Stein Roe Mutual Funds
Semiannual Report
March 31, 2000
PHOTO OF: HANDS AND PLANT
Stein Roe Equity Funds
Growth Funds
Growth Stock Fund
Midcap Growth Fund
Disciplined Stock Fund
Large Company Focus Fund
Capital Opportunities Fund
Growth Investor Fund
Small Company Growth Fund
[LOGO: STEIN ROE]
STEIN ROE MUTUAL FUNDS
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Sensibile Risks. Intelligent Investments(R)
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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............. 8
MIDCAP GROWTH FUND
An interview with Portfolio Manager Steve Hayward.............. 12
DISCIPLINED STOCK FUND
An interview with Portfolio Managers Dan Cantor
and Jeffrey Kinzel............................................. 16
LARGE COMPANY FOCUS FUND
An interview with Portfolio Manager Dave Brady................. 20
CAPITAL OPPORTUNITIES FUND
An interview with Portfolio Managers Dave Brady
and Steve Hayward.............................................. 23
GROWTH INVESTOR FUND
An interview with Portfolio Co-Manager Dave Brady ............. 27
SMALL COMPANY GROWTH FUND
An interview with Portfolio Manager William M. Garrison ....... 30
PORTFOLIOS OF INVESTMENTS......................................... 34
A complete list of investments with market values
FINANCIAL STATEMENTS.............................................. 58
Statements of assets and liabilities, operations and changes
in net assets
NOTES TO FINANCIAL STATEMENTS..................................... 74
FINANCIAL HIGHLIGHTS.............................................. 80
Selected per-share data and ratios
MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS.
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FROM THE PRESIDENT
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DEAR SHAREHOLDER:
We are pleased to say that all of the Stein Roe Equity Funds discussed in this
report provided positive and, in some cases, outstanding results for the
six-month period ended March 31, 2000, while the United States' economy and our
equity markets moved at a rapid pace.
On the economic front, consumer spending reached record levels during the
past six months, while in the business sector, industrial production remained
strong. In total, the U.S. economy expanded at an annual inflation-adjusted rate
of 7.3% in the final quarter of 1999. Judging by preliminary data, it slowed
only slightly in the first three months of 2000. Creation of new jobs at good
pay remained strong, while consumer confidence and consumer spending on retail
items and autos continued at high levels.
All of this strength stirred up fears of higher inflation and, ultimately,
led our central bank, the Federal Reserve, to raise short-term interest rates
three times between September 30 and March 31. The Federal Reserve was concerned
about the possibility that the U.S. economy may be growing too quickly and that
inflationary pressures may derail our economic expansion, now in its ninth year.
In the equity markets, worries about rapid economic growth, inflation, and
changing interest rates kept investors wondering and, for many stocks, put a
damper on price appreciation. Despite robust gains in earnings, overall stock
prices rose only moderately, with the exception of the technology sector.
Throughout the period, the market could clearly be divided into the "haves" --
most anything related to technology and telecommunications -- and the "have
nots" -- most everything else. In general, portfolios with large allocations to
technology shares sprinted ahead, while other portfolios lagged. In spite of a
selloff during the last three weeks of the period, technology and growth
investing were the undisputed victors for the six-month period.
The dichotomy between "old" and "new" economy issues was striking. The
NASDAQ Composite, which contains many "new economy" technology issues, dominated
the markets for roughly two months in early 2000, reaching an historical peak of
5132 by March 10, before retreating to 4573 at March 31. The Standard & Poor's
500 Index, which measures a broad spectrum of the market, including a fair
number of technology stocks, also advanced
----------
Stephen E.
Gibson
PHOTO OF: STEPHEN E. GIBSON
1
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FROM THE PRESIDENT CONTINUED
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strongly. In contrast, the Dow Jones Industrial Average, which is heavily
weighted toward more traditional or "old economy" stocks, was strong in the
fourth quarter of 1999, but lagged the other two indexes by a wide margin
throughout most of the first quarter of calendar year 2000.
As you might expect, those Stein Roe Equity Funds whose investment
objectives and strategies allow them to invest in technology stocks delivered
the largest total returns for the period. Yet even those funds that must focus
on other sectors of the market provided total returns for the six-months that
met or exceeded the long-term historical average for the broad market. I
attribute this to the disciplined, research-intensive approach to investing
practiced by our portfolio managers.
For several of the funds discussed in this report, the past six months
involved either initiation or completion of changes in their investment
strategies. For instance, we have worked diligently to revamp the portfolios of
the Stein Roe Midcap Growth, Disciplined Stock and Capital Opportunities Funds,
and we believe all three are now better positioned to capture the growth
potential of medium-sized companies. And Stein Roe Small Company Growth Fund has
developed a more growth-focused strategy.
In the following report, you will find detailed information about the
investment strategies employed by the portfolio manager or management teams that
guide seven of the Stein Roe equity funds. As you read them, I think you will
see why we believe so strongly that diversification should be part of every
investor's game plan. Throughout the reports there are references to the broad
sell-off in "new economy" technology stocks -- the growth stocks of today's
markets -- and a shift toward "old economy" or value stocks during the final
weeks. Historically, growth and value have taken turns leading the market, and a
well-conceived investment strategy that includes both can help an investor
pursue long-term performance while controlling risk. Many of our portfolio
managers anticipate considerable levels of volatility in the market in the
coming months, so now, perhaps more than any time in the past few years,
maintaining a diversified portfolio may be important.
I encourage you to review this report carefully and to visit us on the
Internet at www.steinroe.com for quarterly updates on the Funds' progress.
As always, we thank you for choosing the Stein Roe Equity Funds and for the
opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
May 15, 2000
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PERFORMANCE SUMMARY
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SIX-MONTH CUMULATIVE AND AVERAGE ANNUAL TOTAL RETURNS
Periods Ended March 31, 2000
<TABLE>
<CAPTION>
PAST ONE FIVE 10 LIFE OF
6 MONTHS YEAR YEARS YEARS FUND
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
GROWTH STOCK FUND* 45.13% 41.15% 31.93% 21.34% --%
Lipper Large-Cap Growth Fund Average 38.35 39.33 29.49 20.20 --
DISCIPLINED STOCK FUND 9.53 22.48 12.02 11.87 --
Lipper Mid-Cap Value Fund Average 16.95 22.00 15.84 13.22 --
CAPITAL OPPORTUNITIES FUND* 69.12 69.65 23.67 17.22 --
Lipper Mid-Cap Growth Fund Average 69.73 96.70 29.07 20.83 --
STANDARD & POOR'S 500 INDEX 17.50 17.93 26.75 18.82 --
STANDARD & POOR'S MIDCAP 400 INDEX 32.06 38.08 24.08 19.11 --
GROWTH INVESTOR FUND* 39.05 31.40 30.43 -- 27.98
Lipper Multi-Cap Growth Fund Average 56.31 66.36 30.28 -- 26.69
SMALL COMPANY GROWTH FUND* 74.23 111.52 -- -- 30.14
Russell 2000 Index 26.83 37.29 -- -- 14.46
Lipper Small-Cap Growth Fund Average 65.63 93.88 -- -- 25.50
S&P 600 19.00 30.70 -- -- 14.05
</TABLE>
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 six-months, one-, five- and ten-year periods shown
there were 489, 448, 192 and 64 funds in the large-cap growth category,
respectively; 192, 188, 81 and 34 funds in the mid-cap value category,
respectively; 233, 219, 81 and 30 funds in the mid-cap growth category,
respectively; 386, 371, 155 and 120 funds in the multi-cap growth category,
respectively; and 255, 247 and 122 funds in the small-cap growth category,
respectively.
PAST ONE LIFE OF
6 MONTHS YEAR FUND
-------------------------------
MIDCAP GROWTH FUND* 67.88% 75.01% 31.00%
Lipper Multi-Cap Growth Fund Average 56.26 66.10 36.76
STANDARD & POOR'S MIDCAP 400 INDEX 32.06 38.08 23.89
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 9/30/99. For the six months, one-year
and life of fund periods shown, there were 383, 368 and 263 funds, respectively,
in the multi-cap growth category.
PAST ONE LIFE OF
6 MONTHS YEAR FUND
--------------------------------
LARGE COMPANY FOCUS FUND* 24.55% 26.81% 24.37%
Lipper Large-Cap Core Fund Average 21.89 21.82 20.11
STANDARD & POOR'S 500 INDEX 17.50 17.93 18.83
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 six months, one year
and life of fund periods shown, there were 448, 433 and 355 funds, respectively,
in the large-cap core category. Benchmark performance for life of fund period is
from 6/30/98.
*Due to market volatility after the close of the quarterly period, current
performance is lower to significantly lower than that shown. 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.
3
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INVESTMENT COMPARISONS
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GROWTH OF A $10,000 INVESTMENT March 31, 1990 to March 31, 2000
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STEIN ROE GROWTH STOCK FUND
[Line Chart]
Stein Roe Lipper Large Cap Growth
Date Growth Stock Fund S&P 500 Index Fund Average (64 Funds)
3/31/90 10000 10000 10000
3/31/91 11996 11438 11910
3/31/92 14422 12698 13781
3/31/93 15953 14630 15231
3/31/94 15804 14847 15856
3/31/95 17310 17151 17337
3/31/96 22926 22649 22476
3/31/97 26415 27134 25225
3/31/98 38858 40145 37089
3/31/99 49037 47559 47606
3/31/00 69198 56111 64860
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 made on March 31, 1990, 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 March 31, 2000
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STEIN ROE MIDCAP GROWTH FUND
[Line Chart]
S&P Lipper Multi-Cap
Stein Roe Midcap Growth Fund
Midcap Growth 400 Average
Fund Index (263 Funds)
6/30/97 10000 10000 10000
9/30/97 10770 11608 11362
12/31/97 10959 11705 10971
3/31/98 12659 12994 12443
6/30/98 12749 12716 12674
9/30/98 10409 10876 10884
12/31/98 12629 13942 13705
3/31/99 11999 13053 14501
6/30/99 12909 14899 15676
9/30/99 12499 13649 15393
12/31/99 18026 15995 20955
3/31/00 21001 18023 24249
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 made on June 30, 1997, and
reinvestment of income and capital gains distributions. The S&P MidCap 400 Index
is an unmanaged group of middle-capitalization stocks that differs from the
composition of the Fund; it is not available for direct investment. Source:
Lipper Inc.
4
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INVESTMENT COMPARISONS CONTINUED
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GROWTH OF A $10,000 INVESTMENT March 31, 1990 to March 31, 2000
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STEIN ROE DISCIPLINED STOCK FUND
[Line chart]
Stein Roe Lipper Mid-Cap
Disciplined S&P Mid-Cap Value Fund Average
Stock Fund 400 Index (34 Funds)
3/31/90 10000 10000 10000
3/31/91 11141 12043 10977
3/31/92 12736 14627 13094
3/31/93 15202 16990 15185
3/31/94 16081 18037 16528
3/31/95 17402 19539 17929
3/31/96 21195 25129 22420
3/31/97 22496 27795 25566
3/31/98 32206 41421 36319
3/31/99 25060 41611 31531
3/31/00 30696 57458 36829
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 made on March 31, 1990, 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 30, 1998 to March 31, 2000
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STEIN ROE LARGE COMPANY FOCUS FUND
[Line chart]
Stein Roe
Large Lipper Large-Cap
Company S&P 500 Core Fund Average
Focus Fund Index (355 Funds)
6/30/98 10000 10000 10000
9/30/98 8712 9007 8862
12/31/98 10308 10923 10791
3/31/99 11555 11467 11284
6/30/99 12343 12275 12009
9/30/99 11764 11508 11285
12/31/99 14223 13220 13205
3/31/00 14685 13524 13810
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 made on June 30, 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.
5
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INVESTMENT COMPARISONS CONTINUED
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GROWTH OF A $10,000 INVESTMENT March 31, 1990 to March 31, 2000
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STEIN ROE CAPITAL OPPORTUNITIES FUND
[Line chart]
Stein Roe Lipper Mip-Cap
Capital Growth Fund
Opportunities S&P MidCap Average
Fund 400 Index (30 Funds)
3/31/90 10000 10000 10000
3/31/91 9196 12043 11796
3/31/92 11383 14627 14402
3/31/93 12401 16990 16003
3/31/94 14813 18037 18321
3/31/95 16926 19539 20520
3/31/96 26864 25129 28185
3/31/97 23201 27795 27073
3/31/98 33937 41421 38695
3/31/99 28857 41611 40967
3/31/00 48964 57458 70179
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 made on March 31, 1990, 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 April 30, 1994 to March 31, 2000
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STEIN ROE GROWTH INVESTOR FUND
[Line chart]
Stein Roe
Growth Lipper
Investor S&P 500 Multi-Cap
Fund Index Growth Fund
4/30/94 10000 10000 10000
9/30/94 10239 10398 10184.7
3/31/95 11414 11406 10823.3
9/30/95 14396 13485 13277.7
3/31/96 16465 15063 14362.5
9/30/96 19511 16222 15769.4
3/31/97 19293 18045 15316.6
9/30/97 24656 22777 20159.5
3/31/98 28903 26698 22073.8
9/30/98 24932 24843 19310.4
3/31/99 32783 31629 25789.8
9/30/99 30978 31743 27412.1
3/31/00 43088 37301 42617.6
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 April 30, 1994, and reinvestment of
income and capital gains distributions. The index shown above is an unmanaged
groups of stocks that differ from the composition of the Fund; they are not
available for direct investment.
6
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INVESTMENT COMPARISONS CONTINUED
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GROWTH OF A $10,000 INVESTMENT March 31, 1996 to March 31, 2000
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STEIN ROE SMALL COMPANY GROWTH FUND
[Line chart]
Stein Roe
Small
Company Russell
Growth S&P 600 2000
Fund Index Index
3/31/96 10000 10000 10000
9/30/96 11271.5 10537 11432
3/31/97 9987.39 10542 10402
9/30/97 13998.4 14034 10839
3/31/98 14655.6 14927 14874
9/30/98 11101.4 11363 16008
3/31/99 13663.4 12500 12095
9/30/99 15942.2 13530 12944
3/31/00 26498.5 17160 16916
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 March 31, 1996, and reinvestment of
income and capital gains distributions. The indices are an unmanaged group of
stocks that differ from the composition of the Fund; they are not available for
direct investment.
7
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QUESTIONS & ANSWERS
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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
TOTAL NET ASSETS:
$1,153.2 million
[Graphic]
Q: HOW DID THE GROWTH STOCK FUND PERFORM DURING THE FIRST HALF OF FISCAL 2000?
GUSTAFSON: The Fund performed very well between September 30, 1999, and March
31, 2000. With a total return of 45.13%, the Fund outperformed the 17.50% total
return for the Standard & Poor's 500 Index by a considerable margin.
Q: MOST OF THE ATTENTION--AND THE GAINS--IN THE MARKET WERE FOCUSED ON
TECHNOLOGY STOCKS DURING THIS PERIOD. CAN THE PORTFOLIO INVEST IN THIS SECTOR?
GUSTAFSON: Yes, it can. The Portfolio focuses on large-capitalization,
high-quality stocks, especially in those areas of the market where companies
have been able to generate above-average growth in earnings or have been able to
exceed their earnings estimates. Larger companies have been the most successful
at this in recent years. Of course, that has included a fair number of the
biggest technology companies.
Investors favored large-company stocks in the most recent period, in part
because
Photo of: Erik Gustafson
they had produced faster earnings growth than any other asset class.
Q: WHICH INVESTMENTS CONTRIBUTED THE MOST TO THE PORTFOLIO'S PERFORMANCE?
GUSTAFSON: The best-performing sector in the portfolio was technology. At 53% of
total net assets, technology was also the largest sector in the Portfolio.
As the U.S. economy transforms itself from one based on industry to one
built on information, technology has become a critical element. "Technology" is
an all-encompassing term that embraces a number of subsectors, such as
semiconductors and computer hardware. Within this broad category, certain areas
fared better than others. For the Fund, the greatest performance came from
8
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Q&A CONTINUED
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companies involved in the communications revolution-- semiconductors, optics,
wireless operators and storage device providers.
In the United States, use of wireless communications tools is estimated at
approximately 27% of the total available market. In Scandinavia, market
penetration is roughly 60%. The United States is definitely lagging behind
Europe and Japan in this area. There appears to be enormous room for growth, and
demand exploded during the period. This explains the strong results for our
positions in cell phone manufacturers Ericsson, Motorola and Nokia (3.2%, 3.1%
and 2.6% of net assets, respectively) and optical telecommunications systems
providers Corning and JDS Uniphase (3.7% and 2.9%, respectively, of net assets).
Expanding demand for semiconductors in cell phones and Internet
applications has put that subsector on a growth trajectory after several years
in a downward cycle, so our holdings in Texas Instruments, Atmel and LSI Logic
(3.9%, 3.1% and 3.2%, respectively, of net assets) delivered strong results as
well.
Another technology stock that performed exceedingly well was EMC (3.9% of
net assets), a dominant company in the data storage device business and one of
the Fund's top five holdings.
Q: WERE THERE ANY NON-TECHNOLOGY HOLDINGS THAT BOOSTED PERFORMANCE OF THE
PORTFOLIO?
GUSTAFSON: The Portfolio benefited from investments in ATT-Liberty Media and
Clear Channel Communications (2.7% and 2.3%, respectively, of net assets). We
also initiated a position in Enron, a natural gas carrier that is moving into
telecommunications (though it is still categorized as an energy stock). Enron
(4.3% of net assets) turned out to be one of the outstanding performers in the
Portfolio.
Q: WHICH INVESTMENTS PERFORMED POORLY?
GUSTAFSON: Health care stocks and financial services companies underperformed.
For the former, government and regulatory issues dampened investor enthusiasm
for the stocks, including our holdings in Pfizer and Johnson & Johnson (1.8% and
1.7% of net assets, respectively). However, we remain committed to this sector
because we feel that baby boomers will need and demand more and better health
care in the future. As for the latter group, the Federal Reserve pushed
short-term rates up three times since November 1999, and the rising rates hurt
our investments in companies like Citigroup and General Electric (2.9% and 3.0%
of net assets,
9
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Q&A CONTINUED
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respectively). (The majority of GE's profits recently have derived from its GE
Capital unit, so we view it as a financial services stock.)
Q: WHAT ARE YOUR THOUGHTS ON THE STOCK MARKET GOING FORWARD?
GUSTAFSON: Technology has been very volatile, and we believe the volatility is
here to stay for the immediate future. Nonetheless, we remain committed to this
sector, because we believe technology companies are still the most likely to
deliver fast earnings growth. And, in spite of the poor results in health care,
we have been adding to our core holdings there.
As we move forward, we intend to intensify our focus on companies that
appear most able to meet earnings estimates. We look for the economy to remain
strong while the inflationary pressures ease. A growing economy combined with a
low rate of inflation can be the perfect environment for growth stocks, so we
are cautiously optimistic for our market segment.
10
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FUND HIGHLIGHTS AS OF MARCH 31, 2000
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SR&F GROWTH STOCK PORTFOLIO
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
Cisco Systems 5.8% Texas Instruments 3.9%
Microsoft 5.1 Corning Incorporated 3.7
Enron 4.3 Applied Materials 3.4
Tyco International 4.1 Ericsson 3.2
EMC Corp. 3.9 LSI Logic 3.2
--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
PORTFOLIO S&P 500 INDEX
----------------------------
Number of Holdings 36 500
Dollar Weighted Median Market Capitalization ($Mil.) 75,915 85,679.3
--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
Equity Portfolio S&P 500 Index
[Pie chart] [Pie chart]
0% Basic Materials 2%
13% Consumer Cyclical 12%
10% Consumer Non-Cyclical 15%
4% Energy 6%
3% Financial 13%
11% Industrial 7%
53% Technology 35%
6% Utilities 10%
--------------------------------------------------------------------------------
ASSET ALLOCATION
As of September As of March
30, 1999 31, 2000
[Pie chart] [Pie chart]
96.0% Equities 98.6%
4.0% Cash & Equivalents 1.4%
11
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QUESTIONS & ANSWERS
--------------------------------------------------------------------------------
AN INTERVIEW WITH STEVE HAYWARD, PORTFOLIO MANAGER OF MIDCAP GROWTH FUND
(FORMERLY STEIN ROE GROWTH OPPORTUNITIES 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 mid-cap companies that the portfolio
manager believes have long-term growth potential.
FUND INCEPTION:
June 30, 1997
NET ASSETS:
$72.9 million
[Graphic]
Q: HOW DID MIDCAP GROWTH FUND PERFORM FOR THE SIX MONTHS ENDED MARCH 31, 2000?
HAYWARD: We are very pleased with the Fund's total return of 67.88%, which
compares very favorably to the 32.06% total return for its benchmark, the
unmanaged Standard & Poor's MidCap 400 Index. In addition, we attribute the
strong results to changes that brought the Portfolio more in line with the
Fund's aggressive growth objective. Returns attributable to investments in
newly-issued public companies reflected the very favorable initial public
offering market and may not be sustainable.
Q: WHAT WERE THOSE CHANGES?
HAYWARD: Previously, the Fund invested in stocks of all capitalization sizes and
owned as many as 75 issues. Between November 1999 and the end of the first
quarter of 2000, many of the slower-growing, large-capitalization stocks in the
Portfolio were sold. Then, we began to construct the Portfolio with more mid-cap
growth stocks. As of
Photo of: Steve Hayward
March 31, the Fund was invested in approximately 50 stocks and the average
market capitalization was less than $9 billion, compared to more than $35
billion last fall.
Q: WITH THE CHANGE IN FOCUS, WHAT TYPES OF COMPANIES ARE YOU LOOKING FOR?
HAYWARD: We still look for companies with the ability to produce higher earnings
growth than the market. That's why 58% of the Portfolio consisted of technology
stocks at March 31. Technology and telecommunications appear to be the future of
our economy, so for the foreseeable future, technology companies may well be the
ones with the greatest potential for sustainable growth. Of course, that
12
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Q&A CONTINUED
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doesn't include all technology stocks. During the past six months, we stayed
away from the high-flying but potentially profitless e-tailers and dot.com
issues.
Q: WHICH STOCKS PERFORMED WELL?
HAYWARD: Of the ten stocks in the Portfolio that performed best, nine were
technology or telecommunications issues that in some way create or support the
infrastructure to the newly emerging, technology-based economy. Among them were
Inktomi, SDL, Inc., and Broadcom (2.7%, 2.9% and 2.7%, respectively, of net
assets), as well as Scientific-Atlanta, Time-Warner Telecom and Spectrasite
(1.7%, 2.7% and 1.9%, respectively, of net assets).
Q: WHAT'S SO APPEALING ABOUT STOCKS LIKE THESE?
HAYWARD: A common denominator among many of them is that they may stand to
profit no matter which companies become the "household names" of the technology
revolution. For example, SDL manufactures lasers for undersea cable. Regardless
of which company or companies finally become the brand names in global
communications, the winner(s) will need undersea cable -- and products like
SDL's -- to conduct business. Likewise, Spectrasite owns towers for
communications antennas. As long as the Internet and wireless communications
keep expanding, we expect this well-run company to show growth in revenues and
cash flow.
Q: DID ANY OTHER INVESTMENTS CONTRIBUTE SIGNIFICANTLY TO PERFORMANCE?
HAYWARD: Outside technology, the results were mixed, and the strong performers
were not concentrated in any one sector. One of the strongest was Midwest
retailer Kohl's (2.8% of net assets), which has launched an aggressive expansion
plan that has taken it into new territory.
Also, we generated about 3%-7% of our total dollar appreciation in the Fund
from our participation in IPOs, where held the securities for less than two
weeks.
Q: LOOKING BACK, WHAT WOULD YOU HAVE DONE DIFFERENTLY?
HAYWARD: We would have invested in more semiconductor manufacturers. Growing
demand for wireless communications has meant more demand for semiconductor chips
to use in cell phones. The semiconductor subsector did very well in the past six
months.
13
<PAGE>
Q&A CONTINUED
--------------------------------------------------------------------------------
Q: LOOKING AHEAD, WHAT ARE YOUR PLANS FOR THE FUND?
HAYWARD: As the first half of the fiscal year ended, the equity markets were
very volatile. Some of this was inevitable, since some sectors, like technology,
had a very rapid runup in a short period of time. We weren't surprised by the
reversal, only its magnitude, and we remained committed to owning technology. In
fact, we plan to use the volatility in the market to buy more of those tech and
telecom stocks that we feel have the brightest prospects.
Having said that, we should point out that, although the Fund has a sizable
investment in these "new economy" companies, it's not a technology fund. We're
interested in any mid-cap companies with promising fundamentals. And since we're
committed to keeping the Fund fully invested and diversified, we'll be looking
at a wide variety of mid-cap (and, opportunistically, large-cap) stocks.
Our chief concern for the coming six months is the potential impact of
politics in an election year. Areas such as health care and energy may be
greatly effected by the political debate, so we'll be cautious in those areas.
14
<PAGE>
FUND HIGHLIGHTS AS OF MARCH 31, 2000
--------------------------------------------------------------------------------
STEIN ROE MIDCAP GROWTH FUND
TOP 10 EQUITY HOLDINGS (% OF NET ASSETS)
SDL 2.9% Harley Davidson 2.7%
Flextronics 2.9 Inktomi 2.7
Kohls 2.8 Broadcom 2.7
Univision 2.8 Comverse Technologies 2.6
Time Warner 2.7 Entrust Technologies 2.3
--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
S&P
PORTFOLIO 400 INDEX
----------------------------
Number of Holdings 51 400
Dollar Weighted Median Market Capitalization ($Mil.) 6,362.3 2,750.6
--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
Equity Portfolio S&P MidCap 400 Index
[Pie Chart] [Pie chart]
0% Technology 32%
19% Consumer Cyclical 12%
5% Consumer Non-Cyclical 8%
3% Financial 9%
7% Energy 6%
2% Basic Materials 4%
58% Utilities 9%
6% Industrial 8%
--------------------------------------------------------------------------------
ASSET ALLOCATION
As of September 30, 1999 As of March 31, 2000
[Pie chart] [Pie chart]
96.3% Equities 91.0%
3.7% Cash & Equivalents 9.0%
15
<PAGE>
QUESTIONS & ANSWERS
--------------------------------------------------------------------------------
AN INTERVIEW WITH DANIEL CANTOR AND JEFFREY KINZEL, PORTFOLIO MANAGERS
OF DISCIPLINED STOCK FUND AND SR&F DISCIPLINED STOCK PORTFOLIO
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 market capitalizations.
FUND INCEPTION:
May 22, 1968
NET ASSETS:
$519.3 million
[Graphic]
Q: HOW DID THE FUND PERFORM DURING THE FIRST HALF OF FISCAL 2000?
CANTOR: With a total return of 9.53% for the six months ended March 31, 2000,
the Disciplined Stock Fund did not keep pace with the Standard & Poor's MidCap
400 Index. However, this result compared favorably with the average total return
for mid-cap value funds, which rose 8.8%, according to Morningstar, Inc.
Q: WHAT FACTORS MOST INFLUENCED THE PORTFOLIO'S PERFORMANCE?
CANTOR: The biggest factor was undoubtedly the market's preference for growth
stocks in general and technology stocks in particular. The Fund is underweighted
in technology stocks relative to the Standard & Poor's MidCap 400 Index.
Further, since taking over the Fund in mid-1999, we have gradually exchanged
Photos of: Dan Cantor and Jeffery Kinzel
many of the small-cap and distressed stocks in the Portfolio for stocks with
market capitalizations ranging from $2 billion to $10 billion. We intend to
continue to make this transition. However, the ownership of these small-cap and
distressed stocks was a modest drag on performance.
Q: DID ANY STOCKS IN THE PORTFOLIO DO PARTICULARLY WELL?
KINZEL: One standout was Devry (2.9% of net assets). The company is known for
its technical institutes and other private educational alternatives to public
universities. Due to burgeoning demand for personnel in the technology area and
rising enrollment, the company has done very well.
16
<PAGE>
Q&A CONTINUED
--------------------------------------------------------------------------------
Reynolds & Reynolds (1.6% of net assets) was another solid performer. Though
the stock was trading at just ten times earnings, the long-term earnings growth
potential for the company was about 15% per year. The creator of hardware and
specialized software for auto dealerships, Reynolds owns the lion's share of the
market with newer auto retailers, such as the auto superstores. Reynolds'
services and products help boost efficiency and productivity for their
customers. Additionally, the company has a number of e-commerce and Internet
businesses that could be spun off if the stock does not appropriately reflect
their underlying value going forward.
We also are pleased with our investments in Kansas City Southern Industries
(2.4% of net assets), primarily a financial services company that gained 18%
after we purchased it; and Continental Airlines (0.8% of net assets), up
approximately 20% since purchase.
As a group, airline stocks have been beaten down due to concerns about rising
interest rates and oil prices. Of the group, Continental offered the most
attractive price at the time we purchased it, although this reasonable price
appeared inconsistent with Continental's above-average growth prospects. We are
impressed with the company's current management team, which has refocused the
business on growing its strong but underserved hub cities. Also, management has
aggressively bought back about one-quarter of the company's shares in the last
two years.
Q: WHICH OPPORTUNITIES PROVED DISAPPOINTING?
KINZEL: Many of the stocks that underperformed had cyclical characteristics.
Some, such as Freeport-McMoran Copper & Gold and Cooper Tire & Rubber (each 0.7%
of net assets), were part of basic industries that are mature and are facing
pricing pressures.
Q: WHAT ARE YOUR PLANS FOR REPOSITIONING THE FUND?
CANTOR: We continue our work on transitioning the Fund from a small- to a
mid-cap fund in an orderly fashion. We expect to continue to pare back the
longer-standing positions to make room for more compelling buys as opportunities
present themselves. As always, we will look for well-managed companies that
exhibit earnings growth potential and can be purchased at attractive valuations.
As of March 31, 2000, the Fund still had significant holdings in small-cap
securities. However, since the transitioning began in May 1999, new purchases of
small-cap stocks have totaled only 12% of the Fund's purchases. As stated above,
we will continue to sell smaller-capitalization
17
<PAGE>
Q&A CONTINUED
--------------------------------------------------------------------------------
and distressed securities in favor of mid-caps as long as we believe that
divesting the stocks will not be detrimental to the Fund and its shareholders.
From our perspective, the rotation away from technology that began in
mid-March has been good news. The transition to a market less obsessed with
technology at any price and more focused on valuation and risk is consistent
with our investment approach. Further, we expect heightened market volatility to
continue, which should allow us to reshape the Portfolio as unusual
opportunities appear.
18
<PAGE>
FUND HIGHLIGHTS AS OF MARCH 31, 2000
--------------------------------------------------------------------------------
SR&F DISCIPLINED STOCK FUND
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------
AVX 3.8% First Health Group 3.0%
Littlefuse 3.8 Devry 2.9
OM Group 3.6 Cross Timber Oil 2.9
Andrew Corp. 3.4 Kansas City Southern Ind. 2.4
Telephone & Data 3.1 Dexter 2.4
--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
S&P MIDCAP
PORTFOLIO 400 INDEX
--------------------------------------------------------------------------------
Number of Holdings 59 400
Dollar Weighted Median Market
Capitalization ($Mil.) 2,435.8 2,750.6
--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
Equity Portfolio S&P MidCap 400 Index
[PIECHART]
BASIC MATERIALS 17% 4%
CONSUMER CYCLICAL 20 12
CONSUMER NON-CYCLICAL 12 8
ENERGY 7 6
FINANCIAL 7 9
INDUSTRIAL 16 8
TECHNOLOGY 16 32
UTILITIES 5 9
-------------------------------------------------------------------------------
ASSET ALLOCATION
As of September 30, 1999 As of March 31, 2000
EQUITIES 90.5% 91.2%
CASH & EQUIVALENTS 9.5% 8.8%
19
<PAGE>
QUESTIONS & ANSWERS
--------------------------------------------------------------------------------
AN INTERVIEW WITH DAVE BRADY, PORTFOLIO MANAGER
OF STEIN ROE LARGE COMPANY FOCUS FUND
INVESTMENT OBJECTIVE AND STRATEGY:
Stein Roe Large Company Focus Fund seeks long-term growth by investing in a
non-diversified portfolio of equity securities that the manager believes have
above-average growth potential.
FUND INCEPTION:
June 26, 1998
NET ASSETS:
$71.1 million
Q: HOW DID THE FUND PERFORM DURING THE SIX MONTH ENDED MARCH 31, 2000?
BRADY: I'm very pleased with the Fund's total return of 24.55%, which compares
favorably with the 17.50% total return generated by the Standard & Poor's 500
Index.
Q: TO WHAT DO YOU ATTRIBUTE THIS SUPERIOR PERFORMANCE?
BRADY: The Fund has a concentrated portfolio of just 15 to 25 issues (25 as of
March 31), so results -- good or bad -- for any single holding have a greater
impact on the Fund's performance than they would for the more diversified
benchmark. During this most recent period, results were generally good,
especially for the Fund's technology stocks. We saw sizable gains for several
companies that were growing as the Internet expanded. These included Cisco
Systems, Apple Computer, Network Appliance and Intuit (4.3%, 7.6%, 2.9% and 2.7%
of net assets, respectively). Cisco and Network Appliance provide hardware to
companies building out their technology infrastructure. Apple is a major
supplier of personal computers, and Intuit markets popular consumer software
programs (Quicken and TurboTax), as well as Internet-based financial services.
Q: WERE ALL YOUR STRONG PERFORMERS TECHNOLOGY STOCKS?
BRADY: No, they were not. Safeway (3.8% of net assets), a relatively new
holding, and AES Corp. (4.4% of net assets) both chalked up sizable gains. The
former is the premier low-cost operator of supermarkets and is known for its
strong, savvy management. The latter is a leading global independent power
company.
Another contributor was American Home Products (3.5% of net assets), a
pharmaceutical and health care company. The company has an
Photo of: Dave Brady
20
<PAGE>
Q&A CONTINUED
--------------------------------------------------------------------------------
impressive product pipeline and one of the lowest exposures to patent
expiration. The new product pipeline could add billions of dollars in sales to
AHP's already robust sales volume. In addition, the company is considered an
attractive takeover target, which could boost its share price.
Vodafone, the UK-based wireless communications company (5.8% of net assets)
was also a standout. We acquired this position through our interest in AirTouch,
a U.S.-based wireless operations company that was bought by Vodafone last year.
Today, Vodafone is the world's largest wireless communications carrier.
Q: WHICH STOCKS DETRACTED FROM PERFORMANCE?
BRADY: Mattel, the toy manufacturer, proved to be the biggest disappointment and
we divested our holdings before the end of the period. The stock struggled as
management paid too much to acquire The Learning Company and then couldn't make
the newcomer fit into Mattel's business mix.
Other disappointments came from the financial services sector, where rising
interest rates continued to hurt even the best-run companies. South Trust (3.4%
of assets), a leading regional bank in the Southeast, and Household
International, Inc. (4.1% of assets) both suffered. For Household International,
Inc., the poor showing is hardest to explain. Its execution has been terrific,
and earnings grew 33% in 1999, exceeding expectations. We have strong
convictions about the stock and have maintained our position.
Q: WHAT'S YOUR OUTLOOK FOR THE FUND?
BRADY: I believe the Federal Reserve is nearing the end of its program of
raising interest rates, with only one or two more rate hikes to come. In the
second half of 2000, interest rates should decline and inflation worries should
abate. Add to this a healthy economy that has continued to grow at 4% per annum,
and I see plenty of reason to be optimistic about prospects for the Fund. It is
invested in companies that have dominated their industries, that are well run
and that have experienced growth in sales and earnings. While technology may
have fallen from the king-of-the-hill position it held earlier this year, I
believe there is still plenty of room for growth in this sector and many others.
To me, this spells opportunity to buy good stocks, perhaps at more reasonable
prices than we saw in the most recent period.
21
<PAGE>
FUND HIGHLIGHTS AS OF MARCH 31, 2000
--------------------------------------------------------------------------------
STEIN ROE LARGE COMPANY FOCUS FUND
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------
Apple Computer Inc. 7.6% EMC Corp. 4.9%
Microsoft Corp. 6.8 Comcast Corp. 4.6
Motorola, Inc. 5.8 AES Corp. 4.4
Vodafone AirTouch 5.8 Cisco Systems Inc. 4.3
Pitney Bowes, Inc. 5.3 Household International, Inc. 4.1
--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
PORTFOLIO S&P 500
--------------------------------------------------------------------------------
Number of Holdings 25 500
Dollar Weighted Median
Market Capitalization ($Mil.) 31,755.3 85,679.3
--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
[pie chart]
Equity Portfolio S&P 500 Index
Basic Materials 0% 2%
Consumer Cyclical 11 12
Consumer Non-Cyclical 10 15
Energy 2 6
Financial 11 13
Industrial 3 7
Technology 48 35
Utilities 15 10
--------------------------------------------------------------------------------
ASSET ALLOCATION
[pie charts]
As of September 30, 1999 As of March 31, 2000
Equities 99.9% 97.0%
Cash & Equivalents 0.1% 3.0%
22
<PAGE>
Q&A
--------------------------------------------------------------------------------
AN INTERVIEW WITH DAVE BRADY AND STEVE HAYWARD, PORTFOLIO MANAGERS
OF CAPITAL OPPORTUNITIES FUND
FUND DATA
INVESTMENT OBJECTIVE AND STRATEGY:
Stein Roe Capital Opportunities Fund seeks long-term growth by investing in
the stocks of aggressive growth companies. An aggressive growth company has
the ability to increase its earnings at an above-average rate.
FUND INCEPTION:
March 31, 1969
NET ASSETS:
$635.4 million
Photos of: Steve Hayward and Dave Brady
Q: HOW DID THE FUND PERFORM DURING THE FIRST HALF OF FISCAL 2000?
HAYWARD: The Fund generated a total return of 69.12% for the six months ended
March 31, 2000, or more than double the 32.06% total return for the unmanaged
Standard & Poor's MidCap 400 Index.
Q: WHAT WERE THE MAJOR INFLUENCES ON PERFORMANCE?
HAYWARD: The biggest influences on results were the continued repositioning of
the Portfolio and the strength of technology and telecommunications stocks.
Since last May the Fund has been gradually restructured to focus more on the
growth potential of medium-sized companies. I assumed co-portfolio manager
responsibilities in December and, at that time, we accelerated the
repositioning. We trimmed the Fund's exposure to the large-company sector of the
market by trading 15 or so larger-cap stocks that had posted strong gains in the
past but no longer exhibited the rapid growth potential characteristic of
medium-size companies. In their place, we put companies with market
capitalizations below $9 billion that we felt had better growth prospects. As a
result, the median market capitalization of the Fund's holdings dropped from
$8.8 billion in December to less than $8 billion at the end of the period.
Q: DID YOU MAKE OTHER CHANGES TO THE FUND'S INVESTMENT STYLE?
HAYWARD: No. The Fund continues to be diversified -- at least 50 to 55
positions, with no more than 5% of total assets invested in any single issue.
And we continue to look for individual companies that
23
<PAGE>
we believe can generate the above-average earnings growth for an investor.
Q: IN WHAT SECTORS DID YOU FIND THESE GROWTH STOCKS?
HAYWARD: Nearly sixty percent of total assets at March 31 was invested in
technology and telecommunications issues. We also had a sizable allocation to
consumer companies.
Our economy is being restructured around technology and telecommunications.
More than just the Internet, this change encompasses businesses that provide
infrastructure for the transformation, whether it's semiconductors for handheld
phones or software that facilitates broadband communications. We chose not to
invest in the financially weak e-tailers and looked instead for companies that
were positioned to turn the demand-for-information-flow phenomenon into solid
earnings.
For example, we added to a position in American Tower (1.6% of net assets),
which erects towers for communications antennas. Whichever companies ultimately
win the struggle for dominance in local and long-distance wireless
communication, it's likely they'll need towers and antennas to transmit voice
and data signals. We also bought Scientific Atlanta (2.0% of net assets), which
turned out to be one of our better performers. The company supplies products to
cable operators and satellite service providers that allow them to deliver more
content and services to their customers.
Other strong performers were Network Appliance, Broadcom and SDL, Inc. (2.9%,
2.9%, and 3.4% of net assets, respectively). The first supplies equipment for
computer networks. Broadcom manufactures semiconductors for broadband
communications, and SDL produces lasers for undersea cable. Although these are
large-capitalization companies, we chose to keep them due to their superior
growth prospects.
Q: WHAT OTHER SECTORS DID YOU FOCUS ON?
HAYWARD: When looking for new opportunities, we observe what consumers are
buying. That led to purchases of Kohl's (2.4% of net assets), an aggressively
expanding, Midwest-based department store chain; Harley-Davidson (2.2% of net
assets), the motorcycle manufacturer; and a few financial services stocks. For
instance, we bought Northern Trust (1.9% of net assets) because we expect more
people to use professional money management services.
Some of our positions are more opportunistic. Late in the fourth
24
<PAGE>
Q&A CONTINUED
--------------------------------------------------------------------------------
quarter, we added oil services stocks to the Portfolio as the cost of a barrel
of crude oil approached $34.
These non-technology holdings helped to bolster the Fund's performance in
March, when the technology-driven NASDAQ reversed course, falling from an
historic peak of 5132 on March 10 to 4573 at March 31.
Q: WHAT IS YOUR OUTLOOK FOR THE FUND?
HAYWARD: The selloff in technology was not unexpected, though it was more
virulent than we anticipated. We think the sector will rally later in the year.
In the meantime, we are taking advantage of this period of weakness to "weed the
garden," removing underperformers and increasing the holdings in which we have
the most conviction.
Going forward, our biggest concern will be election-year politics, which may
well affect sectors like energy, health care, and education. For the time being,
we expect to keep the Fund underweighted in these areas. We are less concerned
about the possibility of future interest rate increases and their impact on the
markets. We look for continued volatility in the market but view this more as an
opportunity to strengthen our positions in the best growth stocks we can find.
25
<PAGE>
FUND HIGHLIGHTS AS OF MARCH 31, 2000
--------------------------------------------------------------------------------
STEIN ROE CAPITAL OPPORTUNITIES FUND
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------
SDL, Inc. 3.4% Exodus Communications 2.8%
Sanmina 3.2 Heftel Broadcasting 2.7
Comverse Technologies 3.0 JDS Uniphase 2.5
Network Appliance 2.9 Inktomi 2.5
Broadcom 2.9 Kohls 2.4
--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
S&P MIDCAP
PORTFOLIO 400 INDEX
--------------------------------------------------------------------------------
Number of Holdings 61 400
Dollar Weighted Median
Market Capitalization ($Mil.) 7,541.9 2,750.6
--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
[pie charts]
Equity Portfolio S&P MidCap 400 Index
Basic materials 0 4
Consumer Cyclical 23 12
Consumer Non-Cyclical 3 8
Energy 1 6
Financial 5 9
Industrial 0 8
Technology 59 32
Utilities 9 9
--------------------------------------------------------------------------------
ASSET ALLOCATION
As of September 30, 1999 As of March 31, 2000
Equities 99.0% 91.4%
Bonds 1.0% 0.3%
Net Cash & Equivalents 8.3%
26
<PAGE>
Q&A
--------------------------------------------------------------------------------
AN INTERVIEW WITH DAVE BRADY, CO-PORTFOLIO MANAGER
FOR STEIN ROE GROWTH INVESTOR FUND
FUND DATA
INVESTMENT OBJECTIVE AND STRATEGY
Stein Roe Growth Investor Fund seeks long-term growth by investing primarily in
common stocks believed to have long-term growth potential.
FUND INCEPTION
March 31, 1999
NET ASSETS
$29.4 million
[graphic]
Q: HOW DID THE FUND PERFORM THROUGH MARCH 31, 2000?
BRADY: We achieved excellent results for the first half of the fiscal year. The
Fund generated a total return or 39.05%, significantly outperforming the 17.50%
total return for the Standard & Poor's 500 Index. The driving force behind our
results was a high allocation to technology, but it's important to remember that
this is not a technology fund. We make a point of diversifying across industry
sectors and investment styles, both of which helped to keep results in positive
territory when technology ran out of steam at the end of the six-month period.
Q: PLEASE EXPLAIN MORE ABOUT THE FUND'S DIVERSIFICATION.
BRADY: We manage the Fund as though it were an investor's only mutual fund
holding, so we want to be sure to include the best of many different aspects of
the market. The Portfolio's core has always been large-cap, high-quality growth
companies. We surround this nucleus with other conservatively managed companies
that demonstrate clear potential for gains in sales and earnings, whether small-
or mid-cap, growth or value. At the end of the period, the Fund held 55
securities in eight industrial sectors.
Photo of: Dave Brady
Q: WHICH TECHNOLOGY STOCKS ADDED THE MOST TO THE BOTTOM LINE DURING THIS RECENT
PERIOD?
BRADY: The most outstanding companies were ones that dominated their respective
market niches and were experiencing boom times as the Internet grows. For
instance, we did very well with our investment in Cisco Systems (4.8% of net
assets). Cisco has been a major beneficiary of companies' need to rebuild their
telecommunications infrastructure to handle voice, email and data transmissions.
In that same vein, Veritas Software (2.4% of net assets),
27
<PAGE>
Q&A CONTINUED
--------------------------------------------------------------------------------
a leader in storage software, and Network Appliance (3.2% of net assets),
the largest supplier of network attached storage systems, have been riding the
Internet wave.
We also enjoyed successes with our semiconductor holdings, including Atmel
and Maxim Integrated Products (2.9% and 2.5% of net assets, respectively); and
with business- to-business software providers. For example, Tibco (1.7% of net
assets) has done extremely well for us. The company develops software that
allows other software packages to communicate with one another. This so-called
middleware has been a very fast growing area of the market.
Q: HOW DID THINGS EVOLVE IN YOUR NON-TECHNOLOGY STOCKS?
BRADY: Star performers outside the technology arena included Safeway (2.5% of
net assets), a well-managed, low-cost operator of supermarkets. Late in the
period, when technology got knocked down, the price of this value stock went up
dramatically. Another stellar stock was Calpine (1.3% of net assets). An
independent power company that uses mostly natural gas, this business has grown
rapidly. The stock has risen 120% since we purchased it this year.
With one exception, the underperformers in the Portfolio also were
non-technology issues. Among them were Johnson & Johnson, the health care
company; Clear Channel, a leading owner/operation of radio stations nationwide;
and McDonald's Corp., where concern over lackluster growth in its international
business hurt the stock. These companies represented 1.0%, 1.4%, and 2.0% of net
assets, respectively.
Finally, performance also was hurt by our investment in MCI Worldcom, a
long-time core position (1.3% of net assets). MCI was a victim of investor
uncertainty over its pending merger with Sprint.
Q: WHAT DO YOU EXPECT FOR THE NEXT SIX MONTHS?
BRADY: I am very optimistic. Although the markets took a downturn after
mid-March, all of the factors that made the past few years profitable ones for
investors remain intact. I look for the domestic economy to continue to grow at
or above 4% for rest of year, just as it has for the past four years. Looking at
the bigger picture, the circumstances that have driven record market expansion
remain unchanged. Baby boomers still need more for retirement and still have
discretionary dollars to place in the market. In the short run, interest rates
should be less of an issue, since the Federal Reserve appears closer to the end
of its program of raising interest rates than the beginning. Finally, the stocks
we own represent companies whose reasons for growth are solid. In my view, now
is the time to add to them.
28
<PAGE>
FUND HIGHLIGHTS AS OF MARCH 31, 2000
--------------------------------------------------------------------------------
SR&F GROWTH INVESTOR FUND
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------
Cisco System 4.8% EMC Corp. 2.6%
Network Appliance 3.2 Safeway 2.5
Microsoft Corp. 2.9 Maxim Intergated Products 2.5
Atmel 2.9 Veritas Software 2.4
Apple Computer 2.8 General Electric 2.4
--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
S&P 500
PORTFOLIO INDEX
--------------------------------------------------------------------------------
Number of Holdings 55 500
Dollar Weighted Median
Market Value ($Mil.) 22,127 85,679.3
--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
[pie chart]
Equity Portfolio S&P 500 Index
Basic Materials 1 2
Consumer Cyclical 16 12
Consumer Non-Cyclical 6 15
Energy 1 6
Financial 6 13
Industrial 6 7
Technology 51 35
Utilities 13 10
--------------------------------------------------------------------------------
ASSET ALLOCATION
[pie chart]
As of September 30, 1999 As of March 31, 2000
Equities 96.6% 98.1%
Cash & Equivalents 3.4% 1.9%
29
<PAGE>
Q&A
--------------------------------------------------------------------------------
AN INTERVIEW WITH WILLIAM M. GARRISON, PORTFOLIO MANAGER
OF THE STEIN ROE SMALL COMPANY GROWTH FUND.
FUND DATA
INVESTMENT OBJECTIVE AND STRATEGY:
Stein Roe Small Company Growth Fund seeks long-term growth appreciation by
investing in stocks of small, growing companies.
FUND INCEPTION:
March 25, 1996
NET ASSETS:
$29.5 million
[graphic]
Q: HOW WOULD YOU DESCRIBE THE FUND'S PERFORMANCE FOR THE SIX MONTHS ENDED MARCH
31, 2000?
GARRISON: In a word, excellent. At 74.23%, the total return for Stein Roe Small
Company Growth Fund was exceptional, and well ahead of the 19.00% total return
for the Standard & Poor's Small Company 600 Index. I believe these results are a
strong endorsement of changes made since last May to give the Fund a purer
growth strategy while maintaining broad diversification. We did, however,
generate about 9.0% of our total dollar appreciation in the Fund from our
participation in IPOs. We held these securities for less than two weeks.
Q: HOW BROADLY DIVERSIFIED IS THE FUND?
GARRISON: By the end of the period, we held 148 names, including a moderate
number of mid-cap stocks. We also have about 5% of the Portfolio invested in
stocks where we received the shares on initial public offerings.
Photo of: William M. Garrison
Q: WHAT CAN YOU TELL US ABOUT THE SMALL-CAP MARKET IN THE PAST SIX MONTHS?
GARRISON: The past two quarters were a wonderful period for small-cap investors.
Driven by a virtual explosion in technology and communications, and to a lesser
extent, biotechnology, absolute performance for small companies improved
dramatically. Calendar year 1999 was the first year since 1993 that small- and
mid-cap growth stocks outpaced their large-cap counterparts. The favorable IPO
market has helped bring attention to the opportunities for small-cap investors.
Q: WHAT DO YOU MEAN WHEN YOU SAY THE IPO MARKET WAS "FAVORABLE"? HOW DID YOU
PARTICIPATE IN IT?
GARRISON: First, there was a tremendous amount of activity,
30
<PAGE>
Q&A CONTINUED
--------------------------------------------------------------------------------
especially in the technology sector. Second, most IPOs were well received and
generated some significant gains. We evaluate IPOs by the same criteria that we
apply to other stocks. We participated in a number of new offerings. We intend
to hold some of these stocks for the long term and have traded others within
days or weeks of buying them because we could no longer justify holding the
position. Returns attributable to investments in newly-issued public companies
reflected the very favorable initial public offering market and may not be
sustainable.
Q: WHAT INVESTMENTS CONTRIBUTED THE MOST TO PERFORMANCE?
GARRISON: At the risk of sounding like a broken record, I'll say they were
technology holdings. Six months ago we told you about ART Technology Group (0.7%
of net assets), a producer of software products that allow businesses to better
manage Internet relationships. At that time, it had gained 200% since we bought
it. In the past two quarters, it advanced another 245%. Likewise, we saw robust
results for Macromedia, Mercury Interactive, and Micrel (0.9%, 1.0% and 0.6% of
net assets, respectively). All four have moved into mid-cap territory due to
price appreciation, but we have held onto them because we feel each still has
considerable growth potential.
One stock we divested was JDS Uniphase, which had become a large-cap holding
and had appreciated 1640% since we purchased it 14 months ago.
Other growers in the Portfolio included two communications businesses --
Primus Telecommunications and Pinnacle Holdings -- and several health care
stocks. At 2.5% of net assets as of March 31, Primus was one of the Fund's top
ten holdings. The company is a provider of international telecommunications
services for both voice and data. Pinnacle Holdings (1.1% of net assets) leases
towers used to transmit wireless communications.
The biotechnology industry is finally emerging from the lab and bringing
products to the market, making the possibility of revenues and earnings real for
the first time. Investors have responded positively to this progress, which
helped to push up prices of biotech stocks. We used the upswing to sell one
holding, Alkermes, which had appreciated substantially since our initial
purchase in late August 1999. We also bought shares of Maxygen when the company
went public. The company has developed a process for speeding the time to
develop new drugs. However, investor response was too enthusiastic for our
tastes -- the stock had advanced by more than 900% when we exited the position
in early March, with a holding period of less than three months.
31
<PAGE>
Q&A CONTINUED
--------------------------------------------------------------------------------
Q: WHAT IS YOUR OUTLOOK FOR SMALL-CAP INVESTING?
GARRISON: The preceding six months were remarkable, but we can't expect that to
last. By the end of the period, the market had already begun to take back some
of what it had given us. Still, we see good long-term opportunities out there.
Looking at it from the bigger picture, I believe that technology has leveled the
playing field and that large, market-dominating companies no longer have the
same advantages as before. Technology has made it possible for small-caps to
compete more effectively.
32
<PAGE>
FUND HIGHLIGHTS AS OF MARCH 31, 2000
--------------------------------------------------------------------------------
STEIN ROE SMALL COMPANY GROWTH FUND
TOP 10 HOLDINGS (% OF NET ASSETS)
--------------------------------------------------------------------------------
Methode Electronics Inc. 2.8% Clickaction 1.5%
Primus Telecommunication 2.5 Varian Semiconductor 1.4
Tut Systems 1.9 Prosofttraining.com 1.2
Independent Energy 1.9 Dusa Pharamaceuticals 1.2
MRV Communications 1.7 Actuate Corp.com 1.2
--------------------------------------------------------------------------------
EQUITY PORTFOLIO HIGHLIGHTS
S&P 600
PORTFOLIO INDEX
--------------------------------------------------------------------------------
Number of Holdings 148 600
Dollar Weighted Median
Market Value ($Mil.) 1,000 957.7
--------------------------------------------------------------------------------
ECONOMIC SECTOR BREAKDOWN
[pie chart]
Equity Portfolio S&P 600 Index
Technology 50% 28%
Consumer Cyclical 11 16
Health Care 9 11
Capital Goods 7 13
Communication Services 5 1
Energy 5 4
Consumer Staples 4 7
Financial 3 11
Transportation 3 3
Utilities 2 3
Basic Materials 1 3
--------------------------------------------------------------------------------
ASSET ALLOCATION
[pie chart]
As of September 30, 1999 As of March 31, 2000
Equities 98.1% 91.0%
Bonds 1.9% 8.9%
33
<PAGE>
SR&F GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
MARCH 31, 2000 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 98.6% SHARES VALUE
--------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 2.9%
INSURANCE CARRIERS
Citigroup, Inc.................................... 1,000 $ 59,312
MANUFACTURING - 58.2%
CHEMICALS & ALLIED PRODUCTS - 4.9%
Amgen, Inc. (a)................................... 500 30,687
Johnson & Johnson................................. 500 35,031
Pfizer, Inc....................................... 1,000 36,563
--------
102,281
COMMUNICATIONS EQUIPMENT - 8.9%
Motorola, Inc..................................... 450 64,069
Nokia Oyj ADR..................................... 250 54,312
Telefonakteibolaget LM Ericsson................... 700 65,669
--------
184,050
ELECTRICAL INDUSTRIAL EQUIPMENT - 3.0%
General Electric Co............................... 400 62,075
ELECTRONIC & ELECTRICAL EQUIPMENT - 5.3%
Atmel Corp. (a)................................... 1,250 64,531
Flextronics International Ltd. (a)................ 650 45,784
--------
110,315
ELECTRONIC COMPONENTS - 9.8%
Gemstar International Group Ltd. (a).............. 300 25,800
LSI Logic Corp. (a)............................... 900 65,363
Novellus Systems, Inc. (a)........................ 550 30,869
Texas Instruments, Inc............................ 500 80,000
--------
202,032
MACHINERY & COMPUTER EQUIPMENT - 13.1%
Applied Materials, Inc. (a)....................... 750 70,688
Cisco Systems, Inc. (a)........................... 1,550 119,834
EMC Corp. (a)..................................... 650 81,250
--------
271,772
MEASURING & ANALYZING INSTRUMENTS - 5.4%
JDS Uniphase Corp. (a)............................ 500 60,281
Medtronic, Inc.................................... 1,000 51,437
--------
111,718
MISCELLANEOUS MANUFACTURING - 4.1%
Tyco International Ltd............................ 1,700 84,787
STONE, CLAY, GLASS & CONCRETE - 3.7%
Corning, Inc...................................... 400 77,600
MINING & ENERGY - 4.3%
OIL & GAS FIELD SERVICES
Enron Corp........................................ 1,200 89,850
RETAIL TRADE - 6.6%
APPAREL & ACCESSORY STORES - 2.5%
Kohl's Corp. (a).................................. 500 51,250
34
<PAGE>
--------------------------------------------------------------------------------
SR&F GROWTH STOCK PORTFOLIO CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
RETAIL TRADE - 6.6% (CONTINUED)
BUILDING, HARDWARE & GARDEN SUPPLY - 3.0%
Home Depot, Inc................................... 975 $ 62,888
MISCELLANEOUS RETAIL - 1.1%
Walgreen Co....................................... 850 21,888
SERVICES - 11.4%
COMPUTER SOFTWARE - 9.2%
Microsoft Corp. (a)............................... 1,000 106,250
Oracle Corp., (a)................................. 750 58,547
Veritas........................................... 200 26,200
----------
190,997
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 2.2%
Genentech, Inc. (a)............................... 300 45,600
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS, & SANITARY SERVICES - 15.2%
BROADCASTING - 5.1%
AT&T Corp-Liberty Media Group Class A (a)......... 950 56,288
Clear Channel Communications, Inc. (a)............ 700 48,344
----------
104,632
ELECTRIC SERVICES - 1.9%
AES Corp. (a)..................................... 500 39,375
TELECOMMUNICATION - 8.2%
American Tower Corp. Class A (a).................. 1,000 49,375
Global Crossing Ltd. (a).......................... 750 30,703
MCI WorldCom, Inc. (a)............................ 1,013 45,879
Vodafone AirTouch PLC ADR......................... 800 44,450
----------
170,407
----------
TOTAL COMMON STOCKS (cost of $1,154,377) (b)......... 2,042,829
----------
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 1.2% PAR
COMMERCIAL PAPER
Associates First Capital,
4.17%(c) 4/3/00................................. $23,955 23,947
----------
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES - 0.2%.................... 3,735
----------
NET ASSETS - 100.0%.................................. $2,070,511
==========
--------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Non-income producing.
(b) At March 31, 2000, the cost of investments for financial reporting and
federal income tax purposes was identical. Net unrealized appreciation was
$888,452, consisting of gross unrealized appreciation of $917,905 and gross
unrealized depreciation of $29,453.
(c) Rate represents yield at time of purchase.
Acronym Name
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
35
<PAGE>
STEIN ROE MIDCAP GROWTH FUND
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
MARCH 31, 2000 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 90.3% SHARES VALUE
--------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 6.5%
DEPOSITORY INSTITUTIONS - 2.3%
Northern Trust Corp............................... 25 $ 1,689
FINANCIAL SERVICES - 2.7%
Federated Investors, Inc. - Class B............... 35 956
Knight/Trimark Group, Inc. ....................... 20 1,020
--------
1,976
INSURANCE CARRIERS - 1.5%
MGIC Investment Corp. ............................ 25 1,091
MANUFACTURING - 23.4%
CHEMICALS & ALLIED PRODUCTS - 2.3%
Forest Laboratories, Inc.......................... 20 1,690
COMMUNICATIONS EQUIPMENT - 2.6%
Comverse Tech..................................... 10 1,890
ELECTRONIC MACHINERY, COMPONENTS & SUPPLIES - 1.7%
Harmonic, Inc..................................... 15 1,249
ELECTRONIC & ELECTRICAL EQUIPMENT - 6.3%
Aeroflex, Inc..................................... 25 1,238
Flextronics Intl LTD.............................. 30 2,113
Scientific-Atlanta, Inc........................... 20 1,268
--------
4,619
ELECTRONIC COMPONENTS - 4.1%
Broadcom Corp., Class A........................... 8 1,943
Sawtek, Inc....................................... 20 1,051
--------
2,994
PRINTING & PUBLISHING - 3.7%
Time Warner Telecom - Class A..................... 25 1,988
Tribune Co........................................ 20 731
--------
2,719
TRANSPORTATION EQUIPMENT - 2.7%
Harley-Davidson, Inc.............................. 25 1,984
MINING & ENERGY - 1.4%
OIL & GAS EXTRACTION
Noble Drilling Corp............................... 25 1,036
RETAIL TRADE - 5.6%
APPAREL & ACCESSORY STORES - 2.8%
Kohl's Corp...................................... 20 2,050
FOOD STORES - 1.5%
Starbucks Corp.................................... 25 1,120
MISCELLANEOUS RETAIL - 1.3%
Bed Bath & Beyond, Inc............................ 25 984
36
<PAGE>
STEIN ROE MIDCAP GROWTH FUND CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
SERVICES - 21.0%
BUSINESS SERVICES - 2.5%
Korn/Ferry International.......................... 30 $ 893
Tmp Worldwide, Inc................................ 12 933
--------
1,826
COMPUTER RELATED SERVICES - 8.9%
Digex, Inc........................................ 15 1,664
Entrust Technologies, Inc......................... 20 1,702
Internap Network Services......................... 15 690
Spectrasite Holdings, Inc......................... 50 1,416
Teligent, Inc. - Class A.......................... 15 1,001
--------
6,473
COMPUTER SOFTWARE - 9.6%
Citrix Systems, Inc............................... 10 663
Inktomi Corp...................................... 10 1,950
Lycos, Inc........................................ 15 1,054
Network Solutions, Inc............................ 10 1,537
Register.Com...................................... 10 695
USA Networks, Inc................................. 50 1,127
--------
7,026
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 30.7%
BROADCASTING - 5.0%
CSG Systems International, Inc.................... 25 1,220
Cumulus Media, Inc. - Class A..................... 25 359
Univision Communications, Inc. - Class A.......... 18 2,034
--------
3,613
CABLE - 1.0%
Adelphia Communications Corp. - Class A........... 15 735
COMMUNICATIONS - 1.5%
Research in Motion Ltd............................ 10 1,065
GAS SERVICES - 1.2%
Kinder Morgan, Inc................................ 25 863
RAILROAD - 1.8%
Kansas City Southern Industries, Inc.............. 15 1,289
TELECOMMUNICATION - 19.2%
Allegiance Telecom, Inc........................... 20 1,614
Diamond Tech Partners, Inc........................ 20 1,315
Level 3 Communications............................ 15 1,586
PC-Tel, Inc....................................... 20 1,505
Pegasus Communications Corp....................... 10 1,408
Pinnacle Holdings, Inc............................ 30 1,657
RF Micro Devices, Inc............................. 10 1,344
SDL, Inc.......................................... 10 2,129
Telocity, Inc..................................... 40 495
Western Wireless Corp. - Class A.................. 20 916
--------
13,969
WATER TRANSPORTATION - 1.0%
Royal Caribbean Cruises Ltd....................... 25 700
37
<PAGE>
STEIN ROE MIDCAP GROWTH FUND CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
WHOLESALE TRADE - 1.7%
NONDURABLE GOODS
Suiza Foods Corp.................................. 30 $ 1,208
--------
TOTAL COMMON STOCKS (cost of $50,760)................ 65,858
--------
--------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS - 0.7% PAR
U.S.TREASURY BONDS
0.00% 07/20/00.................................... 500 491
--------
TOTAL GOVERNMENT OBLIGATIONS (cost of $493).......... 491
--------
TOTAL INVESTMENTS (cost of $51,253)(b)............... 66,349
--------
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 7.2%
COMMERCIAL PAPER
Associates First Capital,
4.17%(c) 04/03/00............................... 2,680 2,679
UBS Finance,
4.19%(c) 04/03/00............................... 2,600 2,599
--------
5,278
--------
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES - 1.8%.................... 1,313
--------
NET ASSETS - 100%.................................... $ 72,940
========
--------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Non-incoming producing security
(b) At March 31, 2000, the cost of investments for financial reporting and
federal income tax purposes was identical. Net unrealized appreciation was
$15,096, consisting of gross unrealized appreciation of $18,758 and gross
unrealized depreciation of $3,662.
(c) Rate represents yield at time of purchase.
Par value Unrealized
covered Expiration depreciation
Type by contracts month at 03/31/00
---- ------------ ---------- ------------
Nasdaq 100 $ 800 June $ 165
See Accompanying Notes to Financial Statements.
38
<PAGE>
SR&F DISCIPLINED STOCK PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
MARCH 31, 2000 (UNAUDITED, IN THOUSANDS)
COMMON STOCK - 91.2% SHARES VALUE
--------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 6.5%
DEPOSITORY INSTITUTIONS - 5.8%
Chase Manhattan Corp.............................. 100 $ 8,719
Golden West Financial Corp........................ 362 11,280
Washington Mutual, Inc............................ 383 10,139
--------
30,138
INSURANCE CARRIERS - 0.7%
Premark International Inc......................... 75 3,558
MANUFACTURING - 49.9%
CHEMICALS & ALLIED PRODUCTS - 14.6%
Air Products & Chemicals, Inc..................... 200 5,687
Bristol-Myers Squibb Co........................... 50 2,887
Dexter Corp....................................... 235 12,455
E.I. DuPont De Nemours & Co....................... 100 5,288
Ecolab, Inc....................................... 257 9,421
Imperial Chemical Industries PLC ADR.............. 375 12,107
Millennium Chemicals, Inc......................... 254 5,082
OM Group, Inc..................................... 410 18,650
Praxair, Inc...................................... 100 4,163
--------
75,740
COMMUNICATIONS EQUIPMENT - 3.9%
Andrew Corp. (a).................................. 764 17,474
SABRE Group Holdings, Inc......................... 72 2,669
--------
20,143
ELECTRICAL INDUSTRIAL EQUIPMENT - 3.8%
Littlefuse, Inc. (a).............................. 535 19,628
ELECTRONIC COMPONENTS - 3.8%
AVX Corp.......................................... 260 19,734
LEATHER - 1.5%
Wolverine World Wide, Inc......................... 731 8,041
LIGHTING EQUIPMENT - 0.5%
U.S. Industries, Inc.............................. 253 2,793
LUMBER & WOOD PRODUCTS - 0.8%
Georgia Pacific Corp.............................. 100 3,956
MACHINERY & COMPUTER EQUIPMENT - 5.9%
Compaq Computer Corp.............................. 200 5,325
Flowserve Corp.................................... 365 4,699
International Business Machines Corp.............. 60 7,080
Seagate Technology, Inc. (a)...................... 166 9,989
Silicon Graphics, Inc. (a)........................ 320 3,380
--------
30,473
39
<PAGE>
SR&F DISCIPLINED STOCK PORTFOLIO CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
MANUFACTURING - 49.9% (CONTINUED)
MEASURING & ANALYZING INSTRUMENTS - 4.5%
Acuson Corp. (a).................................. 587 $ 8,690
Biomet, Inc....................................... 270 9,821
Mallinckrodt, Inc................................. 170 4,888
--------
23,399
PRIMARY METAL - 0.9%
Carpenter Technology Corp......................... 220 4,579
PRIMARY SMELTING - 0.8%
Phelps Dodge Corp................................. 86 4,081
PRINTING & PUBLISHING - 1.6%
Reynolds & Reynolds Co............................ 300 8,100
RUBBER & PLASTIC - 2.8%
Carlisle Cos., Inc................................ 281 11,248
Cooper Tire & Rubber Co........................... 280 3,518
--------
14,766
STONE, CLAY, GLASS & CONCRETE - 0.3%
Gentex Corp. (a).................................. 44 1,631
TEXTILE MILL PRODUCTS - 0.4%
Unifi, Inc........................................ 245 2,194
TRANSPORTATION EQUIPMENT - 3.8%
Eaton Corp........................................ 54 4,212
Lear Corp. (a).................................... 177 4,978
Superior Industries International, Inc............ 330 10,463
--------
19,653
MINING & ENERGY - 4.7%
CRUDE PETROLEUM & NATURAL GAS - 2.9%
Cross Timber Oil Co............................... 1,166 15,234
METAL & MINING - 0.7%
Freeport-McMoran Copper & Gold, Inc............... 300 3,619
OIL & GAS FIELD SERVICES - 1.1%
Petroleum Geo-Services ADR (a).................... 322 5,582
RETAIL TRADE - 4.3%
APPAREL & ACCESSORY STORES - 1.9%
TJX Companies, Inc................................ 450 9,984
GENERAL MERCHANDISE STORES - 1.4%
Federated Department Stores, Inc. (a)............. 180 7,515
MISCELLANEOUS RETAIL - 1.0%
Borders Group, Inc. (a)........................... 310 5,328
40
<PAGE>
SR&F DISCIPLINED STOCK PORTFOLIO CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
SERVICES - 13.8%
AUTO REPAIR, RENTAL & PARKING - 0.6%
Hertz Corp........................................ 90 $ 3,066
BUSINESS SERVICES - 3.7%
Interim Services Inc. (a)......................... 550 10,209
Pittston Brink's Group............................ 540 9,184
--------
19,393
EDUCATIONAL SERVICES - 2.9%
Devry, Inc. (a)................................... 500 15,250
HEALTH SERVICES - 5.0%
Columbia/HCA Healthcare Corp...................... 405 10,249
First Health Group Corp. (a)...................... 495 15,661
--------
25,910
PERSONAL SERVICES - 1.6%
Cintas Corp....................................... 218 8,523
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 10.4%
AIR TRANSPORTATION - 1.4%
AMR Corp. (a)..................................... 100 3,187
Continental Airlines, Inc. (a).................... 100 4,088
--------
7,275
COMMUNICATIONS - 3.1%
Telephone & Data Systems, Inc..................... 143 15,873
GAS SERVICES - 1.2%
El Paso Energy Corp............................... 150 6,056
RAILROAD - 2.4%
Kansas City Southern Industries, Inc.............. 145 12,461
TELECOMMUNICATION - 1.5%
Bell Atlantic Corp................................ 125 7,641
WATER TRANSPORTATION - 0.8%
Tidewater, Inc.................................... 131 4,167
WHOLESALE TRADE - 1.6%
DURABLE GOODS - 1.6%
Arrow Electronics, Inc. (a)....................... 239 8,418
--------
TOTAL COMMON STOCKS (cost of $356,065)(b)............ 473,902
--------
--------------------------------------------------------------------------------
41
<PAGE>
SR&F DISCIPLINED STOCK PORTFOLIO CONTINUED
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 9.0% PAR VALUE
--------------------------------------------------------------------------------
COMMERCIAL PAPER
Associates First Capital 4.17%(c) 04/03/00........ $17,510 $ 17,504
CVS Corp. 3.10%(c) 04/05/00....................... 12,000 11,992
GTE Corp. 3.07%(c) 04/03/00....................... 17,000 16,994
--------
46,490
--------
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES - (0.2)%.................. (1,115)
--------
NET ASSETS - 100%.................................... $519,277
========
--------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At March 31, 2000 the cost of investments for financial reporting and
federal income tax purposes was identical. Net unrealized appreciation was
$117,837, consisting of gross unrealized appreciation of $149,349 and gross
unrealized depreciation of $31,512.
(c) Rate represents yield at time of purchase.
Acronym Name
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
42
<PAGE>
STEIN ROE LARGE COMPANY FOCUS FUND
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
MARCH 31, 2000 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 97.0% SHARES VALUE
--------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 10.6%
DEPOSITORY INSTITUTIONS - 6.5%
MBNA Corp......................................... 85 $ 2,167
Southtrust Corp................................... 96 2,437
--------
4,604
NONDEPOSITORY CREDIT INSTITUTIONS - 4.1%
Household International, Inc...................... 77 2,884
MANUFACTURING - 36.9%
CHEMICALS & ALLIED PRODUCTS - 3.5%
American Home Products Corp....................... 46 2,488
COMMUNICATIONS EQUIPMENT - 5.8%
Motorola, Inc..................................... 29 4,129
ELECTRONIC & ELECTRICAL EQUIPMENT - 2.7%
Intuit Inc. (a)................................... 35 1,903
MACHINERY & COMPUTER EQUIPMENT - 16.9%
Apple Computer Inc................................ 40 5,433
Cisco Systems Inc.(a)............................. 40 3,077
EMC Corp. (a)..................................... 28 3,500
--------
12,010
OFFICE MACHINES - 5.4%
Pitney Bowes, Inc................................. 85 3,798
PAPER PRODUCTS - 2.6%
Avery Dennison Corp............................... 30 1,838
MINING & ENERGY - 2.1%
OIL & GAS FIELD SERVICES
Enron Corp........................................ 20 1,498
RETAIL TRADE - 3.8%
FOOD STORES
Safeway, Inc. (a)................................. 60 2,715
SERVICES - 15.3%
COMPUTER RELATED SERVICES - 2.9%
Network Appliance Inc. (a)........................ 25 2,069
COMPUTER SOFTWARE - 10.0%
Microsoft Corp.(a)................................ 46 4,845
Rational Software Corp. (a)....................... 30 2,295
--------
7,140
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 2.4%
Genentech, Inc. (a)............................... 11 1,672
43
<PAGE>
STEIN ROE LARGE COMPANY FOCUS FUND CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS AND SANITARY SERVICES - 28.3%
BROADCASTING - 5.8%
CBS Corp.......................................... 48 $ 2,718
Clear Channel Communications, Inc................. 20 1,381
--------
4,099
COMMUNICATIONS - 2.9%
Crown Castle Intl Corp. (a)....................... 55 2,083
ELECTRIC SERVICES - 4.4%
AES Corp. (a)..................................... 40 3,150
TELECOMMUNICATION - 15.2%
Arrowpoint Communications (a)..................... 5 581
Comcast Corp-Special Class A...................... 75 3,253
MCI Worldcom Inc. (a)............................. 64 2,882
Vodafone AirTouch PLC ADR......................... 74 4,112
--------
10,828
--------
TOTAL COMMON STOCKS (Cost of $53,513)(b)............. 68,908
--------
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 2.4% PAR
--------------------------------------------------------------------------------
COMMERCIAL PAPER 2.4%
Associates First Capital 4.17%(c) 04/03/2000...... $1,720 1,719
--------
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, 0.6%..................... 442
--------
TOTAL NET ASSETS - 100%.............................. $ 71,069
========
--------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At March 31, 2000, the cost of investments for financial reporting and
federal income tax purposes was identical. Net unrealized appreciation was
$15,395, consisting of gross unrealized appreciation of $18,877 and gross
unrealized depreciation of $3,482.
(c) Rate represents yield at time of purchase.
Acronym Name
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
44
<PAGE>
STEIN ROE CAPITAL OPPORTUNITIES FUND
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
MARCH 31, 2000 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 91.4% SHARES VALUE
--------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 3.8%
DEPOSITORY INSTITUTIONS - 1.9%
Northern Trust Corp............................... 175 $ 11,823
INSURANCE CARRIERS - 1.2%
MGIC Investment Corp.............................. 175 7,634
SECURITY BROKERS & DEALERS - 0.7%
Paine Webber Group, Inc........................... 100 4,400
MANUFACTURING - 28.5%
CHEMICALS & ALLIED PRODUCTS - 1.7%
Forest Laboratories, Inc.......................... 125 10,562
COMMUNICATIONS EQUIPMENT - 4.2%
Comverse Technology, Inc. (a)..................... 100 18,900
Tellabs, Inc. (a)................................. 125 7,873
--------
26,773
ELECTRONIC MACHINERY, COMPONENTS & SUPPLIES - 1.1%
Conexant Systems, Inc. (a)........................ 100 7,100
ELECTRONIC & ELECTRICAL EQUIPMENT - 4.2%
Flextronics International Ltd. (a)................ 200 14,087
Scientific-Atlanta, Inc........................... 200 12,688
--------
26,775
ELECTRONIC COMPONENTS - 6.0%
Broadcom Corp., Class A (a)....................... 75 18,216
Sanmina Corp. (a)................................. 300 20,269
--------
38,485
MACHINERY & COMPUTER EQUIPMENT - 4.4%
Exodus Communications, Inc. (a)................... 125 17,563
Lexmark International Group, Inc. (a)............. 100 10,575
--------
28,138
MEASURING & ANALYZING INSTRUMENTS - 2.5%
JDS Uniphase Corp. (a)............................ 130 15,673
PRINTING & PUBLISHING - 1.0%
Tribune Co........................................ 175 6,398
STONE, CLAY, GLASS & CONCRETE - 1.2%
Gentex Corp. (a).................................. 200 7,413
TRANSPORTATION EQUIPMENT - 2.2%
Harley-Davidson, Inc.............................. 175 13,891
MINING & ENERGY - 1.3%
OIL & GAS EXTRACTION
Noble Drilling Corp. (a).......................... 125 5,180
Rowan Companies, Inc. (a)......................... 100 2,944
--------
8,124
45
<PAGE>
STEIN ROE CAPITAL OPPORTUNITIES FUND CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
RETAIL TRADE - 6.5%
APPAREL & ACCESSORY STORES - 2.4%
Kohl's Corp. (a).................................. 150 $ 15,375
FOOD STORES - 1.2%
Starbucks Corp. (a)............................... 175 7,842
GENERAL MERCHANDISE STORES - 2.1%
Dollar Tree Stores, Inc. (a)...................... 250 13,031
MISCELLANEOUS RETAIL - 0.8%
Bed Bath & Beyond, Inc. (a)....................... 125 4,922
SERVICES - 20.2%
AMUSEMENT & RECREATION - 0.7%
International Speedway Corp. Class A.............. 100 4,494
BUSINESS SERVICES - 2.3%
Korn/Ferry International (a)...................... 125 3,719
TMP Worldwide, Inc. (a)........................... 80 6,220
Young & Rubicam, Inc.............................. 100 4,700
--------
14,639
COMPUTER RELATED SERVICES - 6.1%
Fiserv, Inc. (a).................................. 325 12,086
Network Appliance, Inc. (a)....................... 225 18,619
Teligent, Inc. Class A (a)........................ 125 8,351
--------
39,056
COMPUTER SOFTWARE - 9.9%
CMGI, Inc. (a).................................... 40 4,532
Inktomi Corp. (a)................................. 80 15,600
Lycos, Inc. (a)................................... 75 5,269
Network Solutions, Inc. (a)....................... 80 12,296
Register.com, Inc. (a)............................ 75 5,213
USA Networks, Inc. (a)............................ 350 7,897
VeriSign, Inc. (a)................................ 80 11,960
--------
62,767
PERSONAL SERVICES - 1.2%
Steiner Leisure Ltd. (a).......................... 400 7,700
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 30.1%
BROADCASTING - 5.9%
CSG Systems International, Inc. (a)............... 100 4,881
Cumulus Media, Inc., Class A (a).................. 100 1,437
Heftel Broadcasting Corp. (a)..................... 150 16,988
Univision Communications, Inc., Class A (a)....... 125 14,125
--------
37,431
CABLE - 1.1%
Adelphia Communications Corp., Class A (a)........ 150 7,350
46
<PAGE>
STEIN ROE CAPITAL OPPORTUNITIES FUND CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 30.1% (CONTINUED)
COMMUNICATIONS - 3.7%
Crown Castle International Corp. (a).............. 100 $ 3,787
Nextlink Communications, Inc., Class A (a)........ 75 9,277
Research in Motion Ltd. (a)....................... 60 6,390
XM Satellite Radio Holdings, Inc., Class A (a).... 125 4,359
--------
23,813
TELECOMMUNICATIONS - 18.7%
Allegiance Telecom, Inc. (a)...................... 150 12,094
American Tower Corp., Class A (a)................. 200 9,875
Diamond Technology Partners, Inc. (a)............. 100 6,575
Level 3 Communications, Inc. (a).................. 125 13,219
Nextel Partners, Inc., Class A (a)................ 60 1,740
Pinnacle Holdings, Inc. (a)....................... 125 6,906
Proxim, Inc. (a).................................. 100 11,969
RF Micro Devices, Inc. (a)........................ 75 10,078
SDL, Inc. (a)..................................... 100 21,287
TranSwitch Corp. (a).............................. 100 9,612
VoiceStream Wireless Corp. (a).................... 75 9,661
Western Wireless Corp., Class A (a)............... 125 5,727
--------
118,743
WATER TRANSPORTATION - 0.7%
Royal Caribbean Cruises Ltd....................... 150 4,200
WHOLESALE TRADE - 1.0%
NONDURABLE GOODS
Suiza Foods Corp. (a)............................. 150 6,038
--------
TOTAL COMMON STOCKS (cost of $371,449)............... 580,590
--------
--------------------------------------------------------------------------------
47
<PAGE>
STEIN ROE CAPITAL OPPORTUNITIES FUND CONTINUED
--------------------------------------------------------------------------------
BONDS & NOTES - 0.3% PAR VALUE
--------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS
U.S Treasury Bond:
0.000% 07/20/00................................ $1,200 $ 1,179
6.500% 2/28/00................................. 400 400
--------
TOTAL BONDS & NOTES (cost of $1,579)................ 1,579
--------
TOTAL INVESTMENTS (cost of $373,028)................ 582,169
--------
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 1.8%
COMMERCIAL PAPER
Associates First Capital,
4.17%(c) 4/3/00................................ 11,700 11,696
--------
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES, NET - 6.5%............... 41,553
--------
NET ASSETS - 100%.................................... $635,418
========
--------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At March 31, 2000, the cost for financial reporting and federal income tax
purposes was identical. Net unrealized appreciation was $209,141,
consisting of gross unrealized appreciation of $229,070 and gross
unrealized depreciation of $19,929.
(c) Rate represents yield at time of purchase.
Long futures contracts open at March 31, 2000:
Par value Unrealized
covered Expiration depreciation
Type by contracts month at 03/31/00
---- ------------ ---------- ------------
Nasdaq 100 $ 4,000 June $ (655)
See Accompanying Notes to Financial Statements.
48
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
MARCH 31, 2000 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 98.1% SHARES VALUE
--------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 6.3%
DEPOSITORY INSTITUTIONS - 0.7%
Texas Regional Bancshares, Class A................ 375 $ 9,539
FINANCIAL SERVICES - 2.2%
The Goldman Sachs Group, Inc...................... 300 31,537
INSURANCE CARRIERS - 2.1%
Citigroup, Inc.................................... 600 29,656
NONDEPOSITORY CREDIT INSTITUTIONS - 1.3%
Household International, Inc...................... 500 18,656
MANUFACTURING - 32.8%
CHEMICALS & ALLIED PRODUCTS - 2.9%
American Home Products Corp....................... 300 14,479
Johnson & Johnson................................. 450 14,012
Minerals Technologies, Inc........................ 300 13,369
--------
41,860
COMMUNICATIONS EQUIPMENT - 3.9%
Comverse Technology, Inc. (a)..................... 300 28,350
Motorola, Inc..................................... 200 28,475
--------
56,825
ELECTRICAL INDUSTRIAL EQUIPMENT - 2.4%
General Electric Co............................... 255 34,141
ELECTRONIC & ELECTRICAL EQUIPMENT - 4.7%
Atmel Corp. (a)................................... 700 41,300
Intuit, Inc. (a).................................. 500 27,187
--------
68,487
ELECTRONIC COMPONENTS - 2.5%
Maxim Integrated Products (a)..................... 500 35,531
MACHINERY & COMPUTER EQUIPMENT - 10.2%
Apple Computer, Inc............................... 275 40,744
Cisco Systems, Inc. (a)........................... 800 69,581
EMC Corp. (a)..................................... 300 37,500
--------
147,825
MEASURING & ANALYZING INSTRUMENTS - 1.8%
KLA - Tencor Corp. (a)............................ 300 25,275
MISCELLANEOUS MANUFACTURING - 0.8%
Hasbro, Inc....................................... 700 11,550
OFFICE MACHINES - 1.5%
Pitney Bowes, Inc................................. 500 22,344
STONE, CLAY, GLASS & CONCRETE - 2.1%
Corning, Inc...................................... 160 31,040
49
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
RETAIL TRADE - 6.0%
FOOD STORES - 2.5%
Safeway, Inc. (a)................................. 800 $ 36,200
MISCELLANEOUS RETAIL - 1.5%
Walgreen Co....................................... 850 21,888
RESTAURANTS - 2.0%
McDonald's Corp................................... 750 28,172
SERVICES - 26.9%
AMUSEMENT & RECREATION - 0.4%
Cedar Fair, L.P................................... 315 6,261
BUSINESS SERVICES - 3.1%
Equant NV - NY Registered Shares (a).............. 200 17,013
Sun Microsystems, Inc. (a)........................ 300 28,111
--------
45,124
COMPUTER RELATED SERVICES - 4.6%
America Online, Inc. (a).......................... 300 20,175
Network Appliance, Inc. (a)....................... 550 45,513
--------
65,688
COMPUTER SOFTWARE - 12.1%
Doubleclick (a)................................... 100 9,362
Foundry Networks, Inc. (a)........................ 100 14,375
Inktomi Corp. (a)................................. 100 34,125
Microsoft Corp. (a)............................... 400 42,500
Rational Software Corp. (a)....................... 200 15,300
Tibco Software, Inc. (a).......................... 300 24,450
Veritas Software Corp. (a)........................ 200 34,388
--------
174,500
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 2.7%
Gemstar (a)....................................... 200 17,200
Genentech, Inc. (a)............................... 98 14,896
Paychex, Inc...................................... 450 23,569
--------
55,665
MOTION PICTURES - 3.9%
Walt Disney....................................... 800 33,100
TRAVEL SERVICES - 0.1%
Sabre Group Holdings.............................. 55 2,032
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 26.1%
BROADCASTING - 7.2%
AT&T Liberty Media A (a).......................... 500 29,625
Clear Channel Communications (a).................. 400 20,719
Hispanic Broadcasting Corp. (a)................... 280 31,710
Univision Communications, Inc. Class A (a)........ 200 22,600
--------
104,654
COMMUNICATIONS - 3.0%
Crown Castle International Corp. (a).............. 700 26,512
Nextlink Communications, Inc. Class A (a)......... 200 24,737
--------
51,249
50
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE
--------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 26.1%
(CONTINUED)
ELECTRIC SERVICES - 3.6%
AES Corp. (a)..................................... 400 $ 31,500
Calpine Corp. (a)................................. 200 18,800
----------
50,300
GAS SERVICES - 1.4%
Kinder Morgan, Inc................................ 600 20,700
TELECOMMUNICATIONS - 10.9%
Level 3 Communications, Inc. (a).................. 300 31,725
MCI WorldCom, Inc. (a)............................ 400 18,125
NTL, Inc. (a)..................................... 300 27,844
Qwest Communications International (a)............ 583 28,278
Sonera Oyj ADR.................................... 350 23,231
Vodafone AirTouch PLC ADR......................... 600 27,781
----------
156,984
----------
TOTAL COMMON STOCKS (Cost $837,584) (b).............. 1,416,783
----------
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 1.2% PAR
--------------------------------------------------------------------------------
COMMERCIAL PAPER
Associates First Capital 4.17%(c) 04/03/00........ $16,690 16,684
----------
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES - 0.7%.................... 9,707
----------
NET ASSETS - 100%.................................... $1,443,174
==========
--------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At March 31, 2000, the cost of investments for financial reporting and
federal income tax purposes was identical. Net unrealized appreciation was
$579,199, consisting of gross unrealized appreciation of $600,366 and gross
unrealized depreciation of $21,167.
(c) Rate represents yield at time of purchase.
Acronym Name
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
51
<PAGE>
STEIN ROE SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
MARCH 31, 2000 (UNAUDITED, IN THOUSANDS)
COMMON STOCKS - 91.1% SHARES VALUE
--------------------------------------------------------------------------------
CONSTRUCTION - 1.1%
Astec Industries, Inc. (a)........................ 6 $ 165
Insituform Technologies, Class A (a).............. 5 153
--------
318
FINANCE, INSURANCE & REAL ESTATE - 2.9%
DEPOSITORY INSTITUTIONS - 1.2%
Imperial Bancorp (a).............................. 7 211
Silicon Valley Bancshares (a)..................... 2 151
--------
362
FINANCIAL SERVICES - 1.5%
Espeed, Inc., Class A (a)......................... 3 142
Globalnet Financial.Com (a)....................... 6 226
Profit Recovery Group International, Inc. (a)..... 5 85
--------
453
REAL ESTATE - 0.2%
Homeseekers.com, Inc. (a)......................... 4 55
MANUFACTURING - 29.2%
APPAREL - 0.8%
Chico's Fas, Inc. (a)............................. 14 237
CHEMICALS & ALLIED PRODUCTS - 4.4%
Alpharma, Inc., Class A........................... 4 129
Dusa Pharmaceuticals, Inc. (a).................... 15 357
Jones Pharmaceuticals, Inc........................ 4 119
Medicis Pharmaceutical Corp., Class A (a)......... 3 112
Shire Pharmaceuticals ADR (a)..................... 6 325
Vical, Inc. (a)................................... 2 80
Zoll Medical Corp. (a)............................ 4 179
--------
1,301
COMMUNICATIONS EQUIPMENT - 0.6%
Inter-Tel, Inc.................................... 5 126
ITC Deltacom, Inc. (a)............................ 2 64
--------
190
ELECTRIC MACHINERY, COMPUTER & SUPPLY - 1.3%
Aspect Medical Systems, Inc. (a).................. 3 89
Aspeon, Inc. (a).................................. 11 225
Dionex Corp. (a).................................. 2 76
--------
390
ELECTRONIC & ELECTRICAL EQUIPMENT - 5.7%
Alaska Communication Systems Holding, Inc. (a).... 5 62
CTS Corp.......................................... 3 188
Emisphere Technologies, Inc. (a).................. 4 223
Kemet Corp. (a)................................... 3 190
Methode Electronics, Class A...................... 16 813
Official Payments Corp. (a)....................... 2 80
QRS Corp. (a)..................................... 2 128
--------
1,684
52
<PAGE>
STEIN ROE SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------
Continued SHARES VALUE
--------------------------------------------------------------------------------
MANUFACTURING - 29.2% (CONTINUED)
ELECTRONIC COMPONENTS - 8.9%
Burr-Brown Corp. (a).............................. 6 $ 302
Concord Camera Corp. (a).......................... 6 335
Elantec Semiconductor, Inc. (a)................... 1 96
JNI Corp. (a)..................................... 2 122
LTX Corp. (a)..................................... 4 199
Micrel, Inc. (a).................................. 2 182
MRV Communictions, Inc. (a)....................... 6 504
Plexus Corp. (a).................................. 3 173
Therma-Wave, Inc. (a)............................. 3 99
Tweeter Home Entertainment Group (a).............. 5 199
Varian Semiconductor Equipment (a)................ 7 420
--------
2,631
FOOD & KINDRED PRODUCTS - 1.4%
Amercian National Can Group, Inc. (a)............. 25 328
Canandaigua Brands, Inc., Class A (a)............. 2 97
--------
425
MACHINERY & COMPUTER EQUIPMENT - 3.1%
C-Cube Microsystems, Inc. (a)..................... 3 189
Electro Scientific Industries, Inc. (a)........... 5 267
Electroglas, Inc. (a)............................. 5 168
Ion Networks, Inc. (a)............................ 6 198
Xircom, Inc. (a).................................. 3 93
--------
915
MEASURING & ANALYZING INSTRUMENTS - 1.2%
Orbotech Ltd. (a)................................. 2 191
Teradyne, Inc. (a)................................ 2 165
--------
356
PAPER PRODUCTS - 0.9%
Helene Curtis Industries, Inc. (a)................ 5 256
RUBBER & PLASTIC - 0.5%
AptarGroup, Inc................................... 5 136
STONE, CLAY, GLASS & CONCRETE - 0.4%
London Pacific Group, Ltd., ADR................... 5 121
MINING & ENERGY - 4.0%
CRUDE PETROLEUM & NATURAL GAS - 0.6%
Triton Energy Corp. (a)........................... 5 179
METAL MINING - 0.8%
Stillwater Mining Co. (a)......................... 6 236
OIL & GAS EXTRACTION - 2.1%
Cal Dive International, Inc. (a).................. 4 213
Pogo Producing Co................................. 7 209
Santa Fe Snyder Corp. (a)......................... 21 197
--------
619
OIL & GAS FIELD SERVICES - 0.5%
UTI Energy Corp. (a).............................. 4 132
53
<PAGE>
STEIN ROE SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------
Continued SHARES VALUE
--------------------------------------------------------------------------------
RETAIL TRADE - 2.6%
APPAREL & ACCESSORY STORES - 0.1%
AnnTaylor Stores Corp. (a)........................ 2 $ 44
GENERAL MERCHANDISE STORES - 0.4%
99 Cents Only Stores (a).......................... 1 52
Tuesday Morning Corp. (a)......................... 4 62
--------
114
MISCELLANEOUS RETAIL - 1.8%
Damark International, Inc. (a).................... 7 267
Zale Corp. (a).................................... 6 264
--------
531
RESTAURANTS - 0.3%
CEC Entertainment, Inc. (a)....................... 3 92
SERVICES - 28.5%
BUSINESS SERVICES - 15.9%
American Management Systems (a)................... 3 114
Art Technology Group, Inc. (a).................... 3 197
Active Software, Inc. (a)......................... 3 159
Actuate Corp. (a)................................. 6 344
Clickaction, Inc. (a)............................. 9 432
Catalina Marketing Corp. (a)...................... 1 91
ChoicePoint, Inc. (a)............................. 7 250
DSP Group, Inc. (a)............................... 5 330
Extensity, Inc. (a)............................... 2 91
Intervu, Inc. (a)................................. 1 108
Interim Services, Inc. (a)........................ 5 93
Kronos, Inc. (a).................................. 3 95
Macromedia, Inc. (a).............................. 3 280
Matrixone, Inc. (a)............................... 3 108
Mercury Interactive Corp. (a)..................... 4 301
National Computer Systems, Inc.................... 3 157
Net.Genesis Corp. (a)............................. 6 273
Netamerica.Com Corp. (a).......................... 8 160
Saleslogix Corp. (a).............................. 5 130
SEI Investments Co................................ 3 295
Sonicwall, Inc. (a)............................... 2 107
Sensar Corp. (a).................................. 2 112
The Bisys Group, Inc. (a)......................... 2 113
Watchguard Technologies, Inc. (a)................. 4 324
Websense, Inc. (a)................................ 19
--------
4,683
COMPUTER RELATED SERVICES - 1.8%
Hall Kinion & Associates, Inc. (a)................ 9 212
Overland Data, Inc. (a)........................... 19 267
Predictive Systems, Inc. (a)...................... 1 59
--------
538
54
<PAGE>
STEIN ROE SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------
Continued SHARES VALUE
--------------------------------------------------------------------------------
SERVICES - 28.5% (CONTINUED)
COMPUTER SOFTWARE - 6.7%
724 Solutions, Inc. (a)........................... $ 13
Allscripts, Inc. (a).............................. 3 186
Aspen Technology, Inc. (a)........................ 6 230
Blaze Software, Inc. (a).......................... 3 71
Bluestone Software (a)............................ 4 125
Clarus Corp. (a).................................. 4 283
Intraware, Inc. (a)............................... 2 62
Manugistics Group, Inc. (a)....................... 3 171
Register.Com (a).................................. 4 243
SPSS, Inc. (a).................................... 4 114
Symantec Corp. (a)................................ 3 195
TSI International Software Ltd. (s)............... 2 158
Wind River Systems (a)............................ 3 120
--------
1,971
EDUCATIONAL SERVICES - 1.9%
Lightspan Partnership, Inc. (a)................... 11 193
Prosofttraining.Com (a)........................... 16 368
--------
561
ENGINEERING, ACCOUNTING, RESEARCH & MANAGEMENT - 1.0%
Tetra Tech (a).................................... 12 280
HEALTH SERVICES - 1.2%
Chromavision Medical Systems (a).................. 9 136
Novoste Corp. (a)................................. 6 228
--------
364
TRANSPORTATION, COMMUNICATION, ELECTRIC, GAS & SANITARY SERVICES - 20.7%
AIR TRANSPORTATION - 0.6%
Skywest, Inc...................................... 4 172
BROADCASTING - 1.5%
Acme Communications, Inc. (a)..................... 6 144
Cumulus Media, Inc., Class A (a).................. 8 112
Radio One, Inc. (a)............................... 2 133
Salem Communications, Class A (a)................. 4 47
--------
436
COMMUNICATIONS - 7.4%
Alamosa Pcs Holdings, Inc. (a).................... 2 60
Certicom Corp. ................................... 1 60
Certicom Corp. ................................... 2 191
Cypress Communications, Inc. (a).................. 4 101
Eloquent, Inc. (a)................................ 5 100
Focal Communications Corp. (a).................... 2 84
Genus, Inc. (a)................................... 16 218
Intervoice-Brite, Inc. (a)........................ 9 263
Interwave Communications Intl., Ltd............... 1 30
Orckit Communications Ltd......................... 1 67
Orckit Communications Ltd......................... 2 154
Telaxis Communications Corp. (a).................. 1 48
Telecorp PCS, Inc. (a)............................ 2 104
Titan Corp. (a)................................... 2 119
Tut Systems, Inc. (a)............................. 11 571
--------
2,170
55
<PAGE>
STEIN ROE SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------
Continued SHARES VALUE
--------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 20.7% (CONTINUED)
ELECTRIC SERVICES - 1.9%
Independent Energy Holdings, ADR.................. 13 $ 565
MOTOR FREIGHT & WAREHOUSING - 0.8%
American Freightways Corp. (a).................... 8 113
USfreightways Corp................................ 4 135
--------
248
TELECOMMUNICATION - 7.4%
Arrowpoint Communications......................... 2 225
Blue Wave Systems, Inc. (a)....................... 17 270
FirstWorld Communications, Inc., Class B (a)...... 3 61
Lightpath Technologies, Inc., Class A (a)......... 3 122
Media 100, Inc. (a)............................... 7 237
Net2000 Communications, Inc. (a).................. 1 26
Pinnacle Holdings, Inc. (a)....................... 6 315
Primus Telecommunications Group................... 14 724
Telocity, Inc. (a)................................ 16 197
--------
2,177
TRANSPORTATION SERVICES - 1.1%
Circle International.............................. 7 177
Expeditors International Washington, Inc.......... 3 107
Getthere.Com, Inc. (a)............................ 2 34
--------
318
WHOLESALE TRADE - 2.1%
DURABLE GOODS - 0.7%
Cytyc Corp. (a)................................... 3 155
Patterson Dental Co............................... 2 61
--------
216
NONDURABLE GOODS - 1.4%
Barrett Resources Corp. (a)....................... 2 60
Bindley Western Industries, Inc................... 8 111
Priority Healthcare Corp., Class B (a)............ 5 241
--------
412
--------
TOTAL COMMON STOCKS (cost of $21,048 ) (b)........... 26,888
--------
--------------------------------------------------------------------------------
56
<PAGE>
STEIN ROE SMALL COMPANY GROWTH FUND
--------------------------------------------------------------------------------
Continued PAR VALUE
--------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 10.3%
--------------------------------------------------------------------------------
Repurchase Agreement with SBC Warburg Ltd. dated 03/31/00, due 04/03/00
at 6.100%, collateralized by U.S Treasury bonds and/or
notes with a maturity of 2022, market value $3,113
(repurchase proceeds $3,027)...................... $3,025 $ 3,025
--------
--------------------------------------------------------------------------------
OTHER ASSETS & LIABILITIES - (1.4)%.................. (410)
--------
NET ASSETS - 100%.................................... $ 29,503
========
--------------------------------------------------------------------------------
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Non-income producing.
(b) At March 31, 2000, the cost for financial reporting and federal income tax
purposes was identical. Net unrealized appreciation was $5,840, consisting
of gross unrealized appreciation of $7,306 and gross unrealized
depreciation of $1,466.
Acronym Name
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
57
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
MARCH 31, 2000 (UNAUDITED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER-SHARE DATA)
<TABLE>
<CAPTION>
LARGE
GROWTH MIDCAP DISCIPLINED COMPANY
STOCK GROWTH STOCK FOCUS
FUND FUND FUND FUND
---------- ---------- ---------- ----------
ASSETS
<S> <C> <C> <C> <C>
Investments in Portfolio, at value................................ $1,168,863 $ -- $519,850 $ --
Investments, at market value (cost--, $51,253,--, $53,513,
$373,028,--, and $21,048, respectively)........................ -- 66,349 -- 68,908
Short-term obligations............................................ -- 5,278 -- 1,719
------------ --------- ---------- ---------
1,168,863 71,627 519,850 70,627
Cash.............................................................. -- 2 -- 2
Receivable for investments sold................................... -- 2,749 -- 3,429
Receivable for fund shares sold................................... 739 11 1,033 120
Dividends receivable.............................................. -- 3 -- 46
Variation margin on futures....................................... -- 104 -- --
Expense reimbursement due from Advisor............................ -- 34 -- --
Other............................................................. 450 32 116 --
------------ --------- ---------- ---------
Total Assets................................................... 1,170,052 74,562 520,999 74,224
------------ --------- ---------- ---------
LIABILITIES
Payable for investments purchased................................. -- 1,492 -- 2,950
Payable for fund shares repurchased............................... 16,493 36 2,420 41
Payable due to Advisor............................................ -- -- -- 68
Accrued:
Management fee................................................. -- 49 -- 45
Administrative fee............................................. 157 10 62 9
Transfer agent fee............................................. 5 17 110 22
Bookkeeping fee................................................ 219 2 2 2
12b-1 Service & Distribution fees.............................. -- -- -- --
Other............................................................. 2 16 87 18
------------ --------- ---------- ---------
Total Liabilities.............................................. 16,876 1,622 2,681 3,155
------------ --------- ---------- ---------
Net Assets..................................................... $1,153,176 $72,940 $518,318 $71,069
============ ========= ========== =========
ANALYSIS OF NET ASSETS
Paid-in capital................................................... $ 348,528 $33,915 $395,395 $51,996
Accumulated undistributed (overdistributed)
net investment income (loss)................................... (2,014) (238) 1,471 (206)
Accumulated net realized gain (loss).............................. 159,664 23,512 3,663 3,884
Net unrealized appreciation....................................... 646,998 15,751 117,789 15,395
------------ --------- ---------- ---------
Net Assets..................................................... $1,153,176 $72,940 $518,318 $71,069
============ ========= ========== =========
Shares outstanding (unlimited number authorized).................. 17,976 3,526 27,133 5,079
============ ========= ========== =========
Net asset value per share......................................... $ 64.15 $ 20.68 $ 19.10 $ 13.99
============ ========= ========== =========
58
<PAGE>
<CAPTION>
SMALL
CAPITAL GROWTH COMPANY
OPPORTUNITIES INVESTOR GROWTH
FUND FUND FUND
-------------- ---------- ----------
ASSETS
<S> <C> <C> <C>
Investments in Portfolio, at value................................ $ -- $28,858 $ --
Investments, at market value (cost--, $51,253,--, $53,513,
$373,028,--, and $21,048, respectively)........................ 582,169 -- 26,888
Short-term obligations............................................ 11,696 -- 3,025
---------- --------- ---------
593,865 28,858 29,913
Cash.............................................................. 62 -- 88
Receivable for investments sold................................... 31,105 -- 271
Receivable for fund shares sold................................... 26,882 462 161
Dividends receivable.............................................. 26 -- 2
Variation margin on futures....................................... 519 -- --
Expense reimbursement due from Advisor............................ -- -- 25
Other............................................................. 308 145 --
---------- --------- ---------
Total Assets................................................... 652,767 29,465 30,460
---------- --------- ---------
LIABILITIES
Payable for investments purchased................................. 14,974 -- 860
Payable for fund shares repurchased............................... 1,714 18 42
Payable due to Advisor............................................ -- 44 --
Accrued:
Management fee................................................. 418 -- 24
Administrative fee............................................. 85 4 2
Transfer agent fee............................................. 139 7 6
Bookkeeping fee................................................ 3 -- 2
12b-1 Service & Distribution fees.............................. -- 7 --
Other............................................................. 16 -- 21
---------- --------- ---------
Total Liabilities.............................................. 17,349 80 957
---------- --------- ---------
Net Assets..................................................... $635,418 $29,385 $29,503
========== ========= =========
ANALYSIS OF NET ASSETS
Paid-in capital................................................... $240,780 $25,056 $19,431
Accumulated undistributed (overdistributed)
net investment income (loss)................................... (2,434) (54) (82)
Accumulated net realized gain (loss).............................. 188,585 (1,120) 4,314
Net unrealized appreciation....................................... 208,487 5,503 5,840
---------- --------- ---------
Net Assets..................................................... $635,418 $29,385 $29,503
========== ========= =========
Shares outstanding (unlimited number authorized).................. 14,783 -- 1,340
========== ========= =========
Net asset value per share......................................... $ 42.98 $ 13.13(a) $ 22.02
========== ========= =========
</TABLE>
(a) Class S net asset value per share (based on net assets of $18,476 and 1,407
shares issued outstanding).
See Accompanying Notes to Financial Statements.
59
<PAGE>
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
LARGE
GROWTH MIDCAP DISCIPLINED COMPANY
STOCK GROWTH STOCK FOCUS
FUND FUND FUND FUND
---------- ---------- ---------- ----------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividend income allocated from Portfolio.......................... $ 1,620 $ -- $ 2,840 $ --
Dividend income................................................... -- 21 -- 230
Interest income allocated from Portfolio.......................... 1,089 -- 1,834 --
Interest income................................................... -- 76 -- 25
-------- ------- ------- -------
2,709 97 4,674 255
Foreign taxes withheld allocated from Portfolio................... -- -- (54) --
-------- ------- ------- -------
Total investment income........................................ 2,709 97 4,620 255
-------- ------- ------- -------
EXPENSES
Expenses allocated from Portfolio................................. 2,802 -- 2,019 --
Management fee.................................................... -- 219 -- 255
Transfer agent fee................................................ 1,127 70 658 79
Administrative fee................................................ 686 44 393 51
12-b Service & Distribution fees.................................. -- -- -- --
Reports to shareholders........................................... 13 1 30 5
Bookkeeping fee................................................... 25 12 18 13
Registration fees................................................. 15 16 21 13
Audit & legal fees................................................ 8 6 8 12
Trustees' fees.................................................... 4 4 5 7
Custodian fee..................................................... 1 2 1 2
Other............................................................. 42 18 78 24
-------- ------- ------- -------
Total expenses................................................. 4,723 392 3,231 461
Reimbursement of expenses by Advisor.............................. -- (26) -- --
-------- ------- ------- -------
Net expenses................................................... 4,723 366 3,231 461
-------- ------- ------- -------
Net investment income (loss)................................... (2,014) (269) 1,389 (206)
-------- ------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY TRANSACTIONS AND FUTURES CONTRACTS
Net realized gain (loss) on investments allocated from Portfolio.. 162,217 -- 5,292 --
Net realized gain on investments.................................. -- 23,970 -- 3,891
Net realized gain (loss) on closed futures contracts.............. -- (23) -- --
-------- ------- ------- -------
Net realized gain.............................................. -- 23,947 5,292 3,891
-------- ------- ------- -------
Net change in unrealized appreciation/depreciation on investments,
foreign currency transactions and open futures contracts....... 208,009 5,167 37,337 10,980
-------- ------- ------- -------
Net gain....................................................... 370,226 29,114 42,629 14,871
-------- ------- ------- -------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $368,212 $28,845 $44,018 $14,665
======== ======= ======= =======
60
<PAGE>
<CAPTION>
SMALL
CAPITAL GROWTH COMPANY
OPPORTUNITIES INVESTOR GROWTH
FUND FUND FUND
-------------- ---------- ----------
INVESTMENT INCOME
<S> <C> <C> <C>
Dividend income allocated from Portfolio.......................... $ -- $ 53 $ --
Dividend income................................................... 199 -- 10
Interest income allocated from Portfolio.......................... -- 6 --
Interest income................................................... 469 -- 42
-------- ------- -------
668 59 52
Foreign taxes withheld allocated from Portfolio................... -- -- --
-------- ------- -------
Total investment income........................................ 668 59 52
-------- ------- -------
EXPENSES
Expenses allocated from Portfolio................................. -- 47 --
Management fee.................................................... 1,960 -- 76
Transfer agent fee................................................ 624 16 22
Administrative fee................................................ 391 13 13
12-b Service & Distribution fees.................................. -- 10 --
Reports to shareholders........................................... 8 5 9
Bookkeeping fee................................................... 18 13 12
Registration fees................................................. 15 2 (a)
Audit & legal fees................................................ 5 6 59
Trustees' fees.................................................... 12 3 3
Custodian fee..................................................... 2 1 7
Other............................................................. 67 -- (a)
-------- ------- -------
Total expenses................................................. 3,102 116 201
Reimbursement of expenses by Advisor.............................. -- (3) (67)
-------- ------- -------
Net expenses................................................... 3,102 113 134
-------- ------- -------
Net investment income (loss)................................... (2,434) (54) (82)
-------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FOREIGN CURRENCY TRANSACTIONS AND FUTURES CONTRACTS
Net realized gain (loss) on investments allocated from Portfolio.. -- 145 --
Net realized gain on investments.................................. 186,133 -- 4,542
Net realized gain (loss) on closed futures contracts.............. 2,408 -- --
-------- ------- -------
Net realized gain.............................................. 188,541 145 4,542
-------- ------- -------
Net change in unrealized appreciation/depreciation on investments,
foreign currency transactions and open futures contracts....... 79,031 5,037 4,731
-------- ------- -------
Net gain....................................................... 267,572 5,182 9,273
-------- ------- -------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $265,138 $5,128 $9,191
======== ======= =======
</TABLE>
See Accompanying Notes to Financial Statements.
61
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
GROWTH STOCK FUND MIDCAP GROWTH FUND
----------------------- -----------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
MARCH 31,SEPTEMBER 30, MARCH 31,SEPTEMBER 30,
2000 1999 2000 1999
----------------------- -----------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss)............................................ $ (2,014) $ (1,309) $ (269) $ (441)
Net realized gain (loss) on investments, foreign currency transactions
and closed futures contracts......................................... 162,217 78,805 23,947 2,610
Net change in unrealized appreciation/depreciation on investments,
foreign currency transactions and
open futures contracts............................................... 208,009 143,323 5,167 7,804
---------- -------- ------- -------
Net increase (decrease) in net assets resulting from operations...... 368,212 220,819 28,845 9,973
---------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income................................ -- -- -- --
Distributions from net realized capital gains........................... (60,169) -- (750) --
---------- -------- ------- -------
Total distributions to shareholders.................................. (60,169) -- (750) --
---------- -------- ------- -------
FUND SHARE TRANSACTIONS
Receipts for shares sold................................................ 281,635 481,319 9,072 12,421
Value of distributions reinvested....................................... 54,568 -- 727 --
Cost of shares repurchased.............................................. (322,408) (486,145) (9,313) (28,009)
---------- -------- ------- -------
13,795 (4,826) 486 (15,588)
---------- -------- ------- -------
Receipts for shares sold - Class A...................................... -- -- -- --
Cost of shares repurchased - Class A.................................... -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Receipts for shares sold - Class B...................................... -- -- -- --
Cost of shares repurchased - Class B.................................... -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Receipts for shares sold - Class C...................................... -- -- -- --
Cost of shares repurchased - Class C.................................... -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Receipts for shares sold - Class S...................................... -- -- -- --
Cost of shares repurchased - Class S.................................... -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Receipts for shares sold - Class Z...................................... -- -- -- --
Cost of shares repurchased - Class Z.................................... -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Net increase (decrease) from fund share transactions................. 13,795 (4,826) 486 (15,588)
---------- -------- ------- -------
Net increase (decrease) in net assets................................ 321,838 215,993 28,581 (5,615)
NET ASSETS
Beginning of year....................................................... 831,338 615,345 44,359 49,974
---------- -------- ------- -------
End of year............................................................. $1,153,176 $831,338 $72,940 $44,359
========== ======== ======= =======
UNDISTRIBUTED (OVERDISTRIBUTED)NET INVESTMENT INCOME ................... $ (2,014) $ -- $ (238) $ --
========== ======== ======= =======
62
<PAGE>
<CAPTION>
DISCIPLINED STOCK FUND
-----------------------
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
MARCH 31,SEPTEMBER 30,
2000 1999
-----------------------
<S> <C> <C>
OPERATIONS
Net investment income (loss)................................................ $ 1,389 $ 5,406
Net realized gain (loss) on investments, foreign currency transactions
and closed futures contracts............................................. 5,292 175,641
Net change in unrealized appreciation/depreciation on investments,
foreign currency transactions and
open futures contracts................................................... 37,337 (79,109)
-------- ----------
Net increase (decrease) in net assets resulting from operations.......... 44,018 101,938
-------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income.................................... (2,771) (3,888)
Distributions from net realized capital gains............................... (125,955) (160,356)
-------- --------
Total distributions to shareholders...................................... (128,726) (164,244)
-------- --------
FUND SHARE TRANSACTIONS
Receipts for shares sold.................................................... 70,272 192,348
Value of distributions reinvested........................................... 120,849 151,993
Cost of shares repurchased.................................................. (181,621) (600,159)
-------- --------
9,500 (255,818)
-------- --------
Receipts for shares sold - Class A.......................................... -- --
Cost of shares repurchased - Class A........................................ -- --
-------- --------
-- --
-------- --------
Receipts for shares sold - Class B.......................................... -- --
Cost of shares repurchased - Class B........................................ -- --
-------- --------
-- --
-------- --------
Receipts for shares sold - Class C.......................................... -- --
Cost of shares repurchased - Class C........................................ -- --
-------- --------
-- --
-------- --------
Receipts for shares sold - Class S.......................................... -- --
Cost of shares repurchased - Class S........................................ -- --
-------- --------
-- --
-------- --------
Receipts for shares sold - Class Z.......................................... -- --
Cost of shares repurchased - Class Z........................................ -- --
-------- --------
-- --
-------- --------
Net increase (decrease) from fund share transactions..................... 9,500 (255,818)
-------- --------
Net increase (decrease) in net assets.................................... (75,208) (318,124)
NET ASSETS
Beginning of year........................................................... 593,526 911,650
-------- --------
End of year................................................................. $518,318 $593,526
======== ========
UNDISTRIBUTED (OVERDISTRIBUTED)NET INVESTMENT INCOME ....................... $ 1,471 $ 2,853
======== ========
</TABLE>
63
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
GROWTH STOCK FUND MIDCAP GROWTH FUND
----------------------- -----------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
MARCH 31,SEPTEMBER 30, MARCH 31,SEPTEMBER 30,
2000 1999 2000 1999
----------------------- -----------------------
<S> <C> <C> <C> <C>
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Sold............................................................. 5,025 10,293 506 1,088
Issued for distributions reinvested.............................. 1,083 -- 50 --
Repurchased...................................................... (5,745) (10,410) (576) (2,344)
---------- -------- ------- -------
363 (117) (20) (1,256)
---------- -------- ------- -------
Sold - Class A................................................... -- -- -- --
Repurchased - Class A............................................ -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Sold - Class B................................................... -- -- -- --
Repurchased - Class B............................................ -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Sold - Class C................................................... -- -- -- --
Repurchased - Class C............................................ -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Sold - Class S................................................... -- -- -- --
Repurchased - Class S............................................ -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Sold - Class Z................................................... -- -- -- --
Repurchased - Class Z............................................ -- -- -- --
---------- -------- ------- -------
-- -- -- --
---------- -------- ------- -------
Net increase (decrease) in fund shares........................ 363 (117) (20) (1,256)
Shares outstanding at beginning of year.......................... 17,613 17,730 3,546 4,802
---------- -------- ------- -------
Shares outstanding at end of year................................ 17,976 17,613 3,526 3,546
========== ======== ======= =======
64
<PAGE>
<CAPTION>
DISCIPLINED STOCK FUND
-----------------------
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
MARCH 31,SEPTEMBER 30,
2000 1999
-----------------------
<S> <C> <C>
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Sold............................................................. 3,577 8,376
Issued for distributions reinvested.............................. 7,014 7,459
Repurchased...................................................... (9,704) (26,830)
-------- --------
887 (10,995)
-------- --------
Sold - Class A................................................... -- --
Repurchased - Class A............................................ -- --
-------- --------
-- --
-------- --------
Sold - Class B................................................... -- --
Repurchased - Class B............................................ -- --
-------- --------
-- --
-------- --------
Sold - Class C................................................... -- --
Repurchased - Class C............................................ -- --
-------- --------
-- --
-------- --------
Sold - Class S................................................... -- --
Repurchased - Class S............................................ -- --
-------- --------
-- --
-------- --------
Sold - Class Z................................................... -- --
Repurchased - Class Z............................................ -- --
-------- --------
-- --
-------- --------
Net increase (decrease) in fund shares........................ 887 (10,995)
Shares outstanding at beginning of year.......................... 26,246 37,241
-------- --------
Shares outstanding at end of year................................ 27,133 26,246
======== ========
</TABLE>
See Accompanying Notes to Financial Statements.
65
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
LARGE COMPANY FOCUS FUND CAPITAL OPPORTUNITIES FUND
----------------------- -----------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
MARCH 31,SEPTEMBER 30, MARCH 31,SEPTEMBER 30,
2000 1999 2000 1999
----------------------- -----------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment loss.................................. $ (206) $ (250) $ (2,434) $ (3,501)
Net realized gain (loss) on investments.............. 3,891 5,947 188,541 99,234
Net change in unrealized appreciation/
depreciation on investments....................... 10,980 8,974 79,031 (9,404)
------- ------- -------- --------
Net increase (decrease) in net assets
resulting from operations...................... 14,665 14,671 265,138 86,329
------- ------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income............. -- -- -- --
Distributions from net realized capital gains........ (3,219) -- (53,552) --
------- ------- -------- --------
Total distributions to shareholders............... (3,219) -- (53,552) --
------- ------- -------- --------
FUND SHARE TRANSACTIONS
Receipts for shares sold............................. 8,965 19,615 346,898 267,484
Value of distributions reinvested.................... 3,156 -- 49,654 --
Cost of shares repurchased........................... (12,145) (19,355) (384,067) (623,599)
------- ------- -------- --------
(24) (260) 12,485 (356,115)
------- ------- -------- --------
Receipts for shares sold - Class A................... -- -- -- --
Cost of shares repurchased - Class A................. -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Receipts for shares sold - Class B................... -- -- -- --
Cost of shares repurchased - Class B................. -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Receipts for shares sold - Class C................... -- -- -- --
Cost of shares repurchased - Class C................. -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Receipts for shares sold - Class S................... -- -- -- --
Cost of shares repurchased - Class S................. -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Receipts for shares sold - Class Z................... -- -- -- --
Cost of shares repurchased - Class Z................. -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Net increase (decrease) from fund
share transactions............................. (24) (260) 12,485 (356,115)
------- ------- -------- --------
Net increase in net assets........................ 11,422 14,931 224,071 (269,786)
NET ASSETS
Beginning of period.................................. 59,647 44,716 411,347 681,133
------- ------- -------- --------
End of period........................................ $71,069 $59,647 $635,418 $411,347
======= ======= ======== ========
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME............................. $ (206) $ -- $ (2,434) $ --
======= ======= ======== ========
66
<PAGE>
<CAPTION>
SMALL COMPANY
GROWTH INVESTOR FUND GROWTH FUND
----------------------- -----------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
MARCH 31,SEPTEMBER 30, MARCH 31,SEPTEMBER 30,
2000 1999(A) 2000 1999(B)
----------------------- -----------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment loss.................................. $ (154) $ (13) $ (82) $ (22)
Net realized gain (loss) on investments.............. 145 (1,265) 4,542 404
Net change in unrealized appreciation/
depreciation on investments....................... 5,037 466 4,731 132
------- ------- ------- -------
Net increase (decrease) in net assets
resulting from operations...................... 5,128 (812) 9,191 514
------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income............. -- -- -- --
Distributions from net realized capital gains........ -- -- (836) --
------- ------- ------- -------
Total distributions to shareholders............... -- -- (836) --
------- ------- ------- -------
FUND SHARE TRANSACTIONS
Receipts for shares sold............................. -- -- 12,493 793
Value of distributions reinvested.................... -- -- 830 --
Cost of shares repurchased........................... -- -- (2,088) (687)
------- ------- ------- -------
-- -- 11,235 106
------- ------- ------- -------
Receipts for shares sold - Class A................... 2,444 -- -- --
Cost of shares repurchased - Class A................. (53) -- -- --
------- ------- ------- -------
2,391 -- -- --
------- ------- ------- -------
Receipts for shares sold - Class B................... 8,321 -- -- --
Cost of shares repurchased - Class B................. (487) -- -- --
------- ------- ------- -------
7,834 -- -- --
------- ------- ------- -------
Receipts for shares sold - Class C................... 289 -- -- --
Cost of shares repurchased - Class C................. (45) -- -- --
------- ------- ------- -------
244 -- -- --
------- ------- ------- -------
Receipts for shares sold - Class S................... 4,368 13,533 -- --
Cost of shares repurchased - Class S................. (1,910) (1,392) -- --
------- ------- ------- -------
2,458 12,141 -- --
------- ------- ------- -------
Receipts for shares sold - Class Z................... 1 -- -- --
Cost of shares repurchased - Class Z................. -- -- -- --
------- ------- ------- -------
1 -- -- --
------- ------- ------- -------
Net increase (decrease) from fund
share transactions............................. 12,928 12,141 11,235 106
------- ------- ------- -------
Net increase in net assets........................ 18,056 11,329 19,590 620
NET ASSETS
Beginning of period.................................. 11,329 -- 9,913 9,293
------- ------- ------- -------
End of period........................................ $29,385 $11,329 $29,503 $ 9,913
======= ======= ======= =======
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME............................. $ (54) $ -- $ (82) $ --
======= ======= ======= =======
</TABLE>
(a) From commencement of operations on March 31, 1999.
(b) The Fund changed it's fiscal year end from June 30 to September 30.
67
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
LARGE COMPANY FOCUS FUND CAPITAL OPPORTUNITIES FUND
----------------------- -----------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
MARCH 31,SEPTEMBER 30, MARCH 31,SEPTEMBER 30,
2000 1999 2000 1999
----------------------- -----------------------
<S> <C> <C> <C> <C>
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Sold................................................. 694 1,766 9,324 9,598
Issued for distributions reinvested.................. 246 -- 1,581 --
Repurchased.......................................... (924) (1,825) (10,483) (22,199)
------- ------- -------- --------
16 (59) 422 (12,601)
------- ------- -------- --------
Sold - Class A....................................... -- -- -- --
Repurchased - Class A................................ -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Sold - Class B....................................... -- -- -- --
Repurchased - Class B................................ -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Sold - Class C....................................... -- -- -- --
Repurchased - Class C................................ -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Sold - Class S....................................... -- -- -- --
Repurchased - Class S................................ -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Sold - Class Z....................................... -- -- -- --
Repurchased - Class Z................................ -- -- -- --
------- ------- -------- --------
-- -- -- --
------- ------- -------- --------
Net increase (decrease) in fund shares............ 16 (59) 422 (12,601)
Shares outstanding at beginning of period............ 5,063 5,122 14,361 26,962
------- ------- -------- --------
Shares outstanding at end of period.................. 5,079 5,063 14,783 14,361
======= ======= ======== ========
68
<PAGE>
<CAPTION>
SMALL COMPANY
GROWTH INVESTOR FUND GROWTH FUND
----------------------- -----------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED ENDED
MARCH 31,SEPTEMBER 30, MARCH 31,SEPTEMBER 30,
2000 1999(A) 2000 1999(B)
----------------------- -----------------------
<S> <C> <C> <C> <C>
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Sold................................................. -- -- 655 61
Issued for distributions reinvested.................. -- -- 56 --
Repurchased.......................................... -- -- (106) (53)
------- ------- ------- -------
-- -- 605 8
------- ------- ------- -------
Sold - Class A....................................... 190 -- -- --
Repurchased - Class A................................ (4) -- -- --
------- ------- ------- -------
186 -- -- --
------- ------- ------- -------
Sold - Class B....................................... 664 -- -- --
Repurchased - Class B................................ (37) -- -- --
------- ------- ------- -------
627 -- -- --
------- ------- ------- -------
Sold - Class C....................................... 24 -- -- --
Repurchased - Class C................................ (4) -- -- --
------- ------- ------- -------
20 -- -- --
------- ------- ------- -------
Sold - Class S....................................... 372 1,337 -- --
Repurchased - Class S................................ (164) (138) -- --
------- ------- ------- -------
208 1,199 -- --
------- ------- ------- -------
Sold - Class Z....................................... (c) -- -- --
Repurchased - Class Z................................ (c) -- -- --
------- ------- ------- -------
(c) -- -- --
------- ------- ------- -------
Net increase (decrease) in fund shares............ 1,041 1,199 605 8
Shares outstanding at beginning of period............ 1,199 -- 735 727
------- ------- ------- -------
Shares outstanding at end of period.................. 2,240 1,199 1,340 735
======= ======= ======= =======
</TABLE>
(a) From commencement of operations on March 31, 1999.
(b) The Fund changed it's fiscal year end from June 30 to September 30.
(c) Rounds to less than one.
See Accompanying Notes to Financial Statements.
69
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
MARCH 31, 2000 (UNAUDITED)
(ALL AMOUNTS IN THOUSANDS)
SR&F SR&F SR&F
GROWTH DISCIPLINED GROWTH
STOCK STOCK INVESTOR
PORTFOLIO PORTFOLIO PORTFOLIO
--------- ----------- ---------
ASSETS
Investments, at market value (cost of
$1,154,377, $356,065 and $837,584,
respectively)........................... $2,042,829 $473,902 $1,416,783
Short-term obligations..................... 23,947 46,490 16,684
---------- -------- ----------
2,066,776 520,392 1,433,467
Cash...................................... 2 3 13
Receivable for investments sold............ 6,726 4,341 31,265
Dividends receivable...................... 478 798 300
Other...................................... -- 3 184
---------- -------- ----------
Total Assets............................ 2,073,982 525,537 1,465,229
---------- -------- ----------
LIABILITIES
Payable for investments purchased......... 2,643 5,959 21,196
Accrued:
Management fee.......................... 821 297 688
Transfer agent fee...................... 6 3 5
Bookkeeping fee......................... 1 1 1
Other...................................... -- -- 165
---------- -------- ----------
Total Liabilities...................... 3,471 6,260 22,055
---------- -------- ----------
NET ASSETS.............................. $2,070,511 $519,277 $1,443,174
========== ======== ==========
See Accompanying Notes to Financial Statements.
70
<PAGE>
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
(ALL AMOUNTS IN THOUSANDS)
SR&F SR&F SR&F
GROWTH DISCIPLINED GROWTH
STOCK STOCK INVESTOR
PORTFOLIO PORTFOLIO PORTFOLIO
--------- ----------- ---------
INVESTMENT INCOME
Dividend income.......................... $ 2,603 $ 2,985 $ 4,130
Interest income.......................... 1,764 1,765 472
-------- -------- --------
4,367 4,750 4,602
Foreign taxes withheld................... -- (59) --
-------- -------- --------
Total investment income............... 4,367 4,691 4,602
-------- -------- --------
EXPENSES
Management fee.......................... 4,437 1,987 3,472
Bookkeeping fee......................... 32 19 28
Transfer agent fee....................... 3 3 3
Trustees' fees.......................... 12 12 12
Audit & legal fees....................... 10 9 9
Custodian fee............................ 15 19 12
Other.................................... 12 -- 12
-------- -------- --------
Net expenses.......................... 4,521 2,049 3,548
-------- -------- --------
Net investment income................. (154) 2,642 1,054
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investments......... 200,519 5,297 70,819
Net realized loss on foreign currency
transactions.......................... -- -- --
-------- -------- --------
Net realized gain .................... 200,519 5,297 70,819
-------- -------- --------
Net change in unrealized appreciation/
depreciation on investments and foreign
currency transactions............... 400,803 37,343 345,693
-------- -------- --------
Net gain.............................. 601,322 42,640 416,512
-------- -------- --------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $601,168 $45,282 $417,566
======== ======== ========
See Accompanying Notes to Financial Statements.
71
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
(ALL AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SR&F GROWTH SR&F DISCIPLINED
STOCK PORTFOLIO STOCK PORTFOLIO
--------------------- ---------------------
(UNAUDITED) (UNAUDITED)
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
MARCH 31,SEPTEMBER 30, MARCH 31,SEPTEMBER 30,
2000 1999 2000 1999
----------------------- ---------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income................................................... $ (154) $ 2,164 $ 2,642 $ 8,036
Net realized gain on investments and foreign currency transactions...... 200,519 76,399 5,297 175,773
Net change in unrealized appreciation/depreciation on investments
and foreign currency transactions.................................... 400,803 189,808 37,343 (79,229)
----------- ----------- --------- ---------
Net increase in net assets resulting from operations................. 601,168 268,371 45,282 104,580
----------- ----------- --------- ---------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions........................................................... 513,549 680,228 38,425 54,914
Withdrawals............................................................. (292,359) (431,989) (170,010) (471,065)
----------- ----------- --------- ---------
Net increase (decrease) from transactions in investors'
beneficial interest............................................... 221,190 248,239 (131,585) (416,151)
----------- ----------- --------- ---------
Net increase (decrease) in net assets................................ 822,358 516,610 (86,303) (311,571)
NET ASSETS
Beginning of year....................................................... 1,248,153 731,543 605,580 917,151
----------- ----------- --------- ---------
End of year............................................................. $2,070,511 $1,248,153 $519,277 $605,580
=========== =========== ========= =========
72
<PAGE>
<CAPTION>
SR&F GROWTH
INVESTOR PORTFOLIO
---------------------
(UNAUDITED)
SIX MONTHS YEAR
ENDED ENDED
MARCH 31,SEPTEMBER 30,
2000 1999
-----------------------
<S> <C> <C>
OPERATIONS
Net investment income................................................... $1,054 $2,122
Net realized gain on investments and foreign currency transactions...... 70,819 944
Net change in unrealized appreciation/depreciation on investments
and foreign currency transactions.................................... 345,693 169,408
----------- ---------
Net increase in net assets resulting from operations................. 417,566 172,474
----------- ---------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions........................................................... 356,881 274,918
Withdrawals............................................................. (318,113) (183,222)
----------- ---------
Net increase (decrease) from transactions in investors'
beneficial interest............................................... 38,768 91,696
----------- ---------
Net increase (decrease) in net assets................................ 456,334 264,170
NET ASSETS
Beginning of year....................................................... 986,840 722,670
----------- ---------
End of year............................................................. $1,443,174 $986,840
=========== =========
</TABLE>
See Accompanying Notes to Financial Statements.
73
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
(ALL AMOUNTS IN THOUSANDS)
NOTE 1. ORGANIZATION
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, Stein Roe Growth Investor Fund and Stein Roe Small Company Growth Fund
(the "Funds") are series of Liberty-Stein Roe Investment Trust (the "Trust"), an
open-end management investment company organized as a Massachusetts business
trust. Growth Stock Fund, Disciplined Stock Fund and Growth Investor Fund invest
substantially all of their assets in SR&F Growth Stock Portfolio, SR&F
Disciplined Stock Portfolio and SR&F Growth Investor Portfolio, respectively.
Stein Roe Growth Investor Fund (SRGIF) may issue an unlimited number of
shares. SRGIF offers five classes of shares: Class A, Class B, Class C, Class S
and Class Z. Effective October 31, 1999, Class S was closed to new investors.
Each share class has its own sales charge and expense structure, please refer to
the Fund's prospectus.
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, Disciplined Stock Fund and Growth Investor Fund contributed
$474,861, $1,096,779 and $25 in securities and other assets to SR&F Growth Stock
Portfolio, SR&F Disciplined Stock Portfolio and SR&F Growth Investor 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 March 31, 2000, Growth Stock Fund owned 56.5% of the SR&F
Growth Stock Portfolio, Disciplined Stock Fund owned 100.0% of the SR&F
Disciplined Stock Portfolio and Growth Investor Fund owned 2.0% of the SR&F
Growth Investor Portfolio.
--------------------------------------------------------------------------------
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Funds and
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.
74
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date, and interest income is recorded on the accrual
basis. Interest income includes discount accretion on fixed income securities.
Realized gains and losses from investment transactions are reported on an
identified cost basis.
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 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
March 31, 2000.
FUTURES CONTRACTS
During the six months ended March 31, 2000, the Mid-Cap Growth Fund and Capital
Opportunities Fund entered into stock index futures contracts to invest cash
pending direct investments in stocks and to enhance its return. Risks of
entering into futures contracts include the possibility that there may be an
illiquid market at the time the Fund seeks to close out a contract, and changes
in the value of the futures contract may not correlate with changes in the value
of the portfolio securities being hedged. Upon entering into a futures contract,
the Fund deposits with its
75
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
custodian cash or securities in an amount sufficient to meet the initial margin
requirements. Subsequent payments are made or received by the Fund equal to the
daily change in the contract value and are recorded as unrealized gains or
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS:
For SRSGIF all income, expenses (other than class specific transfer agent fees
and 12b-1 service and distribution fees), and realized and unrealized gains
(losses) are allocated to each class proportionately on a daily basis for
purposes of determining the net asset value of each class.
The per share data for Class S was calculated using average shares
outstanding during the period.
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.
The Funds intend to utilize provisions of federal income tax law, which allow
them to carry a realized capital loss forward up to eight years following the
year of the loss, and offset such losses against any future realized gains.
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
recognition or classification of income between the financial statements and tax
earnings are reclassified to paid-in capital.
76
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
NOTE 3. TRUSTEES' FEES AND TRANSACTIONS WITH AFFILIATES
MANAGEMENT & ADMINISTRATION FEES
The Funds and Portfolios pay monthly management and administrative fees to Stein
Roe & Farnham Incorporated (the "Advisor"), an indirect, wholly-owned subsidiary
of Liberty Financial Companies, Inc. ("Liberty"), for its services as investment
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 0.125% of the next $500,000,
Capital Opportunities Fund $500,000, 0.650% of 0.100% of the next $500,000,
the next $500,000, 0.075% thereafter
0.600% thereafter
Growth Investor Fund N/A 0.150% up to $500,000,
0.125% of the next $500,000,
0.100% thereafter
SR&F Growth Investor 0.600% up to $500,000, N/A
Portfolio 0.550% of the next
$500,000, 0.500%
thereafter
Small Company Growth Fund 0.850% 0.150%
------------------------------------------------------------------------------------
</TABLE>
BOOKKEEPING FEE
The Advisor provides bookkeeping and pricing services to each Fund for a monthly
fee equal to $25 annually plus 0.0025% annually of each Fund's average daily net
assets over $50 million.
EXPENSE LIMITS
The Advisor has agreed to reimburse Midcap Growth Fund, Large
77
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
Company Focus Fund, Growth Investor Fund and Small Company Growth Fund for their
operating expenses to the extent that annual expenses exceed 1.25%, 1.50%, 1.10%
and 1.50%, respectively, of average daily net assets. This commitment expires on
January 31, 2001, subject to earlier termination by the Advisor on 30 days
notice.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Liberty Funds Distributor, Inc. (the Distributor), a subsidiary of Liberty, is
SRSGIF's principal underwriter.
SRSGIF has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee on Class A, Class B and Class C net assets. The plan also requires
the payment of a distribution fee to the Distributor on Class A, Class B and
Class C shares only.
TRANSFER AGENT FEE
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of Liberty,
provides shareholder services for a monthly fee equal to 0.22% annually of each
Fund's (excluding Growth Investor Fund) average daily net assets. Growth
Investor Fund pays a monthly fee equal to 0.22% annually of Class S average
daily net assets. The Transfer Agent receives reimbursement for certain out of
pocket expenses.
OTHER
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.
--------------------------------------------------------------------------------
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 six months ended
March 31, 2000.
--------------------------------------------------------------------------------
NOTE 5. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales other than short-term
obligations for the six months ended March 31, 2000, were:
Purchases Sales
--------- ---------
SR&F Growth Stock Portfolio.................... $993,260 $748,996
Midcap Growth Fund............................. 82,353 87,682
SR&F Disciplined Stock Portfolio............... 129,953 246,624
Large Company Focus Fund....................... 38,011 43,546
Capital Opportunities Fund..................... 390,785 482,658
SR&F Growth Investor Portfolio................. 574,713 522,671
Small Company Growth Fund...................... 21,154 12,871
78
<PAGE>
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79
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
GROWTH STOCK FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED
MARCH 31, YEARS ENDED SEPTEMBER 30,
2000 1999 1998
---------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR....................................... $ 47.20 $ 34.71 $ 35.29
---------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a)...................................... (0.11) (0.08) (0.04)
Net realized and unrealized gain on investments
allocated from Portfolio........................................... 20.50 12.57 1.61
---------- -------- --------
Total from investment operations................................... 20.39 12.49 1.57
---------- -------- --------
DISTRIBUTIONS
Net investment income................................................. -- -- --
Net realized capital gains............................................ (3.44) -- (2.15)
---------- -------- --------
Total distributions................................................ (3.44) -- (2.15)
---------- -------- --------
NET ASSET VALUE, END OF PERIOD........................................... $ 64.15 $ 47.20 $ 34.71
========== ======== ========
Ratio of net expenses to average net assets.............................. 0.95%(c) 0.97%(b) 1.03%
Ratio of net investment income (loss) to average net assets ............. (0.40)%(c) (0.18)%(b) (0.10)%
Portfolio turnover rate.................................................. N/A N/A N/A
Total return............................................................. 45.13%(e) 35.98% 4.69%
Net assets, end of period (000's)........................................ $1,153,176 $831,338 $615,345
<CAPTION>
YEARS ENDED SEPTEMBER 30,
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR..................................... $ 28.79 $ 26.13 $ 23.58
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a).................................... 0.01 0.08 0.12
Net realized and unrealized gain on investments
allocated from Portfolio......................................... 8.79 5.01 5.60
-------- -------- --------
Total from investment operations................................. 8.80 5.09 5.72
-------- -------- --------
DISTRIBUTIONS
Net investment income............................................... (0.07) (0.10) (0.15)
Net realized capital gains.......................................... (2.23) (2.33) (3.02)
-------- -------- --------
Total distributions.............................................. (2.30) (2.43) (3.17)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD......................................... $ 35.29 $ 28.79 $ 26.13
======== ======== ========
Ratio of net expenses to average net assets............................ 1.07% 1.08% 0.99%
Ratio of net investment income (loss) to average net assets ........... 0.04% 0.32% 0.56%
Portfolio turnover rate................................................ 5%(d) 39%(d) 36%(d)
Total return........................................................... 33.10% 21.04% 28.18%
Net assets, end of period (000's)...................................... $607,699 $417,964 $360,336
</TABLE>
(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.
(c) Annualized.
(d) Prior to commencement of operations of the Portfolio.
(e) Not annualized.
--------------------------------------------------------------------------------
SR&F GROWTH STOCK PORTFOLIO
<TABLE>
<CAPTION>
(UNAUDITED) YEARS ENDED PERIOD ENDED
SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30,
MARCH 31, 2000 1999 1998 1997 (A)
--------------------- ------ ------ ----------------
Ratio of net expenses
<S> <C> <C> <C> <C>
to average net assets 0.56%(c) 0.58%(b) 0.61% 0.63%(c)
Ratio of net investment
income to average net
assets (0.02)%(c) 0.20%(b) 0.31% 0.52%(c)
Portfolio turnover rate 48% 57% 39% 22%
</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 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.
81
<PAGE>
FINANCIAL HIGHLIGHTS CONTINUED
--------------------------------------------------------------------------------
MIDCAP GROWTH FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
MARCH 31, YEARS ENDED SEPTEMBER 30 SEPTEMBER 30,
2000 1999 1998 1997(A)
-------------- ----- ----- -----
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.................. $ 12.51 $ 10.41 $ 10.77 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment loss (b)................. (0.08) (0.10) (0.07) --
Net realized and unrealized
gain (loss) on
investments.......................... 8.47 2.20 (0.29) 0.77
------- ------- ------- -------
Total from investment
operations........................... 8.39 2.10 (0.36) 0.77
------- ------- ------- -------
DISTRIBUTIONS
Net realized capital gains........... (0.22) -- -- --
------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD........................ $ 20.68 $ 12.51 $ 10.41 $ 10.77
======= ======= ======= =======
Ratio of net expenses to
average net assets (c)............... 1.25%(d) 1.25%(e) 1.25% 1.25%(d)
Ratio of net investment loss
to average net assets (f)............ (0.92)%(d) (0.97)%(e) (0.64)% 0.02%(d)
Portfolio turnover rate................. 150%(g) 133% 75% 3%(g)
Total return (f)........................ 67.88%(g) 20.17% (3.34)% 7.70%(g)
Net assets, end of
period (000's)....................... $72,940 $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 1.34% for the six
months ended March 31, 2000, 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) Annualized.
(e) 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.
(f) Computed giving effect to Advisor's expense limitation undertaking.
(g) Not annualized.
</TABLE>
82
<PAGE>
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83
<PAGE>
FINANCIAL HIGHLIGHTS CONTINUED
--------------------------------------------------------------------------------
DISCIPLINED STOCK FUND
<TABLE>
<CAPTION>
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
(UNAUDITED)
SIX MONTHS
ENDED YEARS ENDED
MARCH 31, SEPTEMBER 30,
2000 1999
-------- --------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR................................................ $ 22.61 $ 24.48
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a)............................................... 0.05 0.17
Net realized and unrealized gain (loss) allocated from Portfolio............... 1.55 2.64
-------- --------
Total from investment operations............................................ 1.60 2.81
-------- --------
DISTRIBUTIONS
Net investment income.......................................................... (0.11) (0.11)
Net realized capital gains..................................................... (5.00) (4.57)
-------- --------
Total distributions......................................................... (5.11) (4.68)
-------- --------
NET ASSET VALUE, END OF YEAR...................................................... $ 19.10 $ 22.61
======== ========
Ratio of net expenses to average net assets....................................... 1.22%(d) 1.16%(b)
Ratio of net investment income (loss) to average net assets....................... 0.53%(d) 0.63%(b)
Portfolio turnover rate........................................................... N/A N/A
Total return...................................................................... 9.53%(e) 13.57%
Net assets, end of year (000's)................................................... $518,318 $593,526
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
1998 1997 1996 1995
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR........................................ $ 33.79 $ 27.39 $ 25.26 $ 23.54
-------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a)....................................... 0.07 (0.06) 0.01 0.13
Net realized and unrealized gain (loss) allocated from Portfolio....... (6.06) 8.57 4.14 3.05
-------- ---------- ---------- ----------
Total from investment operations.................................... (5.99) 8.51 4.15 3.18
-------- ---------- ---------- ----------
DISTRIBUTIONS
Net investment income.................................................. -- -- (0.11) (0.15)
Net realized capital gains............................................. (3.32) (2.11) (1.91) (1.31)
-------- ---------- ---------- ----------
Total distributions................................................. (3.32) (2.11) (2.02) (1.46)
-------- ---------- ---------- ----------
NET ASSET VALUE, END OF YEAR.............................................. $ 24.48 $ 33.79 $ 27.39 $ 25.26
======== ========== ========== ==========
Ratio of net expenses to average net assets............................... 1.13% 1.14% 1.18% 1.02%
Ratio of net investment income (loss) to average net assets............... 0.21% (0.17)% 0.03% 0.56%
Portfolio turnover rate................................................... N/A 7%(c) 32%(c) 41%(c)
Total return.............................................................. (19.17)% 33.67% 17.89% 14.60%
Net assets, end of year (000's)........................................... $911,650 $1,327,578 $1,158,498 $1,201,469
</TABLE>
(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.
(c) Prior to commencement of operations of the Portfolio.
(d) Annualized.
(e) Not annualized.
84
<PAGE>
--------------------------------------------------------------------------------
SR&F DISCIPLINED STOCK PORTFOLIO
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED PERIOD ENDED
MARCH 31, YEARS ENDED SEPTEMBER 30, SEPTEMBER 30,
2000 1999 1998 1997(a)
------------------- ----- ----- ---------------
<S> <C> <C> <C> <C>
Ratio of net expenses to
average net assets........... 0.75%(c) 0.75%(b) 0.73% 0.75%(c)
Ratio of net investment income
to average net assets........ 1.00%(c) 1.04%(b) 0.60% 0.31%(c)
Portfolio turnover rate......... 27% 47% 46% 8%
</TABLE>
(a) From the commencement of operations on February 3, 1997.
(b) During the year ended September 30, 1999, the Portfolio experience 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.
(c) Annualized.
85
<PAGE>
FINANCIAL HIGHLIGHTS CONTINUED
--------------------------------------------------------------------------------
LARGE COMPANY FOCUS FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
2000 1999 1998 (A)
----------- ------------ ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.78 $ 8.73 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b).......... (0.04) (0.05) --
Net realized and unrealized gain
(loss) on investments......... 2.89 3.10 (1.27)
------- ------- -------
Total from investment operations.... 2.85 3.05 (1.27)
------- ------- -------
DISTRIBUTIONS
Net realized capital gains....... (0.64) -- --
------- ------- -------
NET ASSET VALUE, END OF PERIOD...... $13.99 $ 11.78 $ 8.73
======= ======= =======
Ratio of net expenses to average net assets 1.36%(e) 1.49% 1.50%(c)(e)
Ratio of net investment loss to
average net assets............... (0.61)%(e) (0.47)% (0.12)%(d)(e)
Portfolio turnover rate............. 57%(f) 68% 21%(f)
Total return........................ 24.55%(f) 35.05% (12.70)%(d)(f)
Net assets, end of period (000's)... $71,069 $59,647 $44,716
</TABLE>
(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.
86
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87
<PAGE>
FINANCIAL HIGHLIGHTS CONTINUED
-------------------------------------------------------------------------------
CAPITAL OPPORTUNITIES FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEARS ENDED
MARCH 31, SEPTEMBER 30,
2000 1999
-------- --------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............................................. $ 28.64 $ 25.25
------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (b)............................................... (0.17) (0.17)
Net realized and unrealized gain (loss) on investments......................... 18.50 3.56
-------- --------
Total from investment operations............................................ 18.33 3.39
-------- --------
DISTRIBUTIONS
Net investment income.......................................................... -- --
Net realized capital gains..................................................... (3.99) --
-------- --------
Total distributions........................................................ (3.99) --
-------- --------
NET ASSET VALUE, END OF PERIOD.................................................... $ 42.98 $ 28.64
======== ========
Ratio of net expenses to average net assets....................................... 1.19%(d) 1.19%(c)
Ratio of net investment income (loss) to average net assets....................... (0.93)%(d) (0.72)%(c)
Portfolio turnover rate........................................................... 78%(e) 88%
Total return...................................................................... 69.12%(e) 13.43%
Net assets, end of period (000's)................................................. $635,418 $411,347
88
<PAGE>
YEARS ENDED SEPTEMBER 30,
1998 1997 1996 1995 (a)
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................... $ 29.10 $ 31.04 $ 21.69 $ 15.79
-------- ---------- ---------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (b).................................... (0.25) (0.17) (0.06) 0.01
Net realized and unrealized gain (loss) on investments.............. (3.60) (1.77) 10.41 5.91
-------- ---------- ---------- --------
Total from investment operations................................. (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......................................... $ 25.25 $ 29.10 $ 31.04 $ 21.69
======== ========== ========== ========
Ratio of net expenses to average net assets............................ 1.20% 1.17% 1.22% 1.05%
Ratio of net investment income (loss) to average net assets............ (0.72)% (0.69)% (0.40)% 0.08%
Portfolio turnover rate................................................ 47% 35% 22% 60%
Total return........................................................... (13.23)% (6.25)% 49.55% 37.46%
Net assets, end of period (000's)...................................... $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.
(d) Annualized.
(e) Not annualized.
89
<PAGE>
FINANCIAL HIGHLIGHTS CONTINUED
--------------------------------------------------------------------------------
GROWTH INVESTOR FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
MARCH 31, SEPTEMBER 30,
2000 1999 (a)
-------------- -------------
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 9.45 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b).............................. (0.03) (0.02)
Net realized and unrealized gain (loss)on investments 3.71 (0.53)
------- -------
Total from investment operations..................... 3.68 (0.55)
------- -------
NET ASSET VALUE, END OF PERIOD....................... $ 13.13 $ 9.45
======= =======
Ratio of net expenses to average net assets (c)...... 1.10%(d) 1.10%(d)
Ratio of net investment loss to average net assets (e) (0.44)%(d) (0.34)%(d)
Total return (e)..................................... 39.05%(f) (5.50)%(f)
Net assets, end of
period (000's).................................... $29,385 $11,329
(a) From commencement of operations on March 31, 1999.
(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 1.13% (annualized)
for the six months ended March 31, 2000 and 2.34% (annualized) for the year
ended September 30, 1999.
(d) Annualized.
(e) Computed giving effect to Advisor's expense limitation undertaking.
(f) Not annualized.
--------------------------------------------------------------------------------
GROWTH INVESTOR PORTFOLIO
(UNAUDITED)
SIX MONTHS
ENDED YEARS ENDED PERIOD ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
2000 1999 1998 1997(a)
----- ----- ----- ---------------
<S> <C> <C> <C> <C>
Ratio of net expenses to
average net assets 0.57%(b) 0.59% 0.62% 0.63%(b)
Ratio of net investment income
to average net assets 0.17%(b) 0.25% 0.42% 0.54%(b)
Portfolio turnover rate 43% 45% 45% 38%
(a) From commencement of operations on February 3, 1997.
(b) Annualized.
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91
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<CAPTION>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
MARCH 31, SEPTEMBER 30, YEARS ENDED JUNE 30,
-------- ------------- -------- ------------------------------------
1998 1997
2000 1999(a) 1999(c) CLASS A CLASS B CLASS C CLASS A
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 13.50 $ 12.79 $ 14.39 $ 12.65 $ 12.54 $ 12.54 $ 11.30
-------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b).............................. (0.08) (0.03) (0.09) (0.14) (0.24) (0.24) (0.11)
Net realized and unrealized gain (loss) on investments 9.61 0.74 0.19 2.78 2.75 2.75 1.48
-------- -------- -------- -------- -------- -------- --------
Total from investment operations.................. 9.53 0.71 0.10 2.64 2.51 2.51 1.37
-------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income................................ -- -- -- -- -- -- --
Net realized capital gains........................... (1.01) -- (1.70) (0.90) (0.90) (0.90) (0.02)
-------- -------- -------- -------- -------- -------- --------
Total distributions.................................. (1.01) -- (1.70) (0.90) (0.90) (0.90) (0.02)
-------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 22.02 $ 13.50 $ 12.79 $ 14.39 $ 14.15 $ 14.15 $ 12.65
======== ======== ======== ======== ======== ======== ========
Ratio of net expenses to average net assets(e)....... 1.50%(g) 1.50%(g) 1.52% 1.55% 2.30% 2.30% 1.55%
Ratio of net investment loss to average net assets(f) (0.92)%(g) (0.93)%(g) (0.78)% (1.04)% (1.79)% (1.79)% (0.99)%
(1.33)%(g)
Portfolio turnover rate.............................. 77%(h) 27%(h) 105% 70% 70% 70% 54%
Total return(f)...................................... 74.23%(h) 5.55%(h) 1.71% 21.56% 20.68% 20.68% 12.14%
Net assets, end of period (000's).................... $ 29,503 $ 9,913 $ 9,293 $ 3,867 $ 379 $ 379 $ 3,185
92
<PAGE>
YEARS ENDED JUNE 30,
--------------------------------------------------------------
1997 1996(d)
CLASS B CLASS C CLASS A CLASS B CLASS C
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................. $ 11.28 $ 11.28 $ 10.11 $ 10.11 $ 10.11
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b).............................. (0.20) (0.20) (0.02) (0.04) (0.04)
Net realized and unrealized gain (loss) on investments 1.48 1.48 1.21 1.21 1.21
-------- -------- -------- -------- --------
Total from investment operations.................. 1.28 1.28 1.19 1.17 1.170
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income................................ -- -- -- -- --
Net realized capital gains........................... (0.02) (0.02) -- -- --
-------- -------- -------- -------- --------
Total distributions.................................. (0.02) (0.02) -- -- --
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....................... $ 12.54 $ 12.54 $ 11.30 $ 11.28 $ 11.28
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(e)....... 2.30% 2.30% 1.55%(g) 2.30%(g) 2.30%(g)
Ratio of net investment loss to average net assets(f) (1.74)% (1.74)% (0.58)%(g) (1.33)%(g) (1.33)%(g)
Portfolio turnover rate.............................. 54% 54% 0%(h) 0%(h) 0%(h)
Total return(f)...................................... 11.31% 11.31% 11.77%(h) 11.57%(h) 11.57%(h)
Net assets, end of period (000's).................... $ 314 $ 314 $ 2,826 $ 282 $ 282
</TABLE>
(a) The Fund changed its fiscal year end from June 30 to September 30.
Information presented is for the period July 1, 1999 through September 30,
1999.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) On February 3, 1999, Class B and Class C shares were terminated.
(d) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(e) If the Fund had paid all of its expenses and there had been no
reimbursement by the Advisor, this ratio would have been 2.24% (annualized)
for the six months ended March 31, 2000, 3.73% (annualized) for the period
ended September 30, 1999 and 4.05% for the year ended June 30, 1999.
(f) Computed giving effect to Advisor's expense limitation undertaking.
(g) Annualized.
(h) Not annualized.
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<PAGE>
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95
<PAGE>
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96
<PAGE>
INVESTMENT TRUST
-----------------------------------------------------------------------
TRUSTEES
John A. Bacon Jr. Private Investor
William W. Boyd
Chairman and Director, Sterling Plumbing
Group Inc.
Lindsay Cook
Executive Vice President, Liberty Financial
Companies, Inc.
Douglas A. Hacker
Executive Vice President and Chief Financial
Officer, United Airlines
Janet Langford Kelly
Executive 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,
Secretary
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
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
97
<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.
DIR-03/615B-0500 (5/00) 00/821
