STEIN ROE MUTUAL FUNDS
SEMIANNUAL REPORT
MARCH 31, 2000
PHOTO OF: GIRL RUNNING.
STEIN ROE EQUITY FUND
YOUNG INVESTOR FUND
LOGO: STEIN ROE MUTUAL FUNDS
SENSIBLE RISKS. INTELLIGENT INVESTMENTS.(R)
<PAGE>
CONTENTS
From the President............................................... 1
Stephen E. Gibson's thoughts on the equity markets and investing
Performance Summary.............................................. 4
Fund Highlights.................................................. 4
The Companies We Invest In ...................................... 6
Questions & Answers.............................................. 8
An interview with Portfolio Managers David Brady and
Erik Gustafson
Portfolio of Investments......................................... 13
A complete list of investments with market values
Financial Statements............................................. 18
Statements of assets and liabilities, operations and changes
in net assets
Notes to Financial Statements.................................... 24
Financial Highlights............................................. 27
Selected per-share data and ratios
Must be preceded or accompanied by a prospectus.
<PAGE>
TO OUR SHAREHOLDERS
TO OUR SHAREHOLDERS:
During the past six months, investors in Stein Roe Young Investor Fund enjoyed a
continuation of the long-running period of good returns and stock market
strength. Technology and tele communications companies benefited from the
continued growth of the Internet and provided much of the support for the
market's strength during the period. As you will see on the pages that follow,
the Fund continued to invest in both sectors.
Young Investor Fund earned a 40.98% return during the six months ended
March 31, 2000. This compares favorably to the broad-based, unmanaged Standard &
Poor's 500 Index, which posted 17.50% for
Balloon Text: There are many companies working behind the scenes to make the
Internet operate. Besides investing in companies you see on the Internet, such
as America Online (1.4% of net assets), we invest in companies that may provide
the transmission services, make the networks that operate the services, and
manufacture the semiconductors and other hardware needed for operation.
1
<PAGE>
TO OUR SHAREHOLDERS
(Continued)
the same period. Higher interest rates later in the period created a
challenging market environment, but your Fund's managers continued to do their
homework and invest in those companies they felt had best quality and growth
potential.
According to the National Center for Health Statistics, new births are on
the rise after years of decline.* More young people could mean a greater youth
influence on the economic marketplace and thus, the stock market. It also could
mean more young investors. Getting young people involved in investing is a
growing trend of which we are proud to have been a part. While Young Investor
Fund offers you long-term growth potential to help you reach your financial
goals, it is also designed to help you learn about investing along the way. Many
of you have been with the Fund for years and we look forward to serving your
investment needs in the future. We hope you are proud to be among a class that
will set examples for future generations of young investors.
* Source: CNN Financial Network
2
<PAGE>
TO OUR SHAREHOLDERS
(Continued)
On the pages that follow, Dave Brady and Erik Gustafson, the Fund's
portfolio managers, discuss their investment strategy for the past six months
and their economic outlook for the near future. We encourage you to carefully
review this report and visit us on the Internet at www.steinroe.com or
www.younginvestor.com for more information about the Fund. We thank you for your
continued confidence and we look forward to sharing many years of future
investment success with you and your family.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
May 15, 2000
Because market and economic conditions change frequently, there can be no
assurance that the trends described above or on the following pages will
continue.
Photo of: Stephen E. Gibson
3
<PAGE>
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS THROUGH MARCH 31, 2000
SIX MONTHS
(CUMULATIVE) ONE YEAR FIVE YEARS LIFE OF FUND
YOUNG INVESTOR FUND 40.98% 32.84% 30.72% 28.22%
Standard & Poor's
500 Index 17.50% 17.93% 26.75% 24.93%
Due to market volatility after the close of the quarterly period, current
performance is significantly lower than shown.
Stein Roe Young Investor Fund invests all of its investable assets in SR&F
Growth Investor Portfolio, which has the same investment objective and
substantially the same investment policies as the Fund.
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. Performance results reflect any voluntary waivers or
reimbursements of Fund expenses by the Advisor or its affiliate. Absent these
waivers or reimbursement arrangements, performance results would have been
lower. The S&P 500 Index is an unmanaged group of stocks that differs from the
composition of the Fund and is not available for direct investment. The Fund
began operations on 4/29/94. Benchmark information is from 4/30/94 to 3/31/00.
FUND HIGHLIGHTS
Growth of a $10,000 Investment since Young Investor
Fund Began Operating on April 29, 1994
--------------------------------------------------------------------------------
LINE CHART:
YOUNG INVESTOR FUND STANDARD & POOR'S 500 INDEX
4/29/94 10040 10163.5
09/30/94 10240 10398.5
03/31/95 11413.6 11408
09/30/95 14395.5 13487.7
03/31/96 16466.5 15066.4
09/30/96 19512.7 16228.5
03/31/97 19293.7 18052.3
09/30/97 24659.1 22788.9
03/31/98 28909.5 26710.8
09/30/98 24939.8 24858.7
03/31/99 32791.2 31649
09/30/99 30954.5 31765.8
3/31/00 43559 37324
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SHARE PRICE AND INVESTMENT
RETURN WILL VARY, SO YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. This
illustration assumes a $10,000 investment on April 29, 1994, and reinvestment of
income and capital gains distributions. The S&P 500 Index is an unmanaged group
of stocks that differs from the composition of the Fund and is not available for
direct investment.
4
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Your Portfolio and its Benchmark Industry Weightings vs. the S&P 500 Index
As of March 31, 2000
--------------------------------------------------------------------------------
Young S&P 500
Investor Fund Index
--------------------------------------------------------------------------------
Basic Materials 1% 2%
Consumer Cyclical 15% 12%
Consumer Non-Cyclical 6% 15%
Energy 1% 6%
Financial 6% 13%
Industrial 6% 7%
Technology 53% 35%
Utilities 12% 10%
Balloon Text: The S&P 500 Index is made up of 500 companies usually considered
to be a good representation of the thousands of companies that make up the
overall U.S. stock market. We show how the Fund's assets are invested by sector
compared to the Index. This shows how we are investing compared to the Indexes
of the industries, or sectors, that are the largest part of the market and
economy.
Fund Data
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGY:
Seeks to achieve long-term growth by investing in a portfolio primarily made
up of common stocks and other equity securities. The Fund also has an
educational objective to teach investors about basic economic principles and
personal finance through a variety of educational materials prepared and paid
for by the Fund.
AGE OF FUND: 5 YEARS, 11 MONTHS
NET ASSETS: $1,267.3 BILLION
NUMBER OF SHAREHOLDERS: 179,641
5
<PAGE>
THE COMPANIES WE INVEST IN
At the turn of the last century, most people did not have telephones in their
homes. By the turn of this century, we used telephone and cellular phone
services to communicate in ways our ancestors never dreamed possible. From the
time the telephone was invented by Alexander Graham Bell in 1876, the
telecommunications industry has experienced phenomenal growth through new
product developments and expanded service capabilities. Today, this industry
continues to forge new ground with the development of cellular phones and new
ways of communicating with cellular service. For example, there are now cellular
phones that can connect to anyplace in the world. Some people have cellular
phones in their watches, and access the Internet from their cellular handsets.
Companies in this industry are dedicated to perfecting new and better
products and expanding their marketplace. Companies that operate in industries
with such strong growth potential are companies we like to own in Young Investor
Fund. Level 3 Communications (2.2% of net assets), one of the portfolio's
holdings, is a company that has been experiencing rapid growth by providing
products and services in the telecommunications industry. This company hopes to
help create a new Internet generation that our young investors will grow up
with. Its intent is to use the Internet to provide businesses with a full range
of communication services, including local and long distance, and data
transmission. As of March 31, 2000, 20.2% of the portfolio's total net assets
were invested in companies that either make the products or provide the service
that support the telecommunications industry. For a complete list of the Fund's
holdings, see pages 13 - 17.
6
<PAGE>
<TABLE>
<CAPTION>
TOP 10 PORTFOLIO HOLDINGS
AS OF MARCH 31, 2000 PERCENT OF MAIN PRODUCT
COMPANY NET ASSETS OR SERVICE
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
1 Cisco Systems, Inc. 4.8% Computer Software and Services
------------------------------------------------------------------------------------------
2 Network Appliance, Inc. 3.2 Computer Software and Services
------------------------------------------------------------------------------------------
3 Microsoft Corp. 2.9 Computer Software and Services
------------------------------------------------------------------------------------------
4 Atmel Corp. 2.9 Semiconductors
------------------------------------------------------------------------------------------
5 Apple Computer, Inc. 2.8 Computer Software and Services
------------------------------------------------------------------------------------------
6 EMC Corp. 2.6 Computer Software and Services
------------------------------------------------------------------------------------------
7 Safeway, Inc. 2.5 Retail
------------------------------------------------------------------------------------------
8 Maxim Integrated Products 2.5 Semiconductors
------------------------------------------------------------------------------------------
9 Veritas Software Corp. 2.4 Computer Software and Services
------------------------------------------------------------------------------------------
10 General Electric Co. 2.4 Electrical Equipment
* Holdings are disclosed as a percentage of SR&F Growth Investor Portfolio.
Holdings are as of 3/31/00 and are subject to change.
</TABLE>
7
<PAGE>
AN INTERVIEW WITH TH E PORTFOLIO MANAGERS
Q&A with David Brady and Erik Gustafson, portfolio managers of Stein Roe Young
Investor Fund and SR&F Growth Investor Portfolio.
Q. HOW DID THE FUND PERFORM DURING THE SIX-MONTH PERIOD FROM SEPTEMBER 30,
1999 TO MARCH 31, 2000?
A. Stein Roe Young Investor Fund posted strong performance, returning 40.98% for
the six-month period. Economic expansion continued to support the market for
growth stocks of all sizes. As always, we focused our attention on owning the
companies we believed had strong enough growth characteristics to help us attain
strong performance.
Q. DID A PARTICULAR MARKET SECTOR DRIVE THE PORTFOLIO'S PERFORMANCE?
A. Technology holdings posted the strongest returns during the period. Growth of
the Internet and other technology products and services continued to make
technology the fastest growing sector of the economy. The Portfolio owned
companies in many areas of the technology market. Outstanding performers were
companies that support the Internet such as Cisco Systems and Network Appliance
(4.8% and 3.2% of net assets, respectively), semiconductor companies such as
Atmel and KLA (2.9% and 1.8% of net assets, respectively), and hardware
manufacturer Apple Computer (2.8% of net assets).
8
<PAGE>
Q. SO RECENT WEAKNESS IN TECHNOLOGY STOCKS DID NOT PROMPT YOU TO REDUCE YOUR
OVERALL POSITION?
A. No, we used the recent weakness to add to our technology position. At the end
of the period, 53% of the Fund's assets were in the technology sector, up from
35% at the start of the period. We seek those technology companies with growth
potential and continue to find exciting opportunities in this area. We bought
Rational Software (1.1% of net assets), a company that should benefit from
increased business transaction traffic on the Internet and purchased Motorola
(2.0% of net assets) based on the success of their semiconductor and cellular
products.
Q. WHAT OTHER SECTORS DID YOU FAVOR?
A. The telecommunications market is another area that has shown a lot of growth
and has been driving the stock market. We own several companies that have
benefited from this growth, including Nextlink Communications, a competitive
local exchange carrier, and Level 3 Communications, a provider of high-speed
Internet and telephone transmission services (1.7% and 2.2% of net assets,
respectively).
Photo of: David Brady and Erik Gustafson
9
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
(Continued)
Q. TELL US ABOUT SOME OF THE PORTFOLIO'S OTHER NEW HOLDINGS.
A. We added several new names to the portfolio. We look not only to own
companies that are directly benefiting from the growth in a particular industry,
but those that support the industry's infrastructure as well. For example, we
bought companies such as Vodafone (1.9% of net assets), that have benefited
directly from the demand for more cellular phones and services. We also bought
Crown Castle International (1.8% of net assets), a company which should benefit
indirectly from the same trend. Crown Castle owns and operates wireless
communications and broadcast transmission infrastructure such as towers and
monopoles. An increase in cellular service can mean an increase in antennas, and
we believe this tower company would benefit from that demand.
Q. DID YOU SELL ANY NOTABLE POSITIONS?
A. We constantly assess the Portfolio's holdings and if a company does not meet
our goals for growth potential, we generally sell it. We had been positive on
Mattel for a long time, but when their acquisitions did not
Balloon Text: An industry's infrastructure refers to the basic framework or
features that support the industry. For example, Crown Castle operates the
towers that hold the antennas that transmit cellular service.
10
<PAGE>
turn out as planned and the market for toy companies weakened, we sold the
stock. We also sold Royal Caribbean Cruise Lines because the company's future
growth potential became less attractive.
Q. WHAT IS YOUR OUTLOOK FOR THE MARKET IN COMING MONTHS?
A. We look forward to more good times ahead in the form of a strong market for
growth stocks. The economy appears to be on track to maintain its record 4%
growth rate streak. Inflation seems under control and high oil prices seem to
have peaked. Positive movement on interest rates by the Federal Reserve should
be the ultimate catalyst for the market in the second half of the year.
Technology should continue to be an area to watch as companies spend more
to lower costs and improve services. We believe the Internet and wireless
communications services and equipment will continue to expand their markets. The
financial services sector would be in a
Balloon Text:The Federal Reserve is the central bank of the United States.
Created by Congress in 1913, it is responsible for maintaining a sound banking
system and a healthy economy. The Federal Reserve acts as a bank for other banks
and the U.S. government. It also serves as a regulator of financial
institutions. One of its most important functions is maintaining short-term
interest rates.
11
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
(Continued)
position to rebound if interest rates remain firm or move lower. Companies that
can grow their sales and increase their earnings will continue to be the
companies that we want the Portfolio to own. We plan to continue to invest in a
mix of conservative, stable companies balanced by a mix of
smaller-capitalization, aggressive-growth names.
An investment in the Fund and smaller company stocks offers significant
long-term growth potential, but also involves certain risks, including possible
illiquidity and greater price volatility than stocks of larger, more established
companies. The Fund may be affected by stock market fluctuations that occur in
response to economic and business developments.
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. Portfolio holdings are as of 3/31/00 and are subject to
change.
12
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS AT 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
13
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED, IN THOUSANDS) (CONTINUED)
SHARES VALUE
-------- -------
MANUFACTURING - 32.8% (CONTINUED)
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
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
14
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED, IN THOUSANDS) (CONTINUED)
SHARES VALUE
-------- -------
SERVICES - 26.9% (CONTINUED)
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
15
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED, IN THOUSANDS) (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
16
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED, IN THOUSANDS) (CONTINUED)
PAR VALUE
-------- ---------
SHORT-TERM OBLIGATIONS
COMMERCIAL PAPER - 1.2%
Associates Corp. of North America 4.16%(c) 04/03/00 $16,690 $ 16,684
---------
OTHER ASSETS, LESS LIABILITIES 0.7% 9,707
---------
NET ASSETS 100.0% $1,443,174
==========
NOTES TO PORTFOLIO OF INVESTMENTS
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) At March 31, 2000, the cost of investments for 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.
17
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
MARCH 31, 2000
(All amounts in thousands)
ASSETS
Investments, at market value (cost $837,584) $1,416,783
Short-term obligations 16,684
Cash 13
Receivable for investments sold 31,265
Dividends receivable 300
Other 184
----------
Total assets 1,465,229
----------
LIABILITIES
Payable for investments purchased 21,196
Accrued:
Management fee 688
Bookkeeping fee 5
Transfer agent fee 1
Other 165
----------
Total Liabilities 22,055
----------
Net Assets $1,443,174
==========
See accompanying Notes to Financial Statements.
18
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 (Unaudited)
(All amounts in thousands)
INVESTMENT INCOME
Dividends $ 4,130
Interest 472
--------
Total investment income 4,602
--------
EXPENSES
Management fee 3,472
Bookkeeping fee 28
Transfer agent fee 3
Legal & audit fees 9
Trustees' fees 12
Custodian fee 12
Other 12
--------
Total expenses 3,548
--------
Net investment income 1,054
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 70,819
Net change in unrealized appreciation/depreciation on investments 345,693
--------
Net gain 416,512
--------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $417,566
========
See accompanying Notes to Financial Statements.
19
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in thousands)
(Unaudited)
Six Months Year
Ended Ended
March 31, September 30,
2000 1999
---------- -------------
OPERATIONS
Net investment income $ 1,054 $ 2,122
Net realized gain on investments 70,819 944
Net change in unrealized appreciation/depreciation
on investments 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 from transactions in investors'
beneficial interest 38,768 91,696
---------- ----------
Net increase in net assets 456,334 264,170
NET ASSETS
Beginning of year 986,840 722,670
---------- ----------
End of year $1,443,174 $ 986,840
========== ==========
See accompanying Notes to Financial Statements.
20
<PAGE>
STEIN ROE YOUNG INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
MARCH 31, 2000
(All amounts in thousands, except per-share data)
ASSETS
Investment in Portfolio, at value $1,253,339
Receivable for fund shares sold 15,063
Other 349
----------
Total Assets 1,268,751
----------
LIABILITIES
Payable for fund shares repurchased 640
Accrued:
Administrative fee 180
Bookkeeping fee 5
Transfer agent fee 410
Other 199
----------
Total Liabilities 1,434
----------
Net Assets $1,267,317
==========
ANALYSIS OF NET ASSETS
Paid-in capital $ 678,951
Overdistributed net investment income (2,117)
Accumulated net realized gain allocated Portfolio 66,254
Net unrealized appreciation allocated Portfolio 524,229
----------
Net Assets $1,267,317
==========
Shares outstanding (unlimited number authorized) 33,108
==========
Net asset value per share $ 38.28
==========
See accompanying Notes to Financial Statements.
21
<PAGE>
STEIN ROE YOUNG INVESTOR FUND
STATEMENT OF OPERATIONS (Unaudited)
FOR THE SIX MONTHS ENDED MARCH 31, 2000
(All amounts in thousands)
INVESTMENT INCOME
Dividend income allocated from Portfolio $ 3,655
Interest income allocated from Portfolio 417
--------
Total investment income 4,072
--------
EXPENSES
Expenses allocated from Portfolio 3,129
Administrative fee 939
Transfer agent fee 1,707
Bookkeeping fee 26
Trustees' fees 4
Legal & audit fees 8
Reports to shareholders 50
Custodian fee 1
Registration fees 22
Other 303
--------
Total expenses 6,189
--------
Net investment loss (2,117)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
ALLOCATED FROM PORTFOLIO
Net realized gain 71,573
Net change in unrealized appreciation/depreciation 293,823
--------
Net gain 365,396
--------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $363,279
========
See accompanying Notes to Financial Statements.
22
<PAGE>
STEIN ROE YOUNG INVESTOR FUND
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in thousands)
(Unaudited)
Six months Year
ended ended
March 31, September 30,
2000 1999
---------- -------------
OPERATIONS
Net investment loss $ (2,117) $ (3,184)
Net realized gain allocated from Portfolio 71,573 4,240
Net change in unrealized appreciation/depreciation
allocated from Portfolio 293,823 158,189
---------- ----------
Net increase in net assets resulting
from operations 363,279 159,245
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net realized capital gains (10,173) (18,152)
---------- ----------
FUND SHARE TRANSACTIONS
Receipts for shares sold 330,367 335,052
Value of distributions reinvested 10,047 17,877
Cost of shares repurchased (306,777) (299,472)
---------- ----------
Net increase from fund share transactions 33,637 53,457
---------- ----------
Net increase in net assets 386,743 194,550
NET ASSETS
Beginning of period 880,574 686,024
---------- ----------
End of period $1,267,317 $ 880,574
========== ==========
OVERDISTRIBUTED NET INVESTMENT INCOME AT
END OF PERIOD $ (2,117) $ --
========== ==========
ANALYSIS OF CHANGES IN SHARES OF BENEFICIAL INTEREST
Sold 9,661 11,915
Issued for distributions reinvested 312 741
Repurchased (8,980) (10,786)
---------- ----------
Net increase in fund shares 993 1,870
Shares outstanding at beginning of period 32,115 30,245
---------- ----------
Shares outstanding at end of period 33,108 32,115
========== ==========
See accompanying Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS
(Unaudited, all amounts in thousands)
NOTE 1. ORGANIZATION
--------------------------------------------------------------------------------
Stein Roe Young Investor Fund (the "Fund") is a series of Liberty-
Stein Roe Funds Investment Trust (the "Trust"), an open-end management
investment company organized as a Massachusetts business trust. The
Fund invests substantially all of its assets in SR&F Growth Investor
Portfolio (the "Portfolio"), which seeks to achieve long-term capital
appreciation by investing primarily in common stocks and other
equity-type securities that are believed to have long-term appreciation
potential. The Fund also has an educational objective to teach
investors, especially young people, about basic economic principles and
personal finance through a variety of educational materials prepared
and paid for by the Fund.
The Portfolio is a series of SR&F Base Trust, a Massachusetts
common law trust organized under an Agreement and Declaration of Trust
dated August 23, 1993. The Portfolio commenced operations on February
3, 1997. At commencement, the Fund contributed $292,104 in securities
and other assets in exchange for beneficial ownership of the Portfolio.
The Portfolio allocates 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, Stein Roe Young
Investor Fund owned 86.8 percent of the Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
The following summarizes the significant accounting policies of the
Fund and Portfolio. The policies are in conformity with generally
accepted accounting principles, which require management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
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.
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<PAGE>
Each over-the-counter security for which the last sale price is
available from NASDAQ is valued at that price. All other
over-the-counter securities for which reliable quotations are available
are valued at the latest bid quotation. Securities and other assets for
which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the
Board of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on trade date. Dividend
income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis. Interest income includes discount
accretion on fixed income securities. Realized gains and losses from
investment transactions are reported on an identified cost basis.
FEDERAL INCOME TAXES
No provision is made for federal income taxes since (a) the Fund elects
to be taxed as a "regulated investment company" and makes distributions
to its shareholders to be relieved of all federal income taxes under
provisions of current federal tax law; and (b) the Portfolio is treated
as a partnership for federal income tax purposes and all of its income
is allocated to its owners based on methods approved by the Internal
Revenue Service.
DISTRIBUTION TO SHAREHOLDERS
The Fund declares and pays dividends of any net investment income and
net realized capital gains annually, which are recorded on the
ex-dividend date. Dividends are determined in accordance with income
tax principles, which may treat certain transactions differently from
generally accepted accounting principles. Distributions in excess of
tax basis earnings are reported in the financial statements as a return
of capital. Permanent differences in the recognition or classification
of income between the financial statements and tax earnings are
reclassified to paid-in capital.
25
<PAGE>
NOTE 3. TRUSTEES' FEES AND TRANSACTIONS WITH AFFILIATES
--------------------------------------------------------------------------------
MANAGEMENT & ADMINISTRATIVE FEES
The Portfolio pays a monthly management fee and the Fund pays a monthly
administrative fee 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 management fee for the Portfolio is computed at an annual rate
of 0.60% of the Portfolio's average daily net assets up to $500
million, 0.55% of the next $500 million, and 0.50% thereafter. The
administrative fee for the Fund is computed at an annual rate of 0.20%
of the Fund's average daily net assets up to $500 million, 0.15% of the
next $500 million, and 0.125% thereafter.
BOOKKEEPING FEE
The Advisor provides bookkeeping and pricing services for a monthly fee
equal to $25 annually plus 0.0025% annually of the Fund's average daily
net assets over $50 million.
TRANSFER AGENT FEE
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of
Liberty, provides shareholder services to the Fund for a monthly fee
equal to 0.22% annually of the Fund's average daily net assets and
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 other trustee or officer of
the Trust who is affiliated with the Advisor.
NOTE 4. SHORT-TERM DEBT
--------------------------------------------------------------------------------
To facilitate portfolio liquidity, the Fund and Portfolio maintain
borrowing arrangements under which they can borrow against portfolio
securities. Neither the Fund nor the Portfolio had borrowings during
the six months ended March 31, 2000.
NOTE 5. INVESTMENT TRANSACTIONS
--------------------------------------------------------------------------------
The Portfolio's aggregate cost of purchases and proceeds from sales
other than short-term obligations for the six months ended March 31,
2000, were $574,713 and $522,671, respectively.
26
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
FINANCIAL HIGHLIGHTS
(Unaudited)
Six months
ended Years ended Period ended
March 31, September 30, September 30,
2000 1999 1998 1997(a)
--------- ------- ------- -------------
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.
27
<PAGE>
<TABLE>
STEIN ROE YOUNG INVESTOR FUND
FINANCIAL HIGHLIGHTS
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<CAPTION>
(Unaudited)
Six Months
ended
March 31, Years ended September 30,
2000 1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 27.42 $ 22.68 $ 22.75 $ 18.64 $ 14.29 $ 10.24
------------ ------------ ------------ ------------ ------------ -----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a) (0.07) (0.10) (0.06) (0.04) 0.05 0.06
Net realized and unrealized gains
on investments
allocated from Portfolio 11.25 5.44 0.31 4.79 4.86 4.07
------------ ------------ ------------ ------------ ------------ -----------
Total from investment operations 11.18 5.34 0.25 4.75 4.91 4.13
------------ ------------ ------------ ------------ ------------ -----------
DISTRIBUTIONS
Net investment income -- -- -- (0.02) (0.05) (0.08)
Net realized capital gains (0.32) (0.60) (0.32) (0.62) (0.51) --
------------ ------------ ------------ ------------ ------------ -----------
Total distributions (0.32) (0.60) (0.32) (0.64) (0.56) (0.08)
------------ ------------ ------------ ------------ ------------ -----------
NET ASSET VALUE, END OF PERIOD $ 38.28 $ 27.42 $ 22.68 $ 22.75 $ 18.64 $ 14.29
============ ============ ============ ============ ============ ===========
Ratio of net expenses to average net assets 1.12%(e) 1.18% 1.31% 1.43% (b) 1.21% (b) 0.99% (b)
Ratio of net investment income (loss)
to average net assets (0.38)%(e) (0.37)% (0.28)% (0.25)% (c) 0.30% (c) 0.47% (c)
Portfolio turnover rate N/A N/A N/A 22% (d) 98% (d) 55% (d)
Total return 40.98%(f) 23.89% 1.14% 26.37% (c) 35.55% (c) 40.58% (c)
Net assets, end of year (000's) $ 1,267,317 $ 880,574 $ 686,024 $ 475,506 $ 179,089 $31,401
28
<PAGE>
(a) Per share data was calculated using average shares outstanding during the
period.
(b) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by the Advisor, this ratio would have been 1.49%,
2.04% and 2.87% for the years ended September 30, 1997, 1996 and 1995,
respectively.
(c) Computed giving effect to the Advisor's expenses limitation undertaking.
(d) Prior to commencement of operations of the Portfolio (See Note 1 to
Financial Statements).
(e) Annualized.
(f) Not annualized.
</TABLE>
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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
Denise Chasmer, Vice President
J. Kevin Connaughton, Vice President
William Garrison, Vice President
Erik Gustafson, Vice President
Harvey Hirschhorn, Vice President
Gail D. Knudsen, Vice President
Lynn C. Maddox, Vice President
Mary D. McKenzie, 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
33
<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
Shareholders call: 800-338-2550
www.steinroe.com
Liberty Funds Distributor, Inc.
S14-03/080B-0400 (5/00) 00/706
