LIBERTY STEIN ROE FUNDS INVESTMENT TRUST, N-30D, 1999-11-30

LIBERTY STEIN ROE FUNDS INVESTMENT TRUST
N-30D, 1999-11-30

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Stein Roe Mutual Funds
Annual Report
September 30, 1999

Picture of hand holding plant

Stein Roe Equity Funds

Growth Funds

Growth Stock Fund
Midcap Growth Fund
Disciplined Stock Fund
Large Company Focus Fund
Capital Opportunities Fund

Logo: Stein Roe Mutual Funds
Sensible Risks. Intelligent Investments.(R)

<PAGE>

Contents
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From the President................................................ 1

Stephen E. Gibson's thoughts on the equity markets and investing

Performance Summary .............................................. 3

Questions & Answers
Growth Stock Fund

An interview with Portfolio Manager Erik Gustafson............. 7

Midcap Growth Fund

An interview with Portfolio Manager Art McQueen................ 11

Disciplined Stock Fund

An interview with Portfolio Manager Dan Cantor................. 15

Large Company Focus Fund

An interview with Portfolio Manager Dave Brady................. 19

Capital Opportunities Fund

An interview with Portfolio Managers Dave Brady
and Erik Gustafson............................................. 23

Portfolios of Investments......................................... 27

A complete list of investments with market values

Financial Statements.............................................. 40

Statements of assets and liabilities, operations and changes
in net assets

Notes to Financial Statements..................................... 52

Financial Highlights.............................................. 56

Selected per-share data and ratios

Report of Independent Accountants................................. 64

Must be preceded or accompanied by a prospectus.

<PAGE>

From the President
--------------------------------------------------------------------------------

To Our Shareholders
Five years ago fear of higher inflation and rising interest rates dominated the
news. The Federal Reserve Board had raised borrowing rates. Some investors
believed America's robust economy would overheat. The stock market was volatile.
Now, at the threshold of a new century, inflation and interest rates are
again at the top of Wall Street's worries. Market volatility has returned, and
the returns from many large-cap growth stocks in fiscal year 1999 were modest.
Stocks of mid-size companies generally lagged.

--------------------------------------------------------------------------------
Growth Stock Fund and
Large Company Focus Fund
provided fiscal 1999 results
that outpaced the
unmanaged S&P 500 Index.
--------------------------------------------------------------------------------

Fiscal 1999 was a year of transition for three Stein Roe funds that include
midcap stocks in their investment strategies. Since May, we have worked
diligently to reposition Midcap Growth Fund, Disciplined Stock Fund and Capital
Opportunities Fund to capture the growth potential of America's medium-size
companies.
We are pleased to say that the two Stein Roe funds discussed in this report
that primarily focus on large-cap companies -- Growth Stock Fund and Large
Company Focus Fund -- provided outstanding results during fiscal 1999. As you
will see on page 3, the total return of both funds outpaced that of the
unmanaged Standard & Poor's 500 Index for the 12 months ended September 30,
1999.
We attribute our large-cap funds' fiscal 1999 returns to a positioning in
technology and telecom stocks. Perhaps more than in any decade since the 1920s,
advances in technology and telecommunications are revolutionizing American
business. Consider that five years ago, hardly anyone used the Internet. Now it
is becoming the communication tool of choice. A Perspective on Intelligent
Investing One change you'll see in this report is that Lipper Inc., one of the
country's leading monitors of mutual fund performance, has reclassified Stein
Roe funds into new investment categories to help investors better distinguish
between funds. What this means is that your Fund(s) have new peer groups that
are smaller and generally more precise than the categories Lipper was previously
using. Generally, Lipper created categories that combine the average market
capitalization of stocks in a fund's portfolio and investment style

Picture of Stephen E. Gibson

1
<PAGE>

From the President continued

(growth, value or a combination thereof).
As you'll see inside, the two large-cap funds discussed in this report have
kept pace with their peers over time while our midcap funds, in most cases, have
not. We realize we have work to do in this area and the restructuring we
informed you about in May reflects a concerted effort to provide more
competitive results. We appreciate your continued confidence in these funds.
We're sure you'll agree that a year is far too short a period to judge the
performance of an equity fund. Keep in mind that over the past 73 years, annual
returns from stocks have averaged 11%, with some years of negative returns of
more than 20%.* Investors should consider that such volatility is normal for
growth-oriented investments.
As shareholders, you can expect that each Stein Roe fund's management has a
commitment to a disciplined, research intensive approach to stock selection that
has the potential to help you meet your long-term investment goals. On the pages
that follow, the portfolio managers of each Fund detail each Fund's strategy and
provide an outlook for the year ahead. We encourage you to carefully review this
report and visit us on the Internet at www.steinroe.com for quarterly updates on
each Fund's progress.

Sincerely,

/s/Stephen E. Gibson
Stephen E. Gibson
President
November 15, 1999

*Source: Wiesenberger(R), based on average annual returns of the S&P 500 Index,
12/31/25 to 9/30/99.

On November 2, 1999, Stephen E. Gibson was named President of Stein Roe Mutual
Funds. Mr. Gibson is President and Chief Executive Officer of Liberty Funds
Group, LLC, a part of Liberty Financial Companies Inc. Liberty Financial is
Stein Roe's Boston parent organization. Mr. Gibson joined Liberty Financial in
1996 and has more than 20 years of mutual fund industry experience that includes
senior management positions at Putnam Investments and Kemper Corporation.

<PAGE>

Performance Summary
--------------------------------------------------------------------------------

Average Annual Total Returns
Periods Ended September 30, 1999
ONE FIVE 10
YEAR YEARS YEARS
--------------------------------------------------------------------------------
GROWTH STOCK FUND 35.98% 24.07% 16.80%
Lipper Large-Cap Growth Fund Average 37.86 24.02 16.69
DISCIPLINED STOCK FUND 13.57 10.64 10.96
Lipper Mid-Cap Value Fund Average 14.24 12.68 10.44
CAPITAL OPPORTUNITIES FUND 13.43 13.66 10.21
Lipper Mid-Cap Growth Fund Average 50.88 18.04 13.91
STANDARD & POOR'S 500 INDEX 27.79 25.03 16.80
STANDARD & POOR'S MIDCAP 400 INDEX 25.50 18.59 15.64

Lipper Inc., a monitor of mutual fund performance and the source of the above
category averages, reclassified each Stein Roe Fund shown above into a new peer
group as of 9/30/99. For the one, five and ten-year periods shown, there were
331, 130 and 45 funds in the large-cap growth category, respectively; 192, 75
and 31 funds in the mid-cap value category, respectively; and 228, 84 and 33
funds in the mid-cap growth category, respectively.

ONE LIFE OF
YEAR FUND
--------------------------------------------------------------------------------
MIDCAP GROWTH FUND* 20.17% 10.47%
Lipper Multi-Cap Growth Fund Average 41.88 21.58
STANDARD & POOR'S MIDCAP 400 INDEX 25.50 14.82

The fund began operating on 6/30/97. Lipper Inc., a monitor of mutual fund
performance and the source of the above category average, reclassified the Fund
shown above into a new peer group as of 9/99. For the one year and life of fund
periods shown, there were 348 and 270 funds, respectively, in the multi-cap
growth category.

ONE LIFE OF
YEAR FUND
--------------------------------------------------------------------------------
LARGE COMPANY FOCUS FUND*+ 35.05% 13.93%
Lipper Large-Cap Core Fund Average 27.74 10.38
STANDARD & POOR'S 500 INDEX 27.79 11.91

The fund began operating on 6/26/98. Lipper Inc., a monitor of mutual fund
performance and the source of the above category average, reclassified the Fund
shown above into a new peer group as of 9/30/99. For the one year and life of
fund periods shown, there were 357 and 335 funds, respectively, in the large-cap
core category. Benchmark performance for life of fund period is from 6/30/98.

*The Advisor currently limits expenses. Absent these limits as set forth in the
prospectus for each fund, returns would have been less.

+Approximately 9.9% of the Fund's 35.05% return for the 12-month period ended
9/30/99 was due to investments in initial public offerings. Such performance may
not be sustainable.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of income and capital
gains distributions. Each index shown above is an unmanaged group of securities
that differs from the composition of any Stein Roe fund; they are not available
for direct investment.

<PAGE>

Investment Comparisons
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GROWTH OF A $10,000 INVESTMENT September 30, 1989 to September 30, 1999
--------------------------------------------------------------------------------

Line Chart:
STEIN ROE LIPPER LARGE CAP
GROWTH STOCKD GROWTH FUND AVERAGE
FUND S&P 500 INDEX (45 FUNDS)
9/30/89 10000 10000 10000
9/30/90 9583.36 9075.84 9031.73
9/30/91 13094.6 11897.8 12469.6
9/30/92 14976.9 13211.6 13393.5
9/30/93 15739.8 14924.9 15826.5
9/30/94 16070.1 15473.9 15952.7
9/30/95 20598.2 20070.9 20724.1
9/30/96 24932.4 24149.4 24328.9
9/30/97 33185.2 33911.8 32430.3
9/30/98 34741.2 36991.9 34825.1
9/30/99 47241 47270 47611

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 above
illustration assumes a $10,000 investment on Sept. 30, 1989, and reinvestment of
income and capital gains distributions. The S&P 500 Index is an unmanaged group
of large-cap stocks that differs from the composition of the Fund; it is not
available for direct investment. Source: Lipper Inc. GROWTH OF A $10,000
INVESTMENT June 30, 1997 to September 30, 1999

--------------------------------------------------------------------------------
Stein Roe Midcap Growth Fund
Growth of a $10,000 Investment June 30, 1997 to Sept. 30, 1999

Line Chart:
LIPPER MIDCAP
STEIN ROE GROWTH
MIDCAP S&P MIDCAP FUND AVERAGE S&P 500
GROWTH FUND 400 INDEX (270 FUNDS) INDEX
6/30/97 10000 10000 10000 10000
10470 10795.5 10942 10796
10220 10191.2 10678.5 10193
9/30/97 10770 10749 11348.1 10747
10470 10390.4 10849.6 10392
10600 10871 10886.7 10870
12/31/97 10960 11057.5 10982.4 11057
10910 11179.7 10990.5 11183
11890 11985.6 11914 11984
3/31/98 12660 12598.9 12499.4 12595
12640 12727.9 12631.9 12724
12000 12509.4 12126 12499
6/30/98 12750 13017.2 12787.9 13005
12090 12879.6 12430.2 12868
9530 11018.8 10221.8 11007
9/30/98 10410 11725.3 11019.9 11708
10640 12677.5 11620.4 12661
11390 13445.6 12472.5 13421
12/31/98 12630 14219.9 13919.9 14190
12640 14814.3 14759 14772
11480 14354 13965.5 14295
3/31/99 12000 14928.1 14858.3 14850
12240 15506.2 15164.2 15413
11940 15140.4 14865.6 15028
6/30/99 12910 15980.1 15952.4 15845
12750 15481.6 15601.8 15337
12740 15405 15597.6 15242
9/30/99 12510 14983.2 15610.5 14807

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 above
illustration assumes a $10,000 investment on June 30, 1997, and reinvestment of
income and capital gains distributions. The indexes shown above are unmanaged
groups of stocks that differ from the composition of the Fund; they are not
available for direct investment. Source: Lipper Inc

<PAGE>

Investment Comparisons Continued
--------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT September 30, 1989 to September 30, 1999
--------------------------------------------------------------------------------
Stein Roe Disciplined Stock Fund

Line Chart:
DISCIPLINED S&P MIDCAP LIPPER MIDCAP VALUE
STOCK FUND 400 INDEX FUND AVERAGE (31 FUNDS)
9/30/89 10000 10000 10000
9/30/90 9122.22 8557.26 8296.66
9/30/91 12190 13011.9 11118.3
9/30/92 13391 14745.1 12364.5
9/30/93 17181 18413.2 15451.2
9/30/94 17630.9 18810.2 16265.1
9/30/95 20320.4 23783.8 19506.5
9/30/96 24073.4 27227.4 22291.1
9/30/97 32312.1 38013.5 29724.6
9/30/98 26199.5 35709.6 25272.7
9/30/99 28300 44939.4 29309.1

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 above
illustration assumes a $10,000 investment on Sept. 30, 1989, and reinvestment of
income and capital gains distributions. The S&P MidCap 400 Index is an unmanaged
group of mid-cap stocks that differs from the composition of the Fund; it is not
available for direct investment.
Source: Lipper Inc.

GROWTH OF A $10,000 INVESTMENT June 26, 1998 to September 30, 1999
--------------------------------------------------------------------------------
Stein Roe Large Company Focus Fund

Line Chart:
STEIN ROE LARGE LIPPER LARGE-CAP CORE
COMPANY FOCUS FUND S&P 500 INDEX FUND AVERAGE (335 FUNDS)
6/30/98 10000 10000 10000
7/31/98 9770.46 9894.31 9880.67
8193.61 8464.82 8371.05
9/30/98 8712.57 9007.55 8860.89
9091.82 9739.1 9536.31
11/30/98 9790.42 10329.1 10107
10309.4 10924 10794.1
1/31/99 10788.4 11380.6 11207
10568.9 11026.9 10835.1
3/31/99 11556.9 11468 11298.7
11736.5 11912.1 11645.8
5/31/99 11686.6 11631.1 11369.1
12345.3 12276.2 12031.4
7/31/99 12055.9 11893.2 11702.5
11606.8 11834.4 11592.3
9/30/99 11766.5 11510.3 11324.3

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 above
illustration assumes a $10,000 investment on June 26, 1998, and reinvestment of
income and capital gains distributions. The S&P 500 Index is an unmanaged group
of large-cap stocks that differs from the composition of the Fund; it is not
available for direct investment. Source: Lipper Inc. Benchmark performance is
from 6/30/98.

<PAGE>

Line Chart:
STEIN ROE LIPPER MID-CAP
CAPITAL OPPORTUNITIES STEIN ROE GROWTH FUND AVERAGE
FUND MIDCAP 400 INDEX (31 FUNDS)
10000 10000 10000
9/30/90 6249.11 9075.84 8557.26
9/30/91 9593.29 11897.8 12861.6
9/30/92 10167.8 13211.6 14463.6
9/30/93 13625.8 14924.9 17940
9/30/94 13940.4 15473.9 18227.8
9/30/95 19161.9 20070.9 22925.5
9/30/96 28657 24149.4 26135
9/30/97 26866 33911.8 36354.9
9/30/98 23311.5 36991.9 34061.9
9/30/99 26450.5 47270.3 42746.1

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 above
illustration assumes a $10,000 investment on September 30, 1989, and
reinvestment of income and capital gains distributions. The S&P MidCap 400 Index
is an unmanaged group of mid-cap stocks that differs from the composition of the
Fund; it is not available for direct investment. Source: Lipper Inc.

LARGE COMPANY STOCKS OUTPERFORMED MIDCAP STOCKS IN FISCAL YEAR 1999
--------------------------------------------------------------------------------

Line Chart:
S&P 500 INDEX S&P MIDCAP 400 INDEX
9/30/98 0 0
10/31/98 8.13 8.92
11/30/98 14.68 14.36
12/31/98 21.28 28.16
1/31/99 26.35 23.16
2/28/99 22.43 16.72
3/31/99 27.32 19.99
4/30/99 32.25 29.45
5/31/99 29.14 30.01
6/30/99 36.3 36.97
7/31/99 32.04 34.06
8/31/99 31.39 29.47
9/30/99 27.79 25.5

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Total return includes
reinvestment of dividends. Each index shown above is an unmanaged group of
securities that differs from the composition of each Stein Roe fund; they are
not available for direct investmen. Source: Bloomberg Business News.

<PAGE>

Questions & Answers
--------------------------------------------------------------------------------

AN INTERVIEW WITH ERIK GUSTAFSON, PORTFOLIO MANAGER OF GROWTH STOCK FUND AND
SR&F GROWTH STOCK PORTFOLIO

Fund Data
Investment Objective and Strategy:
Stein Roe Growth Stock Fund seeks long-term growth by investing in the common
stocks of companies with large market capitalizations, with an emphasis in
the technology, financial services, health care and global franchise sectors.

Fund Inception:
July 1, 1958

Net Assets:
$831.3 million

Photo of : Erik Gustafson

Q: HOW DID THE FUND PERFORM IN FISCAL 1999?
GUSTAFSON: The Fund performed well in an otherwise choppy market, providing a
total return of 35.98% for the fiscal year ended September 30, 1999. Our results
outpaced the Standard & Poor's 500 Index return of 27.79% for the period. The
average Lipper large cap growth fund rose 37.86%, as shown on page 3.

Q: DURING THE FISCAL YEAR, THE FEDERAL RESERVE ROSE ITS TARGET FOR SHORT-TERM
INTEREST RATES A COMBINED HALF-PERCENTAGE POINT TO 5.25%. WHAT WAS THE IMPACT ON
LARGE-CAP GROWTH STOCKS?
GUSTAFSON: Typically, growth stocks perform best in a low inflation, low
interest rate environment. But the interest rate environment was called into
question by the Federal Reserve's two rate increases -- one on June 30 and the
other on August 24. As investors feared further rate increases, this triggered
a temporary sell-off that sent stock prices downward.
In our opinion, the Fed simply took back what it gave the markets last
October, which was more liquidity (i.e., lower interest rates) in response to a
world market that was very vulnerable. On a positive note, growth stocks managed
to recover faster than the rest of the market as prices stabilized late in the
period. Our stocks hung in very well amid the rising interest rate environment.

Q: WHAT SECTORS CONTRIBUTED MOST TO THE FUND'S PERFORMANCE, AND IN WHAT TYPES OF
COMPANIES HAVE YOU BEEN FOCUSING YOUR INVESTMENTS?
GUSTAFSON: Technology was the best performing sector in the portfolio. It was
also the Portfolio's largest sector weighting at 34% of

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------

net assets as of September 30, 1999. We emphasized companies that build and
manage data networks and which make systems to transmit, retrieve and store
data. In an information age economy, corporate America is forced to spend on
technology infrastructure to stay ahead of the competition. As a result, market
dominant technology companies including Cisco Systems, EMC, Microsoft and Sun
Microsystems (6.0%, 4.3%, 3.6% and 1.3% of net assets, respectively) have done
exceedingly well.
Within our technology allocation, semiconductor companies generated the
strongest returns. We aggressively added to the Portfolio's holdings with
positions in Motorola, Applied Materials, Texas Instruments, and Micron
Technology (3.5%, 2.5%, 2.0% and 1.6% of net assets, respectively). After four
years in a down cycle, semi conductor companies have entered what we believe is
another upward

--------------------------------------------------------------------------------
Market dominant technology
companies including Cisco Systems,
EMC, Microsoft and Sun
Microsystems (6.0%, 4.3%, 3.6%
and 1.3% of net assets, respectively)
have done exceedingly well.
--------------------------------------------------------------------------------

cycle. An increased penetration of semiconductors in everything from cell phones
and Internet applications to manufactured auto parts and machinery is driving
this new phase of the cycle. As semiconductor demand has begun to outstrip
supply, prices have soared.
Another source of strong per for mance in the portfolio in fiscal 1999 was
our focus on growth industrial companies. Our positions in General Electric,
Tyco International and a new holding in Corning (3.8%, 4.5% and 1.5% of net
assets, respectively) have done well as a result of continued growth in the
domestic economy as well as accel erating growth in emerging markets.

Q: WHAT HURT THE FUND'S PERFORMANCE?
GUSTAFSON: Financial services stocks did not perform well for us as interest
rate fears grew unabated in the second half of fiscal 1999. We think financial
stocks will ultimately rebound given our outlook for rates to stabilize and
perhaps move lower over the next six months.

Q: IN OUR MARCH 31, 1999 REPORT TO SHAREHOLDERS, YOU SAID LARGE-CAP GROWTH
COMPANIES ARE IN A STRONG POSITION TO EXPAND EARNINGS. DO YOU STILL HOLD THAT
OPINION?
GUSTAFSON: Yes, we remain confident in large-cap growth companies' ability to
expand earnings and sales given such outstanding business conditions. The
per-share earnings growth of companies in the

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------

S&P 500 has been remarkable since the spring and we think it has the potential
to accelerate going forward.

Q: WHAT OTHER THOUGHTS DO YOU HAVE ABOUT WHAT LIES AHEAD?
GUSTAFSON: We expect the economy to continue growing, but not at a pace that
would create inflationary pressures. Until the interest rate issue is resolved,
we think markets will continue to be volatile. As we move into the second half
of the fourth quarter of calendar year 1999, we expect stocks to accelerate
upward once again.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of all distributions.
Portfolio holdings are disclosed as a percentage of SR&F Growth Stock Portfolio
as of 9/30/99 and are subject to change. Foreign investing involves market,
political, currency and accounting risks not associated with domestic
securities. Each index mentioned is an unmanaged group of stocks that differs
from the composition of any Stein Roe fund; indices are not available for direct
investment. Source: Lipper Inc.

<PAGE>

Fund Highlights
--------------------------------------------------------------------------------
As of Septemper 30, 1999
SR&F Growth Stock Portfolio
TOP 10 HOLDINGS (% OF NET ASSETS)

Cisco Systems 6.0% Citigroup 3.7%
Tyco International 4.5 Microsoft 3.6
EMC Corp 4.3 Home Depot 3.6
General Electric 3.8 Motorola 3.5
MCI WorldCom 3.7 American Int'l Group 3.5

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EQUITY PORTFOLIO HIGHLIGHTS
PORTFOLIO S&P 500 INDEX
--------------------------------------------------------------------------------
Number of Equity & Convertible Holdings 36 500
Dollar-Weighted Median Market Capitalization (Billions) $72.3 $65
Price/Earnings Ratio 39.7x 25.3x
Beta (Volatility) 1.13 1.00

--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
Equity Portfolio S&P 500 Index
Consumer Cyclical 20% 12%
Consumer Noncyclical 16% 19%
Energy/Basic Materials 4% 10%
Financial 10% 14%
Industrial 10% 8%
Technology 34% 26%
Utilities 6% 11%

<PAGE>

Questions & Answers
--------------------------------------------------------------------------------
AN INTERVIEW WITH ART MCQUEEN, PORTFOLIO MANAGER OF MIDCAP GROWTH FUND

Fund Data
Investment Objective and Strategy:
Stein Roe Midcap Growth Fund seeks long-term growth by investing at least 65%
of its assets in common stocks of midcap companies that the portfolio manager
believes have long-term growth potential.

Fund Inception:
June 30, 1997

Net Assets:
$44.4 million

Photo of : Art McQueen

Effective May 6, 1999, Stein Roe Growth Opportunities Fund was renamed Stein Roe
Midcap Growth Fund. The Fund's investment strategy was modified to reinforce its
focus on midcap growth stocks.

Q: HOW DID THE FUND PERFORM IN FISCAL 1999?
MCQUEEN: The Fund delivered a total return of 20.17% for the fiscal year ended
September 30, 1999, trailing the average Lipper Multi-Cap Growth fund return of
41.88%. The unmanaged S&P MidCap 400 Index returned 25.50% for the period; this
became our primary benchmark (replacing the S&P 500 Index) after we repositioned
the Fund to focus on mid-cap growth stocks in May.
To a large extent, the Fund's disappointing returns reflect a decision to
modify the portfolio as well as the relatively weak performance of certain
stocks during the first nine months of fiscal 1999. Many of these stocks are no
longer in the portfolio.
In fiscal 1999 we reduced the number of holdings. We were down to 46 holdings
as of September 30, 1999, from roughly 75 at the start of the 1999 fiscal year.
We began to see what we believe are the benefits of this positioning late in
this reporting period. Some of the Fund's larger holdings were able to
contribute a greater amount to the Fund's overall results.

Q: PRIOR TO MODIFYING THE INVESTMENT STRATEGY, THE FUND INVESTED IN STOCKS OF
ALL CAPITALIZATION SIZES. WITH ITS INCREASED FOCUS ON MID-CAP GROWTH STOCKS,
WHAT TYPES OF COMPANIES ARE YOU LOOKING FOR?
MCQUEEN: As we did before the strategy modification, we continue to seek
companies that have strong growth potential that we believe is sustainable.
However, our mid-cap growth focus offers us the oppor -

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------

tunity to buy that growth potential at more reasonable prices than can be found
in a large-cap arena.

Q: WHAT SECTORS IN THE PORTFOLIO PERFORMED WELL?
MCQUEEN: Technology was the Fund's best performing stock group, led by holdings
in Qualcomm Inc. and Vitesse Semiconductor (3.0% and 2.9% of net assets,
respectively). As a leading provider of innovative digital wireless
communications products and services, Qualcomm has benefited enormously from
growth within the wireless communications industry and is expected to report
record-setting revenues and net income for 1999.
Telecommunications and media were other areas that bolstered the Fund's
results, led by holdings in Univision Communication, one of the largest holdings
in the portfolio, and Clear Channel Communications (3.3% and 2.7% of net assets,
respectively). Univision operates America's largest and most-watched Spanish
language television network, reaching an estimated 91% of the national Hispanic
market. Advertisers are pouring money into their stations to reach this market
and, as a result, Univision has become the fastest growing company in the
network television business.
Although the health care sector was not a particularly strong area for us,
the Fund benefited from holdings in Biogen (2.8% of net assets) and a new
position in QLT PhotoTherapeutics (4.3% of net assets). QLT manufactures a
breakthrough drug called Viasudyne, which won fast-track approval from the Food
and Drug Administration for treating macular degeneration, the leading cause of
blindness in adults over age 55.

Q: WHAT HOLDINGS PERFORMED POORLY?
MCQUEEN: Within business services, our largest position in Snyder Communications
hurt performance. Expectations for increased investment and spending by the
company to create new business units resulted in a substantial reduction in
earnings estimates for 2000, causing the company's stock price to decline. We
sold the stock before September 30, 1999.

--------------------------------------------------------------------------------
We've been trying to build up what we believe are the stronger holdings across
the portfolio by making them larger positions.
--------------------------------------------------------------------------------

Disappointments among the Fund's health care holdings included Omnicare,
Contract Management and Research, and Boron, LePore & Associates. We sold our
positions in all three stocks before fiscal year-end.
Financial services was another weak area for us. Rising interest rates

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------

and slower loan growth sent financial stocks tumbling in the last few months of
our reporting period. We strongly believe this sector will regain ground given
that we foresee little threat of continued interest rate increases by the Fed.

Q: AS YOU'VE BEEN REPOSITIONING THE FUND, HAVE YOU ADDED ANY NEW NAMES TO THE
PORTFOLIO?
MCQUEEN: We really haven't been adding new names. Instead, we've been trying to
build up what we believe are the stronger holdings across the portfolio by
making them larger positions.

Q: WHAT IS YOUR OUTLOOK FOR FISCAL YEAR 2000?
MCQUEEN: There's been a lot of fear and concern about the direction of interest
rates. We believe we're at a point now where we may have one more rate increase,
but certainly not numerous increases. Once investors become comfortable with
that, we think the market will start going up again. And while the economy may
slow a bit, we don't have any concerns about a recession.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of all distributions.
Portfolio holdings are as of 9/30/99 and are subject to change. Each index
mentioned is an unmanaged group of stocks that differs from the composition of
any Stein Roe fund; indices are not available for direct investment. An expense
limit of 1.25% of average daily net assets was in effect for the periods shown.
Returns would have been lower without the limit. Funds that emphasize
investments in small and midcap companies may experience greater volatility.

<PAGE>

Fund Highlights
--------------------------------------------------------------------------------
As of Septemper 30, 1999
Stein Roe Midcap Growth Fund
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------

QLT PhotoTherapeutics 4.3% Kansas City Southern 3.0%
VISX 3.7 Qualcomm 3.0
Solectron 3.6 Pinnacle 2.9
Univision Communication 3.3 Vitesse Semiconductor 2.9
Inet Technologies 3.1 Biogen 2.8

--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
S&P MIDCAP
PORTFOLIO 400 INDEX
--------------------------------------------------------------------------------
Number of Equity & Convertible Holdings 46 400
Dollar-Weighted Median Market Capitalization (Billions) $5.6 $2.7
Price/Earnings Ratio 44.7x 26.2x
Beta (Volatility) 1.21 1.00

--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN

Equity Portfolio S&P Midcap 400 Index
Consumer Cyclical 19% 12%
Consumer Noncyclical 24% 19%
Energy/Basic Materials 10%
Financial 3% 14%
Industrial 8% 8%
Technology 44% 26%
Utilities 2% 11%

<PAGE>

Questions & Answers
--------------------------------------------------------------------------------

AN INTERVIEW WITH DAN CANTOR, PORTFOLIO MANAGER OF STEIN ROE DISCIPLINED STOCK
FUND AND SR&F DISCIPLINED STOCK PORTFOLIO
photo: Dan Cantor

Fund Data
Investment Objective and Strategy:
Stein Roe Disciplined Stock Fund seeks long-term growth from common stocks of
mid capitalization companies. The Portfolio may also invest in companies that
have large-cap market capitalizations.

Fund Inception:
May 22, 1968

Net Assets:
$593.5 million

Effective May 6, 1999, Stein Roe Special Fund was renamed Stein
Roe Disciplined Stock Fund to more accurately reflect its modified focus on
stocks of companies that have growth and/or value characteristics. Dan Cantor
was named portfolio manager of Disciplined Stock Fund, adding to his
responsibility as portfolio manager of Stein Roe Growth & Income Fund. Jeff
Kinzel was named co-portfolio manager of Disciplined Stock Fund on November 19,
1999. Mr. Kinzel has been a senior equity analyst at Stein Roe for eight years.

Q: HOW DID THE FUND PERFORM IN FISCAL 1999?
CANTOR: After a lackluster performance in the first half of fiscal 1999,
Disciplined Stock Fund finished the period on a positive note. The Fund provided
a total return of 13.57% for the fiscal year ended September 30, 1999. Our
results did not keep pace with the average Lipper mid-cap value fund return of
14.24% or the unmanaged S&P MidCap 400 Index's return of 25.50%.
To a large extent, the Fund's disappointing returns reflect a decision to
restructure the portfolio as well as the relatively weak performance of certain
stocks during the first nine months of fiscal 1999. Many of these stocks are no
longer in the portfolio.

Q: SINCE YOU BEGAN MANAGING THE FUND IN MAY, WHAT STEPS HAVE BEEN TAKEN TO
REPOSITION THE PORTFOLIO?
CANTOR: Before we get into specific changes we've made, we should point out that
the day we began managing Disciplined Stock Portfolio marked the start of a new
investment strategy for the Portfolio. In the past, the Portfolio investment
approach was very value-oriented, focused on companies that its manager believed
were undervalued, underfollowed or out-of-favor. We are looking for good

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------

quality companies selling at attractive P/E ratios relative to the overall
market and/or their respective industries.
We invest primarily in the stocks of mid-capitalization companies, but with
the added flexibility of investing in large-cap companies that possess the same
growth and/or value characteristics we seek among mid-cap stocks. Up to this
point in the portfolio's transition, our work has involved selling holdings and
adding positions that we thought were more consistent with the Portfolio's
modified investment strategy.

Q: CAN YOU GIVE EXAMPLES OF NEW HOLDINGS THAT YOU BELIEVE EMBRACE THE FUND'S
MODIFIED INVESTMENT STRATEGY?
CANTOR: We added positions in Ecolab, Federated Department Stores and Lear
Corporation (0.8%, 0.4% and 0.8% of net assets, respectively). The common theme
is that these are well-established names that we believe are well-managed and
have above-average growth prospects. We seek to avoid stocks whose price
appreciation relies heavily on a major company or industry turnaround.

Q: WAS THERE A COMMON THEME WITH REGARD TO THE STOCKS YOU SOLD WHEN YOU ASSUMED
RESPONSIBILITY FOR THE PORTFOLIO?
CANTOR: Since assuming responsibility for the Portfolio, we reduced the
Portfolio's exposure to metal stocks, a sector where the Portfolio had an
overweight position relative to its benchmark. On strength, we sold several gold
stocks including Placer Dome and Newmont Mining. We also reduced the Portfolio's
position in more than a dozen stocks in a variety of other sectors.

Q: WHAT HOLDINGS, WHETHER NEW OR OLD, PERFORMED WELL?
CANTOR: During the first fiscal half, Barrick Gold (1.6% of net assets)--most of
which we have since sold for a sizable profit--supported our performance with
favorable earnings prospects in an environment where most other companies in the
portfolio were suffering from reduced earnings. As we moved through the second
fiscal half, several of our technology and telecommunications-related holdings,
including AVX Corp. and Telephone & Data Systems (3.7% and 3.1% of net assets,
respectively), served us well.

Q: LOOKING AHEAD, WHAT SECTORS DO YOU EXPECT TO FOCUS ON?
CANTOR: We expect to increase the Portfolio's exposure to financial services
companies and decrease holdings in basic materials as we identify new companies
for the portfolio.

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------

Q: WHAT IS YOUR OUTLOOK FOR THE MID-CAP STOCK MARKET AND THE FUND?
CANTOR: We are bottom-up investors. As such, we try to distinguish attractive
opportunities one company at a time through fundamental analysis. The midcap
market currently appears to offer many attractive investment opportunities. At
the same time, prices of many large-cap stocks outside the technology industry
have corrected substantially, making it more attractive for value-oriented
investors. We will continue to emphasize midcap companies, with a complement of
select large-cap stocks.
Over time, we believe the Fund's investment strategy will help produce more
consistent returns. We continue to be pleased with the progress of the
transition, and while we have more work ahead of us, we see no impediments to
getting the job done.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURNS WILL VARY, SO YOU MAY HAVE GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of all distributions.
Portfolio holdings are disclosed as a percentage of SR&F Disciplined Stock
Portfolio as of 9/30/99 and are subject to change. Each index mentioned is an
unmanaged group of stocks that differs from the composition of any Stein Roe
fund; indices are not available for direct investment. Source: Lipper Inc.

<PAGE>

Fund Highlights
--------------------------------------------------------------------------------
As of Septemper 30, 1999
SR&F Disciplined Stock Portfolio
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------

AVX Corp. 3.7% Imperial Chemical 2.7%
Telephone & Data Systems 3.1 Perrigo 2.7
Andrew Corp. 3.0 Cross Timbers Oil 2.6
Superior Industries 2.9 Golden West Financial 2.5
OM Group 2.9 Acuson 2.3

--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS

S&P MIDCAP
PORTFOLIO 400 INDEX
--------------------------------------------------------------------------------
Number of Equity & Convertible Holdings 70 400
Dollar-Weighted Median Market
Capitalization (Billions) $1.1 $2.7
Price/Earnings Ratio 21.0x 26.2x
Beta (Volatility) 0.89 1.00

Economic Sector Breakdown

Equity Portfolio S&P MidCap 400 Index
Basic Materials 19% 3%
Consumer Cyclical 20% 12%
Consumer Noncyclical 10% 19%
Energy 6% 7%
Financial 7% 14%
Industrial 21% 8%
Technology 14% 26%
Utilities 3% 11%

<PAGE>

Questions & Answers
--------------------------------------------------------------------------------
AN INTERVIEW WITH DAVE BRADY, PORTFOLIO MANAGER OF STEIN ROE LARGE COMPANY
FOCUS FUND

Fund Data
Investment Objective and Strategy:
Stein Roe Large Company Focus Fund seeks long-term growth of capital by
investing in a non-diversified portfolio of equity securities believed to
have above-average growth potential.

Fund Inception:
June 26, 1998

Net Assets:
$59.6 million

Photo of: Dave Brady

Q: HOW DID THE FUND PERFORM DURING FISCAL YEAR 1999?
BRADY: We achieved excellent results during the Fund's first full fiscal year of
operations. The Fund's total return of 35.05% outpaced the unmanaged Standard &
Poor's 500 Index, which rose 27.79% for the period, as shown on page 3. Our
focus on technology stocks such as Microsoft and Cisco Systems (6.9% and 4.6% of
net assets, respectively) and telecom stocks such as Vodafone AirTouch (5.3% of
net assets) were the primary factors in generating our strong returns. We also
invested in some initial public offerings and this contributed 9.9% of the
Fund's total return during the past year.*

Q: WAS IT CHALLENGING TO MAINTAIN AN ATTRACTIVE MIX OF STOCKS GIVEN THAT SOME
CONSUMER GROWTH STOCKS FELL OUT-OF-FAVOR THIS PAST YEAR?
BRADY: Many individual stocks have been volatile since mid-1998, particularly
in the global consumer products area, a sector where concerns about higher
inflation, rising interest rates and a slowdown in earnings growth have been
pronounced. It's prompted us to more closely examine the stocks we select for
the portfolio. We attempt to focus on the most attractive stocks in sectors with
the most promising and sustainable long-term growth prospects.
In fiscal 1999, we built a portfolio of companies that represent 10 of the 11
major sectors within the S&P 500 Index. As of September 30, 1999, the Fund had
25 holdings, all of which had above-average earnings per share (EPS) and sales
growth potential, in our view.

* Approximately 9.9% of the Fund's 35.05% return for the 12-month period ended
9/30/99 was due to investments in initial public offerings. Such performance may
not be sustainable.

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------

Q: FINANCIAL SERVICES STOCKS HAVE ALSO BEEN HIT HARD SINCE JANUARY AS INTEREST
RATES HAVE RISEN. SOME FIRMS HAVE REPORTED CONSUMER CREDIT PROBLEMS. WHY DID YOU
HAVE THREE FINANCIAL SERVICES FIRMS AMONG YOUR TOP SEVEN HOLDINGS AS OF
SEPTEMBER 30, 1999 (SEE PAGE 22)?

BRADY: We believe certain companies offer good growth prospects and that
interest rates, in the absence of inflation, are unlikely to move much higher
from current levels. Recent government economic data have confirmed a resilient,
healthy U.S. economy. Retail sales and personal income are rising. Consumer
confidence is high and overall consumer credit trends remain positive, in our
view.
Looking ahead, we believe the investment environment we anticipate will unfold
over the next several months -- continued favorable inflation and moderate
growth - will lead to a more stable interest rate environment, and this should
benefit financial stocks. We remain convinced that the market will recognize the
superior growth potential and track record of companies such as Associates First
Capital Corp. (5.6% of net assets). A top 10 holding, we believe Associates is
on track to post its 25th consecutive annual increase in net earnings.

Q: THERE HAS BEEN A LOT OF MERGER ACTIVITY IN THE TELECOMMUNICATIONS AND MEDIA
INDUSTRIES. HOW DID THIS AFFECT FUND PERFORMANCE IN FISCAL 1999?
BRADY: In the first half of fiscal 1999, the Fund benefited from Vodafone's
takeover of AirTouch Communications. We continue to like the combined company.
During this past summer, Viacom announced plans to acquire CBS (4.7% of net
assets) and subsequent strength in CBS stock helped Fund performance in the
third calendar quarter of 1999. Comcast, a cable television services provider
and another top 10 holding as of September 30, 1999 (6.4% of net assets), also
rose substantially during the past year. It earned a $1.5 billion fee in
connection with AT&T's acquisition of MediaOne Group. Comcast had originally
planned to buy MediaOne. While the Fund does not seek to participate in merger
activity as an investment strategy, our growth-oriented selection process led us
to stocks in two dynamic industries at a fortuitous time.

Q: THE FUND WAS UNDERWEIGHTED IN CONSUMER NON-CYCLICAL STOCKS SUCH AS HEALTH
CARE AND PHARMACEUTICAL COMPANIES AS OF SEPTEMBER 30, 1999. WHY?
BRADY: This past year pharmaceutical stocks were negatively

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------
affected by concerns about government plans to extend prescription drug coverage
to Medicare recipients. Overall, health care stocks provided mixed results for
the Fund. After poor performance, we replaced Eli Lilly with Warner-Lambert
(4.0% of net assets) during the third calendar quarter of 1999. Becton
Dickinson, a maker of medical products, was also a disappointment (2.3% of net
assets). We added IMS Health (3.1% of net assets) to the portfolio. IMS is a
global leader in providing drug makers with information about doctors'
prescription drug usage patterns.

Q: WHAT ARE SOME OF THE RISKS OF MANAGING A CONCENTRATED PORTFOLIO?
BRADY: In a mutual fund that focuses on two dozen or so stocks, price
fluctuations of one stock generally have more of an impact on the portfolio than
in a fund with 100 or more holdings. A concentrated portfolio can augment a
fund's results when stock selections perform as expected, but it can also lead
to substantial underperformance compared to the overall stock market if several
of the fund's holdings do not meet expectations. To help mitigate this risk, we
carefully monitor Large Company Focus Fund's holdings, and we may sell a stock
quickly if uncertainties about earnings or operations arise.

Q: WHAT'S YOUR OUTLOOK FOR THE FUND?
BRADY: We think telecommunications and technology will be among the market's
best performers. We also believe consumer demand for cellular, Internet and
computer products is likely to remain strong for many months to come, boosting
growth prospects for companies with the managerial talent and financial
resources to capitalize on new technology. For example, we have confidence that
Microsoft can continue to deliver strong earnings growth as it introduces
upgrades to its Office 2000 software and begins selling its Windows 2000
operating system upgrade in the coming months.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE GAIN OR LOSS WHEN YOU SELL SHARES. Total
return includes changes in share price and reinvestment of all distributions.
Portfolio holdings are as of 9/30/99 and are subject to change. The S&P 500
Index shown is an unmanaged group of securities that differs from the
composition of each Stein Roe fund; it is not available for direct investment.
Source: Lipper Inc.
An expense limit of 1.50% of average daily net assets was in effect for the
periods shown. Returns would have been lower without the limit.

<PAGE>

Fund Highlights
--------------------------------------------------------------------------------
As of Septemper 30, 1999
Stein Roe Large Company Focus Fund
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------

Microsoft 6.9% Vodafone AirTouch 5.3%
Comcast 6.4 Household Int'l 5.2
Interpublic Group 6.2 CBS 4.7
SouthTrust 5.8 Cisco Systems 4.6
Associates First Capital Corp. 5.6 MCI WorldCom 4.5

--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS

PORTFOLIO S&P 500
--------------------------------------------------------------------------------
Number of Equity & Convertible Holdings 25 500
Dollar Weighted Median Market
Capitalization (Billions) $28.3 $65
Price/Earnings Ratio 33.2x 25.3x
Beta (Volatility) 1.05 1.00

--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN

Equity Portfolio S&P 500 Index
Consumer Cyclical 17% 12%
Consumer Noncyclical 13% 19%
Energy/Basic Materials 4% 10%
Financial 14% 14%
Industrial 3% 8%
Technology 21% 26%
Utilities 28% 11%

<PAGE>

Q&A
--------------------------------------------------------------------------------
AN INTERVIEW WITH DAVE BRADY AND ERIK GUSTAFSON, PORTFOLIO MANAGERS OF STEIN ROE
CAPITAL OPPORTUNITIES FUND

Fund Data
Investment Objective and Strategy:
Stein Roe Capital Opportunities Fund seeks long-term growth by investing in
the stocks of companies believed to offer substantial long-term earnings
growth.

Fund Inception:
March 31, 1969

Net Assets:
$411.3 million

Photo of: Dave Brady, Erik Gustafson

Effective May 6, 1999, Dave Brady and Erik Gustafson assumed portfolio
management responsibilities for the Fund.

Q: HOW DID THE FUND PERFORM DURING FISCAL YEAR 1999?
BRADY: The Fund had a total return of 13.43% for the 12 months ended September
30, 1999. This compares to a 50.88% average return of funds in the Lipper midcap
growth fund category for the period. The Fund's results were also less than the
25.50% return of the unmanaged S&P MidCap 400 Index, the Fund's benchmark. To a
large extent, the Fund's disappointing short-term returns reflect a decision to
restructure the portfolio as well as the relatively weak performance of certain
stocks during the first nine months of fiscal 1999. Many of these stocks are no
longer in the portfolio. Some of the Fund's newer stock selections also did not
meet our expectations this past summer.

GUSTAFSON: In early October 1998, there was a substantial sell-off in the small
and midcap sectors. From the end of the third quarter through October 8, 1998
the S&P MidCap 400 Index fell 10% and the small-cap Russell 2000 Index fell 15%,
versus only a 1.4% decline in the Dow Jones Industrial Average. After the market
bottom of October 8, the small and midcap sectors rebounded. This rally
continued early into 1999, but reversed in February when interest rates began to
rise. Small-cap stocks generally outperformed large cap stocks during the second
half of fiscal year 1999.

<PAGE>

Q: HOW DID YOU RESTRUCTURE THE PORTFOLIO?
BRADY: We modified the portfolio to further reinforce the Fund's aggressive
growth mandate. We reduced holdings in certain consumer and industrial companies
while retaining names that we believed are poised to grow their earnings
regardless of market conditions. Four of the Fund's top 10 holdings a year ago
were still in the top 10 as of September 30, 1999. Telecommunications has been
an area where we made many new purchases.

Q: WHAT SECTORS ARE YOU FOCUSING ON?
GUSTAFSON: The portfolio is focused on the higher growth segments of the economy
such as technology and consumer cyclicals. One stock we've held all year that
has done especially well has been Hispanic Broadcasting (4.2% of net assets).
The Fund's largest holding as of September 30, 1999, Hispanic Broadcasting is
the largest Spanish-language radio station operator in the U.S., with 43
stations. America's Hispanic population is growing at three times the rate of
the non-Hispanic population, and this is fueling substantial increases in
audience size. Spanish-language advertising has been growing at 18% a year,
double that of English ads, and we feel the company is well-positioned to
benefit from this trend.

BRADY: The Fund's technology sector holdings consist of companies we think are
benefiting from the rapid growth in global networking and Internet sectors. This
includes companies such as telecom equipment manufacturer Tellabs (2.8% of net
assets), Conexant (2.6% of net assets), a semiconductor manufac-turer spun-off
earlier this year from Rockwell International, and Network Appliance, a computer
network equip-ment supplier (1.7% of net assets).

Q: DID YOU SELL MANY MAJOR HOLDINGS DURING THE RESTRUCTURING?
BRADY: Overall, our restructuring efforts resulted in the sale of long-time
holdings in several consumer-oriented sectors such as health care that no longer
appeared to us to offer attractive growth potential. In some cases, we realized
significant capital gains. Among the Fund's health care sales were Health
Management Associates, HBO & Co., Omnicare and Quintiles. This past summer we
added Express Scripts (1.9% of net assets), a pharmacy benefit firm that we
believe is well-positioned to distribute ethical drugs over the Internet. At the
start of fiscal 1999, health care was the portfolio's largest sector weighting.
As

<PAGE>

Q&A Continued
--------------------------------------------------------------------------------
of September 30, 1999, the Fund had a lower-than-average market weighting in
this group.

Q: HOW HAVE RECENT STOCK SELECTIONS PERFORMED?
GUSTAFSON: We can point to several successes, particularly in technology.
Conexant and Network Appliance were major contributors to performance in the
third calendar quarter of 1999. However, we've also had some setbacks. We added
Mattel (2.8% of net assets) during the second half and the toy maker
disappointed investors with an earnings shortfall.

Q: WHAT IS YOUR OUTLOOK FOR AGGRESSIVE GROWTH STOCKS?
BRADY: Recent government economic data have confirmed a resilient, healthy U.S.
economy, and in our view this bodes well for companies that are rapidly
expanding their earnings and sales. Retail sales and personal income are rising,
which can potentially benefit consumer stocks. Consumer confidence is high and
consumer credit trends remain positive, in our view. Looking ahead, we believe
the investment environment we anticipate will unfold over the next several
months -- continued favorable inflation and moderate growth -- will lead to a
more stable interest rate environment, and this should help bolster investor
confidence in companies with above-average growth expectations.

<PAGE>

Fund Highlights
--------------------------------------------------------------------------------
As of Septemper 30, 1999
Stein Roe Capital Opportunities Fund
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------
Hispanic Broadcasting 4.2% Paychex 2.9%
Clear Channel Communications 3.9 VISX 2.9
Fiserv 3.4 Mattel 2.8
Carnival 3.2 Tellabs 2.8
Best Buy 3.0 Telephone & Data Systems 2.7

--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
S&P MIDCAP
PORTFOLIO 400 INDEX
--------------------------------------------------------------------------------
Number of Holdings 51 400
Weighted Median Market Value (Billions) $5.0 $2.7
Price/Earnings Ratio 38.9x 26.2x
Beta (Volatility) 1.22 1.00

--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
Equity Portfolio S&P MidCap 400 Index
Consumer Cyclical 32% 12%
Consumer Noncyclical 4% 19%
Energy/Basic Materials 10%
Financial 4% 14%
Industrial 4% 8%
Technology 47% 26%
Utilities 9% 11%

<PAGE>

SR&F Growth Stock Portfolio
--------------------------------------------------------------------------------
Portfolio of Investments at September 30, 1999
(All amounts in thousands)

NUMBER MARKET
COMMON STOCKS (96.0%) OF SHARES VALUE
--------------------------------------------------------------------------------
BUSINESS SERVICES (3.5.%)
America Online, Inc.................................. 150 $ 15,600
Omnicom Group........................................ 350 27,716
----------
43,316
COMPUTER AND COMPUTER SOFTWARE (17.8%)
Applied Materials (a)................................ 400 31,150
Cisco Systems, Inc. (a).............................. 1,100 75,419
EMC Corp. (a)........................................ 750 53,578
Microsoft Corp. (a).................................. 500 45,281
Sun Microsystems (a)................................. 175 16,275
----------
221,703
CONSUMER-RELATED (5.1%)
Gillette Co.......................................... 500 16,969
Johnson & Johnson.................................... 250 22,969
Procter & Gamble Co.................................. 250 23,438
----------
63,376
DISTRIBUTION - RETAIL (8.2%)
Home Depot, Inc...................................... 650 44,606
Kohl's Corp. (a)..................................... 500 33,063
Walgreen Co.......................................... 950 24,106
----------
101,775
ELECTRICAL EQUIPMENT (7.4%)
General Electric Co.................................. 400 47,425
Micron Technology, Inc............................... 300 19,969
Texas Instruments, Inc............................... 300 24,675
----------
92,069
FINANCIAL SERVICES (6.4%)
Citigroup, Inc....................................... 1,050 46,200
Fannie Mae........................................... 550 34,478
----------
80,678
FOOD, BEVERAGE AND TOBACCO (1.2%)
Coca-Cola Co......................................... 300 14,419

INSURANCE (3.5%)
American International Group, Inc.................... 500 43,469

LEISURE AND ENTERTAINMENT (2.8%)
Time Warner, Inc..................................... 575 34,931

MANUFACTURING (4.5%)
Tyco International Ltd............................... 550 56,787

MEDICAL SUPPLIES (5.9%)
Cardinal Health, Inc................................. 600 32,700
Medtronic, Inc....................................... 1,150 40,825
----------
73,525
OIL AND GAS (3.9%)
Enron Corp........................................... 650 26,812
Schlumberger Ltd..................................... 350 21,809
----------
48,621

<PAGE>

SR&F Growth Stock Portfolio Continued
--------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
--------------------------------------------------------------------------------
PHARMACEUTICAL (2.9%)
Pfizer, Inc.......................................... 1,000 $ 35,937

OPTICAL FIBER MANUFACTURER (1.5%)
Corning, Inc......................................... 275 18,855

TELECOMMUNICATIONS (18.4%)
AT&T Corp............................................ 500 21,750
AT&T - Liberty Media Group (a)....................... 250 9,281
Comcast Corp......................................... 800 31,900
Lucent Technologies, Inc............................. 650 42,169
MCI WorldCom, Inc. (a)............................... 650 46,719
Motorola, Inc........................................ 500 44,000
Tellabs, Inc. (a).................................... 600 34,162
----------
229,981
TOYS (3.0%)
Mattel............................................... 2,000 38,000
----------
TOTAL COMMON STOCKS (Cost $709,595).................. 1,197,442
----------
--------------------------------------------------------------------------------
PRINCIPAL
SHORT-TERM OBLIGATIONS (4.3%) AMOUNT
--------------------------------------------------------------------------------
COMMERCIAL PAPER (4.3%)
Associates Corp. of North America 5.600% 10/01/99.... $49,020 49,020
Limited, Inc. 5.700% 10/01/99........................ 5,000 5,000
----------
(Cost $54,020)....................................... 54,020
----------
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.3%)
(Cost $763,615)...................................... 1,251,462

OTHER ASSETS, LESS LIABILITIES (-0.3%)............... (3,309)
----------
NET ASSETS (100.0%).................................. $1,248,153
==========
--------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At September 30, 1999, the cost of investments for federal income tax
purposes was $767,503. Net unrealized appreciation was $483,959, consisting
of gross unrealized appreciation of $513,865 and gross unrealized
depreciation of $29,906.

See accompanying Notes to Financial Statements.

<PAGE>

Stein Roe Midcap Growth Fund
--------------------------------------------------------------------------------
Portfolio of Investments at September 30, 1999
(All amounts in thousands)

NUMBER MARKET
COMMON STOCKS (96.3%) OF SHARES VALUE
--------------------------------------------------------------------------------
BUSINESS SERVICES (5.6%)
AHL Services, Inc. (a)............................... 24 $ 626
Iron Mountain, Inc. (a).............................. 29 982
Paychex, Inc......................................... 25 853
--------
2,461

COMPUTER AND TELECOMMUNICATIONS HARDWARE (32.0%)
Cisco Systems, Inc. (a).............................. 12 823
Citrix Systems, Inc. (a)............................. 14 867
Comverse Technology, Inc. (a)........................ 11 1,037
DoubleClick, Inc. (a)................................ 9 1,072
Inet Technologies, Inc. (a).......................... 35 1,396
Internet Capital Group, Inc. (a)..................... 9 791
Microsoft Corp. (a).................................. 8 725
NOVA Corp. (a)....................................... 27 675
Novell, Inc. (a)..................................... 52 1,076
Qualcomm, Inc. (a)................................... 7 1,324
Quantum Corp. - DLT & Storage Systems (a)............ 40 563
Solectron Corp. (a).................................. 22 1,580
Teradyne, Inc. (a)................................... 28 987
Vitesse Semiconductor Corp. (a)...................... 15 1,281
--------
14,197
EDUCATIONAL SERVICES (2.0%)
Devry, Inc. (a)...................................... 45 900

FINANCIAL SERVICES (5.9%)
Freddie Mac.......................................... 13 676
Kansas City Southern Industries, Inc................. 29 1,347
MGIC Investment Corp................................. 12 573
--------
2,596

HEALTH CARE (26.9%)
Bausch & Lomb, Inc................................... 12 791
Biogen, Inc. (a)..................................... 16 1,261
Biomet, Inc.......................................... 17 447
Cardinal Health, Inc................................. 12 654
Forest Laboratories, Inc. (a)........................ 17 716
Genentech, Inc. (a).................................. 4 585
IMS Health, Inc...................................... 55 1,255
Laser Vision Centers, Inc. (a)....................... 40 561
MedImmune, Inc. (a).................................. 11 1,096
QLT PhotoTherapeutics, Inc........................... 25 1,911
Shire Pharmaceuticals Group - ADR (a)................ 34 980
VISX, Inc. (a)....................................... 21 1,661
--------
11,918
RETAIL (7.1%)
Best Buy Co., Inc. (a)............................... 7 434
Children's Place (a)................................. 26 692
Home Depot, Inc...................................... 12 824
Kohl's Corp. (a)..................................... 9 595
Papa John's International, Inc. (a).................. 15 619
--------
3,164

<PAGE>

Stein Roe Midcap Growth Fund Continued
--------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
--------------------------------------------------------------------------------
TELECOMMUNICATION AND MEDIA (16.8%)
AMFM, Inc. (a)....................................... 20 $ 1,218
Clear Channel Communications, Inc. (a)............... 15 1,198
Comcast Corp., Special Class A (a)................... 16 638
Covad Communications Group, Inc. (a)................. 14 610
Level 3 Communications, Inc. (a)..................... 6 313
MCI WorldCom, Inc. (a)............................... 10 719
Pinnacle Holdings, Inc. (a).......................... 50 1,306
Univision Communications, Inc., Class A (a).......... 18 1,465
--------
7,467
--------
TOTAL COMMON STOCKS (Cost $32,119)................... 42,703
--------
-------------------------------------------------------------------------------
PRINCIPAL
SHORT-TERM OBLIGATIONS (4.0%) AMOUNT
-------------------------------------------------------------------------------
COMMERCIAL PAPER (4.0%)
Associates Corp. of North America
5.600% 10/01/99...................................... $1,800 1,800
--------
TOTAL SHORT-TERM OBLIGATIONS (Cost $1,800 ).......... 1,800
--------
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.3%)
(Cost $33,919) (b)................................... 44,503
OTHER ASSETS, LESS LIABILITIES (-0.3%)............... (144)
--------
NET ASSETS (100.0%).................................. $ 44,359
========
--------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
(a) Non-incoming producing security.
(b) At September 30, 1999, the cost of investments for financial reporting and
federal income tax purposes was identical. Net unrealized appreciation was
$10,584, consisting of gross unrealized appreciation of $12,441 and gross
unrealized depreciation of $1,857.

Acronym Name
--------- ------
ADR American Depositary Receipt

See accompanying Notes to Financial Statements.

<PAGE>

SR&F Disciplined Stock Portfolio
--------------------------------------------------------------------------------
Portfolio of Investments at September 30, 1999
(All amounts in thousands)

NUMBER MARKET
COMMON STOCKS (90.5%) OF SHARES VALUE
--------------------------------------------------------------------------------
AEROSPACE (0.5%)
Goodrich (B.F.) Co................................... 93 $ 2,685

AUTO PARTS (3.9%)
Dana................................................. 150 5,569
Superior Industries International.................... 635 17,786
--------
23,355
AUTO/TRUCK PARTS & EQUIPMENT (1.1%)
Hertz Corp., Class A................................. 50 2,200
Lear Corp. (a)....................................... 130 4,574
--------
6,774
BANKS (4.3%)
Golden West Financial................................ 154 15,121
Washington Mutual.................................... 383 11,191
--------
26,312
BUSINESS SERVICES (1.5%)
Interim Services (a)................................. 550 9,006

CHEMICALS (2.1%)
Wellman.............................................. 700 12,644

COMPUTERS (2.2%)
Silicon Graphics (a)................................. 1,230 13,453

DISTRIBUTION (0.4%)
Federated Department Stores (a)...................... 50 2,184

DIVERSIFIED OPERATIONS (3.1%)
Alexander & Baldwin.................................. 298 7,115
Eaton................................................ 59 5,092
Kansas City Southern Industries...................... 50 2,322
U.S. Industries...................................... 253 3,977
--------
18,506
DRUGS (2.7%)
Perrigo Co. (a)...................................... 2,051 16,148

ELECTRICAL EQUIPMENT (3.0%)
Littelfuse, Inc. (a)................................. 540 12,015
Littelfuse, Inc., Warrants (a)....................... 347 6,076
--------
18,091
ELECTRONICS AND INSTRUMENTATION (4.4%)
AVX Corp............................................. 630 22,139
Arrow Electronics, Inc. (a).......................... 239 4,209
--------
26,348
ENERGY AND RELATED SERVICES (5.1%)
Cross Timbers Oil.................................... 1,166 15,744
Diamond Offshore Drilling............................ 92 3,070
Petroleum Geo-Services ADR (a)....................... 322 6,146
Tidewater Corp....................................... 231 5,891
--------
30,851
FINANCIAL SERVICES (0.5%)
The PMI Group........................................ 75 3,066

<PAGE>

SR&F Disciplined Stock Portfolio Continued
--------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
--------------------------------------------------------------------------------
HEALTH SERVICES AND EQUIPMENT (7.6%)
Acuson Corp. (a)..................................... 1,107 $ 14,110
Columbia/ HCA Healthcare............................. 405 8,579
First Health Group (a)............................... 495 11,111
Invacare............................................. 354 6,918
Mallinckrodt......................................... 170 5,132
--------
45,850
INDUSTRIAL PRODUCTS (2.1%)
Carlisle Cos......................................... 292 11,534
Gentex Corp. (a)..................................... 44 909
--------
12,443
INSURANCE COMPANIES (1.4%)
20th Century Industries.............................. 332 6,427
Travelers Property Casualty - Class A................ 73 2,154
--------
8,581
LEISURE AND ENTERTAINMENT (0.6%)
Brunswick............................................ 146 3,632

MACHINERY (5.2%)
AGCO................................................. 400 5,200
Albany International - Class A....................... 257 3,885
Flowserve............................................ 365 6,068
Regal Beloit......................................... 206 4,275
Stewart & Stevenson Services......................... 924 12,133
--------
31,561
MANUFACTURING - GENERAL INDUSTRY (2.7%)
Dexter Corp.......................................... 275 10,261
Smith (A.O.)......................................... 193 5,838
--------
16,099
METALS (3.2%)
Barrick Gold......................................... 450 9,788
Freeport-McMoran Copper & Gold....................... 600 9,338
--------
19,126
METAL PROCESSORS (1.1%)
Timken............................................... 399 6,432

MINING AND AGRICULTURE (2.3%)
Cyprus Amax Minerals................................. 715 14,032

OFFICE FURNISHINGS (0.9%)
Steelcase - Class A.................................. 395 5,505

PACKAGING (1.3%)
Crown Cork & Seal.................................... 336 8,148

PAPER & RELATED PRODUCTS (0.6%)
Glatfelter (P.H.).................................... 208 3,419

RETAIL (3.6%)
Borders Group (a).................................... 310 4,553
Consolidated Stores (a).............................. 167 3,690
OfficeMax (a)........................................ 750 4,359
Pier 1 Imports....................................... 775 5,231
TJX.................................................. 150 4,209
--------
22,042

<PAGE>

SPECIALTY CHEMICALS (6.4%)
Ecolab............................................... 150 5,119
Imperial Chemical Industries ADR..................... 375 16,213
OM Group............................................. 460 17,633
--------
38,965
STEEL (1.2%)
Carpenter Technology................................. 300 7,350

TECHNOLOGY SERVICES (0.9%)
Seagate Technology, Inc. (a)......................... 186 5,725

TELECOMMUNICATIONS (6.1%)
Andrew Corp. (a)..................................... 1,054 18,312
Telephone & Data Systems............................. 208 18,473
--------
36,785
TEXTILES AND APPAREL (4.1%)
Reebok International................................. 111 1,186
Springs International................................ 126 4,276
Unifi................................................ 785 8,640
Wolverine WorldWide.................................. 961 10,931
--------
25,033
VITAMINS & NUTRITION PRODUCTS (0.3%)
Rexall Sundown, Inc. (a)............................. 175 2,155

WIRE AND CABLE PRODUCTS (0.6%)
Belden............................................... 178 3,649
--------
TOTAL COMMON STOCKS (Cost $467,440).................. 547,928
--------

<PAGE>

SR&F Disciplined Stock Portfolio Continued
--------------------------------------------------------------------------------
PRINCIPAL MARKET
SHORT-TERM OBLIGATIONS (9.4%) AMOUNT VALUE
--------------------------------------------------------------------------------
COMMERCIAL PAPER (9.4%)
Associates Corp. of North America 5.600% 10/01/99.... $28,215 $ 28,215
Limited, Inc. 5.700% 10/01/99........................ 9,000 9,000
Western Resources 5.600% 10/05/99.................... 20,000 19,990
--------
TOTAL SHORT-TERM OBLIGATIONS (cost $57,205).......... 57,205
--------
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.9%)
(Cost $524,645) (b).................................. 605,133
OTHER ASSETS, LESS LIABILITIES (0.1%)................ 447
--------
NET ASSETS (100.0%).................................. $605,580
========
--------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At September 30, 1999, the cost of investments for federal income tax
purposes was $525,335. Net unrealized appreciation was $79,798, consisting
of gross unrealized appreciation of $122,964 and gross unrealized
depreciation of $43,166.

Acronym Name
--------- ------
ADR American Depositary Receipt

See accompanying Notes to Financial Statements.

<PAGE>

Stein Roe Large Company Focus Fund
--------------------------------------------------------------------------------
Portfolio of Investments at September 30, 1999
(All amounts in thousands)

NUMBER MARKET
COMMON STOCKS (99.9%) OF SHARES VALUE
--------------------------------------------------------------------------------
BUSINESS SERVICES (13.0%)
Avery Dennison Corp.................................. 45 $ 2,379
Interpublic Group of Cos., Inc....................... 90 3,685
Mattel, Inc.......................................... 88 1,672
--------
7,736
COMPUTER AND COMPUTER SOFTWARE (25.3%)
Cisco Systems, Inc. (a).............................. 40 2,736
Dell Computer Corp. (a).............................. 20 836
EMC Corp. (a)........................................ 30 2,143
Intuit, Inc. (a)..................................... 20 1,753
Microsoft Corp. (a).................................. 46 4,130
Novell, Inc. (a)..................................... 80 1,655
Sun Microsystems (a)................................. 20 1,860
--------
15,113
FINANCIAL SERVICES (16.6%)
Associates First Capital Corp........................ 92 3,312
Household International, Inc......................... 77 3,102
SouthTrust Corp...................................... 96 3,437
--------
9,851
HEALTH CARE (5.4%)
Becton, Dickinson & Co............................... 49 1,386
IMS Health, Inc...................................... 80 1,825
--------
3,211

OIL AND GAS (2.0%)
Schlumberger Limited................................. 20 1,215

PHARMACEUTICAL (12.6%)
American Home Products Corp.......................... 46 1,926
Clorox Co............................................ 46 1,767
E.I. Dupont De Nemours & Co.......................... 24 1,451
Warner-Lambert Co.................................... 36 2,388
--------
7,532
UTILITIES (4.1%)
AES Corp. (a)........................................ 41 2,431

TELECOMMUNICATIONS (20.9%)
CBS Corp............................................. 61 2,821
Comcast Corp., Special Class A....................... 95 3,788
MCI WorldCom (a)..................................... 37 2,688
Vodafone AirTouch ADR................................ 13 3,186
--------
12,483
--------
TOTAL COMMON STOCKS (Cost $55,157)................... 59,572
--------

<PAGE>
Stein Roe Large Company Focus Fund Continued
-------------------------------------------------------------------------------
PRINCIPAL MARKET
SHORT-TERM OBLIGATION (1.1%) AMOUNT VALUE
-------------------------------------------------------------------------------
COMMERCIAL PAPER (1.1%)
Associates Corp. of North America 5.600% 10/01/99
(Cost $655).......................................... $ 655 $ 655
-------

TOTAL INVESTMENTS (101.0%)
(Cost $55,812)(b).................................... 60,227
OTHER ASSETS, LESS LIABILITIES (-1.0%)............... (580)
-------
TOTAL NET ASSETS (100.0%)............................ $59,647
=======
-------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
-------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At September 30, 1999, the cost of investments for federal income tax
purposes was $55,815. Net unrealized appreciation was $4,412, consisting of
gross unrealized appreciation of $9,365 and gross unrealized depreciation of
$4,953.

Acronym Name
--------- ----
ADR American Depositary Receipt

See accompanying Notes to Financial Statements.

<PAGE>

Stein Roe Capital Opportunities Fund
--------------------------------------------------------------------------------
Portfolio of Investments at September 30, 1999
(All amounts in thousands)

NUMBER MARKET
COMMON STOCKS (99.0%) OF SHARES VALUE
--------------------------------------------------------------------------------
BUSINESS SERVICES (3.5%)
AFLAC, Inc........................................... 200 $ 8,375
Capital One Financial Corp........................... 150 5,850
--------
14,225
CONSUMER PRODUCTS AND SERVICES (2.0%)
Jones Apparel Group (a).............................. 300 8,625

DATA PROCESSING SERVICES (11.5%)
BISYS Group (a)...................................... 200 9,381
CheckFree Holdings Corp. (a)......................... 250 10,281
Fiserv (a)........................................... 425 13,812
IMS Health, Inc...................................... 290 6,616
Network Appliance, Inc. (a).......................... 100 7,163
--------
47,253
EDUCATION & TRAINING (2.9%)
Paychex, Inc......................................... 350 11,943

HEALTH CARE (8.2%)
Cardinal Health...................................... 100 5,450
Express Scripts, Inc., Class A (a)................... 100 7,825
JDS Uniphases Corp. (a).............................. 25 2,845
Shire Pharmaceuticals Group ADRs (a)................. 200 5,762
VISX (a)............................................. 150 11,864
--------
33,746
INDUSTRIAL PRODUCTS (1.0%)
Dycom Industries, Inc. (a)........................... 95 4,008

LEISURE AND ENTERTAINMENT (6.2%)
Carnival Corp........................................ 300 13,050
International Speedway, Class A...................... 70 3,679
Steiner Leisure Ltd. (a)............................. 350 8,750
--------
25,479
MEDIA (20.5%)
American Tower Corp., Class A (a).................... 450 8,803
Adelphia Communications Corp., Class A (a)........... 125 7,352
Clear Channel Communications (a)..................... 200 15,975
Global Telesystems Group, Inc. (a)................... 250 4,930
Hispanic Broadcasting Corp. (a)...................... 225 17,128
Level 3 Communications, Inc. (a)..................... 100 5,222
Nextel Communications, Inc., Class A (a)............. 60 4,069
NEXTLINK Communications, Inc., Class A (a)........... 100 5,184
Proxim, Inc. (a)..................................... 100 4,600
Telephone and Data Systems, Inc...................... 125 11,102
--------
84,365
MISCELLANEOUS (3.5%)
Calpine Corp. (a).................................... 60 5,104
Gentex Corp. (a)..................................... 450 9,295
--------
14,399
RESTAURANTS (1.5%)
Papa John's International (a)........................ 150 6,188

<PAGE>

Stein Roe Capital Opportunities Fund Continued
--------------------------------------------------------------------------------
NUMBER MARKET
OF SHARES VALUE
--------------------------------------------------------------------------------
RETAIL (9.0%)
Best Buy (a)......................................... 200 $ 12,413
Dollar Tree Stores (a)............................... 210 8,387
Kohl's Corp. (a)..................................... 70 4,629
Mattel, Inc.......................................... 600 11,400
--------
36,829
TECHNOLOGY (29.2%)
Adobe Systems, Inc................................... 50 5,675
BMC Software (a)..................................... 100 7,156
Broadcom Corp., Class A (a).......................... 60 6,540
Comverse Technology, Inc. (a)........................ 100 9,431
Conexant Systems, Inc. (a)........................... 150 10,898
EMC Corp. (a)........................................ 150 10,716
Exodus Communications, Inc. (a)...................... 50 3,603
Flextronics International Ltd. (a)................... 150 8,728
Inktomi Corp. (a).................................... 40 4,801
Intuit, Inc. (a)..................................... 60 5,259
Lexmark International Group, Class A (a)............. 100 8,050
Novell, Inc. (a)..................................... 270 5,586
Qualcomm, Inc. (a)................................... 40 7,568
Sanmina Corp. (a).................................... 120 9,285
Tellabs, Inc. (a).................................... 200 11,388
Verisign, Inc. (a)................................... 50 5,325
--------
120,009
--------
TOTAL COMMON STOCKS (Cost $277,613).................. 407,069
--------

<PAGE>

-------------------------------------------------------------------------------
NUMBER MARKET
SHORT-TERM OBLIGATIONS (3.0%) AMOUNT VALUE
-------------------------------------------------------------------------------
COMMERCIAL PAPER (3.0%)
Associates Corp. of North America 5.600% 10/01/99.... $12,370 $ 12,370
--------
SHORT-TERM OBLIGATIONS (Cost $12,370)................ 12,370
--------
-------------------------------------------------------------------------------
TOTAL INVESTMENTS (102.0%)
(Cost $289,983) (b).................................. 419,439
OTHER ASSETS, LESS LIABILITIES (-2.0%)............... (8,092)
--------
NET ASSETS (100.0%).................................. $411,347
========
-------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
-------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At September 30, 1999, the cost of investments for financial reporting and
federal income tax purposes was identical. Net unrealized appreciation was
$129,456, consisting of gross unrealized appreciation of $144,885 and gross
unrealized depreciation of $15,429.

Acronym Name
--------- ----
ADR American Depositary Receipt

See accompanying Notes to Financial Statements.

<PAGE>

Statements of Assets and Liabilities
--------------------------------------------------------------------------------
September 30, 1999
(All amounts in thousands, except per-share data)

GROWTH MIDCAP
STOCK GROWTH
FUND FUND
---------- ----------
<S> <C> <C>
ASSETS
Investments in Portfolio, at value............................................... $831,477 $ --
Investments, at market value (cost $33,919, $55,812 and $289,983, respectively).. -- 44,503
Receivable for investments sold.................................................. -- 36
Receivable for fund shares sold.................................................. 523 2
Dividends receivable............................................................. -- 3
Receivable for expense reimbursement due from Advisor............................ -- 27
Cash............................................................................. 25 1
Other assets..................................................................... 47 2
---------- ---------
Total Assets.................................................................. 832,072 44,574
---------- ---------
LIABILITIES
Payable for investments purchased................................................ -- 16
Payable for fund shares redeemed................................................. 418 119
Payable to Advisor and transfer agent............................................ 155 36
Other liabilities................................................................ 161 44
---------- ---------
Total Liabilities............................................................. 734 215
---------- ---------
Net Assets.................................................................... $831,338 $44,359
========== =========
ANALYSIS OF NET ASSETS
Paid-in capital.................................................................. $334,733 $33,030
Net unrealized appreciation on investments and foreign currency translations..... 438,989 10,584
Accumulated undistributed net investment income (loss)........................... -- --
Accumulated net realized gain on investments and foreign currency transactions... 57,616 745
---------- ---------
Net Assets.................................................................... $831,338 $44,359
========== =========
Shares outstanding (unlimited number authorized)................................. 17,613 3,546
========== =========
Net asset value per share........................................................ $ 47.20 $ 12.51
========== =========

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LARGE
DISCIPLINED COMPANY CAPITAL
STOCK FOCUS OPPORTUNITIES
FUND FUND FUND
---------- -------------------------
<S> <C> <C> <C>
ASSETS
Investments in Portfolio, at value............................................... $605,464 $ -- $ --
Investments, at market value (cost $33,919, $55,812 and $289,983, respectively).. -- 60,227 419,439
Receivable for investments sold.................................................. -- -- 21,371
Receivable for fund shares sold.................................................. 850 27 4,494
Dividends receivable............................................................. -- 47 110
Receivable for expense reimbursement due from Advisor............................ -- -- --
Cash............................................................................. 25 -- 6
Other assets..................................................................... 117 -- 103
---------- --------- ----------
Total Assets.................................................................. 606,456 60,301 445,523
---------- --------- ----------
LIABILITIES
Payable for investments purchased................................................ -- 462 --
Payable for fund shares redeemed................................................. 12,661 28 33,684
Payable to Advisor and transfer agent............................................ 186 117 363
Other liabilities................................................................ 83 47 129
---------- --------- ----------
Total Liabilities............................................................. 12,930 654 34,176
---------- --------- ----------
Net Assets.................................................................... $593,526 $59,647 $411,347
========== ========= ==========
ANALYSIS OF NET ASSETS
Paid-in capital.................................................................. $385,895 $52,020 $228,295
Net unrealized appreciation on investments and foreign currency translations..... 80,452 4,415 129,456
Accumulated undistributed net investment income (loss)........................... 2,853 -- --
Accumulated net realized gain on investments and foreign currency transactions... 124,326 3,212 53,596
---------- --------- ----------
Net Assets.................................................................... $593,526 $59,647 $411,347
========== ========= ==========
Shares outstanding (unlimited number authorized)................................. 26,246 5,063 14,361
========== ========= ==========
Net asset value per share........................................................ $ 22.61 $ 11.78 $ 28.64
========== ========= ==========
See accompanying Notes to Financial Statements.
</TABLE>

<PAGE>

Statements of Operations
--------------------------------------------------------------------------------
For the Year Ended September 30, 1999
(All amounts in thousands)

GROWTH MIDCAP
STOCK GROWTH
FUND FUND
-------- -------
<S> <C> <C>
INVESTMENT INCOME
Dividends allocated from Portfolio............................................... $ 4,409 $ --
Dividends........................................................................ -- 93
Interest allocated from Portfolio................................................ 1,927 --
Interest......................................................................... -- 104
-------- -------
6,336 197
Foreign taxes withheld allocated from Portfolio.................................. -- --
-------- -------
Total investment income....................................................... 6,336 197
-------- -------
EXPENSES
Expenses allocated from Portfolio................................................ 4,663 --
Management fees.................................................................. -- 383
Transfer agent fees.............................................................. 1,825 142
Administrative fees.............................................................. 1,132 77
Printing and postage............................................................. 26 15
Accounting fees.................................................................. 44 25
SEC and state registration fees.................................................. 43 23
Audit and legal fees............................................................. 13 44
Trustees' fees................................................................... 9 14
Custodian fees................................................................... 1 4
Other, net....................................................................... (111) 5
-------- -------
Total expenses................................................................ 7,645 732

Reimbursement of expenses by Advisor............................................. -- (94)
-------- -------
Net expenses.................................................................. 7,645 638
-------- -------
Net investment income (loss).................................................. (1,309) (441)
-------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments allocated from Portfolio................. 78,805 --
Net realized gain on investments................................................. -- 2,610
Net realized loss on foreign currency transactions allocated from Portfolio...... -- --
-------- -------
Net realized gain............................................................. 78,805 2,610
-------- -------
Net change in unrealized appreciation or depreciation on investments
and foreign currency transactions............................................. 143,323 7,804
-------- -------
Net gain on investments and foreign currency transactions..................... 222,128 10,414
-------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. $220,819 $ 9,973
======== =======
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
LARGE
DISCIPLINED COMPANY CAPITAL
STOCK FOCUS OPPORTUNITIES
FUND FUND FUND
-------- ------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends allocated from Portfolio............................................... $ 8,320 $ -- $ --
Dividends........................................................................ -- 441 688
Interest allocated from Portfolio................................................ 5,391 -- --
Interest......................................................................... 5 99 2,065
-------- ------- -------
13,716 540 2,753
Foreign taxes withheld allocated from Portfolio.................................. (64) -- --
-------- ------- -------
Total investment income....................................................... 13,652 540 2,753
-------- ------- -------
EXPENSES
Expenses allocated from Portfolio................................................ 5,619 -- --
Management fees.................................................................. -- 398 4,331
Transfer agent fees.............................................................. 1,800 137 1,411
Administrative fees.............................................................. 1,077 80 854
Printing and postage............................................................. 62 16 66
Accounting fees.................................................................. 43 25 38
SEC and state registration fees.................................................. 47 25 32
Audit and legal fees............................................................. 19 25 41
Trustees' fees................................................................... 9 13 23
Custodian fees................................................................... 1 4 19
Other, net....................................................................... (431) 67 (561)
-------- ------- -------
Total expenses................................................................ 8,246 790 6,254

Reimbursement of expenses by Advisor............................................. -- -- --
-------- ------- -------
Net expenses.................................................................. 8,246 790 6,254
-------- ------- -------
Net investment income (loss).................................................. 5,406 (250) (3,501)
-------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments allocated from Portfolio................. 176,166 -- --
Net realized gain on investments................................................. -- 5,947 99,234
Net realized loss on foreign currency transactions allocated from Portfolio...... (525) -- --
-------- ------- -------
Net realized gain............................................................. 175,641 5,947 99,234
-------- ------- -------
Net change in unrealized appreciation or depreciation on investments
and foreign currency transactions............................................. (79,109) 8,974 (9,404)
-------- ------- -------
Net gain on investments and foreign currency transactions..................... 96,532 14,921 89,830
-------- ------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. $101,938 $14,671 $86,329
======== ======= =======
</TABLE>

See accompanying Notes to Financial Statements.

<PAGE>

Statements of Changes in Net Assets
--------------------------------------------------------------------------------

(All amounts in thousands)

<TABLE>
<CAPTION>
GROWTH STOCK FUND
-----------------------
YEARS ENDED SEPTEMBER 30,
1999 1998
-----------------------
OPERATIONS
<S> <C> <C>
Net investment income (loss)...................................................... $ (1,309) $ (652)
Net realized gain (loss) on investments and foreign currency transactions......... 78,805 (894)
Net change in unrealized appreciation or depreciation on investments and foreign
currency transactions 143,323 29,857
-------- --------
Net increase (decrease) in net assets resulting from operations................ 220,819 28,311
-------- --------

SHARE TRANSACTIONS
Subscriptions to fund shares...................................................... 481,319 110,244
Value of distributions reinvested................................................. -- 29,289
Redemptions of fund shares........................................................ (486,145) (123,211)
-------- --------
Net increase (decrease) from share transactions............................... (4,826) 16,322
-------- --------
Net increase (decrease) in net assets.......................................... 215,993 7,676

NET ASSETS
Beginning of year................................................................. 615,345 607,669
-------- --------
End of year....................................................................... $831,338 $615,345
======== ========

ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)............................ $-- $ --
======== ========

ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Subscriptions to fund shares..................................................... 10,293 2,955
Issued in reinvestment of distributions........................................... -- 876
Redemptions of fund shares........................................................ (10,410) (3,319)
-------- --------
Net increase (decrease) in fund shares......................................... (117) 512
Shares outstanding at beginning of year........................................... 17,730 17,218
-------- --------
Shares outstanding at end of year................................................. 17,613 17,730
======== ========
</TABLE>

See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>

MIDCAP GROWTH FUND DISCIPLINED STOCK FUND
----------------------- -----------------------
YEARS ENDED SEPTEMBER 30, YEARS ENDED SEPTEMBER 30,
1999 1998 1999 1998
----------------------- -----------------------
OPERATIONS
<S> <C> <C> <C> <C>
Net investment income (loss)...................................................... $ (441) $ (347) $ 5,406 $ 2,562
Net realized gain (loss) on investments and foreign currency transactions......... 2,610 (1,412) 175,641 212,315
Net change in unrealized appreciation or depreciation on investments and foreign
currency transactions 7,804 (942) (79,109) (441,669)
------- ------- -------- ----------
Net increase (decrease) in net assets resulting from operations................ 9,973 (2,701) 101,938 (226,792)
------- ------- -------- ----------

DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income.......................................... -- -- (3,888) --
Distributions from net capital gains.............................................. -- -- (160,356) (130,064)
------- ------- -------- ----------
Total distributions to shareholders............................................ -- -- (164,244) (130,064)
------- ------- -------- ----------

SHARE TRANSACTIONS
Subscriptions to fund shares...................................................... 12,421 26,168 192,348 197,598
Value of distributions reinvested................................................. -- -- 151,993 115,138
Redemptions of fund shares........................................................ (28,009) (23,323) (600,159) (371,808)
------- ------- -------- ----------
Net increase (decrease) from share transactions............................... (15,588) 2,845 (255,818) (59,072)
------- ------- -------- ----------
Net increase (decrease) in net assets.......................................... (5,615) 144 (318,124) (415,928)

NET ASSETS
Beginning of year................................................................. 49,974 49,830 911,650 1,327,578
------- ------- -------- ----------
End of year....................................................................... $44,359 $49,974 $593,526 $ 911,650
======= ======= ======== ==========

ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)............................ $ -- $ (26) $ 2,853 $ 2,198
======= ======= ======== ==========

ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Subscriptions to fund shares..................................................... 1,088 2,178 8,376 6,671
Issued in reinvestment of distributions........................................... -- -- 7,459 4,013
Redemptions of fund shares........................................................ (2,344) (2,001) (26,830) (12,731)
------- ------- -------- ----------
Net increase (decrease) in fund shares......................................... (1,256) 177 (10,995) (2,047)
Shares outstanding at beginning of year........................................... 4,802 4,625 37,241 39,288
------- ------- -------- ----------
Shares outstanding at end of year................................................. 3,546 4,802 26,246 37,241
======= ======= ======== ==========
</TABLE>

<PAGE>
Statements of Changes in Net Assets
--------------------------------------------------------------------------------

(All amounts in thousands)

<TABLE>
<CAPTION>
LARGE COMPANY FOCUS FUND
-----------------------
YEARS ENDED SEPTEMBER 30,
1999 1998 (A)
-----------------------
OPERATIONS
<S> <C> <C>
Net investment loss............................................................... $ (250) $ (14)
Net realized gain (loss) on investments........................................... 5,947 (1,997)
Net change in unrealized appreciation or depreciation on investments............. 8,974 (4,559)
------- -------
Net increase (decrease) in net assets resulting from operations................ 14,671 (6,570)
------- -------

DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income.......................................... -- --
Distributions from net capital gains.............................................. -- --
------- -------
Total distributions to shareholders............................................ -- --
------- -------
SHARE TRANSACTIONS
Subscriptions to fund shares...................................................... 19,615 55,706
Value of distributions reinvested................................................. -- --
Redemptions of fund shares........................................................ (19,355) (4,420)
------- -------
Net increase (decrease) from share transactions................................ 260 51,286
------- -------
Net increase (decrease) in net assets.......................................... 14,931 44,716

NET ASSETS
Beginning of period............................................................... 44,716 --
------- -------
End of period.................................................................... $59,647 $44,716
======= =======
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME................................... $ -- $ --
======= =======

ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Subscriptions to fund shares...................................................... 1,766 5,607
Issued in reinvestment of distributions........................................... -- --
Redemptions of fund shares........................................................ (1,825) (485)
------- -------
Net increase (decrease) in fund shares......................................... (59) 5,122
Shares outstanding at beginning of period......................................... 5,122 --
------- -------
Shares outstanding at end of period............................................... 5,063 5,122
======= =======

</TABLE>

46
<PAGE>
<TABLE>
<CAPTION>

CAPITAL OPPORTUNITIES FUND
-----------------------
YEARS ENDED SEPTEMBER 30,
1999 1998
-----------------------
OPERATIONS
<S> <C> <C>
Net investment loss............................................................... $ (3,501) $ (6,791)
Net realized gain (loss) on investments........................................... 99,234 110,560
Net change in unrealized appreciation or depreciation on investments............. (9,404) (195,885)
-------- ----------
Net increase (decrease) in net assets resulting from operations................ 86,329 (92,116)
-------- ----------

DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income.......................................... -- --
Distributions from net capital gains.............................................. -- --
-------- ----------
Total distributions to shareholders............................................ -- --
-------- ----------
SHARE TRANSACTIONS
Subscriptions to fund shares...................................................... 267,484 264,307
Value of distributions reinvested................................................. -- --
Redemptions of fund shares........................................................ (623,599) (601,700)
-------- ----------
Net increase (decrease) from share transactions................................ (356,115) (337,393)
-------- ----------
Net increase (decrease) in net assets.......................................... (269,786) (429,509)

NET ASSETS
Beginning of period............................................................... 681,133 1,110,642
-------- ----------
End of period.................................................................... $411,347 $ 681,133
======== ==========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME................................... $ -- $ --
======== ==========

ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Subscriptions to fund shares...................................................... 9,598 8,722
Issued in reinvestment of distributions........................................... -- --
Redemptions of fund shares........................................................ (22,199) (19,933)
-------- ----------
Net increase (decrease) in fund shares......................................... (12,601) (11,211)
Shares outstanding at beginning of period......................................... 26,962 38,173
-------- ----------
Shares outstanding at end of period............................................... 14,361 26,962
======== ==========
</TABLE>

(a) From commencement of operations on June 26, 1998.

See accompanying Notes to Financial Statements.

<PAGE>

Statements of Assets and Liabilities
--------------------------------------------------------------------------------
September 30, 1999
(All amounts in thousands)
SR&F SR&F
GROWTH DISCIPLINED
STOCK STOCK
PORTFOLIO PORTFOLIO
-------- --------
ASSETS
Investments, at market value (cost of $763,615 and
$524,645, respectively)............................. $1,251,462 $605,133
Cash.................................................. 4 145
Receivable for investments sold........................ -- 40
Dividends receivable.................................. 676 650
---------- --------
Total Assets........................................ 1,252,142 605,968
---------- --------

LIABILITIES
Payable for investments purchased..................... 3,365 --
Payable to Advisor.................................... 596 365
Other liabilities...................................... 28 23
---------- --------
Total Liabilities.................................. 3,989 388
---------- --------
NET ASSETS APPLICABLE TO INVESTORS'
BENEFICIAL INTEREST $1,248,153 $605,580
========== ========

See accompanying Notes to Financial Statements.

<PAGE>
<TABLE>
Statements of Operations
--------------------------------------------------------------------------------

For the Year Ended September 30, 1999
(All amounts in thousands)
<CAPTION>
SR&F SR&F
GROWTH DISCIPLINED
STOCK STOCK
PORTFOLIO PORTFOLIO
-------- --------
<S> <C> <C>
INVESTMENT INCOME
Dividends............................................ $ 5,817 $ 8,322
Interest............................................. 2,496 5,397
-------- --------
8,313 13,719
Foreign taxes withheld............................... -- (64)
-------- --------
Total investment income........................... 8,313 13,655
-------- --------

EXPENSES
Management fees..................................... 6,076 5,581
Accounting fees..................................... 50 43
Transfer agent fee................................... 6 6
Trustees' fees...................................... 24 25
Audit and legal fees................................. 18 17
Custodian fees....................................... 30 35
Other, net........................................... (55) (88)
-------- --------
Net expenses...................................... 6,149 5,619
-------- --------
Net investment income............................. 2,164 8,036
-------- --------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY
Net realized gain on investments..................... 76,399 176,298
Net realized loss on foreign currency transactions... -- (525)
-------- --------
Net realized gain ................................ 76,399 175,773
-------- --------
Net change in unrealized appreciation or depreciation
on investments and foreign currency transactions 189,808 (79,229)
-------- --------
Net gain on investments and foreign
currency transactions.......................... 266,207 96,544
-------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. $268,371 $104,580
======== ========

See accompanying Notes to Financial Statements.
</TABLE>

<PAGE>
<TABLE>
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
(All amounts in thousands)
<CAPTION>
SR&F GROWTH SR&F DISCIPLINED
STOCK PORTFOLIO STOCK PORTFOLIO
-------------------------- ---------------------------
YEARS ENDED SEPTEMBER 30, YEARS ENDED SEPTEMBER 30,
1999 1998 1999 1998
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income .................................................. $ 2,164 $ 2,268 $ 8,036 $ 7,424
Net realized gain (loss) on investments and
foreign currency transactions ........................................ 76,399 (7,814) 175,773 211,299
Net change in unrealized appreciation or depreciation
on investments and foreign currency transactions ..................... 189,808 32,197 (79,229) (441,553)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations ..... 268,371 26,651 104,580 (222,830)
----------- ----------- ----------- -----------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions .......................................................... 680,228 151,248 54,914 60,926
Withdrawals ............................................................ (431,989) (54,727) (471,065) (249,583)
----------- ----------- ----------- -----------
Net increase (decrease) from transactions in
investors' beneficial interest ................................... 248,239 96,521 (416,151) (188,657)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets ............................... 516,610 123,172 (311,571) (411,487)
NET ASSETS
Beginning of year ...................................................... 731,543 608,371 917,151 1,328,638
----------- ----------- ----------- -----------
End of year ............................................................ $ 1,248,153 $ 731,543 $ 605,580 $ 917,151
=========== =========== =========== ===========

See accompanying Notes to Financial Statements.
</TABLE>

<PAGE>

Notes to Financial Statements
--------------------------------------------------------------------------------
(All amounts in thousands)

Note 1. Organization
Stein Roe Growth Stock Fund, Stein Roe Midcap Growth Fund (formerly Stein Roe
Growth Opportunities Fund), Stein Roe Disciplined Stock Fund (formerly Stein Roe
Special Fund), Stein Roe Large Company Focus Fund and Stein Roe Capital
Opportunities Fund (the "Funds") are series of Liberty-Stein Roe Funds
Investment Trust, (the "Trust"), formerly Stein Roe Investment Trust, an
open-end management investment company organized as a Massachusetts business
trust.
Growth Stock Fund and Disciplined Stock Fund invest substantially all of
their assets in SR&F Growth Stock Portfolio and SR&F Disciplined Stock Portfolio
(formerly SR&F Special Portfolio), respectively. The Portfolios are series of
SR&F Base Trust, a Massachusetts common law trust organized under an Agreement
and Declaration of Trust dated August 23, 1993. The Portfolios commenced
operations on February 3, 1997. At commencement, Growth Stock Fund and
Disciplined Stock Fund contributed $474,861 and $1,096,779 in securities and
other assets to SR&F Growth Stock Portfolio and SR&F Disciplined Stock
Portfolio, respectively, in exchange for beneficial ownership of those
Portfolios. The Portfolios allocate income, expenses, realized and unrealized
gains and losses to each investor on a daily basis, based on methods approved by
the Internal Revenue Service. At September 30, 1999, Growth Stock Fund owned
66.6% of the SR&F Growth Stock Portfolio and Disciplined Stock Fund owned 99.9%
of the SR&F Disciplined Stock Portfolio.

Note 2. Significant Accounting Policies
The following summarizes the significant accounting policies of the Funds and
the Portfolios. These 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. Investment
Transactions and Investment Income Investment transactions are accounted for on
trade date. Dividend income, net of applicable withholding taxes, 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.

<PAGE>

Notes to Financial Statements continued
--------------------------------------------------------------------------------

Security Valuations
Securities traded on national securities exchanges are valued at
the last reported sales price or, if there are no sales, at the latest bid
quotation. Each over-the-counter security for which the last sale price is
available from NASDAQ is valued at that price. All other over-the-counter
securities for which reliable quotations are available are valued at the latest
bid quotation. Short term investments are stated at amortized cost, which
approximates market value. 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 Board of Trustees.
Currency Translations
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. Purchases and sales
of securities are translated into U.S. dollars using the prevailing exchange
rate on the dates of such transactions. The effect of changes in foreign
exchange rates on realized and unrealized security gains and losses is reflected
as a component of such gains and losses.
Forward Currency Exchange Contracts
SR&F Disciplined Stock Portfolio may enter into forward foreign currency
exchange contracts to facilitate transactions in foreign securities or as a
hedge against either specific transactions or portfolio positions under which
the Portfolio is obligated to exchange currencies at specified rates on
specified future dates. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movements in
currency values. The Portfolio had no outstanding contracts at September 30,
1999.
Federal Income Taxes
No provision is made for federal income taxes since (a) the Funds elect to be
taxed as "regulated investment companies" and make distributions to their
shareholders to be relieved of all federal income taxes under provisions of
current federal tax law; and (b) the Portfolios are treated as partnerships for
federal income tax purposes and all of their income is allocated to their owners
based on methods approved by the Internal Revenue Service.
Distributions to Shareholders
Each 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 than generally accepted accounting
principles. Distributions in excess of tax basis earnings are reported in the
financial statements as a return of capital. Permanent differences in the

<PAGE>

Notes to Financial Statements Continued
--------------------------------------------------------------------------------

recognition or classification of income between the financial statements and tax
earnings are reclassified to paid-in capital.

Note 3. Trustees' Fees and Transactions with Affiliates
The Funds and the Portfolios pay monthly management fees and the Funds pay
monthly administrative fees to Stein Roe & Farnham Incorporated (the "Advisor"),
an indirect, wholly-owned subsidiary of Liberty Financial Companies, Inc.
("Liberty"), for its services as invest-ment advisor and administrator. The
annual rates, as a percentage of average daily net assets, are as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
MANAGEMENT FEE ADMINISTRATIVE FEE
<S> <C> <C>
Growth Stock Fund N/A 0.150% up to $500,000,
0.125% of the next $500,000,
0.100% thereafter

SR&F Growth Stock Portfolio 0.600% up to $500,000, N/A
0.550% of the next $500,000,
0.500% thereafter

Disciplined Stock Fund N/A 0.150% up to $500,000,
0.125% of the next $500,000,
0.100% of the next $500,000,
0.075% thereafter

SR&F Disciplined 0.750% up to $500,000, N/A
Stock Portfolio 0.700% of the next $500,000,
0.650% of the next $500,000,
0.600% thereafter

Midcap Growth Fund 0.750% up to $500,000, 0.150% up to $500,000,
Large Company Focus Fund 0.700% of the next $500,000, 0.125% of the next $500,000,
Capital Opportunities Fund 0.650% of the next $500,000, 0.100% of the next $500,000,
0.600% thereafter 0.075% thereafter
--------------------------------------------------------------------------------
</TABLE>

The Advisor also provides fund accounting services.
The Advisor has agreed to reimburse Midcap Growth Fund and Large Company
Focus Fund for their operating expenses to the extent that annual expenses
exceed 1.25% and 1.50%, respectively, of average daily net assets. This
commitment expires on January 31, 2000.
Transfer agent fees are paid to SteinRoe Services Inc., a direct,
wholly-owned subsidiary of Liberty.
Certain officers and trustees of the Trust are also officers of the Advisor.
No remuneration was paid to any trustee or officer of the Trust who is
affiliated with the Advisor.

54
<PAGE>

Notes to Financial Statements Continued
--------------------------------------------------------------------------------

Note 4. Short-Term Debt
To facilitate portfolio liquidity, the Funds and the Portfolios maintain
borrowing arrangements under which they can borrow against portfolio securities.
Neither the Funds nor the Portfolios had borrowings during the year ended
September 30, 1999.

Note 5. Investment Transactions
The aggregate cost of purchases and proceeds from sales, other than short-term
obligations, for the year ended September 30, 1999, were:

Purchases Sales
--------- ---------
SR&F Growth Stock Portfolio....................... $849,891 $582,611
Midcap Growth Fund................................ 65,440 79,109
SR&F Disciplined Stock Portfolio.................. 307,076 572,616
Large Company Focus Fund.......................... 37,314 35,091
Capital Opportunities Fund........................ 456,428 774,334

Change in Independent Accountants
Based on the recommendation of the Audit Committee of the Funds and the
Portfolios listed in this book, on August 3, 1999 the Board of Trustees
determined not to retain Arthur Andersen LLP as the Funds' and the Portfolios'
independent accountant and voted to appoint PricewaterhouseCoopers LLP for the
year ended September 30, 1999. During the two most recent fiscal years, Arthur
Andersen LLP audit reports contained no adverse opinion or disclaimer of
opinion; nor were its reports qualified or modified as to uncertainty, audit
scope, or accounting principle. There were no disagreements in accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which if not resolved to the satisfaction of Arthur Andersen LLP
would have caused it to make reference to the disagreement in its report on the
financial statements for such years.

55
<PAGE>
<TABLE>
Financial Highlights
--------------------------------------------------------------------------------

Growth Stock Fund

Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<CAPTION>
YEARS ENDED SEPTEMBER 30,
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR................................ $ 34.71 $ 35.29 $ 28.79 $ 26.13 $ 23.58
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a)............................... (0.08) (0.04) 0.01 0.08 0.12
Net realized and unrealized gain on investments allocated
from SR&F Growth Stock Portfolio............................ 12.57 1.61 8.79 5.01 5.60
-------- -------- -------- -------- --------
Total from investment operations............................ 12.49 1.57 8.80 5.09 5.72
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income.......................................... -- -- (0.07) (0.10) (0.15)

Net realized capital gains..................................... -- (2.15) (2.23) (2.33) (3.02)
-------- -------- -------- -------- --------
Total distributions......................................... -- (2.15) (2.30) (2.43) (3.17)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD.................................... $ 47.20 $ 34.71 $ 35.29 $ 28.79 $ 26.13
======== ======== ======== ======== ========
Ratio of net expenses to average net assets....................... 0.97%(b) 1.03% 1.07% 1.08% 0.99%
Ratio of net investment income (loss) to average net assets ...... (0.18)%(b) (0.10)% 0.04% 0.32% 0.56%
Portfolio turnover rate........................................... N/A N/A 5%(b) 39% 36%
Total return...................................................... 35.98% 4.69% 33.10% 21.04% 28.18%
Net assets, end of period (000's)................................. $831,338 $615,345 $607,699 $417,964 $360,336

(a) Per share data was calculated using average shares outstanding during the
year.

(b) During the year ended September 30, 1999, the Fund experienced a one-time
reduction in its expenses of three basis points as a result of expenses
accrued in a prior period. The Fund's ratios disclosed above reflect the
actual rate at which expenses were incurred throughout the current fiscal
year without the reduction.

--------------------------------------------------------------------------------
Federal Income Tax Information (unaudited).
For the fiscal year ended September 30, 1999, the Fund designates long-term
capital gains of $77,799,533.
--------------------------------------------------------------------------------

<TABLE>
SR&F Growth Stock Portfolio
<CAPTION>
PERIOD ENDED
YEARS ENDED SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997(A)
------- ------- -------------
<S> <C> <C> <C>
Ratio of net expenses to average net assets.... 0.58%(b) 0.61% 0.63%(c)
Ratio of net investment income to
average net assets.......................... 0.20%(b) 0.31% 0.52%(c)
Portfolio turnover rate........................ 57% 39% 22%

(a) From commencement of operations on February 3, 1997.
(b) During the year ended September 30, 1999, the Portfolio experienced a
one-time reduction in its expenses as a result of expenses accrued in a
prior period. The expense adjustment was not large enough to change the
Portfolio's ratios.
(c) Annualized.
</TABLE>

<PAGE>
<TABLE>
Financial Highlights Continued
--------------------------------------------------------------------------------

Midcap Growth Fund
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<CAPTION>
PERIOD ENDED
YEARS ENDED SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997 (A)
------------ -------------- ---------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 10.41 $ 10.77 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b)............................... (0.10) (0.07) --
Net realized and unrealized gain (loss)
on investments...................................... 2.20 (0.29) 0.77
------- ------- -------
Total from investment operations......................... 2.10 (0.36) 0.77
------- ------- -------
NET ASSET VALUE, END OF PERIOD........................... $ 12.51 $ 10.41 $ 10.77
======= ======= =======
Ratio of net expenses to average net assets (c).......... 1.36%(d) 1.25% 1.25%(e)
Ratio of net investment income (loss) to
average net assets (f)................................ (0.97)%(d) (0.64)% 0.02%(e)
Portfolio turnover rate.................................. 133% 75% 3%(g)
Total return (f)......................................... 20.17% (3.34)% 7.70%(g)
Net assets, end of period (000's)........................ $44,359 $49,974 $49,830

(a) From commencement of operations on June 30, 1997.

(b) Per share data was calculated using average shares outstanding during the
period.

(c) If the Fund had paid all of its expenses and there had been no
reimbursement by the Advisor, this ratio would have been 1.43% for the year
ended September 30, 1999, 1.44% for the year ended September 30, 1998 and
1.74% for the period ended September 30, 1997.

(d) During the year ended September 30, 1999, the Fund experienced a one-time
reduction in its expenses of 11 basis points as a result of expenses
accrued in a prior period. The Fund's ratios disclosed above reflect the
actual rate at which expenses were incurred throughout the current fiscal
year without the reduction.

(e) Annualized.

(f) Computed giving effect to Advisor's expense limitation undertaking.

(g) Not annualized.

--------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
For the fiscal year ended September 30, 1999, the Fund designates long-term
capital gains of $823,877.
--------------------------------------------------------------------------------

</TABLE>
<PAGE>
<TABLE>

Financial Highlights Continued
--------------------------------------------------------------------------------

Large Company Focus Fund
Selected per-share data (for a share outstanding throughout the period), ratios
and supplemental data.
<CAPTION>
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 (A)
------- -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 8.73 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b)........................ (0.05) --
Net realized and unrealized gain
(loss) on investments....................... 3.10 (1.27)
------- -------
Total from investment operations.................. 3.05 (1.27)
------- -------
NET ASSET VALUE, END OF PERIOD.................... $ 11.78 $ 8.73
======= =======
Ratio of net expenses to average net assets....... 1.49% 1.50%(c)(e)
Ratio of net investment loss to average
net assets (d)................................. (0.47)% (0.12)%(e)
Portfolio turnover rate........................... 68% 21%(f)
Total return (d).................................. 35.05% (12.70)%(f)
Net assets, end of period (000's)................. $59,647 $44,716

(a) From commencement of operations on June 26, 1998.

(b) Per share data was calculated using average shares outstanding during the
period.

(c) If the Fund had paid all of its expenses and there had been no
reimbursement by the Advisor, this ratio would have been 1.61% for the
period ended September 30, 1998.

(d) Computed giving effect to Advisor's expense limitation undertaking.

(e) Annualized.

(f) Not annualized.

--------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
For the fiscal year ended September 30, 1999, the Fund designates long-term
capital gains of $19,198.
--------------------------------------------------------------------------------
</TABLE>
59

<PAGE>
<TABLE>
Financial Highlights Continued
--------------------------------------------------------------------------------

Disciplined Stock Fund

Selected per-share data (for a share outstanding throughout each year), ratios
and supplemental data.
<CAPTION>
YEARS ENDED SEPTEMBER 30,
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR.............................. $ 24.48 $ 33.79 $ 27.39 $ 25.26 $ 23.54
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a)............................. 0.17 0.07 (0.06) 0.01 0.13

Net realized and unrealized gain (loss) on investments
and foreign currency allocated from SR&F Disciplined
Stock Portfolio............................................ 2.64 (6.06) 8.57 4.14 3.05
-------- -------- -------- -------- --------
Total from investment operations.......................... 2.81 (5.99) 8.51 4.15 3.18
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income........................................ (0.11) -- -- (0.11) (0.15)

Net realized capital gains................................... (4.57) (3.32) (2.11) (1.91) (1.31)
-------- -------- -------- -------- --------
Total distributions....................................... (4.68) (3.32) (2.11) (2.02) (1.46)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR.................................... $ 22.61 $ 24.48 $ 33.79 $ 27.39 $ 25.26
======== ======== ======== ======== ========
Ratio of net expenses to average net assets..................... 1.16%(b) 1.13% 1.14% 1.18% 1.02%
Ratio of net investment income (loss) to average net assets..... 0.63%(b) 0.21% (0.17)% 0.03% 0.56%
Portfolio turnover rate......................................... N/A N/A 7%(c) 32%(c) 41%(c)
Total return.................................................... 13.57% (19.17)% 33.67% 17.89% 14.60%
Net assets, end of year (000's)................................. $593,526 $911,650 $1,327,578 $1,158,498 $1,201,469

(a) Per share data was calculated using average shares outstanding during the
year.

(b) During the year ended September 30, 1999, the Fund experienced a one-time
reduction in its expenses of nine basis points as a result of expenses
accrued in a prior period. The Fund's ratios disclosed above reflect the
actual rate at which expenses were incurred throughout the current fiscal
year without the reduction.

100% of ordinary income distributed by the Fund in the year ended September 30,
1999 qualifies for the corporate dividends received deduction.
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SR&F Disciplined Stock Portfolio
PERIOD ENDED
YEARS ENDED SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1997(A)
--------------- --------------- ---------------
<S> <C> <C> <C>
Ratio of net expenses to average
net assets ...................... 0.75% 0.73% 0.75%(c)
Ratio of net investment income to
average net assets .............. 1.04% 0.60% 0.31%(c)
Portfolio turnover rate............. 47% 46% 8%
</TABLE>

(a) From commencement of operations on February 3, 1997.

(b) During the year ended September 30, 1999, the Portfolio experienced a
one-time reduction in its expenses of one basis point as a result of
expenses accrued in a prior period. The Portfolio's ratios disclosed above
reflect the actual rate at which expenses were incurred throughout the
current fiscal year without the reduction.

60 61

<PAGE>

Financial Highlights Continued
--------------------------------------------------------------------------------

Capital Opportunities Fund

Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
1999 1998 1997 1996 1995 (A)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................... $ 25.25 $ 29.10 $ 31.04 $ 21.69 $ 15.79
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (b)............................ (0.17) (0.25) (0.17) (0.06) 0.01
Net realized and unrealized gain (loss) on investments...... 3.56 (3.60) (1.77) 10.41 5.91
-------- -------- -------- -------- --------
Total from investment operations......................... 3.39 (3.85) (1.94) 10.35 5.92
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income....................................... -- -- -- (0.01) (0.02)
Net realized capital gains.................................. -- -- -- (0.99) --
-------- -------- -------- -------- --------
Total distributions...................................... -- -- -- (1.00) (0.02)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD................................. $ 28.64 $ 25.25 $ 29.10 $ 31.04 $ 21.69
======== ======== ======== ======== ========
Ratio of net expenses to average net assets.................... 1.19%(c) 1.20% 1.17% 1.22% 1.05%
Ratio of net investment income (loss) to average net assets.... (0.72)%(c) (0.72)% (0.69)% (0.40)% 0.08%
Portfolio turnover rate........................................ 88% 47% 35% 22% 60%
Total return................................................... 13.43% (13.23)% (6.25)% 49.55% 37.46%
Net assets, end of period (000's).............................. $411,347 $681,133 $1,110,642 $1,684,538 $242,381

(a) All per-share amounts reflect a two-for-one stock split effective
August 25, 1995.
(b) Per share data was calculated using average shares outstanding during
the period.
(c) During the year ended September 30, 1999, the Fund experienced a
one-time reduction in its expenses of twelve basis points as a result
of expenses accrued in a prior period. The Fund's ratios disclosed
above reflects the actual rate at which expenses were incurred
throughout the current fiscal year without the reduction.

--------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
For the fiscal year ended September 30, 1999, the Fund designates long-term
capital gains of $90,437,460.
--------------------------------------------------------------------------------

62 63
</TABLE>
<PAGE>

Report of Independent Accountants
--------------------------------------------------------------------------------

To the Trustees and Shareholders of:

Liberty-Stein Roe Funds Investment Trust
Stein Roe Growth Stock Fund
Stein Roe Midcap Growth Fund
Stein Roe Disciplined Stock Fund
Stein Roe Large Company Focus Fund
Stein Roe Capital Opportunities Fund

SR&F Base Trust
SF&F Growth Stock Portfolio
SF&F Disciplined Stock Portfolio

In our opinion, the accompanying statements of assets and liabilities, including
the investment portfolios, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Stein Roe Growth Stock Fund, Stein
Roe Midcap Growth Fund (formerly Stein Roe Growth Opportunities Fund), Stein Roe
Disciplined Stock Fund (formerly Stein Roe Special Fund), Stein Roe Large
Company Focus Fund, Stein Roe Capital Opportunities Fund (the "Funds"), each a
series of Liberty-Stein Roe Funds Investment Trust (formerly Stein Roe
Investment Trust), and SR&F Growth Stock Portfolio and SR&F Disciplined Stock
Portfolio (formerly SR&F Special Portfolio) (the "Portfolios"), each a series of
SR&F Base Trust, at September 30, 1999, the results of each of their operations,
the changes in each of their net assets and the financial highlights for the
period then ended in conformity with generally accepted accounting principles.
These financial statements and the financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Funds' and the
Portfolios' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of portfolio positions at September 30, 1999 by correspondence with
the custodian, provide a reasonable basis for the opinion expressed above. The
financial statements of the Funds and the Portfolios for periods prior to
October 1, 1998 were audited by other independent accountants whose report dated
November 16, 1998 expressed an unqualified opinion on those statements.

PricewaterhouseCoopers LLP
Boston, Massachusetts
November 15, 1999

<PAGE>

Investment Trust
--------------------------------------------------------------------------------

Trustees
John A. Bacon Jr. Private Investor
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
Vice President-Corporate Development, General Counsel and Secretary, Kellogg Co.
Charles R. Nelson
Van Voorhis Professor of Political Economy, University of Washington
Thomas C. Theobald
Managing Partner, William Blair Capital Partners

Officers
Stephen E. Gibson, President
William D. Andrews, Executive Vice President
Loren A. Hansen, Executive Vice President
Kevin M. Carome, Executive Vice President, Assistant Secretary
Timothy Jacoby, Senior Vice President
Christine Balzano, Vice President
David Brady, Vice President
Daniel Cantor, Vice President
J. Kevin Connaughton, Vice President, Treasurer
William Garrison, Vice President
Erik Gustafson, Vice President
Harvey Hirschhorn, Vice President
Gail D. Knudsen, Vice President, Controller
Lynn C. Maddox, Vice President
Mary D. McKinzie, Vice President
Art McQueen, Vice President
Nicholas Norton, Vice President
Nicolette D. Parrish, Vice President, Assistant Secretary
Heidi J. Walter, Vice President, Secretary
Michael Fisher, Assistant Treasurer

Agents and Advisors
Stein Roe & Farnham Incorporated
Investment Advisor
State Street Bank and Trust Company
Custodian
SteinRoe Services, Inc.
Transfer Agent
Bell, Boyd & Lloyd
Legal Counsel to the Fund
PricewaterhouseCoopers LLP
Independent Accountants

<PAGE>

The Stein Roe Mutual Funds

FIXED INCOME FUNDS
Cash Reserves Fund
Municipal Money Market Fund
Intermediate Municipals Fund
Managed Municipals Fund
High-Yield Municipals Fund
Intermediate Bond Fund
Income Fund
High Yield Fund

EQUITY FUNDS
Balanced Fund
Growth & Income Fund
Disciplined Stock Fund
Growth Stock Fund
Growth Investor Fund
Young Investor Fund
Midcap Growth Fund
Large Company Focus Fund
Capital Opportunities Fund
International Fund
Small Company Growth Fund

Stein Roe Mutual Funds
P.O. Box 8900
Boston, MA 02205-8900
Financial Advisors call: 800-322-0593
Shareholders call: 800-338-2550
www.steinroe.com

Liberty Funds Distributor, Inc.

EQ11A 11/99