STEIN ROE MUTUAL FUNDS
ANNUAL REPORT
SEPTEMBER 30, 2000
PHOTO OF: GIRL ON BALANCE BEAM.
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
Questions & Answers.............................................. 6
An interview with portfolio managers David Brady and
Erik Gustafson
Portfolio of Investments......................................... 11
A complete list of investments with market values
Financial Statements............................................. 16
Statements of assets and liabilities, operations and changes
in net assets
Notes to Financial Statements.................................... 22
Financial Highlights............................................. 25
Selected per-share data and ratios
Report of Independent
Accountants...................................................... 28
Must be preceded or accompanied by a prospectus.
<PAGE>
TO OUR SHAREHOLDERS
TO OUR SHAREHOLDERS:
During the past 12 months, the stock market experienced a great deal of
volatility (a series of rapid ups and downs). Despite this, the Fund delivered
strong results for you, our shareholders. For the 12-month period ended
September 30, 2000, the Stein Roe Young Investor Fund returned 32.32%. This
compares favorably to the Standard and Poor's 500 Index, which returned 13.27%
for the same period.
The 12 months ended September 30, 2000 began with investors feeling very
enthusiastic about stocks. Technology stocks performed particularly well during
these early months. In fact, they were responsible for most
Text in balloon: Stein Roe Young Investor Fund Class A shares returned
32.32% for the 12-month period ended 9/30/00. In the early months of the period,
the Fund benefited from its investments in technology stocks, and later it was
helped by a reduction in technology holdings.
1
<PAGE>
TO OUR SHAREHOLDERS
(Continued)
of the positive performance in the market. At the same time, many stocks outside
the technology sector were going through difficult times.
The situation changed quickly after mid-March. Investors became more
concerned that maybe technology stocks had reached prices that were too high to
continue rising. At the same time, there was increasing concern about whether
our economy might begin to have some difficulties. Investors began to sell many
of the stocks that had previously been so successful, and prices declined as a
result--even on technology stocks.
Looking at the past year, I am reminded that it is important to own a
variety of stocks to help minimize the impact of a single stock performing
badly. Young Investor Fund is managed to include many different types of stocks,
representing a variety of industries.
The following report gives you more insights from the Fund's managers. For
additional information, visit us on the Internet at www.steinroe.com or
www.younginvestor.com.
2
<PAGE>
TO OUR SHAREHOLDERS
(Continued)
As always, we thank you for choosing the Stein Roe Young Investor Fund and
for giving us the opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
November 20, 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 FOR THE PERIOD ENDED SEPTEMBER 30, 2000
ONE YEAR FIVE YEARS LIFE OF FUND
YOUNG INVESTOR FUND 32.32% 23.22% 24.52%
Standard & Poor's 500 Index 13.27 21.68 22.08
Morningstar Large Growth Category 30.68 22.62 23.12
STEIN ROE YOUNG INVESTOR FUND INVESTS ALL OF ITS INVESTABLE ASSETS IN SR&F
GROWTH INVESTOR PORTFOLIO, WHICH HAS THE SAME INVESTMENT OBJECTIVES 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 YOUR 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 affiliates. 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 9/30/00.
FUND HIGHLIGHTS
Growth of a $10,000 investment since Young
Investor Fund began operating on April 29, 1994
--------------------------------------------------------------------------------
Line Chart:
Morningstar Large Standard & Poor's Young Investor
Growth Category 500 Index Fund
9/30/93 10000 10000 10000
10000 10128 10000
10017.9 10293 9897
9612.88 10041 9444
9873.1 10370 9670
10399.7 10794 10254
10221.8 10531 10182
10435.2 10767 10376
10042.2 10375 9979
10131.1 10529 10121
4/29/94 10189.6 10801 10069
10559.1 11221 10492
10874.3 11552 10832
11097.9 11892 11002
11427.7 12367 11234
12023.8 12653 11961
12680.9 13072 12782
12759.8 13105 12919
9/30/95 13159.4 13658 13289
13012.7 13609 13068
13428.8 14205 13540
13395.5 14479 13591
13682.1 14971 13743
14033.6 15111 14215
14097.8 15256 14408
14603.1 15480 15198
15026.1 15878 15713
14810.8 15938 15265
13853.3 15234 14048
14353.5 15555 14744
9/30/96 15343.4 16429 15767
15395.4 16883 15594
16313.1 18157 16339
15943.8 17798 16110
16911.6 18908 16869
16511.6 19058 16176
15652.7 18276 15220
16358.1 19366 15536
17559 20549 17014
18249.9 21463 17642
19949.2 23170 19205
19149.8 21872 18851
9/30/97 20204.2 23069 20067
19449.4 22298 19142
19766.6 23330 19173
19940.3 23732 19353
20178.2 23993 19279
21772.5 25723 20891
22765.1 27040 21911
23114.8 27316 22139
22473.3 26846 21182
23772.3 27936 22220
23507.5 27639 21456
19686.8 23646 17617
9/30/98 21104.5 25161 18954
22449.4 27204 19972
24042 28853 21454
26580.6 30515 23894
28247.5 31790 25181
27024.1 30802 23754
28619.9 32034 25312
28855.7 33273 26059
27997.2 32488 25660
29962.1 34285 27533
29166 33219 27010
29163.6 33052 27086
9/30/99 28926.5 32147 27170
30900.2 34182 29262
32753.9 34876 32036
36827.5 36926 37459
35442.8 35073 36684
38352.3 34410 43019
40031 37775 42873
37628.3 36638 39190
35414.6 35887 36506
38057.3 36770 40335
37193.4 36196 39133
40440.4 38444 43469
9/30/00 37975.5 35981 40885
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 in the Fund 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. Benchmark performance is from
4/30/94 to 9/30/00.
The Fund's return is also compared to the average return of the funds included
in the Morningstar Large Growth category. This Morningstar category 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.
4
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Your Portfolio and its Industry
Weightings vs. the S&P 500 Index
as of September 30, 2000
--------------------------------------------------------------------------------
Young S&P 500
Investor Fund Index
--------------------------------------------------------------------------------
Basic Materials 1% 2%
Consumer Cyclical 17% 10%
Consumer Non-Cyclical 10% 18%
Energy 2% 7%
Financial 15% 16%
Industrial 10% 8%
Technology 31% 30%
Utilities 14% 9%
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:
6 YEARS, 5 MONTHS
NET ASSETS:
$1.22 BILLION
NUMBER OF SHAREHOLDERS: 181,260
TEXT IN BALLOON: 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
Index in the industries, or sectors, that are the largest part of the market and
economy.
5
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
Q & A with David Brady and Erik Gustafson, portfolio managers of Stein Roe Young
Investor Fund and the SR&F Growth Investor Portfolio.
Q. HOW DID THE FUND PERFORM OVER THE PAST YEAR?
A. From September 30, 1999 to September 30, 2000, Stein Roe Young Investor Fund
generated a total return of 32.32%. This was much better than the performance of
the stock market as a whole, as measured by the total return of 13.27% for the
Standard & Poor500 Stock Index. The Fund's strong performance is mainly a result
of our investments in technology stocks (during the first half of the year) and
our utilities and financial services holdings (during the second half of the
year). Although technology stocks had a more difficult time beginning in March,
2000, the earlier gains were more than enough to make up for the later
difficulties.
Q. WERE THERE SPECIFIC STOCKS THAT HELPED THE FUND'S PERFORMANCE?
A. Among the stocks that gained the most during the year were EMC (2.7% of net
assets) and Network Appliance (2.2% of net assets). As more and more companies
realize their increased need for data storage devices, these two companies are
seeing their businesses grow quickly.
The Fund also benefited from the performance of stocks such as:
o Sun Microsystems (2.0% of net assets), a manufacturer of computer servers
and software which are more critical than ever in this Internet age.
6
<PAGE>
o Intuit (2.8% of net assets), maker of the popular financial software
programs Quicken and TurboTax.
o Rational Software (2.6% of net assets), a company that creates software
tools to help businesses write their own personalized software.
Q. YOU MENTIONED THAT THINGS CHANGED IN THE MARKET IN MARCH. WHAT HAPPENED?
A. Many investors appeared to become a bit confused about what would happen to
the United States economy. For several years, it has been growing very nicely,
helping to create new jobs and giving people more money to spend and invest.
Some investors began to believe that things wouldn't continue going so well, so
they began to change their focus.
Investors turned away from technology companies, which had been the best
performers in the market. Instead, they began to favor other types of stocks,
such as utilities and financial services companies.
Photos of: David Brady and Erik Gustafson
7
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
(Continued)
Some companies that provide electrical power benefited from this shift; for
example, Calpine and AES Corp. (3.2% and 2.1%, respectively, of net assets).
Some companies that provide financial services also enjoyed strong stock
performance. Among the Fund's holdings that were particularly strong were
Goldman Sachs (a major investment banker), Citigroup (one of the world's largest
diversified financial services companies) and Household International, a
low-cost consumer finance company (2.4%, 3.4%, and 3.2%, respectively, of net
assets).
Q. TELECOMMUNICATIONS STOCKS HAVE PLAYED AN IMPORTANT ROLE IN THE PORTFOLIO. HOW
DID THEY PERFORM OVER THE PAST YEAR?
A. They generally experienced difficult times in the past year. We all had high
expectations for companies like WorldCom (1.1% of net assets), which merged with
long-distance provider MCI, and Lucent Technologies (0.8% of net assets).
Unfortunately, they and other big names in the telephone and telecommunications
business
Text in balloon: Until March 2000, the stock market's strong performance was
generated in large part by stocks of technology-oriented companies, many of
which benefited from the Internet boom. In March, investors changed their focus,
as they worried about the ability of many technology companies to earn a profit
on their fast-growing businesses.
8
<PAGE>
disappointed us. Even with the explosive growth of technologies like the
Internet and cellular phones, the market has been difficult for these stocks
because of the increased number of competitors and the high costs involved in
upgrading technologies. These factors have made it more difficult for them to
perform well.
Q. WHAT DO YOU EXPECT WILL HAPPEN IN THE NEXT YEAR?
A. For starters, it looks as if many companies will have a more difficult time
increasing their profits than they had in recent years. This is likely because
we expect that the rate of growth in the U.S. economy will slow down a bit.
We have enjoyed an amazingly strong period of performance in the stock
market in recent years. While there is reason to believe the general positive
trend for stocks will continue, it is not likely to grow at such a rapid rate
year after year. Just be sure that your expectations are reasonable, and
remember that an investment in the Stein Roe Young Investor Fund should be a
long-term proposition. Your investment plan should
Text in balloon: A strong economy usually helps companies be more profitable and
successful. If our economy weakens significantly, many firms could face more
difficulties. But fortunately, the U.S. economy has remained fairly strong.
We're hopeful that growth in the economy can continue.
9
<PAGE>
AN INTERVIEW WITH THE PORTFOLIO MANAGERS
(Continued)
match your time horizon, risk tolerance and your objectives, regardless of
current market conditions.
An investment in the Fund offers significant long-term growth potential, but
also involves certain risks, including more volatility than the stock market in
general. The Fund may 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 9/30/00.
Text in balloon: Stock markets don't always go up 20-30% each year, even though
that has been fairly common lately. It is smart to expect stock prices to move
up and down a lot, and prepare for returns that are below what we've become used
to in the last few years. Still, the Fund will pursue a diversified, selective
investment approach designed to identify the best investments available in the
stock market today.
10
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS AT SEPTEMBER 30, 2000
(In thousands)
COMMON STOCKS - 92.5% SHARES VALUE
-------- -------
CONSUMER DISCRETIONARY - 12.9%
AUTOMOBILES & COMPONENTS - 0.8%
Automobile Manufacturers
Ford Motor Co. 437 $ 11,063
-------
CONSUMER DURABLES & APPAREL - 1.4%
Leisure Products
Mattel, Inc. 1,800 20,138
-------
HOTELS, RESTAURANTS & LEISURE - 2.0%
LEISURE FACILITIES - 0.4%
Cedar Fair, LP 315 5,808
-------
RESTAURANTS - 1.6%
McDonald's Corp. 750 22,641
-------
MEDIA - 7.0%
BROADCASTING & CABLE - 4.8%
AT&T Corp.-Liberty Media Group, Class A (a) 1,400 25,200
Clear Channel Communications, Inc. (a) 450 25,425
Hispanic Broadcasting Corp. (a) 650 18,119
-------
68,744
-------
MOVIES & ENTERTAINMENT - 2.2%
The Walt Disney Co.
850 32,513
-------
RETAILING - 1.7%
Apparel Retail
The Gap, Inc. 1,250 25,156
-------
CONSUMER STAPLES - 5.4%
FOOD & DRUG RETAILING - 2.6%
Drug Retail
Walgreen Co. 1,000 37,938
-------
FOOD RETAIL - 2.8%
Safeway, Inc. (a) 880 41,085
-------
11
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
(In thousands)
SHARES VALUE
-------- -------
FINANCIALS - 13.7%
BANKS - 3.0%
Texas Regional Bancshares, Inc., Class A 375 $ 10,641
Wells Fargo & Co. 700 32,156
-------
42,797
CONSUMER FINANCE - 5.0%
Household International, Inc. 805 45,583
MBNA Corp. 700 26,950
-------
72,533
-------
DIVERSIFIED FINANCIAL SERVICES - 5.7%
Citigroup, Inc. 900 48,656
The Goldman Sachs Group, Inc. 300 34,181
-------
82,837
-------
HEALTH CARE - 6.2%
PHARMACEUTICALS & BIOTECHNOLOGY - 1.3%
Biotechnology
Genentech, Inc. (a) 100 18,569
PHARMACEUTICALS - 4.9%
American Home Products Corp. 500 28,281
Johnson & Johnson 450 42,272
-------
70,553
-------
INDUSTRIALS - 7.2%
CAPITAL GOODS - 5.0%
Industrial Conglomerates
General Electric Co. 765 44,131
Tyco International Ltd. 550 28,531
-------
72,662
-------
COMMERCIAL SERVICES & SUPPLIES - 2.2%
Data Processing Services
Paychex, Inc. 615 32,288
-------
12
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
(In thousands)
SHARES VALUE
-------- -------
INFORMATION TECHNOLOGY - 32.3%
SOFTWARE & SERVICES - 12.1%
APPLICATIONS SOFTWARE - 5.4%
Intuit, Inc. (a) 700 $ 39,900
Rational Software Corp. (a) 550 38,156
-------
78,056
-------
INTERNET SOFTWARE & SERVICES - 2.4%
America Online, Inc. 650 34,937
-------
SYSTEMS SOFTWARE - 4.3%
Microsoft Corp. (a) 560 33,740
VERITAS Software Corp. (a) 200 28,400
-------
62,140
-------
TECHNOLOGY HARDWARE & EQUIPMENT - 20.2%
COMPUTER HARDWARE - 3.2%
Apple Computer, Inc. 675 17,381
Sun Microsystems, Inc. (a) 250 29,188
-------
46,569
-------
COMPUTER STORAGE & PERIPHERALS - 5.0%
EMC Corp. (a) 400 39,650
Network Appliance, Inc. (a) 250 31,844
-------
71,494
-------
NETWORKING EQUIPMENT - 1.7%
Cisco Systems, Inc. (a) 450 24,862
-------
SEMICONDUCTOR EQUIPMENT - 0.9%
KLA-Tencor Corp. (a) 300 12,356
-------
SEMICONDUCTORS - 3.0%
Bookham Technology PLC (a) 265 11,362
Maxim Integrated Products, Inc. (a) 400 32,175
-------
43,537
-------
TELECOMMUNICATIONS EQUIPMENT - 6.4%
Comverse Technology, Inc. (a) 300 32,400
Corning, Inc. 106 31,482
Lucent Technologies, Inc. 400 12,225
Motorola, Inc. 600 16,950
-------
93,057
-------
13
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
(In thousands)
SHARES VALUE
-------- -------
MATERIALS - 1.0%
CHEMICALS - 1.0%
Specialty Chemicals
Minerals Technologies, Inc. 300 $ 13,800
--------
TELECOMMUNICATION SERVICES - 6.6%
DIVERSIFIED TELECOM SERVICES - 5.3%
ALTERNATIVE CARRIERS - 4.2%
Level 3 Communications, Inc. (a) 425 32,778
Qwest Communications International, Inc. (a) 583 28,023
-------
60,801
-------
INTEGRATED TELECOM SERVICES - 1.1%
WorldCom, Inc. (a) 500 15,188
-------
WIRELESS TELECOM SERVICES - 1.3%
Vodafone Group PLC, ADR 500 18,500
--------
UTILITIES - 7.2%
ELECTRIC UTILITIES - 5.4%
AES Corp. (a) 450 30,824
Calpine Corp. (a) 450 46,969
-------
77,793
-------
GAS UTILITIES - 1.8%
Kinder Morgan, Inc. 650 26,609
-------
TOTAL COMMON STOCKS (cost of $907,041) (b) 1,337,024
---------
14
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
(In thousands)
PAR VALUE
-------- ---------
SHORT-TERM OBLIGATIONS - 4.6%
COMMERCIAL PAPER - 4.6%
Associates Corp. of North America 6.790%(c)
10/2/00 $47,415 $ 47,406
Houston Industries Financial Corp. 7.100%(c)
10/2/00 19,430 19,426
---------
TOTAL SHORT-TERM OBLIGATIONS 66,832
---------
OTHER ASSETS & LIABILITIES, NET - 2.9% 41,388
---------
NET ASSETS - 100.0% $1,445,244
==========
NOTES TO INVESTMENT PORTFOLIO
--------------------------------------------------------------------------------
(a) Non-income producing.
(b) Cost for federal income tax purposes is $909,541.
(c) Rate represents yield at time of purchase.
Acronym Name
ADR American Depositary Receipt
See notes to financial statements.
15
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
(In thousands)
ASSETS
Investments, at market value (cost $907,041) $1,337,024
Short-term obligations 66,832
Cash 3
Receivable for:
Investments sold 74,140
Dividends 474
----------
Total Assets 1,478,473
----------
LIABILITIES
Payable for investments purchased 32,534
Accrued:
Management fee 685
Bookkeeping fee 5
Transfer agent fee 1
Other 4
----------
Total Liabilities 33,229
----------
Net Assets applicable to investors' beneficial interest $1,445,244
==========
See notes to financial statements.
16
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
(All amounts in thousands)
INVESTMENT INCOME
Dividends $ 6,720
Interest 1,457
--------
Total Investment Income 8,177
--------
EXPENSES
Management fee 7,245
Bookkeeping fee 56
Trustees' fee 27
Audit fee 12
Legal fee 1
Transfer agent fee 6
Custodian fee 29
Other 39
--------
7,415
--------
Net Investment Income 762
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 140,322
Net change in unrealized appreciation/depreciation 187,931
--------
Net Gain 328,253
--------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $329,015
========
See notes to financial statements.
17
<PAGE>
SR&F GROWTH INVESTOR PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In thousands)
YEARS ENDED SEPTEMBER 30,
2000 1999
---------- ----------
OPERATIONS
Net investment income $ 762 $ 2,122
Net realized gain on investments 140,322 944
Net change in unrealized appreciation/depreciation 187,931 169,408
---------- ----------
Net increase in net assets resulting from
operations 329,015 172,474
---------- ----------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST
Contributions 885,014 274,918
Withdrawals (755,625) (183,222)
---------- ----------
Net increase from transactions in investors'
beneficial interest 129,389 91,696
---------- ----------
Net increase in net assets 458,404 264,170
NET ASSETS
Beginning of year 986,840 722,670
---------- ----------
End of year $1,445,244 $ 986,840
========== ==========
See notes to financial statements.
18
<PAGE>
STEIN ROE YOUNG INVESTOR FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
(All amounts in thousands, except per-share data)
ASSETS
Investment in Portfolio, at value $1,232,063
Receivable for Fund shares sold 356
Other 9
----------
Total Assets 1,232,428
----------
LIABILITIES
Payable for Fund shares repurchased 15,936
Accrued:
Administrative fee 174
Bookkeeping fee 4
Transfer agent fee 305
Other 200
----------
Total Liabilities 16,619
----------
Net Assets $1,215,809
==========
Shares outstanding (unlimited number authorized) 33,839
==========
Net asset value per share $ 35.93
==========
ANALYSIS OF NET ASSETS
Paid-in capital $ 721,342
Accumulated net realized gain allocated from Portfolio 105,737
Net unrealized appreciation allocated from Portfolio 388,730
----------
$1,215,809
==========
See notes to financial statements.
19
<PAGE>
STEIN ROE YOUNG INVESTOR FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
(All amounts in thousands)
INVESTMENT INCOME
Dividends allocated from Portfolio $ 5,873
Interest allocated from Portfolio 1,262
---------
Total Investment Income 7,135
---------
EXPENSES
Expenses allocated from Portfolio 6,462
Administrative fee 1,919
Transfer agent fee 3,201
Bookkeeping fee 52
Trustees' fees 8
Audit fee 6
Legal fee 9
Custodian fee 1
Registration fee 23
Reports to shareholders 82
Other 526 12,289
-------- ---------
Net Investment Loss (5,154)
---------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS ALLOCATED FROM PORTFOLIO
Net realized gain allocated from Portfolio 134,120
Net change in unrealized appreciation/depreciation
allocated from Portfolio 158,324
---------
Net Gain 292,444
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 287,290
=========
See notes to financial statements.
20
<PAGE>
STEIN ROE YOUNG INVESTOR FUND
STATEMENT OF CHANGES IN NET ASSETS
(All amounts in thousands)
YEARS ENDED SEPTEMBER 30,
2000 1999
---------- -----------
OPERATIONS
Net investment loss $ (5,154) $ (3,184)
Net realized gain 134,120 4,240
Net change in unrealized appreciation/depreciation 158,324 158,189
---------- ----------
Net increase (decrease) in net assets resulting
from operations 287,290 159,245
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net realized capital gains (10,173) (18,152)
---------- ----------
SHARE TRANSACTIONS
Subscriptions to Fund shares 718,379 335,052
Value of distributions reinvested 10,047 17,877
Redemptions of Fund shares (670,308) (299,472)
---------- ----------
Net increase from Fund share transactions 58,118 53,457
---------- ----------
Net increase in net assets 335,235 194,550
NET ASSETS
Beginning of period 880,574 686,024
---------- ----------
End of period $1,215,809 $ 880,574
========== ==========
UNDISTRIBUTED (OVERDISTRIBUTED) NET
INVESTMENT INCOME $ -- --
========== ==========
ANALYSIS OF CHANGES IN SHARES OF
BENEFICIAL INTEREST
Subscriptions to Fund shares 20,880 11,915
Issued in reinvestment of distributions 312 741
Redemptions of Fund shares (19,468) (10,786)
---------- ----------
Net increase in Fund shares 1,724 1,870
Shares outstanding at beginning of year 32,115 30,245
---------- ----------
Shares outstanding at end of year 33,839 32,115
========== ==========
See notes to financial statements.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
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 February 3,
1997. The Portfolio allocates income, expenses, realized and unrealized
gains and losses to each investor on a daily basis, based on their
respective percentage of ownership. At September 30, 2000, Stein Roe
Young Investor Fund owned 85.3% of the Portfolio.
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.
22
<PAGE>
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.
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.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-date.
The amount and character of income 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. 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 Portfolio and receives a monthly fee as follows:
Average Net Assets Annual Fee Rate
First $500 million 0.60%
Next $500 million 0.55%
Over $1 billion 0.50%
23
<PAGE>
ADMINISTRATION FEE
The Advisor also provides accounting and other services to the Fund for
a monthly fee as follows:
Average Net Assets Annual Fee Rate
First $500 million 0.200%
Next $500 million 0.150%
Over $1 billion 0.125%
BOOKKEEPING FEE
The Advisor provides bookkeeping and pricing services to the Portfolio
and the Fund for a monthly fee equal to $25,000 annually plus 0.0025%
annually of the Portfolio's and Fund's average daily 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 daily net assets and receives
reimbursement for certain out of pocket expenses. The Portfolio pays
the Transfer Agent a monthly fee equal to $6,000 annually.
OTHER
The Fund pays no compensation to its officers, all of whom are
employees of the Advisor.
NOTE 3. PORTFOLIO INFORMATION
--------------------------------------------------------------------------------
INVESTMENT ACTIVITY
During the year ended September 30, 2000, purchases and sales of
investments, other than short-term obligations, were $976,309,339 and
$915,033,633, respectively.
Unrealized appreciation (depreciation) at September 30, 2000 based
on cost of investments for federal income tax purposes was:
Gross unrealized appreciation $502,478,058
Gross unrealized depreciation (74,995,022)
------------
Net unrealized appreciation $427,483,036
------------
OTHER
The Portfolio may focus its investments in certain industries,
subjecting it to greater risk than a fund that is more diversified.
24
<PAGE>
NOTE 4. LINE OF CREDIT
--------------------------------------------------------------------------------
The Liberty-Stein Roe Funds Investment Trust and SR&F Base Trust
participate in unsecured line of credit agreements provided by the
custodian bank consisting of two components. The committed line of
credit entitles the Trusts 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 agreement.
NOTE 5. OTHER RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------
During the year ended September 30, 2000, the Portfolio used
Alphatrade, a wholly owned subsidiary of Colonial Management
Associates, Inc., as a broker. Total commissions paid to Alphatrade
during the year were $63,249.
SR&F GROWTH INVESTOR PORTFOLIO
FINANCIAL HIGHLIGHTS
PERIOD ENDED
YEARS ENDED SEPTEMBER 30, SEPTEMBER 30,
2000 1999 1998 1997(a)
--------- --------- --------- --------------
Ratio of net expenses to
average net assets 0.57% 0.59% 0.62% 0.63%(b)
Ratio of net investment
income to average net assets 0.06% 0.25% 0.42% 0.54%(b)
Portfolio turnover rate 72% 45% 45% 38%
(a) From commencement of operations on February 3, 1997.
(b) Annualized.
25
<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>
YEARS ENDED SEPTEMBER 30,
2000 1999 1998 1997 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 27.42 $ 22.68 $ 22.75 $ 18.64 $ 14.29
------------ ------------ ------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (a) (0.15) (0.10) (0.06) (0.04) 0.05
Net realized and unrealized gains on investments
allocated from Portfolio 8.98 5.44 0.31 4.79 4.86
------------ ------------ ------------ ------------ ------------
Total from investment operations 8.83 5.34 0.25 4.75 4.91
------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS
Net investment income -- -- -- (0.02) (0.05)
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)
------------ ------------ ------------ ------------ -----------
NET ASSET VALUE, END OF PERIOD $ 35.93 $ 27.42 $ 22.68 $ 22.75 $ 18.64
============ ============ ============ ============ ============
Ratio of net expenses to average net assets 1.08% 1.18% 1.31% 1.43% (b) 1.21% (b)
Ratio of net investment income (loss) to average net assets (0.45)% (0.37)% (0.28)% (0.25)% (c) 0.30% (c)
Portfolio turnover rate N/A N/A N/A 22% (d) 98% (d)
Total return 32.32% 23.89% 1.14% 26.37% (c) 35.55% (c)
Net assets, end of year (000's) $ 1,215,809 $ 880,574 $ 686,024 $ 475,506 $ 179,089
(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%
and 2.04% for the years ended September 30, 1997 and 1996, respectively.
(c) Computed giving effect to the Advisor's expense limitation undertaking.
(d) Prior to commencement of operations of the Portfolio.
--------------------------------------------------------------------------------
Federal Income Tax information (unaudited)
For the fiscal year ended September 30, 2000, the Fund designates long-term
capital gains of $114,077,730.
--------------------------------------------------------------------------------
</TABLE>
26-27 Spread
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of
Liberty-Stein Roe Funds Investment Trust and
SR&F Base Trust and the
Shareholders of Stein Roe Young Investor Fund
In our opinion, the accompanying statements of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Stein Roe Young Investor Fund (the
"Fund")(a series of Liberty-Stein Roe Funds Investment Trust) and SR&F Growth
Investor Portfolio (the "Portfolio")(a series of SR&F Base Trust) at September
30, 2000, the results of each of their operations for the year then ended, the
changes in each of their net assets and their 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 and the Portfolio'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 correspondence with the custodian,
provide a reasonable basis for our opinion. The financial highlights of the Fund
and the Portfolio 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
28
<PAGE>
LIBERTY - STEIN ROE ADVISOR 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
Joseph R. Palombo
Chairman of the Board of Trustees
Executive Vice President and Director,
Colonial Management Associates
Thomas C. Theobald
Managing Partner, William Blair
Capital Partners
OFFICERS
--------------------------------------------------------------------------------
Stephen E. Gibson, President
William D. Andrews, Executive
Vice President
Kevin M. Carome, Executive
Vice President, Secretary
Loren A. Hansen, Executive Vice President
Joseph R. Palombo, Executive Vice President
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
Legal Counsel to the Fund and Portfolio
PricewaterhouseCoopers LLP
Independent Accountants
29
<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
Focus Fund
Capital Opportunities Fund
Small Company Growth Fund
INTERNATIONAL FUNDS
Asia Pacific Fund
International Fund
Small Cap Tiger Fund
Stein Roe Mutual Funds
P.O. Box 8900
Boston, MA 02205-8900
800-338-2550
www.steinroe.com
Liberty Funds Distributor, Inc.
S14-02/205D-0900 (11/00) 00/2098
