STEIN ROE MUTUAL FUNDS
SEMIANNUAL REPORT
March 31, 1997
Photo of: small girl
STEIN ROE EQUITY FUND
YOUNG INVESTOR FUND
STEIN ROE MUTUAL FUNDS
- ----------------------
Building Wealth for Generations
<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
General Information.............................................. 34
A guide to products and services
Must be accompanied or preceded by a prospectus.
<PAGE>
TO OUR SHAREHOLDERS
DEAR INVESTOR,
Last year, we sponsored an essay contest in which we asked young people to share
with us the most important lessons they had learned about investing. The
response was overwhelming. We received more than 1,200 entries from all across
the country.
From the replies we received, it was obvious that many of you are well
versed in the benefits of investing. But, more importantly, we were pleased to
learn that many of you also are well aware of the risks involved. That's
important to us because we believe the better informed investors are about the
risks -- as well as the benefits -- of investing, the more successful they'll be
in the long run.
We realize it's not much fun to think about investment risk. But we think
the current bull market -- one of the longest and strongest in history -- may
have created unusually high expectations among investors. Many have never
experienced a major correction, let alone a bear market. As a result, some
investors now take double-digit returns for granted. But the fact is the market
can't continue to go up in a straight line forever. With that in mind, we would
like to take this opportunity to remind investors -- both young and old -- that
the market goes both up and down. Sooner or later, the market will experience a
correction.
<PAGE>
We don't mean to worry you. We simply think it's important that investors
are prepared for an occasional downturn, and that they maintain realistic
expectations. Technically speaking, an ordinary selloff turns into a bear market
when stock prices fall by 20 percent or more. Since the early 1930s, investors
have seen a zoo-full of bear markets -- 12 in all.* Some bear markets have
preceded recessions; others were triggered by sky-high inflation. The most
recent bear market occurred in mid-1990. It drove stock prices down 20 percent,
but lasted just three months!
The most important thing to remember is that, despite occasional downturns,
stocks historically have been among the best investments to help achieve your
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>
So if the market's recent fluctuations have made you a little nervous, we
believe you should keep things in perspective. As many of our young investors
reminded us in their essays, a long-term perspective is one of the most
important parts of a successful investing program.
Sincerely,
/s/ Timothy K. Armour
Timothy K. Armour
President, Stein Roe Mutual Funds
April 20, 1997
* Bear market information provided by Standard & Poor's Statistical Service.
Photo of: Timothy K. Armour, President
When the stock market goes through a period of rising prices, it is called a
bull market. People who are optimistic and expect the market to go up are
sometimes called "bulls." Bulls represent a rising market because the animal,
the bull, tosses its head and horns up in the air when it attacks.
When stock prices fall, it is called a bear market. "Bears" are pessimistic
people who expect the market to go down. The animal, the bear, is said to
symbolize a falling market because it paws downward when it attacks.
<PAGE>
THE COMPANIES WE INVEST IN
Believe it or not, the most important marketplace in the world is not a
department store or a grocery store. It's the financial market -- or the
exchanges where people buy and sell securities. Today, there are more than 140
of these marketplaces in major cities throughout the world. Without them, the
entire global economic system would slow to a standstill. Governments would be
unable to issue bonds to pay their bills and corporations would have problems
raising cash to run their businesses.
In the United States, there are two principal stock exchanges, both located
in New York City -- the New York Stock Exchange (NYSE), also known as the Big
Board, and the American Stock Exchange, or AMEX. Although the NYSE is now the
world's most prestigious stock exchange, it had very humble beginnings. It was
created in 1792, when 24 merchants joined forces to buy and sell stock under a
buttonwood tree. The exchange moved indoors in 1793, and to its present site --
Wall Street -- in 1863.
At first people resisted buying stocks. They thought they would lose all
their money. But that soon changed and, in 1886, the NYSE celebrated its first
"million-share" day. Today, it's not uncommon for a million shares to trade
within the first five minutes after the opening bell! The people who make these
trades are called "specialists." You may have seen them in action on television,
running around a large trading floor and waving their hands. Basically, their
job is to sell stock to the highest bidder and purchase it for the lowest
offered price.
Another large stock market is called Nasdaq, which stands for the National
Association of Securities Dealers Automated Quotation System. Unlike the NYSE or
AMEX, Nasdaq has no trading floor. Instead, Nasdaq "market makers" sit at
computer terminals in offices around the country, matching buyers with sellers
and executing trades through the Nasdaq computer network. When Nasdaq was
founded 26 years ago, it was primarily a trading place for small companies.
Today, however, many established companies are listed on Nasdaq, and the number
of daily transactions often exceeds those made on the NYSE.
<PAGE>
Young Investor 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 as of March 31, 1997.
<TABLE>
<CAPTION>
% of Total
Net Assets
on 3/31/97 Symbol Exchange
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Heftel Broadcasting Corp. 1.9% HBCCA Nasdaq*
- ----------------------------------------------------------------------------------------------
2 Motorola, Inc. 1.8 MOT NYSE**
- ----------------------------------------------------------------------------------------------
3 Mattel, Inc. 1.8 MAT NYSE
- ----------------------------------------------------------------------------------------------
4 The Coca-Cola Company 1.7 KO NYSE
- ----------------------------------------------------------------------------------------------
5 Guidant Corporation 1.7 GDT NYSE
- ----------------------------------------------------------------------------------------------
6 Sears, Roebuck & Co. 1.7 S NYSE
- ----------------------------------------------------------------------------------------------
7 Disney (Walt) Company 1.7 DIS NYSE
- ----------------------------------------------------------------------------------------------
8 McDonald's Corporation 1.7 MCD NYSE
- ----------------------------------------------------------------------------------------------
9 Citicorp 1.6 CCI NYSE
- ----------------------------------------------------------------------------------------------
10 Johnson & Johnson 1.6 JNJ NYSE
- ----------------------------------------------------------------------------------------------
<FN>
* National Association of Securities Dealers Automated Quotation
** New York Stock Exchange
Portfolio holdings are as of March 31, 1997, and are subject to change.
</FN>
</TABLE>
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
Q. HOW HAS THE FUND PERFORMED?
A. Not as well as we would have liked. For the six-month period ended
March 31, 1997, the Fund posted a return of -1.12 percent, which trailed both
the 11.24 percent return of the S&P 500 and the 5.29 percent median return of
its Lipper growth fund peer group. This performance ranked the Fund 674th
out of 803 growth funds for the six-month period. But, over the longer term,
the Fund has continued to outpace its competitors. For the one-year and since
inception periods, the Fund ranked 163rd out of 730 growth funds and 10th
out of 468 growth funds, respectively.
Q. WHAT AFFECTED PERFORMANCE?
A. Beginning early last year, many investors started to worry that
stronger-than-expected economic growth would force the Federal Reserve to
raise interest rates in an attempt to stay a step ahead of inflation.
As you know, it's important that the economy grows. But if the economy
grows too fast, it can spark inflation. When inflation is high, the prices of
things go up and people and companies tend to cut back on how much they
<PAGE>
spend. This makes it harder for companies to sell their products. When this
happens, companies' earnings tend to suffer, which, in turn, can make their
stock prices go down.
Since last summer, investors have flocked to the stocks of
large-capitalization, high-quality companies in search of the safety and
earnings predictability they tend to offer. This clearly benefited many of
the Portfolio's large-cap holdings, such as Coca-Cola, Gillette and Procter
& Gamble (1.7 percent, 1.1 percent and 1.5 percent of total net assets,
respectively). Offsetting this strong performance, however, was the fact
that this same uncertainty caused many investors to shy away from small- and
mid-cap stocks that have less predictable earnings. As a result, the
Portfolio's exposure to smaller-cap holdings, which gave performance a big
boost last year, dampened performance this period, particularly over the
past three months.
<PAGE>
Q. DID THE FEDERAL RESERVE RAISE INTEREST RATES?
A. Yes. In late March, the Federal Reserve finally raised the federal funds
rate -- the rate that commercial banks charge each other for overnight
loans -- by one-quarter percentage point to 5.50 percent. The Federal
Reserve thinks the increase -- which means higher borrowing costs for both
companies and consumers -- will help slow economic growth and reduce
pressures that could trigger inflation and threaten the U.S. economy's
long expansion.
Q. WHAT HAPPENED NEXT?
A. At first, investors let out a huge sigh of relief. After nearly a year of
guessing "will they or won't they," investors finally had their answer. In
response, the markets experienced what is known as a "relief rally." But soon
after, the government released yet another set of stronger-than-expected
economic reports. Investors concluded that if economic growth continued at
its current pace, inflation would indeed pick up and the Federal Reserve
would be forced to raise interest rates again. Remember, as interest rates
go up, it makes it more difficult for companies to take out loans because it
costs more to repay them. As a result, higher interest rates can make it
harder for companies to do business, which can cause stock prices to tumble.
That's exactly what happened, and, by the end of March, even our large-cap
holdings had given back the gains they had made earlier in the period.
<PAGE>
Q. DO YOU THINK THE FEDERAL RESERVE WILL CONTINUE TO RAISE INTEREST RATES? AND,
IF SO, HOW DO YOU THINK INVESTORS WILL REACT?
A. Right now, the market is divided into two camps. The first group expects
the Federal Reserve to raise interest rates at least one more time this
year -- and possibly several times. The other group believes that the most
recent rate hike was an isolated event, and economic growth will slow down
on its own with little, if any, additional help, from the Federal Reserve.
Although we think there could be another rate hike this year, we don't
expect the Federal Reserve to make a series of rate hikes. If the Federal
Reserve does increase interest rates again, we think investors would react
to it much the same way you would react to a spoonful of medicine. That is,
they might shudder as it goes down but, in the end, we think most investors
will accept that it was for their own good. After all, we believe one or two
small rate increases now could help extend the expansion by eliminating the
need for larger -- and possibly recession-producing -- interest rate hikes
in the future.
Q. SO HOW ARE YOU DEALING WITH THE MARKET'S RECENT VOLATILITY?
A. We're long-term investors, so we don't usually concern ourselves with the
market's day-to-day fluctuations or the up-and-down cycles of the economy. Of
course, if a company's stock price falls, we will investigate to see if the
price drop is a sign of a bigger problem. If we don't see any change in the
company's long-term outlook, however, then we usually sit tight. In fact, we
often use these occasional downturns as an opportunity to buy more of a
company's stock.
Unlike some investors, we invest in businesses, not stock prices. We
believe there tends to be a strong relationship between the success of a
<PAGE>
company and the success of its stock. That's why we look for success
stories -- companies that we think can do well, regardless of economic or
market conditions. As long as we think a company has a product or service
that's in demand, capable management and favorable long-term growth
prospects, then we'll stick with it.
Q. WHERE ARE YOU FINDING GOOD INVESTMENT OPPORTUNITIES RIGHT NOW?
A. Although we expect some continued near-term volatility, we think many
small- and mid-cap companies offer exceptional long-term prospects and,
because of the recent selloff, we think many are attractively valued. Within
the small- to mid-cap area of the market, we think some of the best
opportunities can be found in the technology sector. We think companies that
offer products that can either make people's lives easier or businesses more
efficient should do particularly well.
We also think that many of the Portfolio's core large-cap holdings --
particularly classic kids' companies like Disney and Coca-Cola -- could
benefit from the spending habits of the world's rapidly growing young
population. Census figures show that the five- to-19-year-old age group is the
second-fastest-growing segment of the U.S. population and the fastest-growing
segment of many emerging countries like India and China.(1) As a result, we
think companies that can provide the products and services that young people
want or need are positioned to do extremely well in the years to come.
Q. WHAT'S YOUR OUTLOOK?
A. We're not necessarily predicting a bear market, but we think investors would
be wise to brace themselves for some rougher times ahead. Nonetheless, we
remain optimistic about the long-term prospects of the companies we are
<PAGE>
invested in, and we plan to use this period of weakness as an opportunity to
buy the stock of some of our favorite companies at what we think are
bargain prices.
1 Source: U.S. Census Bureau, 1996
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR A LOSS WHEN YOU SELL SHARES.
Portfolio holdings are as of March 31, 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 Young Investor Fund; it is not available for direct
investment. According to Lipper Analytical Services, Inc., an independent
monitor of mutual fund performance, the median returns for all growth funds for
the one-year and Life of Fund periods ended March 31, 1997, were 12.91 percent
and 16.77 percent, respectively.
The Federal Reserve is the central bank of the United States. Created by
Congress in 1913, it is responsible for maintaining a sound banking system and
a healthy economy. Today, the Federal Reserve is composed of 12 regional
banks, each serving a specific part of the country, and the Board of
Governors, which oversees the entire system. To accomplish its mission, the
Federal Reserve acts as a bank for other banks and for the U.S. government. It
also serves as a regulator of financial institutions and as the nation's money
manager, performing many functions that affect the U.S. economy and its
financial system.
A company's capitalization is the total value of all of its outstanding
shares of stock, which are owned by investors like you. Large-cap companies
typically have market capitalizations, or "caps," of $5 billion or more. A
mid-cap company usually has a market value of somewhere between $1 billion
and $5 billion, and a small-cap stock's total market value typically will be
less than $1 billion.
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.
Photo of: David Brady, Erik Gustafson, Art McQueen
<PAGE>
FUND HIGHLIGHTS
as of March 31, 1997
Average Annual Total Returns
- ------------------------------------------------------------------
Life
One-Year of Fund*
--------------------------------
YOUNG INVESTOR FUND 17.17% 25.24%
S&P 500 19.82 22.45
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR A LOSS WHEN YOU SELL SHARES. Total
return performance includes changes in share price and reinvestment of income
and capital gains distributions.
* 4/29/94 through 3/31/97
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
children and teenagers 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: $330.2 MILLION
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 S&P 500 Index.
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. The Index consists of
approximately 400 industrial, 40 financial, 40 utility and 20 transportation
stocks.
<PAGE>
<TABLE>
<CAPTION>
Economic Sector Breakdown
- -------------------------------------------------------------------
Portfolio S&P 500
----------------------------------
<S> <C> <C>
Technology 29% 16%
Consumer Cyclical 25 13
Consumer Noncyclical 22 23
Financial 13 15
Industrial 7 10
Basic Materials 2 5
Utilities 1 8
Energy 1 10
---------------------------------
Total 100% 100%
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
[line chart]
Comparison of change in value of $10,000 investment
- ------------------------------------------------------------------------------
Young
Investor S & P
Fund 500
<S> <C> <C>
4/30/94 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
12/31/95 15012 14300
3/31/96 16466 15068
6/30/96 18780 15743
9/30/96 19512 16229
12/31/96 20279 17581
3/31/97 19294 18054
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR A 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>
<CAPTION>
SR&F GROWTH INVESTOR PORTFOLIO
Investments as of March 31, 1997
(Dollar amounts in thousands)
(Unaudited)
Number Market
EQUITY-RELATED SECURITIES (92.1%) of Shares Value
<S> <C> <C>
Common Stocks (90.7%)
Automobiles/Vehicles (2.7%)
Volvo AB ADRs
(Manufactures cars, trucks, buses, marine engines
and aerospace equipment) 170,000 $ 4,420
Chrysler Corporation
(Manufactures, assembles and sells cars and trucks) 100,000 3,000
*Circuit City Stores - CarMax Group
(Sells retail used cars and light trucks) 100,000 1,500
-------
8,920
Banks (4.6%)
Citicorp
(Provides a broad range of financial services) 50,000 5,413
Texas Regional Bancshares, Class A
(Commercial bank operating in the Rio Grande
Valley of Texas) 150,000 4,875
Wells Fargo & Co.
(Provides a broad array of financial products and
services) 17,000 4,830
-------
15,118
Commercial Services (3.4%)
*ABR Information Services, Inc.
(Provides benefits administration, compliance and
information services to employers) 200,000 3,600
Paychex, Inc.
(Provides computerized payroll accounting services
to businesses) 110,000 4,524
*Sykes Enterprises, Inc.
(Provides information technology outsourcing services,
including support services and development services
and solutions) 100,000 3,263
-------
11,387
Computer Software and Services (5.6%)
*Cisco Systems Inc.
(Produces, markets and supports
multiprotocol internetworking systems) 100,000 4,812
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Computer Software and Services (Continued)
*Fore Systems Inc.
(Produces network management software for data
communications and computer applications) 85,000 $ 1,275
*Microsoft Corporation
(Manufactures software products) 55,000 5,043
*Sterling Commerce Inc.
(Global provider of electronic commerce software
products and network services) 170,000 4,930
*3Com Corporation
(Designs, produces and markets a broad range of
global data networking solutions) 70,000 2,292
-------
18,352
Consumer Products (5.5%)
*CUC International Inc.
(Consumer marketing company) 200,000 4,500
General Electric Company
(Appliances, broadcasting, communications
and transportation) 50,000 4,962
The Gillette Company
(Shaving and personal care products) 50,000 3,631
The Procter & Gamble Company
(Produces personal care products, pharmaceuticals,
food and beverages) 43,000 4,945
-------
18,038
Data Processing (2.8%)
Automatic Data Processing
(Offers a variety of data processing services) 100,000 4,187
First Data Corporation
(Provides information processing and related
services) 150,000 5,081
-------
9,268
Distribution - Retail (8.2%)
*Inacom Corporation
(Markets and distributes information
technology products and services) 175,000 3,981
*Insight Enterprises, Inc.
(Markets microcomputers, peripherals and software) 100,000 2,475
Mattel, Inc
(Designs, manufactures and markets children's toys) 248,314 5,959
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Distribution - Retail (Continued)
*PETsMART Inc.
(Operates pet food and supply stores) 230,000 $ 4,657
Sears, Roebuck & Co.
(Retailer of apparel, home and automotive products
and services) 110,000 5,527
Walgreen Company
(Large retail drugstore chain in the United States) 110,000 4,606
-------
27,205
Educational Services (2.2%)
*Apollo Group Inc., Class A
(Provides higher education programs
for working adults) 180,000 4,410
*Children's Comprehensive Services
(Provides services for at-risk youth) 250,000 2,875
-------
7,285
Electrical Equipment (5.7%)
Hewlett-Packard Co.
(Designs, manufactures and services computers,
calculators, workstations, printers and medical
diagnostic devices) 80,000 4,260
Intel Corp.
(Produces and sells microcomputer
components and related products) 35,000 4,869
Motorola, Inc.
(Producer of electronic and telecommunication
equipment) 100,000 6,037
*Sipex Corporation
(Manufactures, markets and sells analog-integrated
circuits) 128,500 3,759
-------
18,925
Entertainment (2.8%)
Cedar Fair L.P.
(Owns and operates four amusement theme parks) 100,000 3,775
Disney (Walt) Company
(Operates theme parks and resorts and produces
motion pictures) 75,000 5,475
-------
9,250
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Financial Institutions (4.1%)
Federal Home Loan Mortgage Corp. 170,000 $ 4,633
(Purchases mortgages from lenders and resells in pools
or packages)
Federal National Mortgage Association
(Purchases mortgages and issues guaranteed mortgage-
backed securities) 130,000 4,696
Household International Inc.
(Provides financial and banking services) 50,000 4,306
-------
13,635
Financial Services (1.8%)
American Express Company
(Provides a variety of diversified travel and
financial services) 80,000 4,790
*Nationwide Financial Services
(Provides long-term saving and retirement products to
retail and institutional customers) 47,800 1,231
-------
6,021
Food & Beverage (2.9%)
The Coca-Cola Company
(Producer and distributor of soft drink products) 100,000 5,588
Wrigley (Wm.) Jr. Company
(Chewing gum manufacturer) 70,000 4,086
-------
9,674
Health Care (3.0%)
Johnson & Johnson
(Manufactures and markets a broad range of
health care and other products) 100,000 5,288
United Healthcare Corp.
(Owns and manages health maintenance organizations) 100,000 4,763
-------
10,051
Insurance (2.5%)
CMAC Investment Corp.
(Provides private mortgage insurance coverage) 100,000 3,337
MGIC Investment Corp.
(Provides private mortgage insurance coverage) 70,000 4,953
-------
8,290
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Leisure Products (1.1%)
Callaway Golf Company
(Produces and markets golf clubs) 120,000 $ 3,435
Machinery (1.4%)
*Thermo Electron Corporation
(Manufactures and sells environmental monitoring and
analysis instruments, papermaking and recycling
equipment) 150,000 4,631
Medical/Pharmaceutical (4.4%)
Eli Lilly & Co.
(Involved in discovery, development, manufacture
and sale of pharmaceutical products) 60,000 4,935
Merck & Co., Inc.
(Manufactures and produces human and
animal health products and services) 55,000 4,634
SmithKline Beecham Plc ADRs
(Develops, manufactures and
markets pharmaceuticals) 70,000 4,900
-------
14,469
Medical-Instruments (5.4%)
*Boston Scientific Corp.
(Develops, produces and markets
medical devices) 75,000 4,631
Guidant Corporation
(Designs, develops and manufactures
cardiovascular products) 90,000 5,535
*Idexx Laboratories Inc.
(Develops and manufactures
biotechnology-based detection systems
for veterinarians) 200,000 2,800
Medtronic Inc.
(Manufactures various cardiovascular
medical instruments) 80,000 4,980
-------
17,946
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Oil Exploration and Production (0.7%)
*United Meridian Corporation
(Acquires, explores and develops
natural gas and crude oil properties) 80,000 $ 2,410
Office Furnishings (0.2%)
Shelby Williams Industries, Inc.
(Designs, manufactures and distributes
products for the contract furniture market) 50,000 694
Publishing, Broadcasting and Media (6.8%)
*Clear Channel Communications Inc.
(Owns, operates and manages radio and
television stations) 110,000 4,716
*Heftel Broadcasting Corp., Class A
(Spanish language radio broadcasting company) 135,000 6,278
*International Family Entertainment
(Produces and distributes entertainment
programming) 150,000 3,056
*Outdoor Systems Inc.
(Outdoor advertising company) 160,000 4,780
*Telemundo Group Inc., Class A
(Develops and produces Spanish
language television programming and advertising) 125,000 3,578
-------
22,408
Restaurant/Hotel (3.1%)
*HFS Inc.
(Franchiser of hotel chains, real estate and car
rental firms) 80,000 4,710
McDonald's Corporation
(Develops, licenses, leases and services a
worldwide system of restaurants) 115,000 5,434
-------
10,144
Specialty Chemicals (1.5%)
Minerals Technologies Inc.
(Develops, produces and markets specialty minerals,
mineral-based and synthetic mineral products) 150,000 4,988
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Telecommunications (6.0%)
Ascend Communications Inc.
(Produces, markets and services telecommunications
delivery systems) 70,000 $ 2,853
*Associated Group Inc., Class A
(Wireless cable company) 90,000 3,397
*Cascade Communications Corp.
(Designs, develops and maintains a line of multiservice
wide area network switches) 180,000 4,748
Lucent Technologies Inc.
(Produces public and private networks, communication
systems and software) 90,000 4,748
*Tellabs Inc.
(Designs, assembles, markets and services
voice and data networking products) 110,000 3,974
--------
19,720
Travel Services (1.4%)
*Sabre Group Holdings Inc.
(Provider of a travel reservation system) 180,000 4,545
Transportation (0.9%)
*Heartland Express
(Carrier of irregular route motor freight) 150,000 2,850
--------
TOTAL COMMON STOCKS
(Cost $291,213) 299,659
PREFERRED STOCK (1.4%)
Nokia Corp. ADSs
(International electronics group)
(Cost $3,761) 80,000 4,660
--------
TOTAL EQUITY-RELATED SECURITIES
(Cost $294,974) 304,319
--------
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
Principal Market
Amount Value
<S> <C> <C>
SHORT-TERM OBLIGATIONS (9.1%)
Commercial Paper
Price/Costco 7.300% 4/01/97 $10,000 $ 10,000
UBS Finance 6.750% 4/01/97 13,415 13,415
Windmill Funding 5.400% 4/01/97 6,500 6,500
-------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $29,915) 29,915
-------
TOTAL INVESTMENTS (101.2%)
(Cost $324,889) 334,234
OTHER ASSETS, LESS LIABILITIES (-1.2%) (3,917)
-------
TOTAL NET ASSETS (100%) $330,317
=======
See accompanying notes to financial statements.
<FN>
* Non-Income Producing
</FN>
</TABLE>
SmithKline Beecham Plc is a multinational corporation headquartered in the
United Kingdom. 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.
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 such as commercial paper. These are
like short-term loans (between one and 270 days long) to large corporations or
banks. For example, the Fund made a loan to UBS Finance that came due one
day after the date of this report.
<PAGE>
<TABLE>
<CAPTION>
SR&F GROWTH INVESTOR PORTFOLIO
BALANCE SHEET
March 31, 1997
(Amounts in thousands)
(Unaudited)
<S> <C>
- ----------------------------------------
Assets
Investments, at market value $334,234
Dividends receivable 244
Cash 3
--------
Total Assets $334,481
========
- ----------------------------------------
Liabilities
Payable for investments purchased $ 3,984
Payable to investment adviser 178
Other liabilities 2
--------
Total Liabilities 4,164
- -----------------------------------------
Net Assets Applicable to Investor's Beneficial Interest $330,317
========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF OPERATIONS
For The Period Ended March 31, 1997 (a)
(Amounts in thousands)
(Unaudited)
<S> <C>
- ------------------------------------------
Investment Income
Dividend income $ 361
Interest income 318
-------
Total Investment Income 679
-------
- ------------------------------------------
Expenses
Management fees 320
Accounting fees 5
Trustees' fees 4
Audit and legal fees 3
Custodian fees 1
Other 9
-------
Total Expenses 342
-------
Net Investment Income 337
-------
- ------------------------------------------
Realized and Unrealized Gains on Investments
Net realized gains on investments 472
Net change in unrealized appreciation or depreciation
of investments 9,345
-------
Net Gains on Investments 9,817
-------
-------
Net Increase in Net Assets Resulting from Operations $10,154
=======
<FN>
(a) The Portfolio commenced operations on February 3, 1997.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For The Period Ended March 31, 1997 (a)
(Amounts in thousands)
(Unaudited)
<S> <C>
- --------------------------------------------
Operations
Net investment income $ 337
Net realized gains on investments 472
Net change in unrealized appreciation or
depreciation of investments 9,345
---------
Net Increase in Net Assets Resulting
from Operations 10,154
---------
- --------------------------------------------
Transactions in Investors' Beneficial Interest
Contributions 339,630
Withdrawals (19,467)
---------
Net Increase from Transactions
in Investors' Beneficial Interest 320,163
---------
Net Increase in Net Assets 330,317
- --------------------------------------------
Total Net Assets
Beginning of Period --
---------
End of Period $ 330,317
=========
<FN>
(a) The Portfolio commenced operations on February 3, 1997.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
BALANCE SHEET
March 31, 1997
(Amounts in thousands, except per-share amount)
(Unaudited)
<S> <C>
- -------------------------------------
Assets
Investment in SR&F Growth Investor Portfolio, at
market value $ 330,228
Receivable for fund shares sold 1,484
Cash and other assets 217
---------
Total Assets $ 331,839
=========
- -------------------------------------
Liabilities
Payable for fund shares redeemed $ 1,597
Payable to investment adviser and transfer agent 79
---------
Total Liabilities 1,676
---------
- -------------------------------------
Capital
Paid-in capital 318,926
Net unrealized appreciation of
investments and foreign currencies 9,352
Accumulated overdistributed net investment income (271)
Accumulated undistributed net realized gains on
investments and foreign currency transactions 2,156
---------
Total Capital (Net Assets) 330,163
---------
Total Liabilities and Capital $ 332,057
=========
- --------------------------------------
Shares Outstanding (Unlimited Number Authorized) 18,553
=========
Net Asset Value (Capital) Per Share $ 17.80
=========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1997
(All amounts in thousands)
(Unaudited)
<S> <C>
Investment Income
Interest $ 538
Dividends 534
Interest allocated from SR&F Growth
Investor Portfolio 318
Dividends allocated from SR&F
Growth Investor Portfolio 360
--------
Total Investment Income 1,750
--------
- ----------------------
Expenses
Management fees 502
Printing and postage 422
Expenses allocated from SR&F
Growth Investor Portfolio 341
Transfer agent fees 307
Administrative fee 279
SEC and state registration fees 37
Custodian fees 15
Accounting fees 15
Trustees' fees 10
Amortization of organization
expenses 1
Other 197
--------
2,126
Reimbursement of expenses by investment adviser (219)
--------
Total Expenses 1,907
--------
Net Investment Loss (157)
--------
- ----------------------
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 475
Net change in unrealized appreciation or depreciation
of investments (13,243)
--------
Net Losses on Investments (11,079)
--------
- -----------------------
Net Decrease in Net Assets Resulting from Operations $(11,236)
========
See accompanying notes to financial statements.
</TABLE>
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
(Stein Roe) 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.
<PAGE>
<TABLE>
<CAPTION>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENTS OF CHANGES IN NET ASSETS
(All amounts in thousands)
(Unaudited)
Year Six Months
Ended Ended
Sept. 30, March 31,
1996 1997
--------- ---------
<S> <C> <C>
--------------------------------------------
Operations
Net investment income (loss) $ 241 $ (157)
Net realized gains on investments 8,332 2,164
Net change in unrealized appreciation or
depreciation of investments 17,075 (13,243)
--------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Operations 25,648 (11,236)
--------- ---------
- ----------------------------------------------
Distributions To Shareholders
Dividends from net investment income (125) (250)
Capital gains distributions (1,383) (8,295)
--------- ---------
Total Distributions to Shareholders (1,508) (8,545)
--------- ---------
- ----------------------------------------------
Share Transactions
Subscriptions to fund shares 139,130 264,365
Investment income dividends reinvested 108 236
Capital gains distributions reinvested 1,368 7,855
Redemptions of fund shares (17,058) (101,601)
--------- ---------
Net Increase from Share Transactions 123,548 170,855
--------- ---------
Net Increase in Net Assets 147,688 151,074
- ----------------------------------------------
Total Net Assets
Beginning of Period 31,401 179,089
--------- ---------
End of Period $ 179,089 $ 330,163
========= =========
- ----------------------------------------------
Accumulated Undistributed (Overdistributed) Net
Investment Income at End of Period $ 136 $ (271)
========= =========
- ----------------------------------------------
Analysis of Changes in Shares of Beneficial Interest
Subscriptions to fund shares 8,324 13,800
Investment income dividends reinvested 8 13
Capital gains distributions reinvested 97 433
Redemption of fund shares (1,017) (5,302)
--------- ---------
Net increase in fund shares 7,412 8,944
Shares outstanding at beginning of period 2,197 9,609
--------- ---------
Shares outstanding at end of period 9,609 18,553
========= =========
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 on
February 3, 1997. At commencement, Stein Roe Young Investor Fund
contributed $250,786 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 March 31, 1997, Stein Roe Young Investor Fund and Stein Roe Advisor
Young Investor Fund owned 99.97 percent and .03 percent, respectively.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
The following are the significant accounting policies of the Portfolio
and 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 31, 1997. 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
<PAGE>
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 make such
distributions to its shareholders as to be relieved of all federal
income taxes under provisions of current federal tax law.
DISTRIBUTION TO SHAREHOLDERS
Dividends from net investment income and capital gains, if any, are
distributed annually. 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.
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.
A mutual fund's financial statements provide
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 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.
<PAGE>
The administrative fee for the Fund is computed at an annual rate of
.15 of 1 percent of average daily net assets up to $500 million, .125
of 1 percent of the next $500 million, and .10 of 1 percent thereafter.
The 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 March 31, 1997, Keyport Life Insurance Company, an indirect,
majority-owned subsidiary of Liberty Mutual Insurance Company, owned
433,566 shares of the Fund with a net asset value of $7,717.
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 sub-transfer agent for the Fund.
The Adviser also provides certain accounting services. For the
period ended March 31, 1997, the Fund and Portfolio incurred charges of
$15 and $5, respectively.
Certain officers and trustees of the Trusts are also officers of
the Adviser. The compensation of trustees not affiliated with the
Adviser for the Fund and the Portfolio for the period ended March 31,
1997, was $10 and $4, respectively. No remuneration was paid to any
other trustee or officer of the Trusts.
NOTE 4. SHORT-TERM DEBT
- ------------------------
To facilitate portfolio liquidity, the Fund and Portfolio maintain
borrowing arrangements under which it can borrow against portfolio
securities. Neither the Fund nor the Portfolio had borrowings during
the period ended March 31, 1997.
<PAGE>
NOTE 5. INVESTMENT TRANSACTIONS
- --------------------------------
The aggregate cost of purchases and proceeds from sales other than
short-term obligations for the period ended March 31, 1997, were:
FUND PURCHASES SALES
-------- -----
Young Investor Fund $148,447 $44,691
Growth Investor Portfolio 66,668 12,956
At March 31, 1997, the cost of investments for federal income tax
purposes and for financial reporting were $327,797 and $324,889,
respectively. Unrealized appreciation and depreciation on a tax basis
were $28,491 and $22,054, respectively.
SR&F GROWTH INVESTOR PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Period
Ended
March 31,
1997 (a)
--------
<S> <C>
- --------------------------------------
Ratios to Average Net Assets
Ratio of net expenses to average net assets.....................0.64%*
Ratio of net investment income to average net assets............0.63%*
Portfolio turnover rate............................................4%
Average commissions (per share)...............................$0.0575
<FN>
* Annualized
(a) The Portfolio commenced operations on February 3, 1997.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
FINANCIAL HIGHLIGHTS
Selected per-share data (for a share outstanding throughout the period), ratios
and supplemental data.
Period Six Months
Ended Years Ended Ended
Sept. 30, September 30, March 31,
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 (0.01)
Net realized and unrealized gains (losses) on investments....... 0.21 4.07 4.86 (0.19)
------- -------- ---------- ----------
Total from investment operations.............................. 0.24 4.13 4.91 (0.20)
------- -------- ---------- ----------
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 $ 17.80
=========== ============= ============== ============
Ratio of net expenses to average net assets (b).................... 0.99%* 0.99% 1.21% 1.37%*
Ratio of net investment income to average net assets (c)........... 1.07%* 0.47% 0.30% (0.11%)*
Portfolio turnover rate............................................ 12% 55% 98% 22%
Average commissions (per share).................................... $ -- $ -- $ 0.0603 $ 0.0565
Total return....................................................... 2.40% 40.58% 35.55% (1.12%)
Net assets, end of period.......................................... $8,176 $31,401 $179,089 $330,163
<FN>
* 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 investment adviser, this ratio would have
been 4.58 percent for the period ended September 30, 1994, 2.87 percent
and 2.04 percent for the years ended September 30, 1995, and
September 30, 1996, respectively, and 1.52 percent for the six months ended
March 31, 1997.
(c) Computed giving effect to the investment adviser's expense
limitation undertaking.
</FN>
</TABLE>
This number(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.
<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
A custodian holds the stock certificates and other assets of a mutual fund for
safekeeping. State Street Bank and Trust Company of Boston, Massachusetts, is
the custodian for Growth Investor Portfolio and Young Investor Fund.
<PAGE>
OFFICERS
- ------------------------------------------------------------------------------
Timothy K. Armour, President
Jilaine H. Bauer, Executive Vice President, Secretary
Thomas W. Butch, 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
E. Bruce Dunn, 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
Arthur J. McQueen, Vice President
Nicolette D. Parrish, Vice President, Assistant Secretary
Cynthia A. Prah, Vice President
Richard B. Peterson, Vice President
Gloria J. Santella, Vice President
Thomas P. Sorbo, Vice President
Heidi J. Walter, Vice President
Stacy H. Winick, Vice President
Sharon R. Robertson, Controller
Judith E. Perrie, Treasurer
Margaret O. Zwick, Assistant Treasurer
Janet B. Rysz, Assistant Secretary
<PAGE>
THE STEIN ROE FUNDS
Stein Roe Government Reserves Fund
Stein Roe Cash Reserves Fund
Stein Roe Government Income 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 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
http://www.steinroe.com
In Chicago, visit our Fund Center at One South Wacker Drive, 32nd Floor
Liberty Securities Corporation, Distributor
Member SIPC
YI12A 5/97
