Stein Roe Mutual Funds
ANNUAL REPORT
SEPT. 30, 1997
Photo of: small girl.
Stein Roe Equity Fund
YOUNG INVESTOR FUND
LOGO: STEIN ROE MUTUAL FUNDS
BUILDING WEALTH FOR GENERATIONS(SM)
<PAGE>
CONTENTS
From the President............................................... 1
Tim Armour's thoughts on the markets and investing
The Companies We Invest In....................................... 4
Top 10 holdings
Q&A.............................................................. 6
An interview with the portfolio managers and a summary of
investment activity
Fund Highlights.................................................. 12
Information about the Fund
Investments...................................................... 14
A complete list of investments with market values
Financial Statements............................................. 22
Balance sheet, statements of operations and changes in net assets
Notes to Financial Statements.................................... 28
Financial Highlights............................................. 31
Selected per-share data
Report of Independent Public
Accountants.................................................... 34
General Information.............................................. 35
A guide to products and services
Must be preceded or accompanied by a prospectus.
<PAGE>
TO OUR SHAREHOLDERS
DEAR INVESTOR,
Rarely in any three-year period in the history of the U.S. stock exchange have
annual gains of more than 20 percent been reported. But that's just what
happened during the year ended Sept. 30, 1997, and the two years that went
before it. In fact, altogether, the S&P 500 Index's return for these three years
was a whopping 119.15 percent.
That's good news, but it also could be causing what some experts think is a
problem for U.S. stocks. That's because when stocks post high returns, more
investors want to own them, and they'll pay higher and higher prices to get
them. As a result, stock prices go way up compared to their actual growth
potential -- investors call stocks that behave this way "overvalued." Why is
this a problem?
When a portfolio manager invests in a stock, he or she generally hopes to
earn a certain level of return from it. If the stock is overvalued, the
likelihood of earning that hoped-for return is reduced and, by the same token,
the probability of losing a little money is increased. In addition, in some
cases, the more a stock's price rises and its upside potential is realized, the
more its downside risk can grow if the company doesn't meet investors'
expectations. You can think of this in terms of climbing a hill. You're not too
worried about falling when you're at the bottom of the hill, because if you
fall, you're not going to fall that far. As you climb, the nearer you are to the
top, the farther you have to fall and the greater your risk of injury.
But we think recent events may have helped fix the problem.
<PAGE>
In October, a series of exchange rate problems and economic uncertainties
in Southeast Asia caused sharp declines in emerging markets around the world. At
first investors in larger, more established markets were unaffected by these
events -- until a surprisingly severe crash occurred in Hong Kong. Finally
unnerved, all of the major markets fell sharply, including the United States,
where stocks tumbled 7 percent in one day of trading on Oct. 27, 1997, and have
since continued to swing up and down.
While unsettling, marked declines such as this are a normal part of
investing. No one can predict market events with any certainty, yet despite the
unease caused by the sharp and unexpected decline, we believe there is no reason
to panic. U.S. economic growth is strong, inflation is low and we think interest
rates are likely to remain relatively stable. As a result, we believe the impact
on the U.S. economy of the market's recent confusion will not be large and, by
bringing stock prices down to a more reasonable level, may even prove to be a
positive.
If the market's recent ups and downs have made you a little nervous, we
believe you should keep things in perspective. Despite occasional downturns,
stocks historically have been among the best investments to help achieve
long-term financial goals. What's more, we have found that investors who
maintain some exposure to stocks, through both good times and bad, fare far
better than those who attempt to time the market. Even if you were able to
forecast a market correction and sold your investments at exactly the right
time, it's unlikely that you would be able to successfully predict when to get
back in. That's because market rallies often occur in brief, unexpected spurts.
<PAGE>
We hope this report helps you to better understand Young Investor Fund's
performance. As always, if you have any questions, I encourage you to call us at
800-338-2550.
Sincerely,
/s/ Timothy K. Armour
Timothy K. Armour
President, Stein Roe Mutual Funds
Nov. 10, 1997
Stock market performance is measured by the S&P 500, an unmanaged group of
stocks generally representative of the U.S. stock market. The S&P 500 differs in
composition from any Stein Roe fund; it is not available for direct investment.
Photo of: Timothy K. Armour.
<PAGE>
THE COMPANIES WE INVEST IN
As you probably know, a mutual fund invests in the stocks of different kinds of
companies. In every shareholder report you'll find the 10 largest holdings in
the Fund.
Unlike some funds, we don't invest a large portion of our assets in a few
favorite stocks. Instead, the portfolio typically will have between 50 and 70
holdings, with each holding representing roughly 2 percent of the portfolio. And
depending on what the market does, the portfolio's top 10 holdings may change
from day to day. In any case, we seek to invest most of our assets in companies
that kids can relate to or that affect their lives in some way.
As you look at the portfolio's holdings, you'll notice that some of the
companies are easy to recognize, like Nike or McDonald's. Others might not be as
familiar to you. But -- while they may not be household names -- you're probably
well aware of the products and services they offer. For example, Intel makes the
micro processors that power many computers, and Outdoor Systems Inc. operates
billboards, such as you see on the side of the road. A more complete list of the
portfolio's holdings can be found on pages 14 through 21.
Balloon text: Diversification means investing the fund's assets (money) in
more than one company to help reduce risk. Because a mutual fund invests in so
many companies, your investment is automatically diversified. That means if the
price of one security in the portfolio declines, it should have less of an
impact than if you only invested in that one security by itself. You can tell
the Young Investor Fund is broadly diversified because the top 10 holdings made
up only about 20 percent of the portfolio's net assets on Sept. 30.
<PAGE>
The portfolio 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 portfolio's 10 largest holdings as of Sept. 30, 1997.
<TABLE>
<CAPTION>
% of Total
Net Assets
on 9/30/97 Symbol Exchange
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Intel 2.1% INTC Nasdaq*
- ------------------------------------------------------------------------------------
2 CUC International, Inc. 2.0 CU NYSE+
- ------------------------------------------------------------------------------------
3 Mattel, Inc. 1.9 MAT NYSE
- ------------------------------------------------------------------------------------
4 Household International, Inc. 1.9 HI NYSE
- ------------------------------------------------------------------------------------
5 Wrigley 1.9 WWY NYSE
- ------------------------------------------------------------------------------------
6 AT&T Corp. 1.9 T NYSE
- ------------------------------------------------------------------------------------
7 MGIC Investment Corp. 1.8 MTG NYSE
- ------------------------------------------------------------------------------------
8 Texas Regional Bancshares 1.8 TRBS Nasdaq
- ------------------------------------------------------------------------------------
9 Associated Group Inc. 1.8 AGRPA Nasdaq
- ------------------------------------------------------------------------------------
10 Fannie Mae 1.8 FNM NYSE
- ------------------------------------------------------------------------------------
<FN>
* National Association of Securities Dealers Automated Quotation
+ New York Stock Exchange
Portfolio holdings are as of Sept. 30, 1997, and are subject to change.
</FN>
</TABLE>
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
Q: HOW DID STEIN ROE(SM) YOUNG INVESTORSM FUND DO?
A: Taken by itself, Young Investor did fairly well, posting a 26.37 percent
total return for the 12 months ended Sept. 30, 1997. When you compare the Fund
to other, similar funds, however, we didn't perform as well as we'd like. Young
Investor trailed both the 33.52 percent return of the Lipper growth funds peer
group and the 40.43 percent return of the S&P 500.
We're not overly concerned with short-term returns, however. In our view,
investing in growth for the long term means being willing to take a few lumps
along the way. In fact, we're pleased with the Fund's long-term results -- its
three-year return is 34.04 percent, which outpaces both the 24.84 percent peer
group return and the 28.89 percent return of the S&P. Likewise, Young Investor's
return since inception is 30.20 percent, well ahead of the 23.03 percent peer
group return and the S&P's 27.26 percent return.
Q: WHAT CAUSED YOUR ONE-YEAR RESULTS?
A: Small technology companies had a tough time from September 1996 to March
1997. With roughly 40 percent of the portfolio weighted in small and
medium-sized companies at the time, that dampened performance considerably. We
still hold those stocks, however, because we think they have good long-term
prospects.
<PAGE>
Q: AFTER POSTING STRONG GAINS FROM SEPTEMBER 1996 TO JUNE 1997, THE BIG
COMPANIES THAT HAVE OPERATIONS OVERSEAS -- LIKE COCA-COLA AND
PROCTOR & GAMBLE -- STUMBLED RECENTLY. WHAT HAPPENED?
A: That was mostly a result of currency exposure. When a U.S. company has
overseas operations, some of its profits are in the overseas country's currency
and have to be translated back to the company's "home" currency, the U.S.
dollar. If the dollar is worth more than the other currency, the company's
profits will be lower after translation.
Profits are one of the things investors look at when they are deciding to
buy a stock -- so if a company's earnings are lower than expected because it had
to translate profits from a weak currency to a strong one, investors may start
to avoid it. We believe that's what happened to a lot of big companies this fall
- -- investors saw that profits were coming down and decided that the stock prices
were probably higher than they should be anyway because the big companies had
done so well earlier in the year. So they began looking elsewhere for new
investment ideas. The result: the stock prices of many big multinational
companies fell.
Q: INVESTORS ARE TALKING ABOUT THE RECENT RALLY IN SMALL-CAP STOCKS.
CAN YOU TELL US ABOUT IT?
A: The strong showing of stocks of small and medium-sized companies has been the
big news in the investment markets for the past six months. For nearly two years
the stocks of these companies had not done as well as the stocks of large
companies. Large-cap stocks, on the other hand, had done so well that investors
flocked to them, which drove the stock prices up. People began thinking that
prices looked too high, and they thought that large-cap stocks probably wouldn't
be able to continue climbing as fast as they had been. As a result, investors
began looking around to see what else they could invest in. And they saw small-
and mid-cap stocks, offering good growth potential at generally much lower
prices than large-caps. As more and more people began shifting their investment
dollars from large-cap stocks to those of smaller companies, the stocks of
smaller companies began to rise. That's what sparked the rally, and continued
reports of solid earnings from smaller companies has kept it going strong.
Photo of: Erik Gustafson and David Brady.
<PAGE>
Q: YOUNG INVESTOR FUND CAN INVEST IN COMPANIES OF ALL SIZES. HAS THE RALLY
HELPED THE FUND'S PERFORMANCE?
A: That's one of the places where we think Young Investor Fund has an advantage
- -- we can invest in small, medium and large companies, so if large companies
aren't doing well, we can concentrate more on small ones. Early last summer we
started focusing on smaller companies -- as of Sept. 30, 1997, 36 percent of the
portfolio's total net assets was held in small- and mid-cap stocks. We think
that turned out to be a good decision, because Young Investor outperformed the
S&P 500 in each of the last two quarters (April 1 to June 30, and July 1 to
Sept. 30), mostly as a result of the big rally in small- and mid-cap stocks.
Q: WHAT KINDS OF COMPANIES DID BEST DURING THE PAST YEAR?
A: Financial services companies and telecommunications companies were standout
performers for us -- especially Associated Group, a fixed-wire
telecommunications service provider whose stock price doubled in the most recent
quarter; and AT&T (1.8 percent and 1.9 percent of total net assets,
respectively).
<PAGE>
Heftel, a Spanish-language radio broadcasting company here in the States
(1.6 percent of total net assets), also did well, partly because of the rapid
growth in the country's Spanish-speaking population, and partly because
advertisers are increasingly interested in reaching this segment of the market.
Other standouts included Outdoor Systems, an outdoor advertising company;
Lucent, an AT&T spinoff providing telecommunications equipment; Clear Channel
Communications, a radio broadcasting company; and Intel, the computer chip
company (1.6 percent, 1.6 percent, 1.5 percent and 2.1 percent of total net
assets, respectively).
Q: WHAT LIMITED THE FUND'S PERFORMANCE?
A:Idexx, a supplier of veterinary equipment, had a difficult year. The business
was growing very rapidly and it hit a period when that growth wasn't
sustainable. Another disappointment was PetSmart, which also grew at an
unsustainable rate and suffered even more when it became apparent that the
company would have to close some stores. We sold our holdings in both companies
during the year.
Q: WHAT KINDS OF COMPANIES HAVE YOU BEEN BUYING LATELY?
A: We've been buying technology companies, particularly telecommunications
companies. Consumers are increasingly hungry for bandwidth on which to transmit
video and data. This, plus deregulation in the industry, are driving demand for
tele communications services. We also like the data networking area. We think
the continued migration from mainframes to desktop computing, and the increased
need for Intranets -- companies' own internal web sites -- should continue to
keep demand for data networking services strong.
<PAGE>
Finally, we continue to think financial services companies are
a good investment. That's because most experts agree that baby boomers -- the
more than 80 million people born between 1946 and 1964 -- have become
overwhelmingly interested in saving and investing, perhaps because they've
recognized the importance of saving for retirement themselves rather than
depending on a company pension. Ever since the first members of the baby boom
generation were born, they've been reshaping the nation's tastes, interests and
priorities to reflect their own. School construction experienced a boom in the
1950s, for example, followed by an automobile boom in the 1960s, a housing boom
in the 1970s, and a consumption boom in the 1980s. Now, in the 1990s, it appears
they're at it again -- this time with an investment boom that we think may
continue for some time.
Q: ANY FINAL THOUGHTS?
A: We're optimistic about the outlook for stocks and we believe the economy will
continue to grow, with inflation and interest rates remaining in check. We think
small- and mid-cap stocks continue to show strong growth potential, and we plan
to keep adding to our holdings in these kinds of stocks.
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 Sept. 30, 1997, and are subject to change. Total return
performance includes changes in share price and reinvestment of income and
capital gains distributions. The Fund's investment adviser currently limits
expenses to 1.50 percent of average net assets, subject to termination on 30
days' notice to the Fund. Absent past expense limits, the Fund's total return
would have been less. The S&P 500 is an unmanaged group of stocks that differs
from the composition of Growth Investor Portfolio; it is not available for
direct investment. According to Lipper Analytical Services, Inc., an independent
monitor of mutual fund performance, the median returns for the Fund's growth
fund peer group for the one-year and Life of Fund periods ended Sept. 30, 1997,
were 33.52 percent and 23.03 percent, respectively.
Investments in smaller companies may experience greater volatility.
<PAGE>
FUND HIGHLIGHTS
As of Sept. 30, 1997
Average Annual Total Returns
Life
One-Year of Fund*
YOUNG INVESTOR FUND 26.37% 30.20%
S&P 500 40.43 27.26
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.
* April 29, 1994, through Sept. 30, 1997
Fund Data
Investment Objective:
Seeks to achieve long-term capital appreciation by investing in a portfolio
primarily made up of common stocks and other equity-type securities that we
believe have long-term appreciation potential. The Fund also has an educational
objective to teach investors about basic economic principles and personal
finance through a variety of educational materials prepared and paid for by the
Fund.
Fund Inception: April 29, 1994
Total Net Assets: $475.5 million
Balloon text with arrow pointing to Consumer Cyclical: Cyclical stocks are the
stocks of companies whose earnings rise and fall with the business cycle. For
example, The portfolio's investment in Volvo (1.3 percent of total net assets),
an automobile manufacturer, is a typical investment during a stable or improving
economy because individuals tend to purchase new cars when economic conditions
are favorable.
<PAGE>
<TABLE>
<CAPTION>
Economic Sector Breakdown
Portfolio S&P 500
<S> <C> <C>
Technology 27% 16%
Consumer Cyclical 19 13
Consumer Noncyclical 18 22
Financial 17 16
Industrial 10 10
Utilities 5 8
Basic Materials 2 5
Energy 2 10
---- ----
Total 100% 100%
==== ====
</TABLE>
Comparison of change in value of $10,000 investment
Line chart:
Young Investor Fund S&P 500
4/30/94 10,000 10,000
6/30/94 9,700 9,915
9/30/94 10,240 10,398
12/31/94 10,739 10,397
3/31/95 11,414 11,408
6/30/95 12,723 12,496
9/30/95 14,395 13,488
12/31/95 15,011 14,229
3/31/96 16,466 15,067
6/30/96 18,779 15,742
9/30/96 19,511 16,229
12/31/96 20,278 17,580
3/31/97 19,292 18,053
6/30/97 22,761 21,202
9/30/97 24,657 22,789
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. The S&P
500 is not available for direct investment. Total return performance includes
changes in share price and reinvestment of income and capital gains
distributions.
<PAGE>
<TABLE>
SR&F GROWTH INVESTOR PORTFOLIO
Investments as of September 30, 1997
(Dollar amounts in thousands)
<CAPTION>
Number Market
EQUITY-RELATED SECURITIES (95.4%) of Shares Value
<S> <C> <C>
Common Stocks (93.9%)
Automobiles/Vehicles (1.3%)
Volvo AB ADRs
(Manufactures cars, trucks, buses, marine engines
and aerospace equipment) 210,000 $ 5,959
Banks (4.8%)
Citicorp
(Provides a broad range of financial services) 55,000 7,367
Texas Regional Bancshares, Class A
(Commercial bank operating in the Rio Grande
Valley of Texas) 272,500 8,516
Wells Fargo & Co.
(Provides a broad array of financial products
and services) 25,000 6,875
------
22,758
Commercial Services (3.5%)
*ABR Information Services, Inc.
(Provides benefits administration, compliance and
information services to employers) 200,000 5,525
Paychex, Inc.
(Provides computerized payroll accounting services
to businesses) 200,000 6,975
*Sykes Enterprises, Inc.
(Provides information technology outsourcing services,
including support services and development services
and solutions) 150,000 4,013
------
16,513
Computer Software and Services (8.8%)
*Altera Corporation
(Designs, develops and markets programmable logic
integrated circuits and computer engineering
development software and hardware) 150,000 7,687
*Cisco Systems Inc.
(Produces, markets and supports multiprotocol
internetworking systems) 110,000 8,037
Comdisco, Inc.
(Technology service company that provides solutions
that help organizations reduce technology
cost and risk) 150,000 4,884
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Computer Software and Services (Continued)
*J.D. Edwards & Company
(Develops, markets and supports software
solutions) 70,500 $ 2,362
*MAXIMUS, Inc.
(Provides program management and consulting
services) 150,000 4,341
*Microsoft Corporation
(Manufactures software products) 60,000 7,939
*Sterling Commerce Inc.
(Global provider of electronic commerce software
products and network services) 190,000 6,828
------
42,078
Consumer Products (5.5%)
*CUC International Inc.
(Consumer marketing company) 300,000 9,300
General Electric Company
(Appliances, broadcasting, communications
and transportation) 100,000 6,806
The Gillette Company
(Shaving and personal care products) 50,000 4,316
The Procter & Gamble Company
(Produces personal care products, pharmaceuticals,
food and beverages) 86,000 5,939
------
26,361
Data Processing (3.0%)
First Data Corporation
(Provides information processing and related 160,000 6,010
services)
*Transaction Systems Architects, Inc.
(Develops, markets and supports a broad line of
software products and services) 200,000 8,125
------
14,135
Distribution - Retail (4.9%)
Mattel, Inc.
(Designs, manufactures and markets children's 275,000 9,109
toys)
Sears, Roebuck & Co.
(Retailer of apparel, home and automotive products
and services) 140,000 7,971
Walgreen Company
(Large retail drugstore chain) 250,000 6,406
------
23,486
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Educational Services (2.3%)
*Apollo Group Inc., Class A
(Provides higher education programs for
working adults) 155,000 $ 6,568
*Children's Comprehensive Services
(Provides services for at-risk youth) 200,000 4,300
------
10,868
Electrical Equipment (4.4%)
Intel Corp.
(Produces and sells microcomputer components
and related products) 106,000 9,785
*Micron Technology, Inc.
(Manufacturer and marketer of semiconductor memory
and enhancement products for workstations and
personal computers) 100,000 3,469
Motorola, Inc.
(Producer of electronic and telecommunications
equipment) 110,000 7,906
------
21,160
Entertainment (2.7%)
Cedar Fair L.P.
(Owns and operates four amusement theme parks) 140,000 6,685
Disney (Walt) Company
(Operates theme parks and resorts and produces
motion pictures) 75,000 6,047
------
12,732
Financial Institutions (5.2%)
Federal Home Loan Mortgage Corp.
(Purchases mortgages from lenders and resells in
pools or packages) 200,000 7,050
Federal National Mortgage Association
(Purchases mortgages and issues guaranteed
mortgage-backed securities) 180,000 8,460
Household International Inc.
(Provides financial and banking services) 80,000 9,055
------
24,565
Balloon text: Common stock can be separated into more than one class, such as
Class A and Class B. Class A shares typically have more voting power and are
among the first investors paid when a dividend is declared.
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Financial Services (1.7%)
American Express Company
(Provides a variety of diversified travel and
financial services) 100,000 $ 8,187
Food & Beverage (4.6%)
The Coca-Cola Company
(Producer and distributor of soft drink products) 110,000 6,703
Quaker Oats Company
(An international marketer of foods & beverages) 125,000 6,297
Wrigley (Wm.) Jr. Company
(Chewing gum manufacturer) 120,000 9,038
------
22,038
Health Care (1.5%)
Johnson & Johnson
(Manufactures and markets a broad range of
health care and other products) 120,000 6,915
Insurance (3.3%)
CMAC Investment Corp.
(Provides private mortgage insurance coverage) 135,000 7,239
MGIC Investment Corp.
(Provides private mortgage insurance coverage) 150,000 8,597
------
15,836
Leisure Products (1.7%)
Callaway Golf Company
(Produces and markets golf clubs) 235,000 8,196
Machinery (2.3%)
*Applied Materials Inc.
(Supplies wafer fabrication systems and services to
the global semiconductor industry) 50,000 4,762
*Thermo Electron Corporation
(Manufactures and sells environmental monitoring
and analysis instruments, papermaking and
recycling equipment) 150,000 6,000
------
10,762
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Medical/Pharmaceutical (1.9%)
*Columbia Laboratories, Inc.
(Develops and markets pharmaceutical
over-the-counter drugs) 200,000 $ 3,700
*Forest Laboratories Inc.
(Develops, manufactures and sells both branded and
generic forms of ethical drug products) 125,000 5,266
------
8,966
Medical - Instruments (4.5%)
*Boston Scientific Corp.
(Develops, produces and markets medical devices) 110,000 6,071
Guidant Corporation
(Designs, develops and manufactures
cardiovascular products) 140,000 7,840
Medtronic Inc.
(Manufactures various cardiovascular medical
instruments) 160,000 7,520
------
21,431
Oil - Exploration and Production (3.6%)
Amoco Corporation
(Worldwide integrated petroleum and chemical
company) 75,000 7,228
*EVI, Inc.
(Manufactures engineered oilfield products) 100,000 6,400
*Falcon Drilling Company, Inc.
(Provides drilling & workover services for the
domestic and international oil and gas industry) 100,000 3,531
------
17,159
Packaging (1.5%)
Crown Cork & Seal Inc
(Supplies packaging products to consumer marketing
companies) 150,000 6,919
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Publishing, Broadcasting and Media (6.4%)
*Clear Channel Communications Inc.
(Owns, operates and manages radio and
television stations) 110,000 $ 7,136
*Heftel Broadcasting Corp., Class A
(Spanish language radio broadcasting company) 100,000 7,575
*Outdoor Systems Inc.
(Outdoor advertising company) 295,000 7,744
*Telemundo Group Inc., Class A
(Develops and produces Spanish
language television programming and advertising) 225,000 7,875
------
30,330
Restaurant/Hotel (1.5%)
McDonald's Corporation
(Develops, licenses, leases and services a
worldwide system of restaurants) 150,000 7,144
Specialty Chemicals (1.6%)
Minerals Technologies Inc.
(Develops, produces and markets specialty minerals,
mineral-based and synthetic mineral products) 175,000 7,798
Telecommunications (9.7%)
*Associated Group Inc., Class A
(Wireless cable company) 120,000 8,460
AT&T Corporation
(Provides communication services and products) 200,000 8,862
GTE Corporation
(Telecommunications company) 140,000 6,352
*Loral Space & Communications
(High technology company concentrated on
satellite manufacturing and satellite-
based communication services) 300,000 6,188
Lucent Technologies Inc.
(Produces public and private networks, communication
systems and software) 95,000 7,731
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Telecommunications (Continued)
*Tellabs Inc.
(Designs, assembles, markets and services
voice and data networking products) 130,000 $ 6,695
*Westell Technologies, Inc.
(Develops and manufactures telecommunications
products) 75,000 1,664
------
45,952
Travel Services (1.7%)
*Sabre Group Holdings Inc.
(Provider of a travel reservation system) 225,000 8,058
-------
TOTAL COMMON STOCKS
(Cost $346,641) 446,306
PREFERRED STOCK (1.5%)
Nokia Corp. ADSs
(International electronics group)
(Cost $4,111) 80,000 7,505
-------
TOTAL EQUITY-RELATED SECURITIES
(Cost $350,752) 453,811
-------
Balloon text:
A preferred stock is a class of stock that pays dividends at a specified rate.
Preferred shares also differ from "common" shares in that they are first in line
when it comes to receiving dividends.
<PAGE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
SHORT-TERM OBLIGATION (3.1%)
Commercial Paper
Associates Corp. of North America 6.400% 10/01/97
(Cost $14,525) $14,525 $ 14,525
--------
TOTAL INVESTMENTS (98.5%)
(Cost $365,277) 468,336
OTHER ASSETS, LESS LIABILITIES (1.5%) 7,204
--------
TOTAL NET ASSETS (100%) $475,540
========
* Non-income producing
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
BALANCE SHEET
September 30, 1997
(All amounts in thousands, except per-share amount)
<CAPTION>
<S> <C>
Assets
Investment in SR&F Growth Investor Portfolio, at value $475,423
Receivable for fund shares sold 690
Cash 50
Other assets 24
--------
Total Assets $476,187
========
Liabilities
Payable for fund shares redeemed $ 221
Payable to investment adviser and transfer agent 230
Other liabilities 230
--------
Total Liabilities 681
--------
Capital
Paid-in capital 365,322
Net unrealized appreciation of investments 103,035
Accumulated undistributed net investment income --
Accumulated net realized gains on investments 7,149
--------
Total Capital (Net Assets) 475,506
--------
Total Liabilities and Capital $476,187
========
Shares Outstanding
(Unlimited Number Authorized) 20,899
========
Net Asset Value (Capital) Per Share $ 22.75
========
See accompanying notes to financial statements.
Balloon text: Young Investor Fund invests its assets directly into the SR&F
Growth Investor Portfolio, a "master fund" with a similar investment objective.
Through this kind of structure, the "master fund" is offered through other
sources, such as stock brokers and banks, allowing more people to enjoy the
benefits of investing in Young Investor Fund.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENT OF OPERATIONS
For the Year Ended September 30, 1997
(All amounts in thousands)
<CAPTION>
<S> <C>
Investment Income
Dividends $ 534
Dividends allocated from SR&F Growth
Investor Portfolio 2,018
Interest 538
Interest allocated from SR&F Growth Investor Portfolio 1,233
--------
Total Investment Income 4,323
--------
Expenses
Expenses allocated from SR&F Growth
Investor Portfolio 1,658
Printing and postage 1,025
Transfer agent fees 765
Administrative fee 695
Management fees 502
SEC and state registration fees 54
Accounting fees 32
Audit and legal fees 19
Custodian fees 12
Trustees' fees 12
Other 404
--------
5,178
Reimbursement of expenses by investment adviser (197)
--------
Total Expenses 4,981
--------
Net Investment Loss (658)
--------
Realized and Unrealized Gains on Investments
Net realized gains on investments 1,689
Net realized gains on investments allocated from
SR&F Growth Investor Portfolio 5,468
Net change in unrealized appreciation or depreciation
of investments 80,440
--------
Net Gains on Investments 87,597
--------
Net Increase in Net Assets Resulting from Operations $ 86,939
========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 1996 and 1997
(All amounts in thousands)
<CAPTION>
1996 1997
<S> <C> <C>
Operations
Net investment income (loss) $ 241 $ (658)
Net realized gains on investments 8,332 7,157
Net change in unrealized appreciation or
depreciation of investments 17,075 80,440
--------- ---------
Net Increase in Net Assets
Resulting from Operations 25,648 86,939
--------- ---------
Distributions To Shareholders
Dividends from net investment income (125) (250)
Capital gain distributions (1,383) (8,295)
--------- ---------
Total Distributions to Shareholders (1,508) (8,545)
--------- ---------
Share Transactions
Subscriptions to fund shares 139,130 391,442
Investment income dividends reinvested 108 236
Capital gain distributions reinvested 1,368 7,855
Redemptions of fund shares (17,058) (181,510)
--------- ---------
Net Increase from Share Transactions 123,548 218,023
--------- ---------
Net Increase in Net Assets 147,688 296,417
Total Net Assets
Beginning of Period 31,401 179,089
--------- ---------
End of Period $ 179,089 $ 475,506
========= =========
Accumulated Undistributed Net Investment
Income (Loss) at End of Period $ 136 $ --
========= =========
Analysis of Changes in Shares of Beneficial Interest
Subscriptions to fund shares 8,324 20,131
Investment income dividends reinvested 8 13
Capital gain distributions reinvested 97 433
Redemption of fund shares (1,017) (9,287)
--------- ---------
Net increase in fund shares 7,412 11,290
Shares outstanding at beginning of year 2,197 9,609
--------- ---------
Shares outstanding at end of period 9,609 20,899
========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SR&F GROWTH INVESTOR PORTFOLIO
BALANCE SHEET
September 30, 1997
(All amounts in thousands)
<CAPTION>
<S> <C>
Assets
Investments, at market value $468,336
Receivable for investments sold 10,030
Dividends receivable 337
Cash 5
Other assets 4
--------
Total Assets 478,712
--------
Liabilities
Payable for investments purchased 2,905
Payable to investment adviser 248
Other liabilities 19
--------
Total Liabilities 3,172
--------
Net Assets Applicable to Investors' Beneficial Interest $475,540
========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF OPERATIONS
For the Period Ended September 30, 1997 (a)
(All amounts in thousands)
<CAPTION>
<S> <C>
Investment Income
Dividend Income $ 2,019
Interest income 1,233
-------
Total Investment Income 3,252
-------
Expenses
Management fees 1,568
Accounting fees 22
Custodian fees 21
Trustees' fees 17
Audit and legal fees 15
Other 16
-------
Total Expenses 1,659
-------
Net Investment Income 1,593
-------
Realized and Unrealized Gains on Investments
Net realized gains on investments 5,460
Net change in unrealized appreciation or
depreciation of investments 61,740
-------
Net Gains on Investments 67,200
-------
Net Increase in Net Assets Resulting from Operations $68,793
=======
<FN>
(a) From commencement of operations on February 3, 1997.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended September 30, 1997 (a)
(All amounts in thousands)
<CAPTION>
<S> <C>
Operations
Net investment income $ 1,593
Net realized gains on investments 5,460
Net change in unrealized appreciation or
depreciation of investments 61,740
---------
Net Increase in Net Assets Resulting
from Operations 68,793
---------
Transactions in Investors' Beneficial Interest
Contributions 452,937
Withdrawals (46,190)
---------
Net Increase from Transactions
in Investors' Beneficial Interest 406,747
---------
Net Increase in Net Assets 475,540
---------
Total Net Assets
Beginning of Period --
---------
End of Period $ 475,540
=========
<FN>
(a) From commencement of operations on February 3, 1997.
</FN>
Balloon text: By investing all of its assets into Growth Investor Portfolio, the
Fund is investing in the investment objective desired by its investors. Because
the Fund is investing for its investors, this is called investor's beneficial
interest, or "beneficial" owners.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION OF THE SR&F GROWTH INVESTOR PORTFOLIO
The SR&F Growth Investor Portfolio (the "Portfolio") is a separate
series of the SR&F Base Trust, a Massachusetts common trust organized
under an Agreement and Declaration of Trust dated August 23, 1993. The
Declaration of Trust permits the Trustees to issue nontransferable
interests in the Portfolio. The Portfolio commenced operations February
3, 1997. At commencement, the Stein Roe Young Investor Fund contributed
$292,104 in securities and other assets. At February 14, 1997, Stein
Roe Advisor Young Investor Fund contributed cash of $100.
The Portfolio allocates net asset value, income and expenses based on
respective percentage ownership of each investor on a daily basis. At September
30, 1997, Stein Roe Young Investor Fund and Stein Roe Advisor Young Investor
Fund owned 99.98 percent and .02 percent, respectively.
NOTE 2. 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) and the Portfolio. 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 September 30, 1997, 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 Portfolio are valued by a method that the Board of
Trustees believes represents a fair value.
<PAGE>
FEDERAL INCOME TAXES
No provision is made for federal income taxes since (a) the Fund elects
to be taxed as a "regulated investment company" and make distributions
to its shareholders to be relieved of all federal income taxes under
provisions of current federal tax law; and (b) the Portfolio is treated
as a partnership for federal income tax purposes and all of its income
is allocated to its owners based on respective percentages of
ownership.
Balloon text: As a regulated investment company, Young Investor Fund can pass
capital gains, dividends and interest earned on fund investments directly to the
shareholders before these earnings are taxed. This saves shareholders from
having to pay taxes twice, once through the Fund at year end, and again on an
individual level, as a mutual fund investor is required to pay taxes on his or
her investment.
DISTRIBUTION TO SHAREHOLDERS
The Fund declares and pays dividends of any net investment income and net
realized capital gains annually, which are recorded on the ex-dividend date.
Dividends are determined in accordance with income tax principles, which may
treat certain transactions differently from generally accepted accounting
principles. Distributions in excess of tax basis earnings are reported in the
financial statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings that
result in temporary overdistributions are classified as distributions in excess
of net investment income or net realized gains. Permanent differences are
reclassified to the appropriate capital account.
OTHER INFORMATION
Dividend income is recognized on the ex-dividend date and interest income is
recognized on an accrual basis.
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.
<PAGE>
NOTE 3. TRUSTEES' FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio pays a monthly management fee and the Fund pays a monthly
administrative fee to Stein Roe & Farnham Incorporated (the "Adviser"), an
indirect, majority-owned subsidiary of Liberty Mutual Insurance Company, for its
services as investment adviser and manager.
The management fee for the Portfolio is computed at an annual rate of .60
of 1 percent of average daily net assets up to $500 million, .55 of 1 percent
of the next $500 million, and .50 of 1 percent thereafter. The administrative
fee for the Fund is computed at an annual rate of .20 of 1 percent of average
daily net assets up to $500 million, .15 of 1 percent of the next $500 million,
and .125 of 1 percent thereafter.
The 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, 1997, the Adviser agreed to
reimburse the Fund to the extent that its expenses exceed 1.50 percent of annual
average net assets. The expense limitation expires January 31, 1998, subject to
earlier termination by the Adviser on 30 days' notice. Prior to February 1,
1997, the Adviser limited expenses to 1.25 percent of annual average net assets.
At September 30, 1997, Keyport Life Insurance Company, an indirect,
majority-owned subsidiary of Liberty Mutual Insurance Company, owned shares of
the Fund with a net asset value of $9,864.
The transfer agent fees are paid to SteinRoe Services Inc. (SSI), an
indirect, majority-owned subsidiary of Liberty Mutual Insurance Company. SSI has
entered into an agreement with Colonial Investors Service Center, Inc., an
indirect, majority-owned subsidiary of Liberty Mutual Insurance Company, to act
as subtransfer agent for the Fund.
The Adviser also provides certain accounting services. For the period ended
September 30, 1997, the Fund and Portfolio incurred charges of $32 and $22,
respectively.
Certain officers and trustees of the Trust are also officers of the Adviser.
The compensation of trustees not affiliated with the Adviser for the Fund and
the Portfolio for the period ended September 30, 1997, was $12 and $17,
respectively. No remuneration was paid to any other trustee or officer of the
Trust.
<PAGE>
NOTE 4. SHORT-TERM DEBT
To facilitate portfolio liquidity, the Fund and Portfolio maintain borrowing
arrangements under which they can borrow against portfolio securities. Neither
the Fund nor the Portfolio had borrowings during the period ended September 30,
1997.
NOTE 5. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales other than short-term
obligations for the period ended September 30, 1997, were:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
<S> <C> <C>
Young Investor Fund $148,447 $ 44,691
Growth Investor Portfolio 243,226 138,724
</TABLE>
At Sept. 30, 1997, the cost of investments in the Portfolio for federal
income tax purposes and for financial reporting were $365,056 and $365,277,
respectively. Unrealized appreciation and depreciation on a tax basis were
$105,821 and $2,541, respectively.
<TABLE>
SR&F GROWTH INVESTOR PORTFOLIO
FINANCIAL HIGHLIGHTS
<CAPTION>
Period
Ended
September 30,
1997 (a)
--------
<S> <C>
Ratios to Average Net Assets
Ratio of net investment income to average net assets............ 0.61%*
Ratio of net expenses to average net assets..................... 0.63%*
Portfolio turnover rate......................................... 38%
Average commissions (per share).................................$0.0583
<FN>
* Annualized
(a) From commencement of operations on February 3, 1997.
</FN>
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
FINANCIAL HIGHLIGHTS
Selected per-share data (for a share outstanding throughout the period), ratios
and supplemental data.
<CAPTION>
Period
Ended
September 30, Years Ended September 30,
1994 (a) 1995 1996 1997
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $10.00 $ 10.24 $ 14.29 $ 18.64
------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).............................. 0.03 0.06 0.05 (0.03)
Net realized and unrealized gains on investments.......... 0.21 4.07 4.86 4.78
------- -------- -------- --------
Total from investment operations........................ 0.24 4.13 4.91 4.75
------- -------- -------- --------
DISTRIBUTIONS
Net investment income........................................ -- (0.08) (0.05) (0.02)
Net realized capital gains................................... -- -- (0.51) (0.62)
------- -------- -------- --------
Total distributions........................................ -- (0.08) (0.56) (0.64)
------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD............................... $10.24 $ 14.29 $ 18.64 $ 22.75
======= ======== ======== ========
Ratio of net expenses to average net assets (b).............. 0.99%* 0.99% 1.21% 1.43%
Ratio of net investment income to average net assets (c)..... 1.07%* 0.47% 0.30% (0.19%)
Portfolio turnover rate...................................... 12% 55% 98% 22% (d)
Average commissions (per share).............................. $ -- $ -- $0.0603 $0.0565 (d)
Total return................................................. 2.40% 40.58% 35.55% 26.37%
Net assets, end of period.................................... $8,176 $31,401 $179,089 $475,506
<FN>
* Annualized
(a) From commencement of 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 investment adviser, this ratio would have been 4.58 percent
for the period ended September 30, 1994, 2.87 percent, 2.04 percent and 1.49
percent for the years ended September 30, 1995, 1996, and 1997, respectively.
(c) Computed giving effect to the investment adviser's expense limitation
undertaking.
(d) Prior to commencement of operations of the Portfolio (See Note 1 to
Financial Statements).
</FN>
Ballon text with arrow pointing to net realized capital gains: Net Realized
Capital Gains is the amount of money the fund earned, based on profits from the
sale of securities within the portfolio, that gets passed along to the
shareholders on a per-share basis.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of:
Stein Roe Young Investor Fund
SR&F Growth Investor Portfolio
We have audited the accompanying balance sheet of the Stein Roe Young Investor
Fund and the accompanying balance sheet, including the schedule of investments,
of the SR&F Growth Investor Portfolio as of September 30, 1997, and the related
statements of operations, changes in net assets and the financial highlights for
the periods indicated thereon. These financial statements and financial
highlights are the responsibility of the Fund's and Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures for the SR&F Growth Investor Portfolio included
confirmation of securities owned as of September 30, 1997, by correspondence
with the custodian and brokers. As to securities purchased but not received, we
requested confirmation from brokers and, when replies were not received, we
carried out alternative auditing procedures. An audit also includes assessing
the estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly the
financial position of the Stein Roe Young Investor Fund and the SR&F Growth
Investor Portfolio at September 30, 1997, the results of their operations, the
changes in their net assets and their financial highlights for the periods
indicated thereon, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
November 7, 1997
Balloon text: Independent public account-ants who are not employees of Stein Roe
audit the infor mation in the annual report to ensure that the financial
statements are free of material errors. This letter tells you that they have
performed their audit.
<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 9 a.m. to 2 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 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. For information on IRA plans, call us toll free at 800-338-2550.
BY MAIL OR E-MAIL
If you prefer to contact us by mail, please address all correspondence
to: P.O. Box 8900, Boston, MA 02205-8900. To contact us by e-mail,
send correspondence directly to [email protected] or visit us at
www.steinroe.com on the Internet.
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 information 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.
Douglas A. Hacker
Senior Vice President and Chief Financial Officer, United Airlines
Janet Langford Kelly
Senior Vice President, Secretary and General Counsel, Sara Lee Corporation
Francis W. Morley
Chairman, Employer Plan Administrators and Consultants Co.
Charles R. Nelson
Van Voorhis Professor of Political Economy, University of Washington
Thomas C. Theobald
Managing Partner, William Blair Capital Partners
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
Balloon text with arrow pointing to transfer agent:
A transfer agent maintains records of mutual fund share owners, keeping track of
when shares are purchased and redeemed. A transfer agent also can provide
answers to questions shareholders may have about their mutual fund accounts.
SteinRoe Services, Inc. is the transfer agent for Growth Investor Portfolio and
Young Investor Fund.
<PAGE>
STEIN ROE INVESTMENT TRUST
OFFICERS
Timothy K. Armour, President
William D. Andrews, Executive Vice President
Jilaine H. Bauer, Executive Vice President, Secretary
Thomas W. Butch, Executive Vice President
Loren A. Hansen, 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
Daniel K. Cantor, Vice President
Philip J. Crosley, Vice President
Erik P. Gustafson, Vice President
David P. Harris, Vice President
Harvey B. Hirschhorn, Vice President
Eric S. Maddix, Vice President
Lynn C. Maddox, Vice President
Anne E. Marcel, Vice President
John S. McLandsborough, Vice President
Arthur J. McQueen, Vice President
Nicolette D. Parrish, Vice President, Assistant Secretary
Richard B. Peterson, Vice President
M. Gerard Sandel, Vice President
Gloria J. Santella, Vice President
Heidi J. Walter, Vice President
Stacy H. Winick, Vice President
Sharon R. Robertson, Controller
Scott E. Volk, Treasurer
Margaret O. Zwick, Assistant Treasurer
Janet B. Rysz, Assistant Secretary
<PAGE>
THE STEIN ROE MUTUAL FUNDS
Stein Roe Cash Reserves Fund
Stein Roe Intermediate Bond Fund
Stein Roe Income Fund
Stein Roe High Yield 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 Young Investor Fund
Stein Roe Growth Opportunities Fund
Stein Roe Special Fund
Stein Roe Special Venture Fund
Stein Roe Capital Opportunities Fund
Stein Roe International Fund
Stein Roe Emerging Markets Fund
Stein Roe Mutual Funds
P.O. Box 8900
Boston, Massachusetts 02205-8900
1-800-338-2550
www.steinroe.com
In Chicago, visit our Fund Center at One South Wacker Drive, 32nd Floor
Liberty Securities Corporation, Distributor
Member SIPC
Effective Jan. 1, 1998, the Funds will be distributed by
Liberty Financial Investments, Inc.
Member SIPC
YI11A 11/97
