Stein Roe Mutual Funds
Annual Report
September 30, 2000
[PHOTO OF HANDS AND PLANT]
Stein Roe Equity Funds
Growth Fund
Focus Fund
[STEIN ROE LOGO]
STEIN ROE MUTUAL FUNDS
Sensible Risks. Intelligent Investments.(R)
<PAGE>
Contents
--------------------------------------------------------------------------------
From the President................................................ 1
Stephen Gibson's thoughts on the markets and investing
Performance Summary............................................... 2
Questions & Answers............................................... 3
Interview with the portfolio manager and
a summary of investment activity
Fund Highlights................................................... 5
Portfolio of Investments.......................................... 6
A complete list of investments with market values
Financial Statements.............................................. 8
Statements of assets and liabilities, operations
and changes in net assets
Notes to Financial Statements..................................... 11
Financial Highlights.............................................. 14
Selected per-share data
Report of Independent
Accountants....................................................... 15
Must be preceded or accompanied by a prospectus.
<PAGE>
From the President
--------------------------------------------------------------------------------
Dear Shareholder:
It's been a good year for the Liberty Focus Fund. Specifically, the Fund's Class
S shares outperformed the S&P 500 Index1, its benchmark index, by nearly 25
percentage points during the period on the strength of the financial services,
utility and certain technology sectors. Although technology stocks had a great
fourth quarter 1999, they retreated from March through May of 2000. A
combination of high valuations and lower than expected net earnings contributed
to the slide.
Economic results were mixed during the period; however, the Fund prospered in
an environment of expanding economic growth and rising corporate profits. In
contrast, the Federal Reserve continued to raise interest rates, and the value
of the euro against the U.S. dollar continued a decline that began early in the
period. Although U.S. conglomerates that do significant business overseas are
sensitive to these currency fluctuations, we believe that the euro's weakness is
temporary, and that it should strengthen in the next fiscal year.
Take a look inside the report. Portfolio Manager David Brady provides a
further discussion on the economic and market factors that affected the Fund's
performance and strategy. Thank you for choosing the Stein Roe Focus Fund and
for giving us the opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
November 20, 2000
1 See benchmark index chart on page 2 for performance results.
Because economic and market conditions change
frequently, there can be no assurance that the trends described in this report
will continue or come to pass.
[PHOTO OF STEPHEN E. GIBSON]
Stephen E. Gibson
1
<PAGE>
Performance Summary
--------------------------------------------------------------------------------
Average Annual Total Returns
Period Ended September 30, 2000
1 LIFE OF
YEAR FUND+
----------------------------------------------------------------------
Focus Fund Class S* 37.67% 23.82%
Morningstar Large Blend Category 16.00 11.67
S&P 500 Index 13.27 12.51
* The Fund commenced operations on 6/26/98.
+ Benchmark performance is for life of fund from 6/30/98.
Investment Comparisons
--------------------------------------------------------------------------------
Growth of a $10,000 Investment June 26, 1998 to September 30, 2000
--------------------------------------------------------------------------------
Stein Roe Focus Fund
[LINE CHART HERE]
Stein Roe Focus Morningstar Large
Fund Class S S&P 500 Index Blend Category
--------------------------------------------------------------------------------
6/30/99 10020 10000 10000
9789.54 9894 9836
8209.51 8464.32 8424.14
9/30/98 8729.17 9006.88 8865.73
9108.89 9738.24 9514.35
9808.45 10328.4 10047.9
12/31/98 10328.3 10923.3 10650.8
10808.6 11379.9 10990.2
10588.1 11026 10644.7
3/31/99 11578.1 11467 11026.7
11757.5 11910.8 11415.1
11707 11629.7 11177.1
6/30/99 12367.2 12272.8 11766.7
12077.8 11891.1 11450.6
11627.3 11831.7 11323
9/30/99 11787.8 11507.5 11061.2
12488 12235.9 11673.3
13147.4 12484.3 11955.1
12/31/99 14251.7 13218.4 12722
13695.9 12554.8 12178.6
13779.5 12317.5 12203.4
3/31/00 14682 13522.2 13167
13895.1 13115.2 12770.2
13118.3 12846.3 12462.7
6/30/00 14398.7 13162.3 12812.2
14597.4 12957 12627.8
16969.4 13761.6 13465.4
9/30/00 16217.1 13037 12818.4
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 your shares. The
above illustration assumes a $10,000 investment made on June 26, 1998 (June 30,
1998 for the Index and the Morningstar category), 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.
The Fund's return is also compared to the average return of the funds included
in the Morningstar Large Blend category average (Morningstar Average). This
Morningstar Average is composed of Funds with similar investment styles as
measured by their underlying portfolio holdings. Morningstar does not warrant
their information to be accurate, correct, complete or timely. They shall not be
responsible for investment decisions, damages or other losses resulting from use
of the averages. Morningstar, Inc. has not granted consent for it to be
considered or deemed an "expert" under the Securities Act of 1933. Sales charges
are not reflected in the Morningstar averages.
2
<PAGE>
Questions & Answers
--------------------------------------------------------------------------------
An interview with David Brady, Portfolio Manager of Stein Roe
Focus Fund
Fund Data
Investment Objective and Strategy:
Stein Roe Focus Fund seeks long-term growth by investing primarily in a
limited number of large capitalization companies that the manager believes have
above-average growth potential.
Fund Inception:
June 26, 1998
Total Net Assets:
$79.7 million
Q: How did The Fund's Class S shares perform during the period?
Brady: Class S shares of the Fund performed well during the 12 months ended
September 30, 2000 by delivering a total return of 37.67%, compared with 13.27%
for the S&P 500 Index during the same period.
Q: Which sectors supported the Fund's positive performance?
Brady: The financial services, utility and technology sectors fueled the Fund's
performance. However, the strength of a number of our technology holdings was a
major contributor to the Fund's above-average performance. Among our best
performers were companies that focus on data storage, including EMC (7.0% of net
assets) and Network Appliance (3.2% of net assets), which continued to
experience strong demand. Network Appliance was added early in the period and
was up significantly, while EMC had a total return of nearly 180% during the
period. Rational Software (5.2% of net assets), a company that supplies tools
used by business-to-business Internet service companies, also performed well. We
believe Rational will continue to have good prospects for the future.
While our gains in the technology area far outweighed any losses, we did have
a few holdings that underperformed. This included applications-based companies
such as Microsoft (4.5% of net assets). In the personal computer area, we sold
our position in Dell Computer on the assumption that growth in the PC and
related hardware markets was slowing. Apple Computer (2.6% of net assets)
[PHOTO OF DAVID P. BRADY]
David P. Brady
3
<PAGE>
Questions & Answers Continued
--------------------------------------------------------------------------------
also revealed that growth would fall short of expectations.
Nevertheless, we are optimistic about the future growth of the sector,
especially the area of data storage.
Utilities and financial services companies also performed well during the
period. AES Corp. (7.2% of net assets) and Active Power, which was bought and
sold during the period, both benefited from deregulation in the utilities
industry and high demand for reliable sources of power. Household International
(5.5% of net assets) and other financial services companies benefited from the
rise in interest rates, especially during the third quarter.
Q: Overall, how was the portfolio invested?
Brady: We continued a strategy of maintaining between 20 to 25 securities
in the portfolio that we believe provide the best risk/reward opportunities. Our
focus is on large-capitalization companies that dominate their particular
industry. Within this context, we decreased the Fund's weighting in the
technology sector and added to our position utilities.
Q: What is your outlook?
Brady: We are guardedly optimistic about the prospects for the economy, the
equity markets and the Fund. We believe the Federal Reserve has interest rates
in a holding pattern, and that its next move will be to lower rates. In
addition, we believe that the growth rate of corporate profits should initially
fall to a much more sustainable level of between 10% and 12%, but accelerate
later in 2001. As a result, we are optimistic about the future of the equity
markets over the next 12 months and believe stocks should benefit.
Past performance is no guarantee of future results. Total return performance
includes changes in share price and reinvestment of income and capital gains
distributions. Share price and investment returns will vary, so you may have a
gain or loss when you sell your shares. Portfolio holdings are as of 9/30/00 and
are subject to change. The S&P 500 Index is an unmanaged group of stocks not
associated with any Liberty Fund; it is not available for direct investment.
4
<PAGE>
Fund Highlights As of September 30, 2000
--------------------------------------------------------------------------------
Stein Roe Focus Fund
Top 10 Equity Holdings (% of Net Assets)
--------------------------------------------------------------------------------
AES 7.2% MBNA 4.1%
EMC 7.0 Intuit 3.9
Household International 5.5 Comcast 3.9
Rational Software 5.2 Viacom 3.8
Microsoft 4.5 Southtrust 3.8
--------------------------------------------------------------------------------
Equity Portfolio Highlights
S&P 500
PORTFOLIO INDEX
--------------------------------------------------------------------------------
Number of Holdings 25 500
Dollar Weighted Median
Market Capitalization ($Mil.) 35,727 80,912
--------------------------------------------------------------------------------
Economic Sector Breakdown
Equity Portfolio
[PIE CHART HERE]
Basic Materials 0%
Consumer Cyclical 9%
Consumer Non-Cyclical 10%
Energy 3%
Financial 15%
Industrial 2%
Technology 46%
Utilities 15%
S&P 500 Index
[PIE CHART HERE]
Basic Materials 2%
Consumer Cyclical 10%
Consumer Non-Cyclical 18%
Energy 7%
Financial 16%
Industrial 8%
Technology 30%
Utilities 9%
--------------------------------------------------------------------------------
Asset Allocation
As of September 30, 1999
[PIE CHART HERE]
Equities 99.9%
Cash Equivalents & Other 0.1%
As of September 30, 2000
[PIE CHART HERE]
Equities 88.6%
Cash Equivalents & Other 11.4%
5
<PAGE>
Stein Roe Focus Fund
--------------------------------------------------------------------------------
Investment Portfolio
September 30, 2000 (in thousands)
Common Stocks - 88.6% Shares Value
--------------------------------------------------------------------------------
Consumer Discretionary - 7.7%
Broadcasting & Cable - 3.9%
Comcast Corp., Special Class A.................... 75 $ 3,070
-------
Movies & Entertainment - 3.8%
Viacom, Inc. Class B (a)......................... 52 3,047
-------
Consumer Staples - 3.5%
Safeway, Inc. (a)................................. 60 2,801
-------
Diversified Financials - 9.6%
Consumer Finance
Household International, Inc..................... 77 4,377
MBNA Corp. ...................................... 85 3,272
-------
7,649
-------
Financials - 3.8%
Southtrust Corp. ................................ 96 3,012
-------
Health Care - 5.4%
Biotechnology - 2.1%
Genentech, Inc. (a)............................... 9 1,671
-------
Pharmaceuticals - 3.3%
American Home Products Corp. ..................... 46 2,625
-------
Industrials - 1.8%
Avery Dennison Corp............................... 30 1,396
-------
Software & Services - 20.3%
Applications Software - 9.2%
Intuit, Inc. (a) ................................ 55 3,135
Rational Software Corp. (a)....................... 60 4,163
-------
7,298
-------
Internet Software & Services - 6.6%
America Online, Inc. (a)......................... 50 2,688
Cosine Communications, Inc. (a)................... 14 778
Parthus Technologies PLC ADR (a)................. 45 1,811
-------
5,277
-------
Systems Software - 4.5%
Microsoft Corp. (a) ............................. 60 3,615
-------
Technology Hardware & Equipment - 20.4%
Computer Hardware - 2.6%
Apple Computer, Inc.............................. 80 2,060
-------
Computer Storage & Peripherals - 10.2%
EMC Corp. (a).................................... 56 5,551
Network Appliance, Inc. (a)...................... 20 2,547
-------
8,098
-------
6
<PAGE>
Stein Roe Focus Fund Continued
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Technology Hardware & Equipment - 20.4% (continued)
Networking Equipment - 2.4%
Cisco Systems, Inc. (a).......................... 35 $ 1,922
-------
Semiconductors - 2.1%
Broadcom Corp., Class A (a)....................... 7 1,706
-------
Telecommunications Equipment - 3.1%
Motorola, Inc.................................... 87 2,458
-------
Telecommunication Services - 6.1%
MCI WorldCom, Inc. (a)............................ 64 1,932
Vodafone Group PLC ADR ........................... 80 2,960
-------
4,892
-------
Utilities - 10.0%
AES Corp. (a)..................................... 84 5,754
Enron Corp....................................... 25 2,191
-------
7,945
-------
Total Common Stocks (cost of $52,635)(b)............. 70,542
-------
--------------------------------------------------------------------------------
Short-Term Obligations - 11.5% PAR
--------------------------------------------------------------------------------
Commercial Paper
American Home Products 6.680%(c) 10/2/00......... $2,865 2,864
Associates Corp. of North America 6.700%(c) 10/2/00 2,795 2,795
Fortune Brands 6.680%(c) 10/2/00................. 3,500 3,499
-------
9,158
-------
--------------------------------------------------------------------------------
Other Assets and Liabilities, Net - (0.1)%........... (48)
-------
Net Assets - 100.0%.................................. $79,652
=======
--------------------------------------------------------------------------------
Notes to Portfolio of Investments
--------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is the same.
(c) Rate represents yield at time of purchase.
Acronym Name
----------- ------------------------------
ADR American Depositary Receipt
See notes to financial statements.
7
<PAGE>
Stein Roe Focus Fund
--------------------------------------------------------------------------------
Statement of Assets and Liabilities
September 30, 2000
(All amounts in thousands, except per-share data)
Assets
Investments at value (cost $52,635)............... $70,542
Short-term obligations ........................... 9,158
-------
79,700
Receivable for:
Dividends...................................... $ 49
Fund shares sold............................... 35 84
------- -------
Total Assets................................. 79,784
Liabilities
Payable for Fund shares repurchased............... 1
Accrued:
Management fee................................. 50
Adminstration fee.............................. 10
Bookeeping fee................................. 2
Transfer Agent fee............................. 23
Other.......................................... 46
-------
Total Liabilities............................. 132
-------
Net Assets .................................... $79,652
-------
Class A
Net asset value & redemption price per share - ($1/(b)) $15.45(a)
-------
Maximum offering price per share ($15.45/0.9425) $16.39(c)
-------
Class S
Net asset value, redemption & offering price per share -
($79,651/5,155)................................ $15.45
-------
Composition of Net Assets
Paid in capital................................... $53,739
Accumulated net realized gain..................... 8,006
Net unrealized appreciation ...................... 17,907
-------
Net Assets..................................... $79,652
-------
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) Rounds to less than one.
(c) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
8
<PAGE>
Stein Roe Focus Fund
--------------------------------------------------------------------------------
Statement of Operations
For the Year Ended September 30, 2000
(All amounts in thousands)
Investment Income
Dividends ........................................ $ 394
Interest ......................................... 122
-------
Total investment income ....................... 516
Expenses
Management fee.................................... $ 519
Administration fee................................ 104
12b-1 Service fee................................. (a)
Transfer agent fees............................... 185
Bookkeeping fee................................... 26
Trustees fee...................................... 13
Custodian fees.................................... 4
Audit fee......................................... 19
Legal fee......................................... 3
Registration fee.................................. 31
Reports to shareholders........................... 13
Other............................................. 14 931
------- -------
Net Investment Loss............................ (415)
-------
Net Realized & Unrealized Gain on Portfolio Positions
Net realized gain ................................ 8,802
Net change in unrealized appreciation/depreciation
during the period.............................. 13,492
-------
Net Gain ...................................... 22,294
-------
Increase in Net Assets Resulting from Operations.. $ 21,879
=======
(a) Rounds to less than one.
See notes to financial statements.
9
<PAGE>
Stein Roe Focus Fund
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
(All amounts in thousands)
Year
Ended Year ended
September 30 September 30
Increase (Decrease) in Net Assets 2000 (a) 1999
------------ ----------
Operations
Net investment loss............................. $ (415) $ (250)
Net realized gain .............................. 8,802 5,947
Net unrealized appreciation /depreciation....... 13,492 8,974
-------- --------
Net Increase from Operations................. 21,879 14,671
Distributions to Shareholders
From net realized capital gains - Class S....... (3,219) --
-------- --------
18,660 14,671
-------- --------
Fund Share Transactions:
Receipt for shares sold - Class A .............. 1 --
-------- --------
1 --
-------- --------
Receipt for shares sold - Class S............... 15,206 19,615
Value of distributions reinvested - Class S .... 3,156 --
Cost of shares repurchased-- Class S............ (17,018) (19,355)
-------- --------
1,344 260
-------- --------
Net Increase from Fund Share Transactions.... 1,345 260
-------- --------
Total Increase............................... 20,005 14,931
Net Assets
Beginning of period............................. 59,647 44,716
-------- --------
End of period................................... $ 79,652 $ 59,647
-------- --------
Number of Fund Shares
Sold - Class A.................................. (b) --
-------- --------
Sold - Class S.................................. 1,123 1,766
Issued for distributions reinvested - Class S... 247 --
Repurchased - Class S........................... (1,278) (1,825)
-------- --------
92 (59)
-------- --------
(a) Class A shares were initially offered on July 31, 2000.
(b) Rounds to less than one.
See notes to financial statements.
10
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
September 30, 2000
Note 1. Organization
Stein Roe Focus Fund - Class S and Liberty Focus Fund - Class A (formerly Stein
Roe Large Company Focus Fund)(collectively 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 may
issue an unlimited number of shares. Effective July 31, 2000, the Fund began
offering Class A shares. The Fund offers two classes of shares: Class A, and
Class S. Class S shares are offered continuously at net asset value. Class A has
its own sales charge and expense structure, please refer to the Fund's Class A
prospectus for more information on Class A shares. The financial highlights for
Class A are presented in a separate annual report.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
Security valuation and transactions
Equity securities generally are valued at the last sale price or, in the case of
unlisted or listed securities for which there were no sales during the day, at
current quoted bid price.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
Portfolio positions for which market quotations are not readily available are
valued at fair value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains and losses are based upon the specific
identification method for both financial statement and federal income tax
purposes.
Determination of class net asset values and financial highlights
All income, expenses (other than Class A 12b-1 service fee and Class A and Class
S Tranfer Agent fee), 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 was calculated using the average shares outstanding during
the period.
Federal income taxes
Consistent with the Fund's policy to qualify as a regulated investment company
and to distribute all of its taxable income, no federal income tax has been
accrued. Distributions to shareholders Distributions to shareholders are
recorded on the ex-date.
The amount and character of income
11
<PAGE>
Notes to Financial Statements Continued
--------------------------------------------------------------------------------
and gains to be distributed are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Reclassifications are made to the Fund's capital accounts to reflect income and
gains available for distribution (or available capital loss carryforwards) under
income tax regulations.
Other
Interest income is recorded on the accrual basis. Dividend Income is recorded on
the ex-dividend date. Corporate actions are recorded on the ex-date.
Note 2. Fees and Compensation Paid to Affiliates
Management fee
Stein Roe and Farnham Inc. (the Advisor) is the investment Advisor of the Fund
and receives a monthly fee as follows:
Average net assets Annual fee rate
-------------- -------------
First $500 million 0.75%
Next $500 million 0.70%
Next $500 million 0.65%
Next $1.5 billion 0.60%
Administration fee
The Advisor also provides accounting and other services for a monthly fee
as follows:
Average net assets Annual fee rate
-------------- -------------
First $500 million 0.150%
Next $500 million 0.125%
Next $500 million 0.100%
Next $1.5 billion 0.075%
Bookkeeping fee
The Advisor provides bookkeeping and pricing services for a monthly fee to equal
to $25,000 annually plus 0.0025% annually of the Fund's average net assets over
$50 million. Transfer agent fee Liberty Funds Services, Inc. (the Transfer
Agent), an affiliate of the Advisor, provides shareholder services for a monthly
fee equal to 0.22% annually of the Fund's average net assets and receives
reimbursement for certain out of pocket expenses. For more information on the
Transfer Agent fee applicable to Class A shares, please refer to the Fund's
prospectus. Underwriting discounts, and service fees Liberty Funds Distributor,
Inc. (the Distributor), a subsidiary of the Advisor, is the Fund's principal
underwriter.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee on Class A net assets. The fee structure for the 12b-1 plan is
defined in the Class A prospectus. Expense limits The Advisor has agreed, until
further notice, to waive fees and bear certain Fund expenses to the extent that
total expenses (exclusive of service fees, distribution fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any) exceed 1.50%
annually of the Fund's average dialy net assets. For the year ended September
30, 2000, the Fund's operating expenses (as defined above) did not exceed the
1.50% expense limit.
Other
The Fund pays no compensation to its officers, all of whom are employees of the
Advisor.
12
<PAGE>
Notes to Financial Statements Continued
--------------------------------------------------------------------------------
Note 3. Portfolio Information Investment Activity
During the year ended September 30, 2000, purchases and sales of investments,
other than short-term obligations, were $51,975,673 and $63,299,846,
respectively.
Unrealized appreciation (depreciation) for the year ended September 30, 2000
based on cost of investments for both financial statement and federal income tax
purposes was:
Gross unrealized
appreciation $22,977,061
Gross unrealized
depreciation (5,070,258)
----------
Net unrealized
appreciation $17,906,803
----------
Other
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
Note 4. Line of Credit
The Liberty-Stein Roe Funds Investment Trust participates in unsecured line of
credit agreements provided by the custodian bank consisting of two components.
The committed line of credit entitles the Trust to borrow from the custodian at
any time upon notice from the Trust. The uncommitted line of credit permits the
Trust to borrow from the custodian at the custodian's sole discretion. The
aggregate borrowings available to the Trust for the committed and uncommitted
lines of credit are $200 million and $100 million, respectively. Borrowings may
be made to temporarily finance repurchase of Fund shares. Interest is charged to
the trust and, ultimately, the Fund based on its borrowings. In addition, a
commitment fee of 0.10% per annum on the Fund's unused commitment shall be paid
quarterly by the Fund based on the relative asset size of the Fund to the Trust
as a whole. The commitment fee is included in other expenses on the Statement of
Operations. For the year ended September 30, 2000, the Trust and Fund had no
borrowings under the agreements.
Note 5. Other Related Party Transactions
During the year ended September 30, 2000, the Fund used Alphatrade, a wholly
owned subsidiary of Colonial Management Associates, Inc., as a broker. Total
commissions paid to Alphatrade during the year were $2,832.
13
<PAGE>
Financial Highlights
--------------------------------------------------------------------------------
Selected per-share data (for a share outstanding throughout each period), ratios
and supplemental data.
<TABLE>
<CAPTION>
Year ended Year ended Period ended
September 30, September 30, September 30,
2000 1999 1998 (a)
Class S
----------- ------------ ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.78 $ 8.73 $ 10.00
------- ------- -------
Income From Investment Operations
Net investment loss (b).......... (0.08) (0.05) --
Net realized and unrealized gain 4.39 3.10 (1.27)
------- ------- -------
Total from investment operations 4.31 3.05 (1.27)
------- ------- -------
Less Distributions Declared to Shareholders:
From net realized gains.......... (0.64) -- --
------- ------- -------
Net Asset Value, End of Period...... $ 15.45 $ 11.78 $ 8.73
======= ======= =======
Total return (c).................... 37.67% 35.05% (12.70)%(d)(e)
Ratio to Average Net Assets
Expenses (f)........................ 1.35% 1.49% 1.50%(g)(h)
Net investment income (f) .......... (0.60)% (0.47)% (0.12)%(d)(h)
Portfolio turnover ................. 77% 68% 21%(e)
Net assets at end of period (000's). $79,651 $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)Total return at net asset value assuming all distributions reinvested.
(d)Computed giving effect to Advisor's expense limitation undertaking.
(e)Not annualized.
(f)The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(g)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.
(h)Annualized.
--------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
For the fiscal year ended September 30, 2000, the Fund designates long-term
capital gains of $380,941.
--------------------------------------------------------------------------------
14
<PAGE>
Report of Independent Accountants
--------------------------------------------------------------------------------
To the Trustees of Liberty-Stein Roe Investment Trust and Class S Shareholders
of Stein Roe Focus Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the Class S financial highlights present fairly, in
all material respects, the financial position of Stein Roe Focus Fund (formerly
Stein Roe Large Company Focus Fund) (the "Fund")(a series of Liberty-Stein Roe
Funds Investment Trust) at September 30, 2000, the results of its operations for
the year then ended, the changes in its net assets and the financial highlights
for the two years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 2000 by correspon dence with the custodian, provide a reasonable
basis for our opinion. The finincial highlights of the Fund for periods
through September 30, 1998 were audited by other independent accountants, whose
report dated November 16, 1998 expressed an unqualified opinion on those
financial highlights.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 20, 2000
15
<PAGE>
This page intentionally left blank.
<PAGE>
Liberty-Stein Roe Funds 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, Secretary and General Counsel, Kellogg Company
Charles R. Nelson
Van Voorhis Professor of Political Economy, University of Washington
Thomas C. Theobald
Managing Director, 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
Agents and Advisors
Stein Roe & Farnham Incorporated
Investment Advisor
State Street Bank and Trust Company
Custodian
Liberty Funds Services, Inc.
Transfer Agent
Bell, Boyd & Lloyd, LLC
Legal Counsel to the Trust
PricewaterhouseCoopers LLP
Independent Accountants
<PAGE>
The Stein Roe Mutual Funds
Fixed Income Funds
Cash Reserves Fund
Municipal Money Market Fund
Intermediate Municipals Fund
Managed Municipals Fund
High-Yield Municipals Fund
Intermediate Bond Fund
Income Fund
High Yield Fund
Equity Funds
Balanced Fund
Growth & Income Fund
Disciplined Stock Fund
Growth Stock Fund
Growth Investor Fund
Young Investor Fund
Focus Fund
Midcap Growth Fund
Capital Opportunities Fund
Small Company Growth Fund
International Funds
Asia Pacific Fund
Small Cap Tiger Fund
International 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
In Chicago, visit our Fund Center at One South Wacker Drive
Liberty Funds Distributor, Inc.
S21-02/207D-0900 (11/00) 00/2128
