Inc. (a)
(Internet service provider) 200 20,800
Cisco Systems, Inc. (a)
(Produces, markets and
supports multiprotocol
internetworking systems) 633 43,400
EMC Corp. (a)
(Provides enterprise storage
systems, software, networks,
and services) 300 21,431
Equant NV-NY Registered Shares (a)
(Operates data network systems
to multinational businesses) 200 16,275
Inktomi Corp. (a)
(Develops and markets scalable
software applications) 100 12,003
Intuit, Inc.
(Develops and markets software
products and related services) 175 15,340
Microsoft Corp. (a)
(Manufactures computer and software
products and operating systems) 300 27,169
Sun Microsystems, Inc. (a)
(Supplies network
computing products) 150 13,950
--------
170,368
--------
Consumer Products (1.7%)
Procter & Gamble Co.
(Produces personal-care
products, pharmaceuticals,
food and beverages) 175 16,406
--------
Distribution - Retail (5.5%)
Hasbro, Inc.
(Manufactures and sells
children's toys) 700 15,006
Mattel, Inc.
(Designs, manufactures and
markets children's toys) 1,000 19,000
Walgreen Co.
(Large retail drugstore chain) 800 20,300
--------
54,306
--------
Electrical Equipment (2.6%)
General Electric Co.
(Appliances, broadcasting,
communications and transportation) 220 26,084
--------
Electrical Generation (3.3%)
AES Corp. (a)
(Provider of electricity to
U.S. and international customers) 400 23,600
Calpine Corp. (a)
(Provider and seller of electricity
and thermal energy in the U.S.) 100 8,506
--------
32,106
--------
Entertainment (3.2%)
Cedar Fair L.P.
(Owns and operates
amusement theme parks) 315 6,536
Time Warner, Inc.
(Media and entertainment company) 200 12,150
Walt Disney
(Operates theme parks and resorts,
and produces motion pictures) 500 12,938
--------
31,624
--------
Financial Services (11.5%)
Alliance Capital Management L.P.
(Provides investment services
to pension funds, endowments,
insurance companies, banks
and individual investors) 350 9,603
American International Group, Inc.
(Provides financial services and
insurance to U.S. and
international companies) 188 16,301
Citigroup, Inc.
(Provider of financial services to
consumers and corporations) 525 23,100
Fannie Mae
(Buys and hold mortgages,
and issues and sells mortgage
backed securities) 275 17,239
Freddie Mac
(Purchases mortgages
from lenders and resells
in pools or packages) 325 16,900
The Goldman Sachs Group, Inc.
(Provides global investment
banking, trading and asset
management services) 165 10,034
Household International, Inc.
(Provides financial and
banking services) 500 20,063
--------
113,240
--------
Food and Beverage (2.9%)
Coca-Cola Co.
(Producer and distributor
of soft drink products) 350 16,822
Wm. Wrigley Jr. Co.
(Manufactures chewing gum) 175 12,042
--------
28,864
--------
Health Care (4.7%)
American Home Products Corp.
(Discovers, develops, manufactures,
distributes and sells health
care products) 270 11,205
IMS Health, Inc.
(Provides information system
solutions to pharmaceutical
and healthcare industries) 500 11,406
Johnson & Johnson
(Manufactures and markets a broad
range of health care and other products) 200 18,375
Orthodontic Centers of America (a)
(Provides management and consulting
services to orthodontic practices) 325 5,687
--------
46,673
--------
Machinery (0.1%)
McDermott International
(Manufacturer of steam generating
and environmental machinery) 19 385
--------
Medical - Instruments (1.4%)
Medtronic
(Manufactures various cardiovascular
medical instruments) 400 14,200
--------
Medical - Pharmaceutical (3.7%)
Pfizer, Inc.
(Researches and provides global
health care products) 600 21,563
Watson Pharmaceuticals (a)
(Develops, produces, markets and
distributes pharmaceutical products) 500 15,281
--------
36,844
--------
Publishing, Broadcasting and Media (6.8%)
AT&T Liberty Media A
(Holds interests in globally
branded entertainment networks) 500 18,563
Clear Channel Communications (a)
(Owns, operates and manages
radio and television stations) 300 23,962
Hispanic Broadcasting, Class A (a)
(Spanish language radio
broadcasting company) 325 24,741
--------
67,266
--------
Restaurant (2.3%)
McDonald's Corp.
(Develops, licenses, leases and
services a worldwide system
of restaurants) 525 22,575
--------
Security Systems (2.6%)
Tyco International Ltd.
(Develops and manufactures
various security systems and products) 250 25,813
--------
Semiconductors (3.9%)
Atmel Corp. (a)
(Produces and sells non-volatile
memory and logic integrated
circuits and related products) 300 10,144
Maxim Integrated Products (a)
(Develops, manufactures and
markets integrated circuits) 300 18,928
KLA-Tencor Corp. (a)
(Manufactures monitoring systems
for semiconductor industry) 150 9,750
--------
38,822
--------
Specialty Chemicals (1.5%)
Minerals Technologies, Inc.
(Develops, produces and markets
specialty minerals, mineral-based
and synthetic mineral products) 300 14,569
--------
Telecommunications (7.8%)
American Tower, Class A (a)
(Operator of wireless
telecommunication towers) 500 9,781
Global Telesystems, Inc. (a)
(Provider of broadband, internet,
international and domestic
long distance services) 590 11,634
Level 3 Communications, Inc. (a)
(Provider of local and long
distance information and
data transmission services) 220 11,488
MCI WorldCom, Inc. (a)
(Provides facilities-based and fully
integrated local, long distance,
international and Internet services) 375 26,953
Qwest Communications International (a)
(Provides communication
services to interexchange carriers,
businesses and consumers) 583 17,236
--------
77,092
--------
Telecommunications Equipment (6.0%)
Foundry Networks, Inc. (a)
(Manufactures networking
products for enterprises and
Internet service providers) 40 5,040
Loral Space & Communications (a)
(High-technology company
concentrated on satellite
manufacturing and satellite-based
communication services) 600 10,313
Lucent Technologies, Inc.
(Produces public and private
networks, communication
systems and software) 360 23,355
Tellabs, Inc. (a)
(Designs, assembles, markets
and services voice and data
networking products) 350 19,928
--------
58,636
--------
Travel Services (2.7%)
Sabre Group Holdings Corp. (a)
(Provider of a travel
reservation system) 250 10,750
Royal Caribbean Cruises Ltd.
(Operator and owner of a
fleet of global cruise vessels) 360 16,200
--------
26,950
--------
Total Common Stocks
(Cost $710,083) 952,135
--------
Principal Market
Short-Term Obligations (0.1%) Amount Value
- --------------------------------------------------------------------------------
Commercial Paper (0.1%)
Associates Corp. of
North America 5.600% 10/01/99 $1,010 $ 1,010
--------
Total Short-Term Obligations
(Cost $1,010) 1,010
--------
Total Investments (96.6%)
(Cost $711,093) (b) 953,145
--------
Other Assets, Less Liabilities (3.4%) 33,695
--------
Net Assets (100.0%) $986,840
========
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 $711,829. Net unrealized appreciation was $241,316, consisting
of gross unrealized appreciation of $282,757 and gross unrealized
depreciation of $41,441.
See notes to financial statements.
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(All amounts in thousands)
Assets
Investments, at market value (cost $711,093) $ 953,145
Receivable for investments sold 71,707
Dividends receivable 431
Cash 2
----------
Total Assets 1,025,285
Liabilities
Payable for investments purchased 37,927
Payable to Advisor 492
Other liabilities 26
----------
Total Liabilities 38,445
Net Assets applicable to
investors' beneficial interest $ 986,840
==========
See notes to financial statements.
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
(All amounts in thousands) Investment Income
Investment Income
Dividends $ 5,808
Interest 1,827
--------
Total investment income 7,635
Expenses
Management fees 5,416
Accounting fees 47
Custodian fees 26
Other fees 18
Transfer Agent fees 6
--------
Total expenses 5,513
--------
Net investment income 2,122
--------
Realized and Unrealized Gain on Investments
Net realized gain on investments 944
Net change in unrealized appreciation
or depreciation on investments 169,408
--------
Net gain on investments 170,352
Net increase in net assets
resulting from operations $172,474
========
See notes to financial statements.
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in thousands)
Years Ended September 30,
1999 1998
--------- ---------
Operations
Net investment income $ 2,122 $ 2,659
Net realized gain on investments 944 12,629
Net change in unrealized appreciation or depreciation
on investments 169,408 (30,644)
--------- ---------
Net increase (decrease) in net assets resulting
from operations 172,474 (15,356)
--------- ---------
Transactions in Investors' Beneficial Interest
Contributions 274,918 389,527
Withdrawals (183,222) (127,041)
--------- ---------
Net increase from transactions
in investors' beneficial interest 91,696 262,486
--------- ---------
Net increase in net assets 264,170 247,130
Net Assets Beginning of year 722,670 475,540
--------- ---------
End of year $ 986,840 $ 722,670
========= =========
See notes to financial statements.
<PAGE>
STEIN ROE ADVISOR YOUNG INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(All amounts in thousands, except per-share data)
Assets
Investment in SR&F Growth
Investor Portfolio, at value $ 93,463
Receivable for fund shares sold 4,233
Receivable for expense reimbursement due from Advisor 45
Cash 5
--------
Total Assets 97,746
--------
Liabilities
Payable for fund shares redeemed 49
Payable due to Transfer agent 15
Other liabilities 39
--------
Total Liabilities 103
--------
Net Assets $ 97,643
========
Analysis of Net Assets
Paid-in capital $ 93,988
Accumulated net realized loss on investments (7,528)
Net unrealized appreciation on investments 11,183
--------
Net Assets $ 97,643
========
Class A
Net asset value per share
(based on net assets of $97,233
and 6,955 shares issued and outstanding) $ 13.98
========
Class K
Net asset value per share
(based on net assets of $410 and 29 shares
issued and outstanding) $ 14.08
========
See notes to financial statements.
<PAGE>
STEIN ROE ADVISOR YOUNG INVESTOR FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
(All amounts in thousands)
Investment Income Dividend income allocated from
SR&F Growth Investor Portfolio $ 430
Interest income allocated from SR&F Growth Investor Portfolio 135
--------
Total interest income 565
--------
Expenses
Expenses allocated from SR&F Growth Investor Portfolio 413
Service fees-- Class A 176
Distribution fees-- Class A 70
Distribution fees-- Class K 1
Transfer agent fees 188
Administrative fees 142
Accounting fees 26
Legal and audit fees 12
SEC and state registration fees 38
Printing and postage 1
Trustees' fees 9
Other 82
--------
1,158
Reimbursement of expenses by Advisor (70)
Fees waived by Distributor-- Class A (35)
--------
Net expenses 1,053
--------
Net investment loss (488)
--------
Realized and Unrealized Gain (Loss) on Investments
Allocated from SR&F Growth Investor Portfolio
Net realized loss on investments (2,036)
Net change in unrealized appreciation or depreciation on
investments 10,756
--------
Net gain on investments 8,720
--------
Net increase in net assets resulting from operations $ 8,232
========
See notes to financial statements.
<PAGE>
STEIN ROE ADVISOR YOUNG INVESTOR FUND
STATEMENTS OF CHANGES IN NET ASSETS
(All amounts in thousands)
Years ended September 30,
1999 1998
--------- ---------
Operations
Net investment loss $ (488) $ (69)
Net realized loss on investments (2,036) (5,529)
Net change in unrealized appreciation or
depreciation on investments 10,756 403
--------- ---------
Net increase (decrease) in net assets
resulting from operations 8,232 (5,195)
--------- ---------
Share Transactions
Subscriptions to fund shares - Class A 100,236 44,021
Redemptions of fund shares - Class A (47,993) (2,011)
--------- ---------
52,243 42,010
--------- ---------
Subscriptions to fund shares - Class K 100 291
Redemptions of fund shares - Class K (106) (48)
--------- ---------
(6) 243
Net increase from share transactions 52,237 42,253
--------- ---------
Net increase in net assets 60,469 37,058
Net Assets
Beginning of year 37,174 116
--------- ---------
End of year $ 97,643 $ 37,174
========= =========
Accumulated Net Investment Income $ -- $ --
--------- ---------
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(All amounts, except per-share amounts, in thousands)
Note 1. Organization
Stein Roe Advisor Young Investor 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 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% on
redemptions made within three years of purchase. The Fund commenced offering
Class A shares on January 26, 1998.
The Portfolio is a series of SR&F Base Trust, a Massachusetts common law trust
organized under an Agreement and Declaration of Trust dated August 23, 1993. The
Portfolio commenced operations on February 3, 1997. On February 14, 1997, Stein
Roe Advisor Young Investor Fund contributed cash of $100. 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 Young Investor Fund owned 9.5%
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 Trust's 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 makes distributions to its
shareholders to be relieved of all federal income taxes under provisions of
current federal tax law; and (b) the Portfolio is treated as a partnership for
federal income tax purposes and all of its income is allocated to its owners
based on methods approved by the Internal Revenue Service.
The Fund intends to utilize provisions of the federal income tax law, 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 $9, $5,529 and $383, which expire in 2005, 2006 and 2007, respectively.
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 "Advisor"), an
indirect, wholly-owned subsidiary of Liberty Financial Companies, Inc.
("Liberty"), for its services as investment advisor and manager.
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 0.20% of the Fund's average daily net assets up to
$500 million, 0.15% of the next $500 million, and 0.125% thereafter.
The Advisor also provides fund accounting services. The Advisor has agreed to
reimburse the fund to the extent that its annual expenses exceed 1.65% of
average daily net assets for Class A shares and 1.50% of average daily net
assets for Class K shares through January 31, 2000, subject to earlier
termination by the Advisor on 30 days notice.
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 (the "Plan") pursuant
to Rule 12b-1 under the Investment Company Act of 1940. 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 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 at an annual rate not to exceed 0.10% of average daily net
assets for Class A shares. The Distributor has voluntarily agreed to waive a
portion of the Class A distribution fee so that it does not exceed 0.05%
annually. 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 average daily net assets for Class K shares.
Transfer agent fees are paid to Liberty Funds Services, Inc. ("LFS"), an
indirect, wholly-owned subsidiary of Liberty. Transfer agent fees for Class A
shares are computed at an annual rate of 0.236% of average daily net assets.
Transfer agent fees for Class K shares are computed at an annual rate of 0.30%
of average daily net assets.
Certain officers and trustees of the Trust are also officers of the Advisor. No
remuneration was paid to any trustee or officer of the 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 the 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 $548,233 and
$422,350, respectively.
Note 6. Capital Share Transactions
The following table summarizes fund share activity during the reporting period:
Year Period
Ended Ended
September 30, September 30,
1999 1998(a)
- --------------------------------------------------------------------------------
Class A shares
Subscriptions to fund shares 7,022 3,406
Redemptions of fund shares (3,312) (161)
------ ------
3,710 3,245
====== ======
Class K Shares
Subscriptions to fund shares 8 23
Redemptions of fund shares (8) (4)
------ ------
-- 19
====== ======
(a) From commencement of multi-class offering on January 26, 1998.
Note 7. Other Related
Party Transactions
At September 30, 1999, the Fund had one shareholder, Liberty Financial
Companies, Inc., which owned 34% of the Fund's shares outstanding.
Change in Independent Accountants
Based on the recommendation of the Audit Committee of the Stein Roe Advisor
Young Investor Fund and SR&F Growth Investor 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>
FINANCIAL HIGHLIGHTS
STEIN ROE ADVISOR YOUNG INVESTOR FUND
Selected per-share data (for a share outstanding throughout the period), ratios
and supplemental data.
Year Period
Ended Ended
September 30, September 30,
Class A 1999 1998(a)
------------- -------------
Net Asset Value,
Beginning of Period $ 11.35 $ 11.67
---------- ----------
Income From Investment Operations
Net investment loss (b) (0.10)(c) (0.02)
Net realized and unrealized gain (loss)
on investments 2.73 (0.30)
---------- ----------
Total from investment operations 2.63 (0.32)
---------- ----------
Net Asset Value, End of Period $ 13.98 $ 11.35
========== ==========
Ratio of net expenses to average net assets (d) 1.65%(c) 1.65% (f)
Ratio of net investment loss to average net
assets (e) (0.69)%(c) (0.52)% (f)
Total return (e) 21.17% (2.74)% (g)
Net assets, end of year (000's) $ 97,233 $ 36,843
(a) From commencement of multi-class offering on January 26, 1998.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Net of fees waived by the Distributor which amounted to $0.007 per share and
0.05%.
(d) If the Fund had paid all of its expenses and there had been no reimbursement
by the Advisor and/or Distributor, this ratio would have been 1.74% for the
year ended September 30, 1999 and 2.02% for the period ended September 30,
1998.
(e) Computed giving effect to the Advisor's and/or Distributor's expense
limitation undertaking. (f) Annualized.
(g) Not annualized.
<PAGE>
FINANCIAL HIGHLIGHTS
STEIN ROE ADVISOR YOUNG INVESTOR FUND
Selected per-share data (for a share outstanding throughout the period), ratios
and supplemental data. Selected per-share data (for a share outstanding
throughout each period), ratios and supplemental data.
Period
Ended
Years Ended September 30, September 30,
Class K 1999 1998 1997(a)
----------- ------------- -------------
Net Asset Value,
Beginning of Period $ 11.41 $ 11.49 $ 10.00
Income From Investment Operations
Net investment loss (b) (0.09) (0.03)) (0.02)
Net realized and unrealized
gain (loss) on investments 2.76 (0.04) 1.51
------- ------- -------
Total from investment operations 2.67 (0.07) 1.49
Distributions
Net investment income -- (0.01) --
------- ------- -------
Net Asset Value
End of Period $ 14.08 $ 11.41 $ 11.49
======= ======= =======
Ratio of net expenses to
average net assets (c) 1.50% 1.50% 1.50%(e)
Ratio of net investment loss
to average net assets (d) (0.64)% (0.48)% (0.24)%(e)
Total return (d) 23.40% (0.62)% 14.90%(f)
Net assets, end of
period (000's) $ 410 $ 331 $ 116
(a) From commencement of operations on February 14, 1997.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) If the Fund had paid all of its expenses and there had been no reimbursement
by the Advisor, this ratio would have been 1.70% for the year ended
September 30, 1999, 20.42% for the year ended September 30, 1998, and 89.45%
for the period ended September 30, 1997.
(d) Computed giving effect to the Advisor's expense limitation undertaking.
(e) Annualized.
(f) Not annualized.
SR&F Growth Investor Portfolio
Period
Years Ended Ended
September 30, September 30,
1999 1998 1997(a)
------- ------- -------------
Ratio of net expenses to average net assets 0.59% 0.62% 0.63%(b)
Ratio of net investment income to average
net assets 0.25% 0.42% 0.54%(b)
Portfolio turnover rate 45% 45% 38%
(a) From commencement of operations on February 3, 1997.
(b) Annualized.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Liberty-Stein Roe Advisor Trust, Stein Roe
Advisor Young Investor Fund, SR&F Base Trust, SR&F Growth Investor 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 Young Investor
Fund (the "Fund") (a series of Liberty-Stein Roe Advisor Trust, formerly Stein
Roe Advisor Trust) and SR&F Growth Investor 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 Number Market
<PAGE>
Puzzles and games
(ages 3-5)
Money Game [Graphic Omitted]
A share of Bigtime stock costs $25.75. Do you have enough money to buy one?
Circle the bills and coins that add up to exactly $25.75.
Answer: 2 ten dollar bills, 5 one dollar bills, 2 quarters, 2 dimes
and 1 nickel.
With a mutual fund, you can own a
part of lots of companies
What is your favorite?
Toy ____________________________
Game ___________________________
[Graphic Omitted] Soda ___________________________
Candy __________________________
Comic __________________________
[Graphic Omitted] color me
<PAGE>
Money Game
(ages 6-8)
Test your knowledge of which historical figures are on each of the following
bills and coins. Some may be found on a bill and a coin.
George Washington
Coins Bills
Abraham Lincoln
1. Penny a. $1
Alexander Hamilton
2. Nickel b. $5
Andrew Jackson
3. Dime c. $10
Ulysses S. Grant
4. Quarter d. $20
Benjamin Franklin
5. Half-dollar e. $50
Thomas Jefferson
f. $100
Franklin Roosevelt
John F. Kennedy
Answers: 1. Abraham Lincoln; 2. Thomas Jefferson; 3. Franklin Roosevelt;
4. George Washington; 5. John F. Kennedy,
a. George Washington; b. Abraham Lincoln; c. Alexander Hamilton;
d. Andrew Jackson; e. Ulysses S. Grant; f. Benjamin Franklin.
<PAGE>
Crossword Puzzle
(ages 6-8)
2.1.5.6.7.3.4.8.9.10.11.
[Graphic of Crossword Puzzle]
Across:
1. Plan for saving money
3. Slang for dollar bills
5. Place where money is made
8. _______ not, want not
9. Money you owe
10. U.S. savings ________
11. Money you lend
Down:
1. Piggy _______
2. $
4. Coin used to ride the subway
6. Money the government takes on wages
7. Automatic teller machine (abbrev.)
ANSWERS: Across: 1. budget, 3. lettuce, 5. mint, 8. waste, 9. debt, 10. bond,
11. loan.
Down: 1. bank, 2. dollar sign, 4. token, 6. income tax, 7. ATM.
<PAGE>
Where Did My Money Go?
(ages 9-12)
[Graphic Omitted]
Would you like your money to buy something you really want? Maybe it's a laser
disc player, a computer or some new clothes? With a little planning, you could
save enough to buy that item. All you need is a budget, the determination to
save and a way to get money to save.
A budget will show how much money you have from your allowance, baby-sitting or
part-time job and how you spend your money. Once you know that, you can figure
out how to cut your spending so you'll have extra money to save.
Make a budget worksheet like the one below to get started. (If you have a
computer with a spreadsheet program, use that.) Begin by writing down all the
money you earn and what you spend for an entire month. Then decide how you can
cut back your spending each month (for example, buy one less CD and see one less
movie), and start saving this amount. Divide the amount needed to purchase the
item you want by the amount that you're saving each month to find how long you
must save to reach your goal.
Budget for the month of December
Income Expenses
- --------------------------------------------------------------------
Date Item Amount Item Amount
- --------------------------------------------------------------------
10 Baby-sitting $20
- --------------------------------------------------------------------
17 Movies & popcorn $8
- --------------------------------------------------------------------
21 Lawnmowing $10 CD $18
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Monthly totals $30 $26
Remainder left for savings (income minus expenses) $4
<PAGE>
CROSSWORD PUZZLE...
(ages 9-12)
[Graphic of Crossword Puzzle]
Investor crossword
Across
1. Describes a fund's investment goals and operating procedures
3. A debt security
5. What you get for doing a good job; goes with 12 across
7. When you put money into a mutual fund, stock or bond
9. Represents ownership in a company
10. Units of mutual fund ownership
11. Animal used to describe a declining market
12. When investing, the chance that you won't gain, or that you'll lose money
Down
1. The people who invest your money in a mutual fund (two words)
2. A good friend to investors
4. The current price of a share of Stein Roe Advisor Young Investor Fund at any
point in time (three words)
6. To spread your investments around
8. A measure of mutual fund performance (two words)
11. Animal used to describe a rising market
Answers: Across 1. Prospectus. 3. Bond. 5. Reward. 7. Invest.
9. Stock. 10. Shares. 11. Bear. 12. Risk.
Down 1. Portfolio managers. 2. Time. 4. Net asset value.
6. Diversify. 8. Total return. 11. Bull.
<PAGE>
<TABLE>
[Graphic Omitted]
Important information
about this report
<S> <C>
The Transfer Agent for Stein Roe Advisor
Young Investor Fund is:
Trustees Liberty Funds Services, Inc.
P.O. Box 1722
John A. Bacon Jr. Boston, MA 02105-1722
Private Investor 1-800-345-6611
William W. Boyd The Fund mails one shareholder report to each shareholder address.
Chairman and Director, Sterling Plumbing If you would like more than one report, please call 1-800-426-3750
Group Inc. and additional reports will be sent to you.
Lindsay Cook This report has been prepared for shareholders of Stein Roe
Senior Vice President, Liberty Financial Advisor Young Investor Fund. This report may also be used as sales
Companies, Inc. literature when preceded or accompanied by the current prospectus
which provides details of sales charges, investment objectives and
Douglas A. Hacker operating policies of the Fund and the most recent copy of the
Senior Vice President and Chief Financial Liberty Funds Distributor, Inc.
Officer, United Airlines performance update.
Janet Langford Kelly
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
</TABLE>
<PAGE>
[Graphic Omitted]
Our "family" of mutual funds
Stein Roe Advisor Young Investor Fund is part of a family of funds
distributed by Liberty Funds Distributor, Inc. Liberty 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 All-Star, Colonial, Crabbe Huson, Newport and Stein Roe
Advisor funds, please consult your financial advisor or call
1-800-426-3750.
- --------------------------------------------------------------------------------
Stein Roe Advisor Young Investor(SM) Fund
Annual Report -- September 30, 1999
[Logo] L I B E R T Y ---------------
--------------------------- BULK RATE
F U N D S U.S. POSTAGE
PAID
ALL-STAR o COLONIAL o CRABBE HUSON o HOLLISTON, MA
NEWPORT o STEIN ROE ADVISOR PERMIT NO. 20
---------------
Liberty Funds Distributor, Inc. (C)1999
One Financial Center, Boston, MA 02111-2621,
1-800-426-3750
www.libertyfunds.com
YI-02/964H-1099 (11/99) 99/1409
