Semiannual Report
March 31, 1996
Stein
Roe
Young Investor Fund
A different kind of semiannual report for a different kind of mutual fund
Photographic image of man holding young child.
<PAGE>
CONTENTS
From the President............................................... 1
Tim Armour's thoughts on Young Investor Fund
The Companies We Invest In....................................... 2
The Fund's top 10 holdings
Q&A.............................................................. 4
An interview with Young Investor Fund's portfolio managers
Fund Highlights.................................................. 9
Information about the Fund
Investments...................................................... 11
A complete list of the Fund's investments with market values
Financial Statements............................................. 17
Balance sheet, statements of operations and changes in net assets
Notes to Financial Statements.................................... 20
Financial Highlights............................................. 23
Selected per-share data
General Information.............................................. 24
A guide to products and services
This report must be accompanied or preceded by a prospectus.
<PAGE>
TO OUR SHAREHOLDERS
DEAR INVESTOR,
Stein Roe created Young Investor Fund in April 1994 in the belief that a
competitive, long-term investment also could help individuals learn more about
money and investing. On the threshold of its second birthday, we're pleased to
provide you with this "report card" of Young Investor's performance.
During the past six months, Young Investor was featured in more than 40
news stories nationwide, including articles in USA Today, Fortune magazine,
The New York Times and Money magazine, as well as spots on CNN and NPR.
The number of new accounts in the Fund rocketed in this six-month period
- -- growing from 9,770 accounts on September 30, 1995, to almost 25,000 on
March 31. At the same time, the Fund's assets nearly doubled, growing to more
than $68 million at the end of the six-month period.
Clearly, Young Investor seizes imaginations. Since the Fund's inception,
shareholders ranging in age from five to 84 have written to tell us what they
think about our educational materials. Many send us suggestions for future
investments. A sampling of those ideas -- GTE, JC Penney, NetScape, New Line
Cinema, Reebok, Sony, Tyson and Virgin Records -- suggests that shareholders
are well attuned to our strategy of investing in companies related to young
people.*
Why might such companies make good investments? Put simply, we believe
the companies that serve children and young people well tend to be
exceptionally well managed. After all, children and teens are cutting-edge
consumers. Many companies that are household names among children also are
among the world's great growth companies. These companies often enjoy dominant
positions in their respective domestic markets; many also have the capacity to
become dominant globally. Finally, there tends to be constancy in demand for
kids' products -there always will be children, and parents eager to please
them.
We enjoy hearing your thoughts on the markets, and hope that you will
continue to send us your ideas. We look forward to hearing from you.
Sincerely,
Timothy K. Armour
President, Stein Roe Mutual Funds
April 24, 1996
* As of March 31, 1996, these companies were not held in the Fund.
<PAGE>
THE COMPANIES WE INVEST IN
Inflation is a word you may have heard mentioned a lot recently. That's
because the government has been taking a number of steps -- like raising
and lowering interest rates -- to help ensure that economic growth is on
track and inflation doesn't get out of hand. According to government economic
reports, its efforts seem to have paid off because it appears that inflation
is under control.
You might wonder how inflation can possibly be under control when the
prices of the things you buy always seem to be going up. To help explain the
gap between the government's inflation statistics and what you see as
constantly rising prices, we thought it might be useful to explain how the
government measures inflation.
The primary benchmark that the government uses to measure inflation is
called the Consumer Price Index, or the CPI. It might help you to think of the
CPI as a giant shopping cart, piled high with just about everything you can
buy, including houses and cars. In fact, there are between 80,000 and 90,000
items in the Index, each weighted according to its share of the typical family
budget. Groceries, for example, make up less than 10 percent of the CPI
shopping cart. So, even if an unexpected snowstorm were to cause the price of
lettuce to double, it won't have much of an effect on the gov ern ment's
inflation statistics. That's because lettuce represents only 0.06 percent of
the Index. On the other hand, the cost of shelter makes up 28 percent of the
Index. That means any change in the prices of houses, up or down, will have
much more of an impact on the government's inflation numbers.
Inflation doesn't just affect how much things cost. It also can have an
effect on how certain stocks in Young Investor Fund will perform. For
instance, the stock of a car company might go down in periods of high
inflation. That's because when inflation is high, people often cut back on
luxury or "big ticket" items, like jewelry or cars. But people will always buy
necessities, like food or soap. That's why the companies that sell these kinds
of everyday products, called consumer staples, are often called
"inflation-resistant" stocks. As a result, when inflation is high, you might
see more of these types of companies in the Fund.
Sidebar:
Inflation describes a period of time when the prices of most goods and
services are steadily increasing. This usually happens because there is more
demand than goods available.
<PAGE>
<TABLE>
As your probably know, a mutual fund invests in the stocks of many different
companies, both to pursue its investment objective and to help diversify its
holdings. Below, you'll find the 10 largest holdings in the Fund as of March
31, 1996.
<CAPTION>
% of Total
Net Assets
on 3/31/96 Symbol Exchange
<S> <C> <C> <C>
1 Apollo-Group 2.3% APOL NASDAQ*
2 Sandoz ADR 2.1 SDOZT NYSE+
3 SITEL Corp. 2.0 SITEL NASDAQ
4 Nabisco Holdings 1.9 NA NYSE
5 StrataCom 1.9 STRM NASDAQ
6 Fed. Home Loan Mortgage Corp. 1.9 FNM NYSE
7 Procter & Gamble 1.9 PG NYSE
8 American Express 1.8 AXP NYSE
9 Sterling Commerce 1.8 SE NYSE
10 Nike 1.8 NIKE NYSE
<FN>
*National Association of Securities Dealers Automated Quotation
+New-York-Stock-Exchange
</TABLE>
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
In February, Co-Portfolio Manager Eric Maddix became co-portfolio manager of
Stein Roe Capital Opportunities Fund.
Q. HOW DID THE FUND PERFORM?
A. For the six-month period ended March 31, 1996, the Fund posted a 14.4
percent total return. That outpaced the 11.7 percent return of the S&P 500,
the most widely used index that measures the performance of U.S. stocks.
It can also be useful to measure our performance against funds that
invest in similar ways. Young Investor Fund, for instance, is a "growth fund,"
which means it normally invests in companies whose long-term earnings are
expected to grow over time. For example, Lipper Analytical Services, an
independent monitor of mutual fund performance, tracks the performance of many
different funds, including growth funds. For the six months ended March 31,
Young Investor also topped the 8.6 percent average return for the Lipper
growth fund category.
Q. WHAT CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. One of the main reasons the Fund performed so well was that it owned stock
in technology companies -- companies that make everything from personal
computers and software to cellular phones. Technology stocks, which
represented 21 percent of the Fund's total net assets at March 31, 1996,
performed well. That's because the demand for technology products is high --
such products not only help make people's lives easier and businesses more
efficient, but many of these companies also are stepping forward as the
companies that will propel the U.S. economy into the 21st century. Some of the
Fund's new technology holdings include Nokia (1.7 percent of total net
assets), the world's second largest producer of cellular phones, and Sun
Microsystems (1.5 percent of total net assets), a manufacturer of high-end
computers. Sun is also credited with developing the JAVA programming language
that many people think will become the standard for the Internet.
<PAGE>
Photographic image of David Brady and Erik Gustafson.
The Fund's stocks in the financial services sector also performed well.
The financial services sector is made up of mostly bank, credit card and
insurance companies. Financial services stocks are sensitive to changes in
interest rates. These stocks performed well because the Federal Reserve -- the
central bank of the United States -- lowered interest rates twice during the
past six months. Interest is the charge you pay when you take out a loan. When
interest rates are low, bank customers -- including individuals and businesses
- -- tend to take out more loans because it's easier to repay them. Interest
also represents the cost of doing business for financial services companies.
When you get a loan from a bank, the bank often must go out and borrow the
money from someone else in order to make the loan. The bank must pay interest
on the loan -- just as you would. When interest rates go down, a bank's cost
of making loans goes down. And as costs go down, profits go up. As a result,
bank stocks tend to do well when interest rates are lower.
Q. LOOKING AT THE FUND'S HOLDINGS, SOME OF THE NAMES ARE EASY TO RECOGNIZE,
WHILE OTHERS ARE NOT AS FAMILIAR. HOW DO SOME OF THESE MORE UNFAMILIAR
HOLDINGS RELATE TO KIDS?
A. While not all of the Fund's holdings are household names, a majority of
them offer products and services that we think kids can relate to, or whose
products and services they use regularly. For instance, if you've ever used
one of the online computer services, such as America Online, you may have
noticed that it can take a long time to get the information you want. Well,
StrataCom (1.9 percent of total net assets) is a rapidly growing technology
company that's working to develop the switching systems to speed up the flow
of that information. Apollo Group (2.3 percent of total net assets), is
another company you may not have heard of, but it's one of the leading
providers of higher education in the United States.
<PAGE>
Demographers -- people who study market and industry trends -- say that
the number of new high school graduates is starting to grow and it could hit a
record 3.1 million by the year 2004. (1) At the same time, the number of older
workers returning to college to get advanced degrees or improve their skills
also is growing. That means a lot of people -- including you or even your
parents -- could be heading off to college in the near future. We think Apollo
Group is sure to benefit from this increasing demand for higher education.
It's also worth noting that the Fund does hold shares in a great many
companies whose names are easily recognized among young people. Those include
Coca-Cola, Disney, Hershey, McDonald's and Nike (1.5 percent, 1.5 percent, 1.5
percent, 1.4 percent and 1.8 percent of total net assets, respectively), to
name a few.
Q. DO YOU EVER BUY STOCKS FROM OTHER COUNTRIES?
A. Although we primarily invest in U.S. stocks, we will occasionally buy a
stock from another country. Sandoz ADR (2.1 percent of total net assets), for
example, is a pharmaceutical company based in Switzerland that also makes
Gerber baby foods. When we buy a foreign stock, we will usually buy an
American Depository Receipt, or ADR. An ADR lets Americans buy shares of a
foreign-based company in a U.S. stock market, instead of in an overseas market
using foreign currency. Those shares are held in a bank vault, so you could
think of an ADR as the proof that we own the stock.
We have high standards when we buy foreign stocks because there are risks
to investing overseas. Since every country has its own kind of money, any time
you buy a foreign stock, you have to pay for it in the currency, or money, of
the country where that company is located. If, for example, we invest in a
French stock, we have to pay for it in francs -- that's what French money is
called. The tricky part is that one U.S. dollar doesn't equal one French
franc, and the value of each currency will change every day. That means we
could lose money if the franc isn't worth as much when we sell the stock and
we convert the proceeds back into U.S. dollars. There are also market and
political risks to consider. If, for instance, a country's army took over the
government, that country's economy might suffer and stock prices could fall.
Of course, we try to avoid that risk by investing in the stocks of more
stable, developed countries. In fact, we buy a foreign stock only when we
think it's the very best company in the world at what it does.
<PAGE>
Even though foreign investing can be risky, it has benefits, too. For
instance, more than two-thirds of the world's stocks are issued by companies
outside of the United States. (2) If we were to ignore foreign investments, we
might miss out on investing in some of the world's most promising stocks.
Owning foreign stocks can also help to diversify the Fund, since U.S. and
foreign stocks tend to go up and down at different times.
Q. DOES THE FUND ATTRACT EXPERIENCED INVESTORS IN ADDITION TO YOUNG PEOPLE?
A. Yes. Even though it was designed with kids in mind, the Fund's investment
strategy -- and its competitive performance -- have captured the attention of
many accomplished investors. We think that's because many of the companies
that serve the youth market are also among the finest growth companies
available. As of March 31, the Fund had nearly 25,000 accounts, 15.5 percent
of which are non-UGMA accounts -- accounts that are not custodial accounts
opened for children.
Q. MANY OF THE FUND'S YOUNG INVESTORS HAVE EXPRESSED INTEREST IN BECOMING A
PORTFOLIO MANAGER WHEN THEY GROW UP. HOW DO YOU BECOME A PORTFOLIO MANAGER,
AND WHAT'S YOUR FAVORITE PART OF THE JOB?
A. There's no easy answer to this question. Most, but not all, portfolio
managers go to college, where they usually major in business, finance or
economics. Chances are you won't become a portfolio manager right out of
college, though. Instead, you'll have to work your way up through the ranks,
gaining experience. Many portfolio managers start their careers as industry
analysts. And, sometimes, portfolio managers will pursue advanced degrees
- -- the most common being an M.B.A. -- or take a series of additional tests to
gain more knowledge and experience.
<PAGE>
As you can see, it's not easy to become a portfolio manager. But if
you're interested in the world of finance, it's well worth all that hard work.
One of the most rewarding aspects of the job is that it's fast paced and
exciting -- after all, in what other job do you get to deal with bulls and
bears, and experience record-breaking highs and wild crashes? It's also
interesting to keep up with the current trends that are affecting the markets
and the economy. Finally, and probably most importantly, it's rewarding to
know that every day you're helping people invest their money to pursue their
long-term financial goals.
If you're thinking of becoming a portfolio manager, you might want to
start by reading some of the books we've suggested in Dollar Digest(R), or by
watching investment-oriented TV shows, joining an investment club or taking a
class about investing. You might even want to try running your own imaginary
portfolio by picking the investments that you think will do best and tracking
their performance in the financial section of your local paper. You probably
should hone your computer skills too, since most managers spend a great deal
of time on the computer getting price quotes and other company information.
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.
Portfolio holdings are as of March 31, 1996, and are subject to change. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions. The Fund's Adviser currently limits expenses
to 1.25 percent of average net assets. Absent past expense limits, total
return would have been less. Expense limits are subject to termination on 30
days' notice to the Fund. The S&P 500 is an unmanaged group of stocks that
differs from the composition of the Fund; it is not available for direct
investment. According to Lipper Analytical Services, an independent monitor of
mutual fund performance, the median returns of the Fund's growth fund peer
group for the one-year and Life of Fund periods ended March 31, 1996, were
28.25 percent and 19.15 percent, respectively.
1 Source: College Board, 1995
2 Source: Morgan Stanley Capital International,
<PAGE>
1995 FUND HIGHLIGHTS as of March 31, 1996
Average Annual Total Returns
Past 1 Life
Year of Fund(1)
YOUNG INVESTOR FUND 44.3% 29.7%
S&P 500 32.1 23.8
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 performance includes changes in share price and reinvestment of income
and capital gains distributions.
1 Inception date: April 29, 1994. Because index returns are calculated on a
monthly basis, any index return marked "Life of Fund" is calculated from the
month-end results that fall closest to the Fund's inception date.
Sidebar:
You can get an idea of how Young Investor Fund performed by comparing it
to a general measure of the stock market's performance such as the Standard
& Poor's 500 Index. The S&P 500 is an unmanaged group of stocks that
differs in composition from the Fund. It is not available for direct
investment. The index consists of approximately 400 industrial, 40 financial,
40 utility and 20 transportation stocks.
Fund Data
INVESTMENT OBJECTIVE:
Seeks to achieve long-term capital appreciation by investing primarily in
common stocks and other equity-type securities that we believe have long-term
appreciation potential. The Fund also has an educational objective to teach
shareholders about basic economic principles and personal finance through a
variety of educational materials prepared and paid for by the Fund.
FUND INCEPTION: 4/29/94
TOTAL NET ASSETS: $68.3 MILLION
<PAGE>
Economic Sector Breakdown
Portfolio S&P 500
3/31/96 3/31/96
Basic Materials 2% 6%
Consumer Cyclical 22 14
Consumer Noncyclical 36 22
Energy 0 10
Financial 13 13
Industrial 6 10
Technology 21 13
Utilities 0 12
Total 100% 100%
Comparison of change in value of $10,000 investment
Graph
DATE YIF S&P 500
4/29/94 10000 10000
6/30/94 9700 9915
9/30/94 10240 10399
12/31/94 10739 10397
3/31/95 11414 11408
6/30/95 12724 12496
9/30/95 14396 13488
3/31/96 16466 15068
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. This
graph compares the performance of Young Investor Fund to the S&P 500 Index, an
unmanaged group of stocks that differs from the composition of the Fund. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions.
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
Investments as of March 31, 1996
(Dollar amounts in thousands)
(Unaudited)
<CAPTION>
Number Market
EQUITY-RELATED SECURITIES (91.8%) of Shares Value
<S> <C> <C>
Common Stocks (90.3%)
Automotive (1.0%)
Volvo Inc. Class B
(Manufacturer of passenger cars, trucks, and buses) 30,000 $ 694
Banks (5.2%)
Citicorp
(Provides broad range of financial services) 15,000 1,200
Fifth Third Bancorp
(Large regional banking institution) 20,000 1,160
MBNA Corp.
(Large credit card issuer) 40,000 1,185
-------
3,545
Business Services (5.0%)
Equifax Inc.
(Provides information services and decision-support
services to businesses) 40,000 805
*Medaphis Corp.
(Provides business management services to physicians
and hospitals) 25,000 1,212
*SITEL Corp.
(Leading independent provider of telemarketing services) 30,000 1,358
-------
3,375
Chemicals (1.7%)
W.R. Grace and Co.
(Manufactures and sells specialty chemicals and
medical products) 15,000 1,174
Computer Software and Services (10.2%)
*Bay Networks
(Markets and manufactures a line of networking products) 30,000 922
*Informix Corp.
(Develops and markets computer software) 30,000 791
*Microsoft Corporation
(Microcomputer software products) 10,000 1,031
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Computer Software and Services (Continued)
*Security Dynamics Technology Inc.
(Designs and markets security products for
computer-based information resources) 20,000 $1,060
*Sterling Commerce Inc.
(Provides electronic data interchange products and services) 40,000 1,230
*Sun Microsystems Inc.
(Supplies high performance workstations, servers and
networking software) 20,000 875
*Sungard Data Systems Inc.
(Provides disaster recovery services for computers and
proprietary support systems for financial industry) 30,000 1,028
------
6,937
Commercial Services (2.3%)
*Apollo Group Inc. Class A
(Provides higher education programs for working adults) 40,000 1,559
Consumer-Related (12.2%)
*CUC International Inc.
(Consumer marketing company) 35,000 1,024
*Edmark Corp.
(Leading developer and publisher of multimedia
educational software and other educational products) 40,000 960
The Gillette Company
(Shaving and personal care products ) 20,000 1,035
International Flavors & Fragrances Inc.
(Fragrance products sold to makers of perfumes and
personal care products) 20,000 957
Mattel Inc.
(Designs, manufactures, and markets children's toys) 37,500 1,017
Nike Inc. Class B
(Designs, manufactures and markets athletic footwear and
apparel products) 15,000 1,219
The Procter & Gamble Company
(Personal care products, pharmaceuticals, food and beverages) 15,000 1,271
Wrigley (Wm.) Jr. Company
(World's largest chewing gum manufacturer) 15,000 879
------
8,362
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Distribution-Retail (11.5%)
Albertson's Inc.
(Retail food and drug chain) 30,000 $1,114
*General Nutrition
(Retail health-related products chain) 40,000 1,000
Hershey Food Corporation
(Produces broad line of chocolate, confectionery and
pasta products) 14,000 1,043
The Home Depot Inc.
(Home improvement retail chain) 25,000 1,197
Johnson & Johnson
(Manufactures and markets a broad range of health care
and other products) 12,000 1,107
*Noodle Kidoodle Inc.
(Wholesaler and retailer of toys and games) 40,000 340
*PetSmart Inc.
(Operates pet food and supply stores) 30,000 1,087
Walgreen Company
(Largest retail drugstore chain in the United States) 30,000 979
------
7,867
Electronics and Electrical Equipment (5.1%)
*Atmel Corp.
(Manufactures and markets a broad range of
high-performance memory and logic integrated circuits) 40,000 1,020
General Electric Company
(Manufactures home and other electrical products) 15,000 1,168
*StrataCom, Inc.
(Designs, manufactures and markets IPX cell
switching systems) 35,000 1,282
------
3,470
Financial (7.0%)
American Express Co.
(Leader in travel-related services and investment services) 25,000 1,234
Federal Home Loan Mortgage Corporation
(Purchases mortgages from lenders and resells in pools
or packages) 15,000 1,279
Federal National Mortgage Association
(Purchases mortgages and issues guaranteed
mortgage-backed securities) 35,000 1,116
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Financial (Continued)
Household International Inc.
(Provider of financial and banking services) 17,000 $1,143
------
4,772
Food & Beverage (4.8%)
The Coca-Cola Company
(Producer and distributor of soft drink products) 12,000 993
Heinz (H.J.)
(Produces a wide variety of food products worldwide) 30,000 994
Nabisco Holdings Corp.
(Manufacturer and marketer of packaged foods) 40,000 1,310
------
3,297
Health Care (5.7%)
*American Oncology Resources
(Multi-state physician practice management company
focusing exclusively on oncology) 25,000 1,063
Baxter International Inc.
(Develops, manufactures and distributes hospital supplies
and related medical equipment) 25,000 1,131
*Idexx Laboratories Inc.
(Develops and manufactures biotechnology-based
detection systems) 20,000 840
*Neuromedical Systems Inc.
(Health care technology company focused on the
detection of cancer) 40,000 870
------
3,904
Leisure & Entertainment (2.9%)
Walt Disney Company
(Theme parks, resorts and motion pictures) 16,000 1,022
*Penske Motorsports Inc.
(Promotes and markets professional motorsports) 4,000 149
*Viacom International Incorporated, Class B
(Entertainment and communications company) 20,000 843
------
2,014
Pharmaceuticals (6.9%)
Eli Lilly and Co.
(Involved in discovery, development, manufacture and
sale of pharmaceutical products) 18,000 1,170
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Pharmaceuticals (Continued)
Merck and Co. Inc.
(Manufactures and produces human
and animal pharmaceuticals) 17,000 $1,058
Sandoz Ltd. ADRs
(Global research-based pharmaceutical and nutrition group) 25,000 1,465
SmithKline Beecham Plc ADRs
(Develops, manufactures and markets pharmaceuticals) 20,000 1,030
------
4,723
Publishing and Broadcasting (3.0%)
*International Family Entertainment
(Produces and distributes entertainment programming
targeted at families worldwide) 60,000 1,012
*Scholastic Corp.
(Publisher and distributor of children's books and other
educational materials) 15,000 1,031
------
2,043
Restaurant (1.4%)
McDonald's Corporation
(Develops, licenses, leases and services a
worldwide system of restaurants) 20,000 960
Telecommunications (3.1%)
*Glenayre Technologies
(Manufactures telecommunications equipment
and software) 30,000 1,147
*Tellabs Inc.
(Designs, assembles, markets and services voice and data
networking products) 20,000 968
------
2,115
Wholesale (1.3%)
*Barnett
(Markets and distributes plumbing, electrical and
hardware products) 40,000 900
------
Sidebar:
Sandoz Ltd. is a multi-national corporation headquartered in Basle,
Switzerland. ADR stands for American Depository Receipt. An ADR lets Americans
buy shares of a foreign-based company in a U.S. stock market, instead
of in an overseas market using foreign currency. The receipt represents
ownership of shares held in the vault of a U.S. bank and it entitles the
receiptholder to all the dividends and capital gains from the stock.
<PAGE>
<CAPTION>
Number Market
of Shares Value
<S> <C> <C>
TOTAL COMMON STOCKS
(Cost $52,039) $ 61,711
--------
PREFERRED STOCK (1.5%)
Nokia Corp. ADSs
(International electronics and electrotechnical group)
(Cost $1,063) 30,000 1,028
--------
TOTAL EQUITY-RELATED SECURITIES
(Cost $53,102) 62,739
--------
Principal
Amount
--------
SHORT-TERM OBLIGATIONS (8.5%)
Commercial Paper (8.5%)
Countrywide Funding Corp.
5.550% 4/01/96 $ 2,500 2,499
UBS Finance 5.500% 4/01/96 3,300 3,299
--------
Total Short-Term Obligations
(Cost $5,798) 5,798
--------
Total Investments (100.3%)
(Cost $58,900) 68,537
Other Assets, Less Liabilities (-0.3%) (226)
--------
Total Net Assets (100%) $ 68,311
========
<FN>
*Non-income producing
Sidebar:
The portfolio managers will sometimes have a large amount of money to invest
but may not want to buy stocks with it right away. To put the money to work,
they will invest in short-term instruments like commercial paper. These are
short-term loans (between one and 270 days long) to large corporations or
banks. For example, the Fund made a four-day loan to Countrywide Funding
that came due one day after the date of this report.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
BALANCE SHEET
March 31, 1996
(All amounts in thousands)
(Unaudited)
<CAPTION>
<S> <C>
Assets
Investments, at market value $68,537
Receivable for investments sold 218
Receivable for fund shares sold 222
Dividends receivable 74
Cash and other assets 243
-------
Total Assets $69,294
=======
Liabilities
Payable for investments purchased $ 921
Payable to investment adviser and transfer agent 25
Other liabilities 37
-------
Total Liabilities 983
-------
Capital
Paid-in-capital 56,037
Net unrealized appreciation 9,637
Accumulated net realized gains on investments 2,637
-------
Total Capital (Net Assets) 68,311
-------
Total Liabilities and Capital $69,294
=======
Shares Outstanding (Unlimited Number Authorized) 4,342
=======
Net Asset Value (Capital) Per Share $ 15.73
=======
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENT OF OPERATIONS
For the Six Months Ended
March 31, 1996
(All amounts in thousands)
(Unaudited)
<CAPTION>
<S> <C>
Investment Income
Dividends $ 207
Interest 144
-------
Total Investment Income 351
-------
Expenses
Management fees 134
Printing and postage 53
Transfer agent fees 49
Administrative fees 45
Registration fees 25
Accounting fees 13
Legal and audit fees 13
Custodian fees 9
Trustees' fees 8
Other expenses 26
-------
375
Reimbursement of expenses
by investment adviser (129)
-------
Total Expenses 246
-------
Net Investment Income 105
-------
Realized and Unrealized Gains on Investments
Net realized gains in investments 2,683
Net change in unrealized appreciation of investments 4,116
-------
Net Gains on Investments 6,799
-------
Net Increase in Net Assets Resulting from Operations $ 6,904
=======
Sidebar:
Here's what it cost to manage and operate the Fund during this reporting
period. The management fees, for example, are paid to the investment adviser
for researching, buying and selling stocks, and for developing an investment
strategy. The transfer agent fees pay for processing shareholder transactions
and for keeping track of all shareholder accounts.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENTS OF CHANGES IN NET ASSETS
(All amounts in thousands)
<CAPTION>
(Unaudited) Year Six Months
Ended Ended
Sept. 30, March 31,
1995 1996
Operations
<S> <C> <C>
Net investment income $ 81 $ 105
Net realized gains on investments 1,448 2,683
Net change in unrealized appreciation or
depreciation of investments 5,236 4,116
-------- --------
Net Increase in Net Assets Resulting
from Operations 6,765 6,904
-------- --------
Distributions to Shareholders
Dividends from net investment income (85) (125)
Capital gains distributions -- (1,383)
-------- --------
Total Distributions to Shareholders (85) (1,508)
-------- --------
Share Transactions
Subscriptions to fund shares 17,073 32,050
Investment income dividends reinvested 84 108
Capital gains distributions reinvested -- 1,368
Redemptions of fund shares (612) (2,012)
-------- --------
Net Increase from Share Transactions 16,545 31,514
-------- --------
Net Increase in Net Assets 23,225 36,910
Total Net Assets
Beginning of period 8,176 31,401
-------- --------
End of period $ 31,401 $ 68,311
======== ========
Accumulated Undistributed Net Investment
Income at End of Period $ 20 $--
======== ========
Analyses of Changes in Shares of Beneficial Interest
Subscriptions to fund shares 1,439 2,175
Investment income dividends reinvested 8 8
Capital gains distributions reinvested -- 97
Redemptions of fund shares (48) (135)
-------- --------
Net increase in fund shares 1,399 2,145
Shares outstanding at beginning of period 798 2,197
-------- --------
Shares outstanding at end of period 2,197 4,342
======== ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The following are the significant accounting policies of the Stein Roe Young
Investor Fund (the "Fund"), a series of the Stein Roe Investment Trust (a
Massachusetts business trust). The policies are in conformity with generally
accepted accounting principles. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
SECURITY VALUATIONS
All securities are valued as of March 29, 1996, the last business day of the
period. Securities traded on national securities exchanges are valued at the
last reported sales price or, if there are no sales, at the latest bid
quotation. Each over-the-counter security for which the last sale price is
available from NASDAQ is valued at that price. All other over-the-counter
securities for which reliable quotations are available are valued at the
latest bid quotation. Other assets and securities of the Fund are valued by a
method that the Board of Trustees believes represents a fair value.
FEDERAL INCOME TAXES
No provision is made for federal income taxes since the Fund elects to be
taxed as a "regulated investment company" and makes such distributions to its
shareholders as to be relieved of all federal income taxes under provisions of
current federal tax law.
DISTRIBUTION TO SHAREHOLDERS
Distributions in excess of tax basis earnings are reported in the financial
statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings
that result in temporary overdistributions are classified as distributions in
excess of net investment income or net realized gains, and any permanent
differences are reclassified to paid-in capital.
<PAGE>
OTHER INFORMATION
Realized gains or losses from sales of securities are determined on the
specific identified cost basis.
All amounts, except per-share amounts, are shown in thousands.
Sidebar:
A mutual fund's financial statement provides standardized information
about its investment transactions and accounting activities. These "Notes"
provide additional clarification and information about practices that affect
Young Investor Fund's operations.
NOTE 2. TRUSTEES' FEES AND TRANSACTIONS WITH AFFILIATES
The Fund pays monthly management and administrative fees to Stein Roe &
Farnham Incorporated (the "Adviser"), an indirect, majority-owned subsidiary
of Liberty Mutual Insurance Company, for its services as investment adviser
and manager.
The management and administrative fees for the Fund are computed at annual
rates as a percentage of average net assets as follows:
Management Fee Administrative Fee
0.60% up to $500 million 0.20% up to $500 million
0.55% of next $500 million 0.15% of next $500 million
0.50% thereafter 0.125% thereafter
The administrative agreement provides that the Adviser will reimburse the Fund
to the extent that its annual expenses, excluding certain expenses, exceed the
applicable limits prescribed by any state in which the Fund's shares are
offered for sale. In addition, effective February 1, 1996, the Adviser agreed
to reimburse the Fund to the extent that its expenses exceed 1.25 percent of
annual average net assets. The expense limitation expires January 31, 1997,
subject to earlier termination by the Adviser on 30 days' notice. Prior to
February 1, 1996, the Adviser limited expenses to .99 percent of annual
average net assets.
<PAGE>
At March 31, 1996, Keyport Life Insurance Company, an indirect, majority-owned
subsidiary of Liberty Mutual Insurance Company, owned 419 shares of the Fund
with a net asset value of $6,587.
The transfer agent fees are paid to SteinRoe Services Inc., an indirect,
majority-owned subsidiary of Liberty Mutual Insurance Company.
The Adviser also provides the Fund with certain fund accounting services.
For the period ended March 31, 1996, the Fund incurred fees of $13.
Certain officers and trustees of the Trust are also officers of the Adviser.
The compensation of trustees not affiliated with the Adviser for the Fund for
the period ended March 31, 1996, was $8. No remuneration was paid to any other
trustee or officer of the Trust.
NOTE 3. SHORT-TERM DEBT
To facilitate portfolio liquidity, the Fund maintains borrowing arrangements
under which it can borrow against portfolio securities. The Fund had no
borrowings during the period ended March 31, 1996.
NOTE 4. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales or maturities of
securities (excluding short-term obligations) for the period ended March 31,
1996, were $46,848 and $18,498, respectively.
At March 31, 1996, the cost of investments for federal income tax purposes
and for financial reporting was the same. Unrealized appreciation and
depreciation on a tax basis were $10,416 and $779, respectively.
<PAGE>
<TABLE>
NOTE 5. FINANCIAL HIGHLIGHTS
Selected per-share data (for a share outstanding throughout the period),
ratios and supplemental data.
<CAPTION>
Period Year Six Months
Ended Ended Ended
Sept, 30, Sept. 30, March 31,
1994(a) 1995 1996
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $10.24 $14.29
------ ------ ------
Income from investment operations
Net investment income............. 0.03 0.06 0.04
Net realized and unrealized gains on
investments..................... 0.21 4.07 1.96
------ ------ ------
Total from Investment Operations.... 0.24 4.13 2.00
DISTRIBUTIONS
Net investment income............. -- (0.08) (0.05)
Net realized capital gains........ -- -- (0.51)
------ ------ ------
Total Distributions............. -- (0.08) (0.56)
------ ------ ------
NET ASSET VALUE, END OF PERIOD...... $10.24 $14.29 $15.73
====== ====== ======
Ratio of net expenses to average net
assets (b)........................ 0.99%* 0.99% 1.10%*
Ratio of net investment income to average
net assets (c).................... 1.07%* 0.47% 0.47%*
Portfolio turnover rate............. 12%** 55% 44%
Average commissions (per share)..... -- -- $0.0632
Total return (c) ................... 2.40%** 40.58% 14.39%
Net assets, end of period........... $8,176 $31,401 $68,311
<FN>
* Annualized
** Not annualized
(a) The Fund commenced operations on April 29, 1994.
(b) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by the Adviser, this ratio would have been 4.58
percent for the period ended September 30, 1994, 2.87 percent for the year
ended September 30, 1995, and 1.68 percent for the six months ended March 31,
1996. (c) Computed giving effect to the Adviser's expense limitation
undertaking.
Sidebar:
This number (art of arrow points to portfolio turnover rate) tells you how
much stock and bond trading the Fund did during the period covered by the
report. The higher the number, the more trading the Fund did. Young Investor
Fund's 55 percent turnover for the period ended September 30, 1995, was
lower than the 84 percent turnover of the average growth fund, according to
Lipper Analytical Services.
</FN>
</TABLE>
<PAGE>
FUNDS FOR EVERY INVESTMENT OBJECTIVE
The Stein Roe family of 100 percent no-load mutual funds offers a variety of
funds so you can select the right fund, or combination of funds, to meet your
investment objec tives. Call us at 800-338-2550 for a prospectus and more
complete information on any of the funds, including management fees and
expenses. Please read the pro spectus carefully before you invest or send
money.
MONEY MARKET FUNDS
Money market funds seek to provide income while preserving principal and
maintaining liquidity. These funds offer free check writing.
o Government Reserves Fund -- Invests primarily in securities issued or
guaranteed by the U.S. government and
its agencies and instrumentalities.*
o Cash Reserves Fund -- Invests in high-quality, short-term money market
securities such as certificates of deposit, banker's acceptances and
commercial paper.*
BOND FUNDS
Bond funds seek high current income by investing pri marily in fixed income
securities.
o Limited Maturity Income Fund -- Invests primarily in U.S. government and
other high-quality debt securities. The dollar -weighted average
effective maturity will not exceed three years.
o Government Income Fund -- Invests primarily in securities issued or
guaranteed by the U.S. government and its agencies.*
o Intermediate Bond Fund-- Invests primarily in marketable debt securities
with an average life of three to 10 years.*
o Income Fund -- Pursues a higher level of current income by investing
primarily in medium- and lower-quality bonds.
TAX-EXEMPT FUNDS
These funds help investors keep more of their earnings by investing in
instruments that earn income free from federal income tax. Income may be
subject to federal alternative minimum tax and state and local taxes; capital
gains are subject to state, local and federal taxes.
o Municipal Money Market Fund -- Seeks to provide the liquidity and
stability of a money market fund plus current tax-free income. Free
check writing available.*
*Money market mutual funds strive to maintain a $1 per share net asset value,
but there is no assurance that the fund will be able to maintain a stable net
asset value. The net asset value of a fund that invests in securities issued
or guaranteed by the U.S. government is not guaranteed.
o Intermediate Municipals Fund -- Seeks high current yield through
investments primarily in the three highest grades of intermediate-term
municipal securities.
o Managed Municipals Fund -- Pursues high tax-free income by investing in a
quality-conscious portfolio of long-term municipal bonds.
o High-Yield Municipals Fund -- Seeks a higher level of tax-free income
from long-term municipal securities, primarily of medium or lower
quality.
<PAGE>
GROWTH AND INCOME FUNDS
These funds seek to provide a conservative investment that is well positioned
for long-term growth and current income. Each fund's approach is designed to
limit the effects of market volatility.
o Balanced Fund +-- Seeks long-term growth of capital and current income
consistent with reasonable investment risk by investing in equities, debt
securities and cash equivalents.
o Growth & Income Fund -- Pursues income and long-term capital growth by
investing primarily in large, well-established companies.
GROWTH FUNDS
Growth funds offer long-term capital appreciation potential by investing
primarily in various types of stocks.
o Growth Stock Fund -- Pursues long-term capital appreciation from stocks
with strong growth potential.
o Special Fund -- Invests in securities believed to have limited downside
risk relative to their potential for above-average growth, including
securities of undervalued, under followed or out-of-favor companies.
o Special Venture Fund -- Seeks capital appreciation through equity
securities of entre preneurially managed companies.
o Young Investor Fund -- Invests in securities of companies that affect the
lives of children or teenagers.
o Capital Opportunities Fund -- Takes a long-term approach to emerging
growth by selecting quality companies with the potential to generate high
levels of earnings growth over a three- to five-year period.
o International Fund -- Invests in a diversified portfolio of foreign
securities.
+Formerly Total Return Fund; name and investment objective change effective
April 17, 1996.
<PAGE>
TO CONTACT US...
BY PHONE 800-338-2550
You can discuss your investment questions with a Stein Roe account
representative by calling us toll free. We'll be happy to answer questions
about your current account, or to provide you with information about opening a
Stein Roe Fund account, including Stein Roe IRAs. We're available seven days a
week, from 7 a.m. to 8 p.m. weekdays and from 8 a.m. to 5 p.m. Saturday and
Sunday (central time).
STEIN ROE'S FUNDS-ON-CALL(R)24-HOUR SERVICE LINE
Using a touch-tone phone, call our toll-free number, day or night, for
your current account balance, the latest Stein Roe Fund prices and yields, and
other information. In addition, if you have a Personal Identification Number
(PIN), you may place orders for the following transactions 24 hours a day:
o Exchange shares between your Stein Roe accounts;
o Purchase Fund shares by electronic transfer;
o Order additional account statements and Money Market Fund checks;
o Redeem shares by check, wire or electronic transfer.
RETIREMENT PLAN ACCOUNTS
Call us for information about how we can assist you with your defined
contribution plan, including 401(k) plans. You can reach us toll free at
800-322-1130.
BY MAIL
If you prefer to contact us by mail, please address all correspondence to:
P.O. Box 804058, Chicago, IL 60680. You also may visit our Internet site --
www.steinroe.com--to contact us by e-mail.
IN PERSON
If you are in the Chicago area, please visit our Investor Center located in
downtown Chicago at One South Wacker Drive, 32nd Floor. Our account
representatives can answer questions about your current Fund investments or
provide you with infor mation about any of the Stein Roe Funds and
retirement plans. Stop by weekdays between 8 a.m. and 5:15 p.m.
<PAGE>
STEIN ROE INVESTMENT TRUST
TRUSTEES
Timothy K. Armour
President, Mutual Fund Division and Director, Stein Roe & Farnham Incorporated
Kenneth L. Block
Chairman Emeritus, A.T. Kearney, Inc.
William W. Boyd
Chairman and Director, Sterling Plumbing Group Inc.
Lindsay Cook
Senior Vice President, Liberty Financial Companies, Inc.
Francis W. Morley
Chairman, Employer Plan Administrators and Consultants Co.
Charles R. Nelson
Van Voorhis Professor of Political Economy, University of Washington
Gordon R. Worley
Private Investor
AGENTS AND ADVISERS
Stein Roe & Farnham Incorporated
Investment Adviser
State Street Bank and Trust Company
Custodian
SteinRoe Services, Inc.
Transfer Agent
Bell, Boyd & Lloyd
Legal Counsel to the Trust
Arthur Andersen LLP
Independent Public Accountants
Sidebar:
A custodian holds the stock certificates and otherassets of a mutual fund for
safekeeping. State Street Bank and Trust Company of Boston, Massachusetts,
is custodian for Young Investor Fund.
<PAGE>
OFFICERS
Timothy K. Armour, President
Jilaine H. Bauer, Executive Vice President, Secretary
N. Bruce Callow, Executive Vice President
Hans P. Ziegler, Executive Vice President
Gary A. Anetsberger, Senior Vice President, Chief Financial Officer
Bruno Bertocci, Vice President
David P. Brady, Vice President
Thomas W. Butch, Vice President
Daniel K. Cantor, Vice President
E. Bruce Dunn, Vice President
Erik P. Gustafson, Vice President
David P. Harris, Vice President
Philip D. Hausken, Vice President
Harvey B. Hirschhorn, Vice President
Stephen P. Lautz, Vice President
Eric S. Maddix, Vice President
Lynn C. Maddox, Vice President
Anne E. Marcel, Vice President
Nicolette D. Parrish, Vice President, Assistant Secretary
Richard B. Peterson, Vice President
Gloria J. Santella, Vice President
Thomas P. Sorbo, Vice President
Sharon R. Robertson, Controller
Margaret O. Zwick, Treasurer
Janet B. Rysz, Assistant Secretary
<PAGE>
The Stein Roe Funds
Stein Roe Government Reserves Fund
Stein Roe Cash Reserves Fund
Stein Roe Limited Maturity Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Income Fund
Stein Roe Municipal Money Market Fund
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Balanced Fund
Stein Roe Growth & Income Fund
Stein Roe Growth Stock Fund
Stein Roe Capital Opportunities Fund
Stein Roe Special Fund
Stein Roe International Fund
Stein Roe Young Investor Fund
Stein Roe Special Venture Fund
P.O. Box 804058
Chicago, Illinois 60680
800-338-2550
In Chicago, visit our Fund Center at One South Wacker Drive
Liberty Securities Corporation, Distributor
Member SIPC. 4/96
YI12A
