STEIN ROE MUTUAL FUNDS
SEMIANNUAL REPORT
MARCH 31, 1998
Photo of: small girl.
STEIN ROE EQUITY FUND
YOUNG INVESTOR FUND
LOGO:
STEIN ROE MUTUAL FUNDS
SENSIBLE RISKS. INTELLIGENT INVESTMENTS.(SM)
<PAGE>
CONTENTS
From the President............................................... 1
Tom Butch'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.................................................. 10
Information about the Fund
Portfolio of Investments......................................... 12
A complete list of investments with market values
Financial Statements............................................. 18
Statements of assets and liabilities, operations and changes
in net assets
Notes to Financial Statements.................................... 24
Financial Highlights............................................. 27
Selected per-share data
General Information.............................................. 30
A guide to products and services
Must be preceded or accompanied by a prospectus.
<PAGE>
TO OUR SHAREHOLDERS
DEAR INVESTOR,
We are pleased to present this semiannual report for the Stein RoeSM Young
InvestorSM Fund. This report covers the six months ended March 31, 1998.
AN UNPRECEDENTED BULL RUN CONTINUES
You probably know that many of the products you use today are made in other
countries. We are linked in many ways to other countries of the world. This is
true in the investment world as well. Sometimes when one of the world's
countries has problems, other countries' stock markets are affected. This
happened last year when countries in Asia suffered from economic problems. Many
of the world's other markets were affected. In our opinion, the U.S. economy's
strength helped our stock markets stay strong and perform better than most of
the world's other stock markets.
The stock market has been on a bull run for quite some time now. In fact,
for the past ten-year period ending March 31, 1998, the S&P 500 Index gained an
average of 18.92 percent per year. Returns like these have never been produced
by the U.S. stock market before. Since no one can predict how the market will
perform, it is possible that this momentum will continue. Then there's always
the possibility the market will begin to act like a bear market rather than a
bull. In fact, experts seem to be divided over these two perspectives.
Eventually, all of us will learn which viewpoint proves to be more
accurate. Meanwhile, we believe it is important that investors focus less on
wagering where the market will go and more on ensuring that their investments
remain appropriate to their investing goals, risk tolerance and time horizon.
YOUR STEIN ROE FUNDS
We are, of course, grateful that you have chosen to invest in Stein Roe
Young Investor Fund. We seek, in this report, to provide you useful and
educational information about your investment in the Fund. I hope you will take
the time to learn from your portfolio managers how they are investing your money
and how they view what went on with the Fund over the past six months.
A REMINDER
We believe that, as an equity investor, it is important that you maintain a
long-term perspective. The turbulence in worldwide markets caused by problems in
Asia during the fourth quarter of 1997 served as a healthy reminder that markets
can swing rapidly and widely. To investors with long-term horizons, short-term
market fluctuations should be the least important consideration about investing,
since market movement has historically evened out in solid growth over time. The
bigger risk, in our view, is the risk of losing sight of long-term investment
goals because of short-term market fluctuations.
So whatever happens with the market, it's your investing perspective that
will lead to your success.
Please call us at 800-338-2550 with your comments and suggestions. As
always, we look forward to serving your investment needs.
Sincerely,
Thomas W. Butch
President
April 30, 1998
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.
The S&P 500 is an unmanaged group of stocks that differs from the composition
of any Stein Roe Fund. It is not available for direct investment.
Balloon Text: 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.
Balloon Text: 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.
Photo of: Thomas W. Butch
<PAGE>
THE COMPANIES WE INVEST IN
Back in the 1920's, cartoons were just a dream in the mind of one man -- Walt
Disney. He had a dream to bring cartoons to "life" through an unheard of process
called animation. Walt Disney soon discovered that he was one man against the
world, and that to convince people of this new idea he would have to work very
hard. His focus, persistence and patience over many years helped him ride out
the ups and downs, or volatility, in his path toward success. And succeed he
did. Walt Disney turned his personal dream into a billion dollar company that
affects the lives of many young people throughout the world. Today the Disney
Company (1.6 percent of total net assets) operates theme parks worldwide and
produces movies and TV shows for kids.
We believe that a long-term perspective is also the key to successful
investing. We encourage investors not to let short-term market volatility
discourage them from pursuing their long-term investment goals.
Our portfolio managers follow the same strategy. When you look at the
Fund's list of holdings you'll see many of the same companies quarter after
quarter. We invest the Fund in companies that we believe will continue to grow;
many of them also affect the lives of young people.
Balloon Text: When something is volatile, that means it tends to go through
extreme and rapid changes. When we say the stock market is volatile, that means
it has the ability to rise or fall sharply within short periods of time.
<PAGE>
Following, you'll find the 10 largest holdings in the Young Investor Fund as of
March 31, 1998. For a complete list of the portfolio's holdings see pages 12-17.
<TABLE>
<CAPTION>
% OF TOTAL
NET ASSETS
ON 3/31/98 SYMBOL EXCHANGE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Outdoor Systems 2.5 OSI NYSE*
- ------------------------------------------------------------------------------------
2 Cisco Systems Inc. 2.1 CSCO Nasdaq+
- ------------------------------------------------------------------------------------
3 Fannie Mae 1.9 FNM NYSE
- ------------------------------------------------------------------------------------
4 Microsoft Corporation 1.8 MSFT Nasdaq
- ------------------------------------------------------------------------------------
5 Mattel, Inc. 1.8 MAT NYSE
- ------------------------------------------------------------------------------------
6 Pfizer Inc. 1.8 PFE NYSE
- ------------------------------------------------------------------------------------
7 The Coca-Cola Co. 1.8 KO NYSE
- ------------------------------------------------------------------------------------
8 Wrigley 1.8 WWY NYSE
- ------------------------------------------------------------------------------------
9 Motorola, Inc. 1.8 MOT NYSE
- ------------------------------------------------------------------------------------
10 Travelers Group 1.8 TRV NYSE
- ------------------------------------------------------------------------------------
* New York Stock Exchange
+ National Association of Securities Dealers Automated Quotation
Holdings are disclosed as a percentage of SR&F Growth Investor Portfolio's
total net assets. Portfolio holdings are as of March 31, 1998,
and are subject to change.
</TABLE>
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
HOW DID THE FUND PERFORM?
The Fund continued to outperform the S&P 500 Index during the six-month period
ended March 31, 1998. The Fund's total return was 17.24 percent, while the
Lipper growth fund peer group returned 12.45 percent, and the S&P 500 Index
returned 17.21 percent for the same period.
WHAT WORKED WELL FOR THE FUND DURING THE LAST SIX MONTHS?
Our investments in companies that provide products and services to consumers
performed well. These companies benefited from a strong economy throughout the
period. Top performing holdings included Outdoor Systems, an outdoor billboard
advertising company, Disney, the operator of amusement parks and maker of
children's movies, and Walgreen's drugstores (2.5 percent, 1.6 percent and 1.3
percent of total net assets, respectively).
WHAT DID NOT WORK AS WELL DURING THE PERIOD?
The technology and energy investments we owned did not perform well. Our
technology holdings were dragged down by turmoil in Asian markets during the
fourth quarter of 1997, while our energy investments were hurt by lower oil and
gas prices.
WHAT STOCKS ARE YOU POSITIVE ABOUT GOING FORWARD?
We like the long-term outlook for the technology sector. Technology enables
businesses to operate more efficiently. Demand for technological advances is
expected to remain strong and we believe companies such as Intel and Microsoft
will continue to be leaders in providing these products and services (1.3
percent and 1.8 percent of total net assets, respectively). We also favor the
consumer sector. Given our positive outlook for economic growth, we believe
stocks in this sector will continue to perform well.
DO YOU THINK THE NEW EDUCATION IRA IS A GOOD VEHICLE FOR INVESTING IN
YOUNG INVESTOR FUND?
Absolutely. Young Investor Fund and the Education IRA complement each other
well. Both can help kids invest for college. In fact, many of our investors use
Young Investor Fund already to save for college educations. Adding the IRA
component can add a significant tax advantage to an investment program. Maximum
annual contributions to an Education IRA are currently limited to $500 per child
from all sources.*
WHAT WOULD YOU TELL YOUNG INVESTORS TO KEEP IN MIND ABOUT RECENT MARKET RETURNS?
The market has been on a record-setting pace over the last three years. The
average annual return of the S&P 500 over that time period was
32.79 percent. Over the last 10 years the market, as measured by the S&P 500,
has returned an average of 18.92 percent annually. This compares to the
long-term average annual S&P 500 return of 11.16 percent over the past 72 years.
The market doesn't always go straight up. We believe investors should always
prepare themselves for the next correction or short-term market downcycle.
WHAT IS YOUR OUTLOOK?
We are cautious about near-term market activity because market valuations are at
historic highs. However, we remain optimistic about the long-term market
potential because many of the factors that have led to the current market
valuations are expected to continue. Economic growth in the United States
remains strong, and inflation and interest rates remain low.
Going forward we plan to continue to invest in companies that have the potential
to, and that we believe will, deliver consistent increases in their earnings
over the long term.
*For guidance and information regarding your investment in an Education IRA, we
encourage you to consult your tax adviser.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURNS WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Holdings
are disclosed as a percentage of SR&F Growth Investor Portfolio's total net
assets. Portfolio holdings are as of March 31, 1998, and are subject to change.
Total return performance includes changes in share price and reinvestment of
income and capital gains distributions. The S&P 500 is an unmanaged group of
stocks that differs from the composition of each Stein Roe 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 the
Fund's growth fund peer group for the one-, five- and 10-year periods ended
March 31, 1998, were 44.07 percent, 19.11 percent and 16.74 percent,
respectively.
Balloon Text:
If you invest your money in a vehicle such as an Individual Retirement
Account (IRA), your money is not taxed yearly, it's only taxed when you withdraw
it. An investment that's taxed in this manner is referred to as tax-deferred.
This type of investment allows your money to grow faster than an investment you
have to pay taxes on every year.
Photo of: Erik Gustafson and David Brady.
<PAGE>
FUND HIGHLIGHTS
As of March 31, 1998
Average Annual Total Returns
- ------------------------------------------------------------------
Life
One-Year Three-Years of Fund*
- ------------------------------------------------------------------
YOUNG INVESTOR FUND 49.84% 36.31% 31.10%
S&P 500 47.96 32.79 28.51
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURNS 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 March 31, 1998
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 mutual funds, 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: $676.3 MILLION
Balloon Text:
We think it's useful to show what a fund's total return means in real dollars.
That's why we show how a $10,000 investment in Young Investor Fund would have
grown over time. If you would have invested $10,000 in the Fund on April 30,
1994, you would have $28,909 invested today.
<TABLE>
<CAPTION>
Economic Sector Breakdown
- -----------------------------------------------------------------
Portfolio S&P 500
- -----------------------------------------------------------------
<S> <C> <C>
Technology 23% 16%
Consumer Cyclical 21 13
Consumer Noncyclical 21 23
Financial 20 17
Industrial 6 9
Utilities 6 10
Basic Materials 2 4
Energy 1 8
- -----------------------------------------------------------------
Total 100% 100%
- -----------------------------------------------------------------
</TABLE>
Comparison of change in value of a $10,000 investment
Graph Data:
Young Investor Fund S&P 500
4/30/94 10000 10000
9/30/94 10240 10399
9/30/95 14396 13488
9/30/96 19512 16228
9/30/97 24659 22789
3/31/98 28909 26711
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURNS 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>
<CAPTION>
SR&F GROWTH INVESTOR PORTFOLIO
Portfolio of Investments at March 31, 1998
(Dollar amounts in thousands)
(UNAUDITED)
Number Market
of Shares Value
<S> <C> <C>
COMMON STOCKS (93.6%)
Automobiles/Vehicles (1.2%)
Volvo AB ADRs
(Manufactures cars, trucks, buses, marine engines
and aerospace equipment) 260,000 $ 8,287
Banks (3.1%)
Citicorp
(Provides a broad range of financial services) 75,000 10,650
Texas Regional Bancshares, Class A
(Commercial bank operating in the Rio Grande
Valley of Texas) 310,000 10,404
------
21,054
Commercial Services (3.3%)
Cendant Corporation (a)
(Global provider of consumer and
business services) 300,000 11,888
Paychex, Inc.
(Provides computerized payroll accounting services
to businesses) 185,000 10,672
------
22,560
Computer Software and Services (11.1%)
Altera Corporation (a)
(Designs, develops and markets programmable logic
integrated circuits and computer engineering
development software and hardware) 175,000 6,606
Analog Devices, Inc. (a)
(Designs, manufactures, and markets linear, mixed-signal
and digital integrated circuits) 300,000 9,975
Cambridge Technology Partners, Inc. (a)
(Designs, develops, and deploys client/server and
Internet applications) 100,000 4,956
Cisco Systems, Inc. (a)
(Produces, markets and supports multiprotocol
internetworking systems) 210,000 14,359
Comdisco, Inc.
(Technology service company which provides solutions
that help organizations reduce technology
cost and risk) 250,000 10,906
Microsoft Corporation (a)
(Manufactures software products) 140,000 12,530
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Computer Software and Services (Continued)
Sterling Commerce Inc. (a)
(Global provider of electronic commerce software
products and network services) 190,000 $ 8,811
Transaction Systems Architects, Inc. (a)
(Develops, markets and supports a broad line of software
products and services) 200,000 7,775
------
75,918
Consumer Products (4.3%)
The Gillette Company
(Shaving and personal care products) 100,000 11,869
The Procter & Gamble Company
(Produces personal-care products, pharmaceuticals,
food and beverages) 100,000 8,437
Tupperware Corporation
(Direct seller of food storage containers) 325,000 8,653
------
28,959
Distribution - Retail (4.7%)
Hasbro, Inc.
(Manufactures and sells children's toys) 300,000 10,594
Mattel, Inc.
(Designs, manufactures and markets
children's toys) 315,000 12,482
Walgreen Company
(Large retail drugstore chain) 250,000 8,797
------
31,873
Educational Services (0.6%)
Children's Comprehensive Services (a)
(Provides services for at-risk youth) 200,000 3,800
Electrical Equipment (4.4%)
General Electric Company
(Appliances, broadcasting, communications
and transportation) 100,000 8,619
Intel Corp.
(Produces and sells microcomputer components and
related products) 116,000 9,055
Motorola, Inc.
(Producer of electronic and telecommunications
equipment) 200,000 12,125
------
29,799
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Entertainment (2.7%)
Cedar Fair L.P.
(Owns and operates amusement theme parks) 280,000 $ 7,700
Disney (Walt) Company
(Operates theme parks and resorts, and produces
motion pictures) 100,000 10,675
------
18,375
Financial Institutions (5.9%)
Federal Home Loan Mortgage Corp.
(Purchases mortgages from lenders and resells in pools
or packages) 225,000 10,673
Federal National Mortgage Association
(Purchases mortgages and issues guaranteed mortgage-
backed securities) 200,000 12,650
Household International Inc.
(Provides financial and banking services) 80,000 11,020
Sirrom Capital Corporation
(Makes loans to small private businesses) 200,000 6,013
------
40,356
Financial Services (4.1%)
Alliance Capital Management L.P.
(Provides investment services to pension funds,
endowments, insurance companies, banks and
individual investors) 100,000 5,188
American Express Company
(Provides a variety of diversified travel and
financial services) 115,000 10,558
Travelers Group Inc.
(Provides investment, consumer finance, property and
casualty insurance and life insurance services) 200,000 12,000
------
27,746
Food & Beverage (5.8%)
The Coca-Cola Company
(Producer and distributor of soft drink products) 160,000 12,390
Groupe Danone ADRs
(Produces packaged foods and beverages) 150,000 7,219
Quaker Oats Company
(An international marketer of foods & beverages) 125,000 7,156
Wrigley (Wm) Jr. Company
(Chewing gum manufacturer) 150,000 12,262
------
39,027
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Health Care (2.4%)
Johnson & Johnson
(Manufactures and markets a broad range of
health care and other products) 150,000 $10,997
Orthodontic Centers of America, Inc. (a)
(Provides management and consulting services to
orthodontic practices) 250,000 5,422
------
16,419
Insurance (3.9%)
CMAC Investment Corp.
(Provides private mortgage insurance coverage) 150,000 10,013
HCC Insurance Holdings, Inc.
(Underwrites property and casualty insurance) 275,000 6,325
MGIC Investment Corp.
(Provides private mortgage insurance coverage) 150,000 9,853
------
26,191
Leisure Products (1.2%)
Callaway Golf Company
(Produces and markets golf clubs) 275,000 7,975
Machinery (1.2%)
Thermo Electron Corporation (a)
(Manufactures and sells environmental monitoring and
analysis instruments, papermaking and
recycling equipment) 200,000 8,075
Medical - Pharmaceutical (6.2%)
ALZA Corporation (a)
(Develops and commercializes pharmaceutical
products) 200,000 8,962
American Home Products Corporation
(Discovers, develops, manufactures, distributes and sells
health care products) 120,000 11,445
Columbia Laboratories, Inc. (a)
(Develops and markets pharmaceutical
over-the-counter drugs) 250,000 3,453
Eli Lilly & Company
(Creates and delivers pharmaceutical-based health
care solutions) 100,000 5,962
Pfizer Inc.
(Research-based global healthcare
products provider) 125,000 12,461
------
42,283
Medical - Instruments (1.4%)
Medtronic Inc.
(Manufactures various cardiovascular medical
instruments) 180,000 9,338
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
<S> <C> <C>
Oil - Exploration and Production (2.5%)
EVI, Inc. (a)
(Manufactures engineered oilfield products) 200,000 $ 9,262
Marine Drilling Companies, Inc. (a)
(Provides offshore contract drilling services for
independent and major oil and gas companies) 350,000 7,569
------
16,831
Publishing, Broadcasting and Media (7.1%)
Clear Channel Communications Inc. (a)
(Owns, operates and manages radio and
television stations) 110,000 10,780
Heftel Broadcasting Corp., Class A (a)
(Spanish language radio broadcasting company) 225,000 10,069
Outdoor Systems Inc. (a)
(Outdoor advertising company) 487,500 17,093
The Petersen Companies, Inc. (a)
(Special-interest magazines, publishing, and television
programming company) 400,000 10,000
------
47,942
Restaurant/Hotel (1.5%)
McDonald's Corporation
(Develops, licenses, leases and services a
worldwide system of restaurants) 175,000 10,500
Specialty Chemicals (1.5%)
Minerals Technologies Inc.
(Develops, produces and markets specialty minerals,
mineral-based and synthetic mineral products) 200,000 10,075
Telecommunications (12.3%)
ADC Telecommunications, Inc. (a)
(Designs, manufactures and markets a variety of
transmission and networking systems) 300,000 8,269
CIENA Corporation (a)
(Designs, manufactures and sells systems for long
distance telecommunications networks) 150,000 6,394
Frontier Corporation
(Offers integrated communications services for business
and residential customers) 300,000 9,769
Intermedia Communications Inc. (a)
(Provides telecommunications solutions for business
and government customers) 75,000 5,972
<PAGE>
<CAPTION>
Number Market
Common Stocks (Continued) of Shares Value
Telecommunications (Continued)
LCI International, Inc. (a)
(Provides a variety of voice and data telecommunication
services in domestic and international markets) 250,000 $ 9,625
Loral Space & Communications (a)
(High technology company concentrated on satellite
manufacturing and satellite-based communication
services) 400,000 11,175
Lucent Technologies Inc.
(Produces public and private networks, communication
systems and software) 90,000 11,509
Tellabs Inc. (a)
(Designs, assembles, markets and services voice and
data networking products) 150,000 10,069
WorldCom, Inc. (a)
(Provides facilities-based and fully integrated local, long
distance, international and Internet services) 250,000 10,766
------
83,548
Travel Services (1.2%)
Sabre Group Holdings Inc. (a)
(Provider of a travel reservation system) 225,000 8,072
-------
TOTAL COMMON STOCKS
(Cost $463,448) 635,003
-------
<CAPTION>
Principal
Amount
SHORT-TERM OBLIGATIONS (7.1%)
<S> <C> <C>
Commercial Paper (7.1%)
Associates Corp. of North America 6.050% 4/01/98 $ 33,060 33,060
Conagra 6.150% 4/01/98 15,000 15,000
-------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $48,060) 48,060
-------
TOTAL INVESTMENTS (100.7%)
(Cost $511,508) (b) 683,063
OTHER ASSETS, LESS LIABILITIES (-0.7%) (4,807)
-------
TOTAL NET ASSETS (100%) $678,256
========
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a)Non-income producing security.
(b)At March 31, 1998, the cost of investments for federal income tax purposes
was $511,517. Net unrealized appreciation was $171,546, consisting of gross
unrealized appreciation of $180,058 and gross unrealized depreciation of
$8,512.
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
(All amounts in thousands, except per-share amount)
(UNAUDITED)
<CAPTION>
<S> <C>
Assets
Investment in SR&F Growth Investor Portfolio, at value $671,891
Cash 50
Receivable for fund shares sold 5,269
Other assets 34
--------
Total assets 677,244
--------
Liabilities
Payable for fund shares redeemed 250
Payable to investment adviser and transfer agent 233
Other liabilities 441
--------
Total liabilities 924
--------
Net assets $676,320
========
Analysis of Net Assets
Paid-in capital $481,598
Net unrealized appreciation on investments 171,348
Accumulated net investment loss (1,452)
Accumulated net realized gains on investments 24,826
--------
Net assets $676,320
========
Shares outstanding (unlimited number authorized) 25,724
========
Net asset value per share $ 26.29
========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1998
(All amounts in thousands)
(UNAUDITED)
<CAPTION>
<S> <C>
Investment Income
Dividends allocated from SR&F Growth
Investor Portfolio $ 1,573
Interest allocated from SR&F Growth
Investor Portfolio 758
--------
Total investment income 2,331
--------
Expenses
Expenses allocated from SR&F Growth
Investor Portfolio 1,660
Transfer agent fees 591
Printing and postage 535
Administrative fees 526
SEC and state registration fees 27
Accounting fees 19
Legal and audit fees 7
Trustees' fees 3
Other 415
--------
Total expenses 3,783
--------
Net investment loss (1,452)
--------
Realized and Unrealized Gains on Investments
Net realized gains on investments allocated from
SR&F Growth Investor Portfolio 24,933
Net change in unrealized appreciation or depreciation
on investments 68,084
--------
Net gains on investments 93,017
--------
Net Increase in Net Assets Resulting from Operations $91,565
========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
STATEMENTS OF CHANGES IN NET ASSETS
(All amounts in thousands)
(UNAUDITED)
<CAPTION>
Six Months Year
Ended Ended
March 31, September 30,
1998 1997
<S> <C> <C>
Operations
Net investment loss $ (1,452) $ (864)
Net realized gains on investments 24,933 7,157
Net change in unrealized appreciation or
depreciation of investments 68,084 80,646
-------- --------
Net increase in net assets
resulting from operations 91,565 86,939
-------- --------
Distributions To Shareholders
Distributions from net investment income -- (250)
Distributions from net capital gains (7,157) (8,295)
-------- --------
Total distributions to shareholders (7,157) (8,545)
-------- --------
Share Transactions
Subscriptions to fund shares 169,461 391,442
Value of distributions reinvested 7,013 8,091
Redemptions of fund shares (60,068) (181,510)
-------- --------
Net increase from share transactions 116,406 218,023
-------- --------
Net increase in net assets 200,814 296,417
Total Net Assets
Beginning of period 475,506 179,089
-------- --------
End of period $676,320 $475,506
======== ========
Accumulated Net Investment Loss at End of Period $ (1,452) $ --
======== ========
Analysis of Changes in Shares of Beneficial Interest
Subscriptions to fund shares 7,135 20,131
Issued in reinvestment of distributions 315 446
Redemptions of fund shares (2,625) (9,287)
-------- --------
Net increase in fund shares 4,825 11,290
Shares outstanding at beginning of period 20,899 9,609
-------- --------
Shares outstanding at end of period 25,724 20,899
======== ========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
(All amounts in thousands)
(UNAUDITED)
<CAPTION>
<S> <C>
Assets
Investments, at market value (cost $511,508) $683,063
Cash 2
Receivable for investments sold 2,789
Dividends receivable 247
Other assets 5
--------
Total assets 686,106
--------
Liabilities
Payable for investments purchased 7,503
Payable to investment adviser 347
--------
Total liabilities 7,850
--------
Net assets applicable to investors' beneficial interest $678,256
========
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1998
(All amounts in thousands)
(UNAUDITED)
<CAPTION>
<S> <C>
Investment Income
Dividends $1,575
Interest 760
-------
Total investment income 2,335
-------
Expenses
Management fees 1,603
Accounting fees 19
Trustees' fees 13
Audit and legal fees 9
Custodian fees 3
Other 16
-------
Total expenses 1,663
-------
Net investment income 672
-------
Realized and Unrealized Gains on Investments
Net realized gains on investments 24,940
Net change in unrealized appreciation or
depreciation on investments 68,266
-------
Net gains on investments 93,206
-------
Net Increase in Net Assets Resulting from Operations $93,878
=======
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
(All amounts in thousands)
(UNAUDITED)
<CAPTION>
Six Months Period
Ended Ended
March 31, September 30,
1998 1997 (a)
<S> <C> <C>
Operations
Net investment income $ 672 $ 1,418
Net realized gains on investments 24,940 5,460
Net change in unrealized appreciation or
depreciation of investments 68,266 61,915
-------- --------
Net increase in net assets
resulting from operations 93,878 68,793
-------- --------
Transactions in Investors' Beneficial Interest
Contributions 136,105 452,937
Withdrawals (27,267) (46,190)
-------- --------
Net increase from transactions in investors'
beneficial interest 108,838 406,747
-------- --------
Net increase in net assets 202,716 475,540
Total Net Assets
Beginning of period 475,540 --
-------- --------
End of period $678,256 $475,540
======== ========
(a) From commencement of operations on February 3, 1997.
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
The Stein Roe Young Investor Fund (the "Fund") is a series of the Stein
Roe Investment Trust (the "Trust"), an open-end management investment
company organized as a Massachusetts business trust. The Fund invests
substantially all of its assets in the SR&F Growth Investor Portfolio
(the "Portfolio"), which seeks to achieve long-term capital
appreciation by investing primarily in common stocks and other
equity-type securities that are believed to have long-term appreciation
potential. The Fund also has an educational objective to teach
investors, especially young people, about basic economic principles and
personal finance through a variety of educational materials prepared
and paid for by the Fund.
The Portfolio is a series of the SR&F Base Trust, a Massachusetts
common law trust organized under an Agreement and Declaration of Trust
dated August 23, 1993. The Portfolio commenced operations February 3,
1997. At commencement, Stein Roe Young Investor Fund contributed
$292,104 in securities and other assets in exchange for beneficial
ownership of the Portfolio. At February 14, 1997, Stein Roe Advisor
Young Investor Fund contributed cash of $100. The Portfolio allocates
net asset value, income and expenses to each investor on a daily basis,
based on their respective percentage of ownership. At March 31, 1998,
Stein Roe Young Investor Fund and Stein Roe Advisor Young Investor Fund
owned 99.06 percent and .94 percent, respectively, of the Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the
Fund and Portfolio. The policies are in conformity with generally
accepted accounting principles, which require management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Certain prior-year amounts have been reclassified to conform to
current-year presentation.
SECURITY VALUATIONS
All securities are valued as of March 31, 1998, 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. Securities and other
assets for which market quotations are not readily available are valued
at fair value as determined in good faith by or under the direction of
the Trust's Board of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on trade date. Dividend
income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis. Interest income includes discount
accretion on fixed income securities. Realized gains and losses from
investment transactions are reported on an identified cost basis.
FEDERAL INCOME TAXES
No provision is made for federal income taxes since (a) the Fund elects
to be taxed as a "regulated investment company" and 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.
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 paid-in capital.
Reclassifications in the accompanying analysis of net assets were
made in 1998 in order to reflect differences between financial
reporting and income tax results. The differences primarily related to
reclassification of prior-year net operating losses and accounting for
partnership investments.
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. Prior to January 31,
1998, the Adviser also agreed to reimburse the Fund to the extent that
its expenses exceeded 1.50 percent of annual average net assets. Prior
to February 1, 1997, the Adviser limited expenses to 1.25 percent of
annual average net assets.
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 March 31, 1998, the Fund and Portfolio incurred charges of
$19 and $19, 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 March 31,
1998, was $3 and $13, respectively. No remuneration was paid to any
other trustee or officer of the Trust.
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 March 31, 1998.
NOTE 5. INVESTMENT TRANSACTIONS
The Portfolio's aggregate cost of purchases and proceeds from
sales other than short-term obligations for the period ended March 31,
1998, were $243,635 and $155,470, respectively. Selected per-share data
(for a share outstanding throughout each period), ratios and
supplemental data.
<TABLE>
<CAPTION>
SR&F GROWTH INVESTOR PORTFOLIO
FINANCIAL HIGHLIGHTS
Six Months
Ended Period
March 31, Ended
1998 September 30,
(Unaudited) 1997 (a)
<S> <C> <C>
Ratios to Average Net Assets
Ratio of net expenses to average net assets 0.62% (b) 0.63% (b)
Ratio of net investment income to average
net assets............................. 0.25% (b) 0.54% (b)
Portfolio turnover rate.................. 60% 38%
Average commissions (per share).......... $0.0586 $0.0583
(a) From commencement of operations on February 3, 1997.
(b) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STEIN ROE INVESTMENT TRUST
YOUNG INVESTOR FUND
FINANCIAL HIGHLIGHTS
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
Six Months
Ended
March 31,
1998 Years Ended September 30,
(Unaudited) 1997 1996
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................. $ 22.75 $ 18.64 $ 14.29
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................................. (0.06) (0.04) 0.05
Net realized and unrealized gains on investments.............. 3.92 4.79 4.86
---------- ---------- ----------
Total from investment operations............................ 3.86 4.75 4.91
---------- ---------- ----------
DISTRIBUTIONS
Net investment income......................................... -- (0.02) (0.05)
Net realized capital gains.................................... (0.32) (0.62) (0.51)
---------- ---------- ----------
Total distributions......................................... (0.32) (0.64) (0.56)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD................................... $ 26.29 $ 22.75 $ 18.64
========== ========== ==========
Ratio of net expenses to average net assets (b).................. 1.41% (d) 1.43% 1.21%
Ratio of net investment income to average net assets (c)......... (0.54%)(d) (0.25%) 0.30%
Portfolio turnover rate.......................................... -- 22% (e) 98%
Average commissions (per share).................................. -- $ 0.0565(e) $0.0603
Total return (c)................................................. 17.24% 26.37% 35.55%
Net assets, end of period (000's)................................ $676,320 $475,506 $179,089
<PAGE>
<CAPTION>
Period
Ended
September 30,
1995 1994 (a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................. $ 10.24 $ 10.00
--------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss).................................. 0.06 0.03
Net realized and unrealized gains on investments.............. 4.07 0.21
--------- ---------
Total from investment operations............................ 4.13 0.24
--------- ---------
DISTRIBUTIONS
Net investment income......................................... (0.08) --
Net realized capital gains.................................... -- --
--------- ---------
Total distributions......................................... (0.08) --
--------- ---------
NET ASSET VALUE, END OF PERIOD................................... $ 14.29 $ 10.24
========= =========
Ratio of net expenses to average net assets (b).................. 0.99% 0.99% (d)
Ratio of net investment income to average net assets (c)......... 0.47% 1.07% (d)
Portfolio turnover rate.......................................... 55% 12%
Average commissions (per share).................................. $ -- $ --
Total return (c)................................................. 40.58% 2.40%
Net assets, end of period (000's)................................ $31,401 $8,176
(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 adivser's expense limitation
undertaking.
(d) Annualized
(e) Prior to commencement of operations of the Portfolio (See Note 1 to
Financial Statements).
</TABLE>
<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 traditional, Roth and Education 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, including the new Roth and Education
IRAs, 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
Balloon Text:
Trustees are elected by the shareholders to act as outside governors of the
funds. The trustees vote on behalf of shareholders in certain everyday matters
concerning the funds. Having trustees ensures that decisions regarding the funds
are made based the shareholders' best interests.
TRUSTEES
Thomas W. Butch
President, Mutual Fund
Division and Director,
Stein Roe & Farnham Incorporated
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
Charles R. Nelson
Van Voorhis Professor of Political Economy, University of Washington
Thomas C. Theobald
Managing Director, 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
<PAGE>
OFFICERS
Thomas W. Butch, President
William D. Andrews, Executive Vice President
Loren A. Hansen, Executive Vice President
Hans P. Ziegler, Executive Vice President
Gary A. Anetsberger, Senior Vice President, Chief Financial Officer
David P. Brady, Vice President
Kevin M. Carome, Vice President, Assistant Secretary
Daniel K. Cantor, 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, Secretary
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 Municipal Money Market Fund
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Intermediate Bond Fund
Stein Roe Income Fund
Stein Roe High Yield 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 Large Company Focus 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 Financial Investments, Inc. Distributor.
YI12SA 5/98
