1933 Act Registration No. 333-17255
1940 Act File No. 811-07955
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 2 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [X]
STEIN ROE ADVISOR TRUST
Registrant
One South Wacker Drive, Chicago, Illinois 60606
Telephone Number: 1-800-338-2550
Jilaine Hummel Bauer Cameron S. Avery
Executive Vice-President Bell, Boyd & Lloyd
& Secretary Three First National Plaza
Stein Roe Advisor Trust Suite 3300
One South Wacker Drive 70 W. Madison Street
Chicago, Illinois 60606 Chicago, Illinois 60602
(Agents for Service)
Registrant has previously elected to register under the Securities
Act of 1933 an indefinite number of its shares of beneficial
interest, without par value, of the series of shares designated
Stein Roe Advisor Growth & Income Fund, Stein Roe Advisor
International Fund, Stein Roe Advisor Young Investor Fund, Stein
Roe Advisor Special Venture Fund, Stein Roe Advisor Balanced Fund,
Stein Roe Advisor Growth Stock Fund, and Stein Roe Advisor Special
Fund.
This Registration Statement has also been signed by SR&F Base
Trust.
<PAGE>
STEIN ROE ADVISOR TRUST
CROSS REFERENCE SHEET
ITEM
NO. CAPTION
- ----- -------
PART A (PROSPECTUS)
1 Front cover
2 Fee Table; Summary
3 (a) Inapplicable
(b) Inapplicable
(c) Investment Return
(d) Inapplicable
4 Organization and Description of Shares; The Fund;
Investment Policies; Investment Restrictions; Risks
and Investment Considerations; Portfolio Investments and
Strategies; Summary--Investment Risks
5 (a) Management--Trustees and Investment Adviser
(b) Management--Trustees and Investment Adviser, Fees and
Expenses
(c) Management--Portfolio Managers
(d) Inapplicable
(e) Management--Transfer Agent
(f) Management--Fees and Expenses
(g) Inapplicable
5A Inapplicable
6 (a) Organization and Description of Shares; see statement of
additional information: General Information and History
(b) Inapplicable
(c) Organization and Description of Shares
(d) Organization and Description of Shares
(e) For More Information
(f) Distributions and Income Taxes
(g) Distributions and Income Taxes
(h) Special Considerations Regarding Master Fund/Feeder Fund
Structure
7 How to Purchase Shares
(a) Management--Distributor
(b) How to Purchase Shares; Net Asset Value
(c) Inapplicable
(d) How to Purchase Shares
(e) Inapplicable
(f) Management--Fees and Expenses
8 (a) How to Redeem Shares
(b) How to Purchase Shares
(c) How to Redeem Shares
(d) How to Redeem Shares
9 Inapplicable
PART B (STATEMENT OF ADDITIONAL INFORMATION)
10 Cover page
11 Table of Contents
12 General Information and History
13 Investment Policies; Portfolio Investments and Strategies;
Investment Restrictions
14 Management
15(a) Inapplicable
(b) Principal Shareholders
(c) Principal Shareholders
16(a) Investment Advisory Services; Management; see prospectus:
Management
(b) Investment Advisory Services
(c) Inapplicable
(d) Investment Advisory Services
(e) Inapplicable
(f) Distributor
(g) Inapplicable
(h) Custodian; Independent Auditors
(i) Transfer Agent and Shareholder Servicing
17(a) Portfolio Transactions
(b) Inapplicable
(c) Portfolio Transactions
(d) Portfolio Transactions
(e) Portfolio Transactions
18 General Information and History
19(a) Purchases and Redemptions; see prospectus: How to Purchase
Shares, How to Redeem Shares
(b) Purchases and Redemptions; see prospectus: Net Asset Value
(c) Purchases and Redemptions
20 Additional Income Tax Considerations; Portfolio Investments
and Strategies--Taxation of Options and Futures
21(a) Distributor
(b) Inapplicable
(c) Inapplicable
22 Investment Performance
23 Balance Sheet
PART C
24 Financial Statements and Exhibits
25 Persons Controlled By or Under Common Control with
Registrant
26 Number of Holders of Securities
27 Indemnification
28 Business and Other Connections of Investment Adviser
29 Principal Underwriters
30 Location of Accounts and Records
31 Management Services
32 Undertakings
<PAGE> 1
STEIN ROE ADVISOR GROWTH & INCOME FUND
The investment objective of Advisor Growth & Income Fund is to
provide both growth of capital and current income. Advisor Growth
& Income Fund invests all of its net investable assets in
SR&F Growth & Income Portfolio, a portfolio of SR&F Base Trust
that has the same investment objective and substantially the same
investment policies as Advisor Growth & Income Fund. (SEE SPECIAL
CONSIDERATIONS REGARDING MASTER FUND/FEEDER FUND STRUCTURE.)
Shares of Advisor Growth & Income Fund may be purchased only
through Intermediaries, including retirement plan service
providers.
Advisor Growth & Income Fund has no sales or redemption charges.
Advisor Growth & Income Fund is a series of Stein Roe Advisor
Trust and Growth & Income Portfolio is a series of SR&F Base
Trust. Each Trust is a diversified open-end management investment
company.
This prospectus contains information you should know before
investing in Advisor Growth & Income Fund. Please read it
carefully and retain it for future reference.
A Statement of Additional Information dated February 14, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information may be obtained without charge
by writing to Stein Roe Mutual Funds, Suite 3200, One South Wacker
Drive, Chicago, Illinois 60606, or by calling the Adviser. For
additional information, call Retirement Services at 800-322-1130
or Advisor/Broker Services at 800-322-0593.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 14, 1997.
<PAGE> 2
TABLE OF CONTENTS
Page
Summary...................................2
Fee Table ................................3
The Fund..................................4
Investment Policies.......................5
Performance Information...................5
Risks and Investment Considerations ......6
Investment Restrictions ..................7
Portfolio Investments and Strategies......8
Net Asset Value .........................10
How to Purchase Shares...................11
How to Redeem Shares ....................12
Distributions and Income Taxes...........12
Management ..............................13
Organization and Description of Shares...15
Special Considerations Regarding the
Master Fund/Feeder Fund Structure......16
For More Information ....................18
SUMMARY
Stein Roe Advisor Growth & Income Fund ("Advisor Growth & Income
Fund") is a series of Stein Roe Advisor Trust, an open-end
diversified management investment company organized as a
Massachusetts business trust. (See The Fund and Organization and
Description of Shares.) This prospectus is not a solicitation in
any jurisdiction in which shares of Advisor Growth & Income Fund
are not qualified for sale.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of
Advisor Growth & Income Fund is to provide both growth of capital
and current income. Advisor Growth & Income Fund invests all of
its net investable assets in SR&F Growth & Income Portfolio
("Growth & Income Portfolio") which has the same investment
objective and investment policies substantially similar to those
of Advisor Growth & Income Fund. The Fund is designed for
investors seeking a diversified portfolio of securities that
offers the opportunity for long-term growth of capital while also
providing a steady stream of income. In seeking to meet this
objective, Growth & Income Portfolio invests primarily in well-
established companies whose common stocks are believed to have
both the potential to appreciate in value and to pay dividends to
shareholders.
For a more detailed discussion of the investment objectives and
policies, please see Investment Policies and Portfolio Investments
and Strategies. There is, of course, no assurance that Advisor
Growth & Income Fund and Growth & Income Portfolio will achieve
their common investment objective.
INVESTMENT RISKS. Advisor Growth & Income Fund is designed for
long-term investors who desire to participate in the stock market
with moderate investment risk while seeking to limit market
volatility. Growth & Income Portfolio may invest in foreign
securities, which may entail a greater degree of risk than
investing in securities of domestic issuers. Please see
Investment Restrictions and Risks and Investment Considerations
for further information.
PURCHASES AND REDEMPTIONS. Shares of Advisor Growth & Income Fund
may be purchased only through Intermediaries, including retirement
plan service providers. For information on purchasing and
redeeming Advisor Growth & Income Fund shares, please see How to
Purchase Shares, How to Redeem Shares, and Management--
Distributor.
MANAGEMENT AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") is investment adviser to Growth & Income Portfolio. In
addition, it provides administrative services to Advisor Growth &
Income Fund and Growth & Income Portfolio. For a description of
the Adviser and these service arrangements, see Management.
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases....................None
Sales Load Imposed on Reinvested Dividends.........None
Deferred Sales Load................................None
Redemption Fees....................................None
Exchange Fees......................................None
ANNUAL FUND OPERATING EXPENSES (as a percentage
of average net assets; after reimbursement)
Management and Administrative Fees (after
reimbursement)..................................0.60%
12b-1 Fees.........................................0.25%
Other Expenses ....................................0.55%
-----
Total Operating Expenses (after reimbursement).....1.40%
=====
EXAMPLE.
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return; and (2) redemption at the end of
each time period:
1 year 3 years
------- --------
$14 $44
The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in Advisor Growth & Income Fund. The
Fee Table reflects the combined expenses of both Advisor Growth &
Income Fund and Growth & Income Portfolio. Anticipated Total
Operating Expenses for Advisor Growth & Income Fund are annualized
projections based upon current administrative fees and management
fees. Other Expenses are estimated amounts for the current fiscal
year. The figures assume that the percentage amounts listed under
Annual Fund Operating Expenses remain the same during each of the
periods and that all income dividends and capital gain
distributions are reinvested in additional shares.
From time to time, the Adviser may voluntarily undertake to
reimburse Advisor Growth & Income Fund for a portion of its
operating expenses and its pro rata share of the fees and expenses
payable by Growth & Income Portfolio. The Adviser has undertaken
to reimburse Advisor Growth & Income Fund for its operating
expenses and its pro rata share of Growth & Income Portfolio's
operating expenses to the extent such expenses exceed 1.40% of
Advisor Growth & Income Fund's annual average net assets. This
commitment expires on January 31, 1998, subject to earlier review
and possible termination by the Adviser on 30 days' notice to
Advisor Growth & Income Fund. Absent such reimbursement, Advisor
Growth & Income Fund's share of Growth & Income Portfolio's
Management Fee and the Fund's Administrative Fee and Total
Operating Expenses would be 0.75% and 1.55%, respectively. Any
such reimbursement will lower Advisor Growth & Income Fund's
overall expense ratio and increase its overall return to
investors. (Also see Management--Fees and Expenses.)
Advisor Growth & Income Fund pays the Adviser an administrative
fee based on its average daily net assets and Growth & Income
Portfolio pays the Adviser a management fee based on its average
daily net assets. The trustees of Advisor Trust have considered
whether the annual operating expenses of Advisor Growth & Income
Fund, including its share of the expenses of Growth & Income
Portfolio, would be more or less than if Advisor Growth & Income
Fund invested directly in the securities held by Growth & Income
Portfolio, and concluded that Advisor Growth & Income Fund's
expenses would not be materially greater in such case.
The figures in the Example are not necessarily indicative of past
or future expenses, and actual expenses may be greater or less
than those shown. Although information such as that shown in the
Example and Fee Table is useful in reviewing Advisor Growth &
Income Fund's expenses and in providing a basis for comparison
with other mutual funds, it should not be used for comparison with
other investments using different assumptions or time periods.
Because Advisor Growth & Income Fund pays a 12b-1 fee, long-term
investors in Advisor Growth & Income Fund may pay more over long
periods of time in distribution expenses than the maximum front-
end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD"). For further information on
Advisor Growth & Income Fund's 12b-1 fee, see Management--
Distributor or call your financial representative.
THE FUND
STEIN ROE ADVISOR GROWTH & INCOME FUND ("Advisor Growth & Income
Fund") is a series of Stein Roe Advisor Trust ("Advisor Trust"),
which is an open-end diversified management investment company
authorized to issue shares of beneficial interest in separate
series.
Rather than invest in securities directly, Advisor Growth & Income
Fund seeks to achieve its investment objective by using the
"master fund/feeder fund structure." Under that structure, a
feeder fund and one or more feeder funds pool their assets in a
master portfolio that has the same investment objective and
substantially the same investment policies as the feeder funds.
(See Special Considerations Regarding Master Fund/Feeder Fund
Structure.) Advisor Growth & Income Fund invests all of its net
investable assets in SR&F Growth & Income Portfolio ("Growth &
Income Portfolio"), which is a series of SR&F Base Trust ("Base
Trust").
Stein Roe & Farnham Incorporated (the "Adviser") provides
portfolio management services to Growth & Income Portfolio and
administrative services to Advisor Growth & Income Fund and Growth
& Income Portfolio.
INVESTMENT POLICIES
The investment objective of Advisor Growth & Income Fund is to
provide both growth of capital and current income. Advisor Growth
& Income Fund invests all of its net investable assets in Growth &
Income Portfolio, which has the same investment objective and
investment policies substantially similar to Advisor Growth &
Income Fund. Advisor Growth & Income Fund is designed for
investors seeking a diversified portfolio of securities that
offers the opportunity for long-term growth of capital while also
providing a steady stream of income. In seeking to meet this
objective, Growth & Income Portfolio invests primarily in well-
established companies whose common stocks are believed to have
both the potential to appreciate in value and to pay dividends to
shareholders.
Although it may invest in a broad range of securities (including
common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, and warrants or rights to purchase
common stocks), normally Growth & Income Portfolio emphasizes
investments in equity securities of companies having market
capitalizations in excess of $1 billion. Securities of these
well-established companies are believed to be generally less
volatile than those of companies with smaller capitalizations
because companies with larger capitalizations tend to have
experienced management; broad, highly diversified product lines;
deep resources; and easy access to credit.
Further information on investment techniques that may be employed
by Growth & Income Portfolio and the risks associated with such
techniques may be found under Risks and Investment Considerations
and Portfolio Investments and Strategies in this prospectus and in
the Statement of Additional Information.
PERFORMANCE INFORMATION
The total return from an investment in Advisor Growth & Income
Fund is measured by the distributions received (assuming
reinvestment), plus or minus the change in the net asset value per
share for a given period. A total return percentage may be
calculated by dividing the value of a share at the end of the
period (including reinvestment of distributions) by the value of
the share at the beginning of the period and subtracting one. For
a given period, an average annual total return may be calculated
by finding the average annual compounded rate that would equate a
hypothetical $1,000 investment to the ending redeemable value.
Comparison of Advisor Growth & Income Fund's total return with
alternative investments should consider differences between the
Fund and the alternative investments, the periods and methods used
in calculation of the return being compared, and the impact of
taxes on alternative investments. Of course, past performance is
not necessarily indicative of future results. Share prices may
vary, and your shares when redeemed may be worth more or less than
your original purchase price.
As of the date of this Prospectus, Advisor Growth & Income Fund
had no past performance. However, Stein Roe Growth & Income Fund,
a different Stein Roe Fund which is a series of Stein Roe
Investment Trust and has a similar name, the same investment
objective and substantially the same investment policies as
Advisor Growth & Income Fund, also invests all of its net
investable assets in Growth & Income Portfolio. The average
annual total return for the periods ended September 30, 1996 for a
1-year, 5-year and since-inception (March 23, 1987) investment in
Stein Roe Growth & Income Fund were 22.67%, 15.76% and 11.80%,
respectively. Stein Roe Growth & Income Fund has a different fee
structure than Advisor Growth & Income Fund, and does not pay 12b-
1 fees. Had these fees been reflected, the total returns shown in
the table would have been lower. The information shown above
reflects the performance of Stein Roe Growth & Income Fund, and
should not be interpreted as indicative of Advisor Growth & Income
Fund's future performance.
RISKS AND INVESTMENT CONSIDERATIONS
Advisor Growth & Income Fund is designed for long-term investors
who desire to participate in the stock market with moderate
investment risk while seeking to limit market volatility. Growth
& Income Portfolio usually allocates its investments among a
number of different industries rather than concentrating in a
particular industry or group of industries, but this does not
eliminate all risk. It will not, however, invest more than 25% of
the total value of its assets (at the time of investment) in the
securities of companies in any one industry. There can be no
guarantee that Advisor Growth & Income Fund or Growth & Income
Portfolio will achieve its objective.
Growth & Income Portfolio may invest up to 35% of its total assets
in debt securities. Debt securities rated in the fourth highest
grade may have some speculative characteristics, and changes in
economic conditions or other circumstances may lead to a weakened
capacity of the issuers of such securities to make principal and
interest payments. Securities rated below investment grade may
possess speculative characteristics, and changes in economic
conditions are more likely to affect the issuer's capacity to pay
interest or repay principal.
Growth & Income Portfolio may invest up to 25% of its total assets
in foreign securities. For purposes of this limit, foreign
securities exclude American Depositary Receipts (ADRs), foreign
debt securities denominated in U.S. dollars, and securities
guaranteed by a U.S. person. Investment in foreign securities may
represent a greater degree of risk (including risk related to
exchange rate fluctuations, tax provisions, exchange and currency
controls, and expropriation of assets) than investment in
securities of domestic issuers. Other risks of foreign investing
include less complete financial information on issuers, different
accounting, auditing and financial reporting standards, different
settlement practices, less market liquidity, more market
volatility, less developed and regulated markets, and greater
political instability. In addition, various restrictions by
foreign governments on investments by non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.
Further information on investment techniques that may be employed
by Growth & Income Portfolio may be found under Portfolio
Investments and Strategies.
INVESTMENT RESTRICTIONS
Neither Advisor Growth & Income Fund nor Growth & Income Portfolio
may invest more than 5% of its assets in the securities of any one
issuer. This restriction applies only to 75% of its investment
portfolio, and does not apply to securities of the U.S. Government
or repurchase agreements /1/ for such securities. This
restriction also does not prevent Advisor Growth & Income Fund
from investing all of its assets in shares of another investment
company having the identical investment objective under a
master/feeder structure.
- ---------------
/1/ A repurchase agreement involves a sale of securities to Growth
& Income Portfolio in which the seller agrees to repurchase the
securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, Growth & Income
Portfolio could experience both losses and delays in liquidating
its collateral.
- ---------------
Neither Advisor Growth & Income Fund nor Growth & Income Portfolio
will acquire more than 10% of the outstanding voting securities of
any one issuer. Advisor Growth & Income Fund may, however, invest
all of its assets in shares of another investment company having
the identical investment objective under a master/feeder
structure.
Neither Advisor Growth & Income Fund nor Growth & Income Portfolio
may make loans except that it may (1) purchase money market
instruments and enter into repurchase agreements; (2) acquire
publicly-distributed or privately-placed debt securities; (3) lend
its portfolio securities under certain conditions; and (4)
participate in an interfund lending program with other Stein Roe
Funds and Portfolios. Advisor Growth & Income Fund and Growth &
Income Portfolio may not borrow money, except for non-leveraging,
temporary, or emergency purposes or in connection with
participation in the interfund lending program. Neither the
aggregate borrowings (including reverse repurchase agreements) nor
the aggregate loans at any one time may exceed 33 1/3% of the
value of total assets. Additional securities may not be purchased
when borrowings less proceeds receivable from sales of portfolio
securities exceed 5% of total assets.
Advisor Growth & Income Fund and Growth & Income Portfolio may
invest in repurchase agreements, provided that neither will invest
more than 15% of its net assets in illiquid securities, including
repurchase agreements maturing in more than seven days.
The policies summarized in the first three paragraphs under this
section and the policy with respect to concentration of
investments in any one industry described under Risks and
Investment Considerations are fundamental policies of Advisor
Growth & Income Fund and Growth & Income Portfolio and, as such,
can be changed only with the approval of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940. The common investment objective of Advisor
Growth & Income Fund and Growth & Income Portfolio is non-
fundamental and, as such, may be changed by the Board of Trustees
without shareholder approval. All of the investment restrictions
are set forth in the Statement of Additional Information.
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES.
Investment in debt securities is limited to those that are rated
within the four highest grades (generally referred to as
investment grade). If the rating of a security held by Growth &
Income Portfolio is lost or reduced below investment grade, the
Portfolio is not required to dispose of the security--the Adviser
will, however, consider that fact in determining whether Growth &
Income Portfolio should continue to hold the security. When the
Adviser deems a temporary defensive position advisable, Growth &
Income Portfolio may invest, without limitation, in high-quality
fixed income securities, or hold assets in cash or cash
equivalents.
FOREIGN SECURITIES.
Growth & Income Portfolio may invest in sponsored or unsponsored
ADRs. In addition to, or in lieu of, such direct investment,
Growth & Income Portfolio may construct a synthetic foreign debt
position by (a) purchasing a debt instrument denominated in one
currency, generally U.S. dollars; and (b) concurrently entering
into a forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and
at a specified rate of exchange. Because of the availability of a
variety of highly liquid U.S. dollar debt instruments, a synthetic
foreign debt position utilizing such U.S. dollar instruments may
offer greater liquidity than direct investment in foreign currency
debt instruments.
In connection with the purchase of foreign securities, Growth &
Income Portfolio may enter into foreign currency forward and
futures contracts to hedge the currency risk in settlement of a
particular security transaction or relative to the entire
portfolio. A forward contract to purchase an amount of foreign
currency sufficient to pay the purchase price of securities at
settlement date involves the risk that the value of the foreign
currency may decline relative to the value of the dollar prior to
the settlement date. This risk is in addition to the risk that
the value of the foreign security purchased may decline. Growth &
Income Portfolio also may enter into foreign currency contracts as
a hedging technique to limit or reduce exposure of the entire
portfolio to currency fluctuations. In addition, Growth & Income
Portfolio may use options and futures contracts, as described
below, to limit or reduce exposure to currency fluctuations.
CONVERTIBLE SECURITIES.
By investing in convertible securities, Growth & Income Portfolio
obtains the right to benefit from the capital appreciation
potential in the underlying stock upon exercise of the conversion
right, while earning higher current income than would be available
if the stock were purchased directly. In determining whether to
purchase a convertible, the Adviser will consider substantially
the same criteria that would be considered in purchasing the
underlying stock. Although convertible securities are frequently
rated investment grade, Growth & Income Portfolio also may
purchase unrated securities or securities rated below investment
grade if the securities meet the Adviser's other investment
criteria. Convertible securities rated below investment grade
tend to be more sensitive to interest rate and economic changes,
may be obligations of issuers who are less creditworthy than
issuers of higher quality convertible securities, and may be more
thinly traded due to the fact that such securities are less well
known to investors than either common stock or conventional debt
securities. As a result, the Adviser's own investment research
and analysis tends to be more important than other factors in the
purchase of convertible securities.
LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES.
Growth & Income Portfolio may make loans of its portfolio
securities to broker-dealers and banks subject to certain
restrictions described in the Statement of Additional Information.
Growth & Income Portfolio may participate in an interfund lending
program, subject to certain restrictions described in the
Statement of Additional Information. Growth & Income Portfolio
may invest in securities purchased on a when-issued or delayed-
delivery basis. Although the payment terms of these securities
are established at the time Growth & Income Portfolio enters into
the commitment, the securities may be delivered and paid for a
month or more after the date of purchase, when their value may
have changed. Growth & Income Portfolio will make such
commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.
SHORT SALES AGAINST THE BOX.
Growth & Income Portfolio may sell short securities it owns or has
the right to acquire without further consideration, using a
technique called selling short "against the box." Short sales
against the box may protect Growth & Income Portfolio against the
risk of losses in the value of its portfolio securities because
any unrealized losses with respect to such securities should be
wholly or partly offset by a corresponding gain in the short
position. However, any potential gains in such securities should
be wholly or partially offset by a corresponding loss in the short
position. Short sales against the box may be used to lock in a
profit on a security when, for tax reasons or otherwise, the
Adviser does not want to sell the security. Growth & Income
Portfolio does not expect to commit more than 5% of its net assets
to short sales against the box. For a more complete explanation,
please refer to the Statement of Additional Information.
DERIVATIVES.
Consistent with its objective, Growth & Income Portfolio may
invest in a broad array of financial instruments and securities,
including conventional exchange-traded and non-exchange-traded
options, futures contracts, futures options, securities
collateralized by underlying pools of mortgages or other
receivables, floating rate instruments, and other instruments that
securitize assets of various types ("Derivatives"). In each case,
the value of the instrument or security is "derived" from the
performance of an underlying asset or a "benchmark" such as a
security index, an interest rate, or a currency. Growth & Income
Portfolio does not expect to invest more than 5% of its net assets
in any type of Derivative except for options, futures contracts,
and futures options.
In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, Growth & Income
Portfolio may: (1) purchase and write both call options and put
options on securities, indexes and foreign currencies; (2) enter
into interest rate, index and foreign currency futures contracts;
(3) write options on such futures contracts; and (4) purchase
other types of forward or investment contracts linked to
individual securities, indexes or other benchmarks. Growth &
Income Portfolio may write a call or put option only if the option
is covered. As the writer of a covered call option, Growth &
Income Portfolio foregoes, during the option's life, the
opportunity to profit from increases in market value of the
security covering the call option above the sum of the premium and
the exercise price of the call. There can be no assurance that a
liquid market will exist when Growth & Income Portfolio seeks to
close out a position. In addition, because futures positions may
require low margin deposits, the use of futures contracts involves
a high degree of leverage and may result in losses in excess of
the amount of the margin deposit.
Derivatives are most often used to manage investment risk or to
create an investment position indirectly because they are more
efficient or less costly than direct investment. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's ability
to correctly predict changes in the levels and directions of
movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
PORTFOLIO TURNOVER.
Although Growth & Income Portfolio does not purchase securities
with a view to rapid turnover, there are no limitations on the
length of time portfolio securities must be held. Accordingly,
the portfolio turnover rate may vary significantly from year to
year, but is not expected to exceed 100% under normal market
conditions. A high rate of portfolio turnover may result in
increased transaction expenses and the realization of capital
gains and losses. (See Distributions and Income Taxes.)
NET ASSET VALUE
The purchase and redemption price of Advisor Growth & Income
Fund's shares is its net asset value per share. Advisor Growth &
Income Fund determines the net asset value of its shares as of the
close of trading on the New York Stock Exchange ("NYSE")
(currently 3:00 p.m., central time) by dividing the difference
between the value of its assets and liabilities by the number of
shares outstanding. Growth & Income Portfolio allocates net asset
value, income, and expenses to Advisor Growth & Income Fund and
any other of its feeder funds in proportion to their respective
interests in Growth & Income Portfolio.
Net asset value will not be determined on days when the NYSE is
closed unless, in the judgment of the Board of Trustees, the net
asset value of Advisor Growth & Income Fund should be determined
on any such day, in which case the determination will be made at
3:00 p.m., central time.
Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation 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.
Long-term straight-debt obligations and securities convertible
into stocks are valued at a fair value using a procedure
determined in good faith by the Board of Trustees. Pricing
services approved by the Board provide valuations (some of which
may be "readily available market quotations"). These valuations
are reviewed by the Adviser. If the Adviser believes that a
valuation received from the service does not represent a fair
value, it values the obligation using a method that the Board
believes represents fair value. The Board may approve the use of
other pricing services and any pricing service used may employ
electronic data processing techniques, including a so-called
"matrix" system, to determine valuations. Other assets and
securities are valued by a method that the Board believes
represents fair value.
HOW TO PURCHASE SHARES
You may purchase Advisor Growth & Income Fund shares only through
broker-dealers, banks, or other intermediaries, including
retirement plan service providers ("Intermediaries"). The Adviser
and Advisor Growth & Income Fund do not recommend, endorse, or
receive payments from any Intermediary.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of Advisor
Growth & Income Fund's shares is made at Advisor Growth & Income
Fund's net asset value (see Net Asset Value) next determined after
receipt by the Fund or through an authorized agent of an order in
good form, including receipt of payment.
CONDITIONS OF PURCHASE. Each purchase order for Advisor Growth &
Income Fund must be accepted by an authorized officer of Advisor
Trust or its authorized agent and is not binding until accepted
and entered on the books of Advisor Growth & Income Fund. Once
your purchase order has been accepted, you may not cancel or
revoke it; you may, however, redeem the shares. Advisor Trust
reserves the right not to accept any purchase order that it
determines not to be in the best interests of Advisor Trust or of
Advisor Growth & Income Fund's shareholders.
PURCHASES THROUGH INTERMEDIARIES. You must purchase shares
through Intermediaries. These Intermediaries may charge for their
services or place limitations on the extent to which you may use
the services offered by Advisor Trust. In addition, each
Intermediary will establish its own procedures for the purchase of
shares of Advisor Growth & Income Fund, including minimum initial
and additional investments, and the acceptable methods of payment
for shares. Your Intermediary may be closed on days when the NYSE
is open. As a result, prices of Fund shares may be significantly
affected on days when you have no access to your Intermediary to
buy shares. If you wish to purchase shares, please contact your
Intermediary for instructions.
Retirement Plans. If you purchase shares through a retirement
plan, you should be aware that retirement plan administrators may
aggregate purchase and redemption orders for participants in the
plan. Therefore, there may be a delay between the time you place
your order with the plan administrator and the time the order is
forwarded for execution.
HOW TO REDEEM SHARES
You may redeem shares only through Intermediaries. Each
Intermediary will establish its own procedures for the sale of
shares of Advisor Growth & Income Fund. Your Intermediary may be
closed on days when the NYSE is open. As a result, prices for
Fund shares may be significantly affected on days when you have no
access to your Intermediary to sell shares. If you wish to redeem
shares through an Intermediary, please contact the Intermediary
for instructions.
EXCHANGE PRIVILEGE. Through an account with an Intermediary, you
may redeem all or any portion of your Advisor Growth & Income Fund
shares and use the proceeds to purchase shares of any other Fund
that is a series of Advisor Trust offered for sale in the state in
which the Intermediary is located. Each Intermediary will
establish its own exchange policies and procedures. In particular,
individual participants of qualified retirement plans may exchange
shares through the plan sponsor or administrator. Those
participants may exchange shares only for shares of other Advisor
Trust Funds that are included in the plan. An exchange
transaction is a sale and purchase of shares for federal income
tax purposes and may result in capital gain or loss. Before
exchanging into another Advisor Trust Fund, you should obtain the
prospectus for the Advisor Trust Fund in which you wish to invest
and read it carefully. The registration of the account to which
you are making an exchange must be exactly the same as that of the
account from which the exchange is made. Advisor Growth & Income
Fund reserves the right to suspend, limit, modify, or terminate
the Exchange Privilege or its use in any manner by any person or
class; Intermediaries would be notified of such a change.
GENERAL REDEMPTION POLICIES. Redemption instructions may not be
cancelled or revoked once they have been received and accepted by
Advisor Trust. Advisor Trust cannot accept a redemption request
that specifies a particular date or price for redemption or any
special conditions.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received by the Intermediary. (See Net Asset
Value.) Because the redemption price you receive depends upon
Advisor Growth & Income Fund's net asset value per share at the
time of redemption, it may be more or less than the price you
originally paid for the shares and may result in a realized
capital gain or loss.
Advisor Trust will pay redemption proceeds as soon as practicable,
and in no event later than seven days after proper instructions
are received by Advisor Growth & Income Fund or its authorized
agent.
DISTRIBUTIONS AND INCOME TAXES
DISTRIBUTIONS. Income dividends are declared and paid each
calendar quarter. Advisor Growth & Income Fund intends to
distribute by the end of each calendar year at least 98% of any
net capital gains realized from the sale of securities during the
twelve-month period ended October 31 in that year. Advisor Growth
& Income Fund intends to distribute any undistributed net
investment income and net realized capital gains in the following
year.
All income dividends and capital gain distributions on shares of
Advisor Growth & Income Fund will be reinvested in additional
shares unless your Intermediary elects to have distributions paid
by check. Reinvestment normally occurs on the payable date.
INCOME TAXES. For federal income tax purposes, Advisor Growth &
Income Fund is treated as a separate taxable entity distinct from
the other series of Advisor Trust. Growth & Income Portfolio
intends to qualify for the special tax treatment afforded
regulated investment companies under Subchapter M of the Internal
Revenue Code, so that it will be relieved of federal income tax on
that part of its net investment income and net capital gain that
is distributed to shareholders.
Advisor Growth & Income Fund will distribute substantially all of
its ordinary income and net capital gains on a current basis.
Generally distributions are taxable as ordinary income, except
that any distributions of net long-term capital gains will be
taxed as such. However, distributions by Advisor Growth & Income
Fund to plans that qualify for tax-exempt treatment under federal
income tax laws will not be taxable. Special tax rules apply to
investments through such plans.
This section is not intended to be a full discussion of income tax
laws and their effect on shareholders. You may wish to consult
your own tax advisor.
MANAGEMENT
TRUSTEES AND INVESTMENT ADVISER. The Board of Trustees of Advisor
Trust and the Board of Trustees of Base Trust have overall
management responsibility for Advisor Growth & Income Fund and
Growth & Income Portfolio, respectively. See Management in the
Statement of Additional Information for the names of and other
information about the trustees and officers. Since Advisor Trust
and Base Trust have the same trustees, the trustees have adopted
conflict of interest procedures to monitor and address potential
conflicts between the interests of Advisor Growth & Income Fund
and Growth & Income Portfolio and other feeder funds investing in
Growth & Income Portfolio that share a common Board of Trustees
with Advisor Trust and Base Trust.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
investment portfolio of Growth & Income Portfolio and the business
affairs of Advisor Growth & Income Fund, Growth & Income
Portfolio, Advisor Trust, and Base Trust, subject to the direction
of the respective Board. The Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940. The
Adviser was organized in 1986 to succeed to the business of Stein
Roe & Farnham, a partnership that had advised and managed mutual
funds since 1949. The Adviser is a wholly owned subsidiary of
Liberty Financial Companies, Inc. ("Liberty Financial"), which in
turn is a majority owned indirect subsidiary of Liberty Mutual
Insurance Company.
PORTFOLIO MANAGERS. Daniel K. Cantor has been portfolio manager
of Growth & Income Portfolio since its inception in 1997 and had
managed its predecessor since 1995. Mr. Cantor is a senior vice
president of the Adviser, which he joined in 1985. A chartered
financial analyst, he received a B.A. degree from the University
of Rochester (1981) and an M.B.A. from the Wharton School of the
University of Pennsylvania (1985). As of December 31, 1996, Mr.
Cantor was responsible for managing $241 million in mutual fund
net assets. Jeffrey C. Kinzel is associate portfolio manager.
Mr. Kinzel received a B.A. from Northwestern University (1979), a
J.D. from the University of Michigan Law School (1983), and an
M.B.A. from the Wharton School of the University of Pennsylvania
(1991). Mr. Kinzel is a vice president and intermediate research
analyst with the Adviser. Before joining the Adviser in 1991 as
an equity research analyst, Mr. Kinzel was employed by the law
firm of Butler and Binion; the law firm of Miller, Canfield,
Paddock and Stone; and 1838 Investment Advisers.
FEES AND EXPENSES. The Adviser is entitled to receive a monthly
administrative fee from Advisor Growth & Income Fund, computed and
accrued daily, at an annual rate of 0.15% of the first $500
million of average net assets, 0.125% of the next $500 million,
and 0.10% thereafter; and a monthly management fee from Growth &
Income Portfolio, computed and accrued daily, at an annual rate of
0.60% of the first $500 million of average net assets, 0.55% of
the next $500 million, and 0.50% thereafter. However, as noted
above under Fee Table, the Adviser may voluntarily undertake to
reimburse Advisor Growth & Income Fund for a portion of its
operating expenses and its pro rata share of Growth & Income
Portfolio's operating expenses.
The Adviser provides office space and executive and other
personnel to Advisor Trust and Base Trust. All expenses of
Advisor Growth & Income Fund (other than those paid by the
Adviser), including, but not limited to, printing and postage
charges, securities registration fees, custodian and transfer
agency fees, legal and auditing fees, compensation of trustees not
affiliated with the Adviser, and expenses incidental to its
organization, are paid out of the assets of Advisor Growth &
Income Fund.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to Advisor Growth &
Income Fund and Growth & Income Portfolio including computation of
net asset value and calculation of its net income and capital
gains and losses on disposition of assets.
In addition, the Adviser is free to make additional payments out
of its own assets to promote the sale of shares of Advisor Growth
& Income Fund.
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
contracts for Growth & Income Portfolio. In doing so, the Adviser
seeks to obtain the best combination of price and execution, which
involves a number of judgmental factors.
TRANSFER AGENT AND SHAREHOLDER SERVICES. SteinRoe Services Inc.
("SSI"), One South Wacker Drive, Chicago, Illinois 60606, a wholly
owned subsidiary of Liberty Financial, is the agent of Advisor
Trust for the transfer of shares, disbursement of dividends, and
maintenance of shareholder accounting records.
Some Intermediaries that maintain nominee accounts with Advisor
Growth & Income Fund for their clients who are Fund shareholders
may be paid a fee from SSI of up to 0.25% of the average net
assets held in such accounts for shareholder servicing and
accounting services they provide with respect to the underlying
Fund shares.
DISTRIBUTOR. The shares of Advisor Growth & Income Fund are
offered for sale through Liberty Securities Corporation
("Distributor") without any sales commissions. The Distributor is
a wholly owned indirect subsidiary of Liberty Financial. The
business address of the Distributor is 600 Atlantic Avenue,
Boston, Massachusetts 02210; however, all Fund correspondence
(including purchase and redemption orders) should be mailed to
SteinRoe Services Inc. at P.O. Box 8900, Boston, Massachusetts
02205.
The trustees of Advisor Trust have adopted a plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("Plan"). The Plan
provides that, as compensation for the promotion and distribution
of shares of Advisor Growth & Income Fund including its expenses
related to the sale and promotion of Fund shares, the Distributor
receives from Advisor Growth & Income Fund a fee at an annual rate
of 0.25% of its average net assets. The Distributor generally
pays this amount to institutions that distribute Advisor Growth &
Income Fund shares and provide services to Advisor Growth & Income
Fund and its shareholders. Those institutions may use the
payments for, among other purposes, compensating employees engaged
in sales and/or shareholder servicing. The amount of fees paid by
Advisor Growth & Income Fund during any year may be more or less
than the cost of distribution or other services provided to
Advisor Growth & Income Fund. NASD rules limit the amount of
annual distribution fees that may be paid by a mutual fund and
impose a ceiling on the cumulative distribution fees paid.
Advisor Trust's Plan complies with those rules.
CUSTODIAN. State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, Massachusetts 02101, is the custodian for
Advisor Growth & Income Fund and Growth & Income Portfolio.
Foreign securities are maintained in the custody of foreign banks
and trust companies that are members of the Bank's Global Custody
Network or foreign depositories used by such members. (See
Custodian in the Statement of Additional Information.)
ORGANIZATION AND DESCRIPTION OF SHARES
Advisor Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
July 31, 1996, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either Advisor
Trust's shareholders or its trustees. Advisor Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, seven series are authorized and outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Advisor Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of Advisor Trust.
The Declaration of Trust provides that persons extending credit
to, contracting with, or having any claim against, Advisor Trust
or any particular series shall look only to the assets of Advisor
Trust or of the respective series for payment under such credit,
contract or claim, and that the shareholders, trustees and
officers of Advisor Trust shall have no personal liability
therefor. The Declaration of Trust requires that notice of such
disclaimer of liability be given in each contract, instrument or
undertaking executed or made on behalf of Advisor Trust. The
Declaration of Trust provides for indemnification of any
shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Advisor Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Advisor
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
SPECIAL CONSIDERATIONS REGARDING THE
MASTER FUND/FEEDER FUND STRUCTURE
Advisor Growth & Income Fund, an open-end management investment
company, seeks to achieve its objective by investing all of its
assets in shares of another mutual fund having an investment
objective identical to that of Advisor Growth & Income Fund. The
initial shareholder of Advisor Growth & Income Fund approved this
policy of permitting Advisor Growth & Income Fund to act as a
feeder fund by investing in Growth & Income Portfolio. Please
refer to the Investment Policies, Portfolio Investments and
Strategies, and Investment Restrictions for a description of the
investment objectives, policies, and restrictions of Advisor
Growth & Income Fund and Growth & Income Portfolio. The
management and expenses of both Advisor Growth & Income Fund and
Growth & Income Portfolio are described under the Fee Table and
Management. Advisor Growth & Income Fund bears its proportionate
share of Portfolio expenses.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
SR&F Growth & Income Portfolio is a separate series of SR&F Base
Trust ("Base Trust"), a Massachusetts common law trust organized
under an Agreement and Declaration of Trust ("Declaration of
Trust") dated August 23, 1993. The Declaration of Trust of Base
Trust provides that Advisor Growth & Income Fund and other
investors in Growth & Income Portfolio will each be liable for all
obligations of Growth & Income Portfolio that are not satisfied by
the Portfolio. However, the risk of Advisor Growth & Income Fund
incurring financial loss on account of such liability is limited
to circumstances in which both inadequate insurance existed and
Growth & Income Portfolio itself were unable to meet its
obligations. Accordingly, the trustees of Advisor Trust believe
that neither Advisor Growth & Income Fund nor its shareholders
will be adversely affected by reason of Advisor Growth & Income
Fund's investing in Growth & Income Portfolio.
The Declaration of Trust of Base Trust provides that Growth &
Income Portfolio will terminate 120 days after the withdrawal of
Advisor Growth & Income Fund or any other investor in Growth &
Income Portfolio, unless the remaining investors vote to agree to
continue the business of Growth & Income Portfolio. The trustees
of Advisor Trust may vote Advisor Growth & Income Fund's interests
in Growth & Income Portfolio for such continuation without
approval of Advisor Growth & Income Fund's shareholders.
The common investment objective of Advisor Growth & Income Fund
and Growth & Income Portfolio is non-fundamental and may be
changed without shareholder approval. The fundamental policies of
Advisor Growth & Income Fund and the corresponding fundamental
policies of Growth & Income Portfolio can be changed only with
shareholder approval.
If Advisor Growth & Income Fund, as a Portfolio investor, is
requested to vote on a proposed change in fundamental policy of
Growth & Income Portfolio or any other matter pertaining to Growth
& Income Portfolio (other than continuation of the business of
Growth & Income Portfolio after withdrawal of another investor),
Advisor Growth & Income Fund will solicit proxies from its
shareholders and vote its interest in Growth & Income Portfolio
for and against such matters proportionately to the instructions
to vote for and against such matters received from Advisor Growth
& Income Fund shareholders. Advisor Growth & Income Fund will
vote shares for which it receives no voting instructions in the
same proportion as the shares for which it receives voting
instructions. If there are other investors in Growth & Income
Portfolio, there can be no assurance that any matter receiving a
majority of votes cast by Fund shareholders will receive a
majority of votes cast by all Growth & Income Portfolio investors.
If other investors hold a majority interest in Growth & Income
Portfolio, they could have voting control over Growth & Income
Portfolio.
In the event that Growth & Income Portfolio's fundamental policies
were changed so as to be inconsistent with those of Advisor Growth
& Income Fund, the Board of Trustees of Advisor Trust would
consider what action might be taken, including changes to Advisor
Growth & Income Fund's fundamental policies, withdrawal of Advisor
Growth & Income Fund's assets from Growth & Income Portfolio and
investment of such assets in another pooled investment entity, or
the retention of another investment adviser. Any of these actions
would require the approval of Advisor Growth & Income Fund's
shareholders. Advisor Growth & Income Fund's inability to find a
substitute master fund or comparable investment management could
have a significant impact upon its shareholders' investments. Any
withdrawal of Advisor Growth & Income Fund's assets could result
in a distribution in kind of portfolio securities (as opposed to a
cash distribution) to Advisor Growth & Income Fund. Should such a
distribution occur, Advisor Growth & Income Fund would incur
brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for Advisor
Growth & Income Fund and could affect the liquidity of Advisor
Growth & Income Fund.
Each investor in Growth & Income Portfolio, including Advisor
Growth & Income Fund, may add to or reduce its investment in
Growth & Income Portfolio on each day the NYSE is open for
business. The investor's percentage of the aggregate interests in
Growth & Income Portfolio will be computed as the percentage equal
to the fraction (i) the numerator of which is the beginning of the
day value of such investor's investment in Growth & Income
Portfolio on such day plus or minus, as the case may be, the
amount of any additions to or withdrawals from the investor's
investment in Growth & Income Portfolio effected on such day; and
(ii) the denominator of which is the aggregate beginning of the
day net asset value of Growth & Income Portfolio on such day plus
or minus, as the case may be, the amount of the net additions to
or withdrawals from the aggregate investments in Growth & Income
Portfolio by all investors in Growth & Income Portfolio. The
percentage so determined will then be applied to determine the
value of the investor's interest in Growth & Income Portfolio as
of the close of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in Growth & Income Portfolio,
but members of the general public may not invest directly in
Growth & Income Portfolio. Other investors in Growth & Income
Portfolio are not required to sell their shares at the same public
offering price as Advisor Growth & Income Fund, might incur
different administrative fees and expenses than Advisor Growth &
Income Fund, and their shares might be sold with a sales
commission. Therefore, Advisor Growth & Income Fund shareholders
might have different investment returns than shareholders in
another investment company that invests exclusively in Growth &
Income Portfolio. Investment by such other investors in Growth &
Income Portfolio would provide funds for the purchase of
additional portfolio securities and would tend to reduce the
Portfolio's operating expenses as a percentage of its net assets.
Conversely, large-scale redemptions by any such other investors in
Growth & Income Portfolio could result in untimely liquidations of
Growth & Income Portfolio's security holdings, loss of investment
flexibility, and increases in the operating expenses of Growth &
Income Portfolio as a percentage of its net assets. As a result,
Growth & Income Portfolio's security holdings may become less
diverse, resulting in increased risk.
Growth & Income Portfolio commenced operations in February 1997
when Stein Roe Growth & Income Fund, a mutual fund that had
invested directly in securities since 1987, converted into a
feeder fund by investing all of its assets in the Portfolio.
Currently Stein Roe Growth & Income Fund, which is a series of
Stein Roe Investment Trust, is the only other investment company
investing in Growth & Income Portfolio. Information regarding any
investment company that may invest in Growth & Income Portfolio in
the future may be obtained by writing to SR&F Base Trust, Suite
3200, One South Wacker Drive, Chicago, Illinois 60606 or by
calling 800-338-2550. The Adviser may provide administrative or
other services to one or more of such investors.
FOR MORE INFORMATION
For more information about Advisor Growth & Income Fund, call
Retirement Services at 800-322-1130 or Advisor/Broker Services at
800-322-0593.
______________________
<PAGE> 1
STEIN ROE ADVISOR INTERNATIONAL FUND
The investment objective of Advisor International Fund is to
provide long-term growth of capital by investing in a diversified
portfolio of foreign securities. Advisor International Fund
invests all of its net investable assets in SR&F
International Portfolio, a portfolio of SR&F Base Trust that has
the same investment objective and substantially the same
investment policies as Advisor International Fund. (SEE SPECIAL
CONSIDERATIONS REGARDING MASTER FUND/FEEDER FUND STRUCTURE.)
Shares of Advisor International Fund may be purchased only through
Intermediaries, including retirement plan service providers.
Advisor International Fund has no sales or redemption charges.
Advisor International Fund is a series of Stein Roe Advisor Trust
and International Portfolio is a series of SR&F Base Trust. Each
Trust is a diversified open-end management investment company.
This prospectus contains information you should know before
investing in Advisor International Fund. Please read it carefully
and retain it for future reference.
A Statement of Additional Information dated February 14, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information may be obtained without charge
by writing to Stein Roe Mutual Funds, Suite 3200, One South Wacker
Drive, Chicago, Illinois 60606, or by calling the Adviser. For
additional information, call Retirement Services at 800-322-1130
or Advisor/Broker Services at 800-322-0593.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 14, 1997.
<PAGE> 2
TABLE OF CONTENTS
Page
Summary..................................2
Fee Table ...............................3
The Fund.................................4
Investment Policies......................5
Performance Information..................6
Risks and Investment Considerations .....6
Investment Restrictions .................8
Portfolio Investments and Strategies.....9
Net Asset Value ........................13
How to Purchase Shares..................13
How to Redeem Shares ...................14
Distributions and Income Taxes..........15
Management .............................16
Organization and Description of Shares..18
Special Considerations Regarding the
Master Fund/Feeder Fund Structure.....19
For More Information ...................21
SUMMARY
Stein Roe Advisor International Fund ("Advisor International
Fund") is a series of Stein Roe Advisor Trust, an open-end
diversified management investment company organized as a
Massachusetts business trust. (See The Fund and Organization and
Description of Shares.) This prospectus is not a solicitation in
any jurisdiction in which shares of Advisor International Fund are
not qualified for sale.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of
Advisor International Fund is to provide long-term growth of
capital by investing in a diversified portfolio of foreign
securities. Advisor International Fund invests all of its net
investable assets in SR&F International Portfolio ("International
Portfolio") which has the same investment objective and investment
policies substantially similar to those of Advisor International
Fund. International Portfolio invests primarily in equity
securities. Under normal market conditions, it will invest at
least 65% of its total assets (taken at market value) in foreign
securities of at least three countries outside the United States.
International Portfolio diversifies its investments among several
countries and does not concentrate investments in any particular
industry.
For a more detailed discussion of the investment objectives and
policies, please see Investment Policies and Portfolio Investments
and Strategies. There is, of course, no assurance that Advisor
International Fund and International Portfolio will achieve their
common investment objective.
INVESTMENT RISKS. Advisor International Fund is intended for
long-term investors who can accept the risks entailed in investing
in foreign securities.
Since International Portfolio invests primarily in foreign
securities, investors should understand and consider carefully the
risks involved in foreign investing. Investing in foreign
securities involves certain considerations involving both risks
and opportunities not typically associated with investing in U.S.
securities. Such risks include fluctuations in exchange rates on
foreign currencies, less public information, less government
supervision, less liquidity, and greater price volatility.
Please see Investment Policies, Portfolio Investments and
Strategies, and Risks and Investment Considerations for further
information.
PURCHASES AND REDEMPTIONS. Shares of Advisor International Fund
may be purchased only through Intermediaries, including retirement
plan service providers. For information on purchasing and
redeeming Advisor International Fund shares, please see How to
Purchase Shares, How to Redeem Shares, and Management--
Distributor.
MANAGEMENT AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") is investment adviser to International Portfolio. In
addition, it provides administrative services to Advisor
International Fund and International Portfolio. For a description
of the Adviser and these service arrangements, see Management.
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.......................None
Sales Load Imposed on Reinvested Dividends............None
Deferred Sales Load...................................None
Redemption Fees.......................................None
Exchange Fees.........................................None
ANNUAL FUND OPERATING EXPENSES (as a percentage of
average net assets; after reimbursement)
Management and Administrative Fees (after
reimbursement)......................................0.95%
12b-1 Fees............................................0.25%
Other Expenses .......................................0.55%
------
Total Operating Expenses (after reimbursement)........1.75%
======
EXAMPLE.
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return; and (2) redemption at the end of
each time period:
1 year 3 years
------ -------
$18 $55
The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in Advisor International Fund. The Fee
Table reflects the combined expenses of both Advisor International
Fund and International Portfolio. Anticipated Total Operating
Expenses for Advisor International Fund are annualized projections
based upon current administrative fees and management fees. Other
Expenses are estimated amounts for the current fiscal year. The
figures assume that the percentage amounts listed under Annual
Fund Operating Expenses remain the same during each of the periods
and that all income dividends and capital gain distributions are
reinvested in additional shares.
From time to time, the Adviser may voluntarily undertake to
reimburse Advisor International Fund for a portion of its
operating expenses and its pro rata share of the fees and expenses
payable by International Portfolio. The Adviser has undertaken to
reimburse Advisor International Fund for its operating expenses
and its pro rata share of International Portfolio's operating
expenses to the extent such expenses exceed 1.75% of Advisor
International Fund's annual average net assets. This commitment
expires on January 31, 1998, subject to earlier review and
possible termination by the Adviser on 30 days' notice to Advisor
International Fund. Absent such reimbursement, Advisor
International Fund's share of International Portfolio's Management
Fee and the Fund's Administrative Fee, and Total Operating
Expenses would be 1.00% and 1.80%, respectively. Any such
reimbursement will lower Advisor International Fund's overall
expense ratio and increase its overall return to investors. (Also
see Management--Fees and Expenses.)
Advisor International Fund pays the Adviser an administrative fee
based on its average daily net assets and International Portfolio
pays the Adviser a management fee based on its average daily net
assets. The trustees of Advisor Trust have considered whether the
annual operating expenses of Advisor International Fund, including
its share of the expenses of International Portfolio, would be
more or less than if Advisor International Fund invested directly
in the securities held by International Portfolio, and concluded
that Advisor International Fund's expenses would not be materially
greater in such case.
The figures in the Example are not necessarily indicative of past
or future expenses, and actual expenses may be greater or less
than those shown. Although information such as that shown in the
Example and Fee Table is useful in reviewing Advisor International
Fund's expenses and in providing a basis for comparison with other
mutual funds, it should not be used for comparison with other
investments using different assumptions or time periods.
Because Advisor International Fund pays a 12b-1 fee, long-term
investors in Advisor International Fund may pay more over long
periods of time in distribution expenses than the maximum front-
end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD"). For further information on
Advisor International Fund's 12b-1 fee, see Management--
Distributor or call your financial representative.
THE FUND
STEIN ROE ADVISOR INTERNATIONAL FUND ("Advisor International
Fund") is a series of Stein Roe Advisor Trust ("Advisor Trust"),
which is an open-end diversified management investment company
authorized to issue shares of beneficial interest in separate
series.
Rather than invest in securities directly, Advisor International
Fund seeks to achieve its investment objective by using the
"master fund/feeder fund structure." Under that structure, a
feeder fund and one or more feeder funds pool their assets in a
master portfolio that has the same investment objective and
substantially the same investment policies as the feeder funds.
(See Special Considerations Regarding Master Fund/Feeder Fund
Structure.) Advisor International Fund invests all of its net
investable assets in SR&F International Portfolio ("International
Portfolio"), which is a series of SR&F Base Trust ("Base Trust").
Stein Roe & Farnham Incorporated (the "Adviser") provides
portfolio management services to International Portfolio and
administrative services to Advisor International Fund and
International Portfolio.
INVESTMENT POLICIES
The investment objective of Advisor International Fund is to
provide long-term growth of capital by investing in a diversified
portfolio of foreign securities. Advisor International Fund
invests all of its net investable assets in International
Portfolio, which has the same investment objective and investment
policies substantially similar to Advisor International Fund.
Current income is not a primary factor in the selection of
portfolio securities. International Portfolio invests primarily
in common stocks and other equity-type securities (such as
preferred stocks, securities convertible or exchangeable for
common stocks, and warrants or rights to purchase common stocks).
International Portfolio may invest in securities of smaller
emerging companies as well as securities of well-seasoned
companies of any size. Smaller companies, however, involve higher
risks in that they typically have limited product lines, markets,
and financial or management resources. In addition, the
securities of smaller companies may trade less frequently and have
greater price fluctuation than larger companies, particularly
those operating in countries with developing markets.
International Portfolio diversifies its investments among several
countries and does not concentrate investments in any particular
industry. In pursuing its objective, International Portfolio
varies the geographic allocation and types of securities in which
it invests based on the Adviser's continuing evaluation of
economic, market, and political trends throughout the world.
While International Portfolio has not established limits on
geographic asset distribution, it ordinarily invests in the
securities markets of at least three countries outside the United
States, including but not limited to Western European countries
(such as Belgium, France, Germany, Ireland, Italy, The
Netherlands, the countries of Scandinavia, Spain, Switzerland, and
the United Kingdom); countries in the Pacific Basin (such as
Australia, Hong Kong, Japan, Malaysia, the Philippines, Singapore,
and Thailand); and countries in the Americas (such as Argentina,
Brazil, Colombia, and Mexico).
Under normal market conditions, International Portfolio will
invest at least 65% of its total assets (taken at market value) in
foreign securities. If, however, investments in foreign
securities appear to be relatively unattractive in the judgment of
the Adviser because of current or anticipated adverse political or
economic conditions, International Portfolio may hold cash or
invest any portion of its assets in securities of the U.S.
Government and equity and debt securities of U.S. companies, as a
temporary defensive strategy. To meet liquidity needs,
International Portfolio may also hold cash in domestic and foreign
currencies and invest in domestic and foreign money market
securities (including repurchase agreements and foreign money
market positions).
In the past, the U.S. Government has from time to time imposed
restrictions, through taxation and otherwise, on foreign
investments by U.S. investors such as International Portfolio. If
such restrictions should be reinstated, it might become necessary
for International Portfolio to invest all or substantially all of
its assets in U.S. securities. In such an event, International
Portfolio would review its investment objective and policies to
determine whether changes are appropriate.
International Portfolio may purchase foreign securities in the
form of American Depositary Receipts (ADRs), European Depositary
Receipts (EDRs), or other securities representing underlying
shares of foreign issuers. International Portfolio may invest in
sponsored or unsponsored ADRs. (For a description of ADRs and
EDRs, see the Statement of Additional Information.)
Further information on investment techniques that may be employed
by International Portfolio and the risks associated with such
techniques may be found under Risks and Investment Considerations
and Portfolio Investments and Strategies in this prospectus and in
the Statement of Additional Information.
PERFORMANCE INFORMATION
The total return from an investment in Advisor International Fund
is measured by the distributions received (assuming reinvestment),
plus or minus the change in the net asset value per share for a
given period. A total return percentage may be calculated by
dividing the value of a share at the end of the period (including
reinvestment of distributions) by the value of the share at the
beginning of the period and subtracting one. For a given period,
an average annual total return may be calculated by finding the
average annual compounded rate that would equate a hypothetical
$1,000 investment to the ending redeemable value.
Comparison of Advisor International Fund's total return with
alternative investments should consider differences between the
Fund and the alternative investments, the periods and methods used
in calculation of the return being compared, and the impact of
taxes on alternative investments. Of course, past performance is
not necessarily indicative of future results. Share prices may
vary, and your shares when redeemed may be worth more or less than
your original purchase price.
As of the date of this Prospectus, Advisor International Fund had
no past performance. However, Stein Roe International Fund, a
different Stein Roe Fund which is a series of Stein Roe Investment
Trust and has a similar name, the same investment objective and
substantially the same investment policies as Advisor
International Fund, also invests all of its net investable assets
in International Portfolio. The average annual total return for
the periods ended September 30, 1996 for a 1-year and since-
inception (March 1, 1994) investment in Stein Roe International
Fund were 8.23% and 4.98%, respectively. Stein Roe International
Fund has a different fee structure than Advisor International
Fund, and does not pay 12b-1 fees. Had these fees been reflected,
the total returns shown in the table would have been lower. The
information shown above reflects the performance of Stein Roe
International Fund, and should not be interpreted as indicative of
Advisor International Fund's future performance.
RISKS AND INVESTMENT CONSIDERATIONS
Advisor International Fund is intended for long-term investors who
can accept the risks entailed in investing in foreign securities.
International Portfolio usually allocates its investments among a
number of different industries rather than concentrating in a
particular industry or group of industries, but this does not
eliminate all risk. It will not, however, invest more than 25% of
the total value of its assets (at the time of investment) in the
securities of companies in any one industry. There can be no
guarantee that Advisor International Fund or International
Portfolio will achieve its objective.
International Portfolio may invest up to 35% of its total assets
in debt securities. Debt securities rated in the fourth highest
grade may have some speculative characteristics, and changes in
economic conditions or other circumstances may lead to a weakened
capacity of the issuers of such securities to make principal and
interest payments. Securities rated below investment grade may
possess speculative characteristics, and changes in economic
conditions are more likely to affect the issuer's capacity to pay
interest or repay principal.
FOREIGN INVESTING. Advisor International Fund provides long-term
investors with an opportunity to invest a portion of their assets
in a diversified portfolio of foreign securities. Non-U.S.
investments may be attractive because they increase
diversification, as compared to a portfolio comprised solely of
U.S. investments. In addition, many foreign economies have, from
time to time, grown faster than the U.S. economy, and the returns
on investments in these countries have exceeded those of similar
U.S. investments--there can be no assurance, however, that these
conditions will continue. International diversification also
allows International Portfolio and an investor to take advantage
of changes in foreign economies and market conditions.
Investors should understand and consider carefully the greater
risks involved in foreign investing. Investing in foreign
securities--positions which are generally denominated in foreign
currencies--and utilization of forward foreign currency exchange
contracts involve certain considerations comprising both risks and
opportunities not typically associated with investing in U.S.
securities. These considerations include: fluctuations in
exchange rates of foreign currencies; possible imposition of
exchange control regulations or currency restrictions that would
prevent cash from being brought back to the United States; less
public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers,
and issuers of securities; lack of uniform accounting, auditing,
and financial reporting standards; lack of uniform settlement
periods and trading practices; less liquidity and frequently
greater price volatility in foreign markets than in the United
States; possible imposition of foreign taxes; possible investment
in the securities of companies in developing as well as developed
countries; and sometimes less advantageous legal, operational, and
financial protections applicable to foreign sub-custodial
arrangements. These risks are greater for emerging market
countries.
Although International Portfolio will try to invest in companies
and governments of countries having stable political environments,
there is the possibility of expropriation or confiscatory
taxation, seizure or nationalization of foreign bank deposits or
other assets, establishment of exchange controls, the adoption of
foreign government restrictions, and other adverse political,
social or diplomatic developments that could adversely affect
investment in these nations.
The price of securities of small, rapidly growing companies is
expected to fluctuate more widely than the general market due to
the difficulty in assessing financial prospects of companies
developing new products or operating in countries with developing
markets.
The strategy for selecting investments will be based on various
criteria. A company proposed for investment should have a good
market position in a fast-growing segment of the economy, strong
management, preferably a leading position in its business,
prospects of superior financial returns, ability to self-finance,
and securities available for purchase at a reasonable market
valuation. Because of the foreign domicile of such companies,
however, information on some of the above factors may be
difficult, if not impossible, to obtain.
To the extent portfolio securities are issued by foreign issuers
or denominated in foreign currencies, investment performance is
affected by the strength or weakness of the U.S. dollar against
these currencies. If the dollar falls relative to the Japanese
yen, for example, the dollar value of a yen-denominated stock held
in the portfolio will rise even though the price of the stock
remains unchanged. Conversely, if the dollar rises in value
relative to the yen, the dollar value of the yen-denominated stock
will fall. (See the discussion of portfolio and transaction
hedging under Portfolio Investments and Strategies.)
Further information on investment techniques that may be employed
by International Portfolio may be found under Portfolio
Investments and Strategies.
INVESTMENT RESTRICTIONS
Neither Advisor International Fund nor International Portfolio may
invest more than 5% of its assets in the securities of any one
issuer. This restriction applies only to 75% of its investment
portfolio, and does not apply to securities of the U.S. Government
or repurchase agreements /1/ for such securities. This
restriction also does not prevent Advisor International Fund from
investing all of its assets in shares of another investment
company having the identical investment objective under a
master/feeder structure.
- -----------------
/1/ A repurchase agreement involves a sale of securities to
International Portfolio in which the seller agrees to repurchase
the securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, International
Portfolio could experience both losses and delays in liquidating
its collateral.
- ------------------
Neither Advisor International Fund nor International Portfolio
will acquire more than 10% of the outstanding voting securities of
any one issuer. Advisor International Fund may, however, invest
all of its assets in shares of another investment company having
the identical investment objective under a master/feeder
structure.
Neither Advisor International Fund nor International Portfolio may
make loans except that it may (1) purchase money market
instruments and enter into repurchase agreements; (2) acquire
publicly-distributed or privately-placed debt securities; (3) lend
its portfolio securities under certain conditions; and (4)
participate in an interfund lending program with other Stein Roe
Funds and Portfolios. Advisor International Fund and
International Portfolio may not borrow money, except for non-
leveraging, temporary, or emergency purposes or in connection with
participation in the interfund lending program. Neither the
aggregate borrowings (including reverse repurchase agreements) nor
the aggregate loans at any one time may exceed 33 1/3% of the
value of total assets. Additional securities may not be purchased
when borrowings less proceeds receivable from sales of portfolio
securities exceed 5% of total assets.
Advisor International Fund and International Portfolio may invest
in repurchase agreements, provided that neither will invest more
than 15% of its net assets in illiquid securities, including
repurchase agreements maturing in more than seven days.
The policies summarized in the first three paragraphs under this
section and the policy with respect to concentration of
investments in any one industry described under Risks and
Investment Considerations are fundamental policies of Advisor
International Fund and International Portfolio and, as such, can
be changed only with the approval of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940. The common investment objective of Advisor
International Fund and International Portfolio is non-fundamental
and, as such, may be changed by the Board of Trustees without
shareholder approval. All of the investment restrictions are set
forth in the Statement of Additional Information.
Nothing in the investment restrictions outlined here shall be
deemed to prohibit International Portfolio from purchasing the
securities of any issuer pursuant to the exercise of subscription
rights distributed to International Portfolio by the issuer. No
such purchase may be made if, as a result, International Portfolio
will no longer be a diversified investment company as defined in
the Investment Company Act of 1940 or if International Portfolio
will fail to meet the diversification requirements of the Internal
Revenue Code.
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES.
In pursuing its investment objective, International Portfolio may
invest up to 35% of its total assets in debt securities.
Investments in debt securities are limited to those that are rated
within the four highest grades (generally referred to as
"investment grade") assigned by a nationally recognized
statistical rating organization. Investments in unrated debt
securities are limited to those deemed to be of comparable quality
by the Adviser. If the rating of a security held by International
Portfolio is lost or reduced below investment grade, the Portfolio
is not required to dispose of the security--the Adviser will,
however, consider that fact in determining whether International
Portfolio should continue to hold the security.
SETTLEMENT TRANSACTIONS.
When International Portfolio enters into a contract for the
purchase or sale of a foreign portfolio security, it usually is
required to settle the purchase transaction in the relevant
foreign currency or receive the proceeds of the sale in that
currency. In either event, International Portfolio is obliged to
acquire or dispose of an appropriate amount of foreign currency by
selling or buying an equivalent amount of U.S. dollars. At or
near the time of the purchase or sale of the foreign portfolio
security, International Portfolio may wish to lock in the U.S.
dollar value of a transaction at the exchange rate or rates then
prevailing between the U.S. dollar and the currency in which the
security is denominated. Known as "transaction hedging," this may
be accomplished by purchasing or selling such foreign securities
on a "spot," or cash, basis. Transaction hedging also may be
accomplished on a forward basis, whereby International Portfolio
purchases or sells a specific amount of foreign currency, at a
price set at the time of the contract, for receipt or delivery at
either a specified date or at any time within a specified time
period. In so doing, International Portfolio will attempt to
insulate itself against possible losses and gains resulting from a
change in the relationship between the U.S. dollar and the foreign
currency during the period between the date the security is
purchased or sold and the date on which payment is made or
received. Similar transactions may be entered into by using other
currencies if International Portfolio seeks to move investments
denominated in one currency to investments denominated in another.
CURRENCY HEDGING.
Most of International Portfolio's portfolio will be invested in
foreign securities. As a result, in addition to the risk of
change in the market value of portfolio securities, the value of
the portfolio in U.S. dollars is subject to fluctuations in the
exchange rate between the foreign currencies and the U.S. dollar.
When, in the opinion of the Adviser, it is desirable to limit or
reduce exposure in a foreign currency to moderate potential
changes in the U.S. dollar value of the portfolio, International
Portfolio may enter into a forward currency exchange contract to
sell or buy such foreign currency (or another foreign currency
that acts as a proxy for that currency)--through the contract, the
U.S. dollar value of certain underlying foreign portfolio
securities can be approximately matched by an equivalent U.S.
dollar liability. This technique is known as "currency hedging."
By locking in a rate of exchange, currency hedging is intended to
moderate or reduce the risk of change in the U.S. dollar value of
International Portfolio's portfolio only during the period of the
forward contract. Forward contracts usually are entered into with
banks and broker-dealers; are not exchange traded; and although
they are usually less than one year, may be renewed. A default on
the contract would deprive International Portfolio of unrealized
profits or force International Portfolio to cover its commitments
for purchase or sale of currency, if any, at the current market
price.
Neither type of foreign currency transaction will eliminate
fluctuations in the prices of International Portfolio's portfolio
securities or prevent loss if the price of such securities should
decline. In addition, such forward currency exchange contracts
will diminish the benefit of the appreciation in the U.S. dollar
value of that foreign currency. (For further information on
forward foreign currency exchange transactions, see the Statement
of Additional Information.)
International Portfolio may utilize spot and forward foreign
exchange transactions to reduce the risk caused by exchange rate
fluctuations between one currency and another when securities are
purchased or sold on a when-issued basis. It may also invest in
synthetic money market instruments. International Portfolio may
invest in repurchase agreements, provided that it will not invest
more than 15% of its net assets in repurchase agreements maturing
in more than seven days and any other illiquid securities. (See
the Statement of Additional Information.)
CONVERTIBLE SECURITIES.
By investing in convertible securities, International Portfolio
obtains the right to benefit from the capital appreciation
potential in the underlying stock upon exercise of the conversion
right, while earning higher current income than would be available
if the stock were purchased directly. In determining whether to
purchase a convertible, the Adviser will consider substantially
the same criteria that would be considered in purchasing the
underlying stock. Although convertible securities are frequently
rated investment grade, International Portfolio also may purchase
unrated securities or securities rated below investment grade if
the securities meet the Adviser's other investment criteria.
Convertible securities rated below investment grade tend to be
more sensitive to interest rate and economic changes, may be
obligations of issuers who are less creditworthy than issuers of
higher quality convertible securities, and may be more thinly
traded due to the fact that such securities are less well known to
investors than either common stock or conventional debt
securities. As a result, the Adviser's own investment research
and analysis tends to be more important than other factors in the
purchase of convertible securities.
LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES.
International Portfolio may make loans of its portfolio securities
to broker-dealers and banks subject to certain restrictions
described in the Statement of Additional Information.
International Portfolio may participate in an interfund lending
program, subject to certain restrictions described in the
Statement of Additional Information. International Portfolio may
invest in securities purchased on a when-issued or delayed-
delivery basis. Although the payment terms of these securities
are established at the time International Portfolio enters into
the commitment, the securities may be delivered and paid for a
month or more after the date of purchase, when their value may
have changed. International Portfolio will make such commitments
only with the intention of actually acquiring the securities, but
may sell the securities before settlement date if it is deemed
advisable for investment reasons.
SHORT SALES AGAINST THE BOX.
International Portfolio may sell short securities it owns or has
the right to acquire without further consideration, using a
technique called selling short "against the box." Short sales
against the box may protect International Portfolio against the
risk of losses in the value of its portfolio securities because
any unrealized losses with respect to such securities should be
wholly or partly offset by a corresponding gain in the short
position. However, any potential gains in such securities should
be wholly or partially offset by a corresponding loss in the short
position. Short sales against the box may be used to lock in a
profit on a security when, for tax reasons or otherwise, the
Adviser does not want to sell the security. International
Portfolio does not expect to commit more than 5% of its net assets
to short sales against the box. For a more complete explanation,
please refer to the Statement of Additional Information.
DERIVATIVES.
Consistent with its objective, International Portfolio may invest
in a broad array of financial instruments and securities,
including conventional exchange-traded and non-exchange-traded
options, futures contracts, futures options, securities
collateralized by underlying pools of mortgages or other
receivables, floating rate instruments, and other instruments that
securitize assets of various types ("Derivatives"). In each case,
the value of the instrument or security is "derived" from the
performance of an underlying asset or a "benchmark" such as a
security index, an interest rate, or a currency. International
Portfolio does not expect to invest more than 5% of its net assets
in any type of Derivative except for options, futures contracts,
futures options, and forward contracts.
In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, International
Portfolio may: (1) purchase and write both call options and put
options on securities, indexes and foreign currencies; (2) enter
into interest rate, index and foreign currency futures contracts;
(3) write options on such futures contracts; and (4) purchase
other types of forward or investment contracts linked to
individual securities, indexes or other benchmarks. International
Portfolio may write a call or put option only if the option is
covered. As the writer of a covered call option, International
Portfolio foregoes, during the option's life, the opportunity to
profit from increases in market value of the security covering the
call option above the sum of the premium and the exercise price of
the call. There can be no assurance that a liquid market will
exist when International Portfolio seeks to close out a position.
In addition, because futures positions may require low margin
deposits, the use of futures contracts involves a high degree of
leverage and may result in losses in excess of the amount of the
margin deposit.
Derivatives are most often used to manage investment risk or to
create an investment position indirectly because they are more
efficient or less costly than direct investment. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's ability
to correctly predict changes in the levels and directions of
movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
PORTFOLIO TURNOVER.
Although International Portfolio does not purchase securities with
a view to rapid turnover, there are no limitations on the length
of time portfolio securities must be held. Accordingly, the
portfolio turnover rate may vary significantly from year to year,
but is not expected to exceed 100% under normal market conditions.
Flexibility of investment and emphasis on capital appreciation may
involve greater portfolio turnover than that of mutual funds that
have the objectives of income or maintenance of a balanced
investment position. A high rate of portfolio turnover may result
in increased transaction expenses and the realization of capital
gains and losses. (See Distributions and Income Taxes.)
NET ASSET VALUE
The purchase and redemption price of Advisor International Fund's
shares is its net asset value per share. Advisor International
Fund determines the net asset value of its shares as of the close
of trading on the New York Stock Exchange ("NYSE") (currently 3:00
p.m., central time) by dividing the difference between the value
of its assets and liabilities by the number of shares outstanding.
International Portfolio allocates net asset value, income, and
expenses to Advisor International Fund and any other of its feeder
funds in proportion to their respective interests in International
Portfolio.
Net asset value will not be determined on days when the NYSE is
closed unless, in the judgment of the Board of Trustees, the net
asset value of Advisor International Fund should be determined on
any such day, in which case the determination will be made at 3:00
p.m., central time.
In computing the net asset value of International Portfolio, the
values of portfolio securities are generally based upon market
quotations. Depending upon local convention or regulation, these
market quotations may be the last sale price, last bid or asked
price, or the mean between the last bid and asked prices as of, in
each case, the close of the appropriate exchange or other
designated time. Trading in securities on European and Far
Eastern securities exchanges and over-the-counter markets is
normally completed at various times before the close of business
on each day on which the NYSE is open. Trading of these
securities may not take place on every NYSE business day. In
addition, trading may take place in various foreign markets on
Saturdays or on other days when the NYSE is not open and on which
International Portfolio's net asset value is not calculated.
Therefore, such calculation does not take place contemporaneously
with the determination of the prices of many of the portfolio
securities used in such calculation and the value of International
Portfolio's portfolio may be significantly affected on days when
shares of International Portfolio may not be purchased or
redeemed.
HOW TO PURCHASE SHARES
You may purchase Advisor International Fund shares only through
broker-dealers, banks, or other intermediaries, including
retirement plan service providers ("Intermediaries"). The Adviser
and Advisor International Fund do not recommend, endorse, or
receive payments from any Intermediary.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of Advisor
International Fund's shares is made at Advisor International
Fund's net asset value (see Net Asset Value) next determined after
receipt by the Fund or through an authorized agent of an order in
good form, including receipt of payment.
CONDITIONS OF PURCHASE. Each purchase order for Advisor
International Fund must be accepted by an authorized officer of
Advisor Trust or its authorized agent and is not binding until
accepted and entered on the books of Advisor International Fund.
Once your purchase order has been accepted, you may not cancel or
revoke it; you may, however, redeem the shares. Advisor Trust
reserves the right not to accept any purchase order that it
determines not to be in the best interests of Advisor Trust or of
Advisor International Fund's shareholders.
PURCHASES THROUGH INTERMEDIARIES. You must purchase shares
through Intermediaries. These Intermediaries may charge for their
services or place limitations on the extent to which you may use
the services offered by Advisor Trust. In addition, each
Intermediary will establish its own procedures for the purchase of
shares of Advisor International Fund, including minimum initial
and additional investments, and the acceptable methods of payment
for shares. Your Intermediary may be closed on days when the NYSE
is open. As a result, prices of Fund shares may be significantly
affected on days when you have no access to your Intermediary to
buy shares. If you wish to purchase shares, please contact your
Intermediary for instructions.
Retirement Plans. If you purchase shares through a retirement
plan, you should be aware that retirement plan administrators may
aggregate purchase and redemption orders for participants in the
plan. Therefore, there may be a delay between the time you place
your order with the plan administrator and the time the order is
forwarded for execution.
HOW TO REDEEM SHARES
You may redeem shares only through Intermediaries. Each
Intermediary will establish its own procedures for the sale of
shares of Advisor International Fund. Your Intermediary may be
closed on days when the NYSE is open. As a result, prices for
Fund shares may be significantly affected on days when you have no
access to your Intermediary to sell shares. If you wish to redeem
shares through an Intermediary, please contact the Intermediary
for instructions.
EXCHANGE PRIVILEGE. Through an account with an Intermediary, you
may redeem all or any portion of your Advisor International Fund
shares and use the proceeds to purchase shares of any other Fund
that is a series of Advisor Trust offered for sale in the state in
which the Intermediary is located. Each Intermediary will
establish its own exchange policies and procedures. In particular,
individual participants of qualified retirement plans may exchange
shares through the plan sponsor or administrator. Those
participants may exchange shares only for shares of other Advisor
Trust Funds that are included in the plan. An exchange
transaction is a sale and purchase of shares for federal income
tax purposes and may result in capital gain or loss. Before
exchanging into another Advisor Trust Fund, you should obtain the
prospectus for the Advisor Trust Fund in which you wish to invest
and read it carefully. The registration of the account to which
you are making an exchange must be exactly the same as that of the
account from which the exchange is made. Advisor International
Fund reserves the right to suspend, limit, modify, or terminate
the Exchange Privilege or its use in any manner by any person or
class; Intermediaries would be notified of such a change.
GENERAL REDEMPTION POLICIES. Redemption instructions may not be
cancelled or revoked once they have been received and accepted by
Advisor Trust. Advisor Trust cannot accept a redemption request
that specifies a particular date or price for redemption or any
special conditions.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received by the Intermediary. (See Net Asset
Value.) Because the redemption price you receive depends upon
Advisor International Fund's net asset value per share at the time
of redemption, it may be more or less than the price you
originally paid for the shares and may result in a realized
capital gain or loss.
Advisor Trust will pay redemption proceeds as soon as practicable,
and in no event later than seven days after proper instructions
are received by Advisor International Fund or its authorized
agent.
DISTRIBUTIONS AND INCOME TAXES
DISTRIBUTIONS. Income dividends are declared and paid annually.
Advisor International Fund intends to distribute by the end of
each calendar year at least 98% of any net capital gains realized
from the sale of securities during the twelve-month period ended
October 31 in that year. Advisor International Fund intends to
distribute any undistributed net investment income and net
realized capital gains in the following year.
All income dividends and capital gain distributions on shares of
Advisor International Fund will be reinvested in additional shares
unless your Intermediary elects to have distributions paid by
check. Reinvestment normally occurs on the payable date.
U.S. FEDERAL INCOME TAXES. For federal income tax purposes,
Advisor International Fund is treated as a separate taxable entity
distinct from the other series of Advisor Trust. International
Portfolio intends to qualify for the special tax treatment
afforded regulated investment companies under Subchapter M of the
Internal Revenue Code, so that it will be relieved of federal
income tax on that part of its net investment income and net
capital gain that is distributed to shareholders.
Advisor International Fund will distribute substantially all of
its ordinary income and net capital gains on a current basis.
Generally distributions are taxable as ordinary income, except
that any distributions of net long-term capital gains will be
taxed as such. However, distributions by Advisor International
Fund to plans that qualify for tax-exempt treatment under federal
income tax laws will not be taxable. Special tax rules apply to
investments through such plans.
FOREIGN INCOME TAXES. Investment income received by International
Portfolio from sources within foreign countries may be subject to
foreign income taxes withheld at the source. The United States
has entered into tax treaties with many foreign countries that
entitle International Portfolio to a reduced rate of tax or
exemption from tax on such income. It is impossible to determine
the effective rate of foreign tax in advance since the amount of
International Portfolio's assets to be invested within various
countries will fluctuate and the extent to which tax refunds will
be recovered is uncertain. International Portfolio intends to
operate so as to qualify for treaty-reduced tax rates where
applicable.
To the extent that International Portfolio is liable for foreign
income taxes withheld at the source, the Portfolio also intends to
operate so as to meet the requirements of the U.S. Internal
Revenue Code to "pass through" to International Advisor Fund's
shareholders foreign income taxes paid, but there can be no
assurance that it will be able to do so.
This discussion of U.S. and foreign taxation is not intended to be
a full discussion of income tax laws and their effect on
shareholders. You may wish to consult your own tax advisor. The
foregoing information applies to U.S. shareholders. Foreign
shareholders should consult their tax advisors as to the tax
consequences of ownership of Fund shares.
This section is not intended to be a full discussion of income tax
laws and their effect on shareholders. You may wish to consult
your own tax advisor.
MANAGEMENT
TRUSTEES AND INVESTMENT ADVISER. The Board of Trustees of Advisor
Trust and the Board of Trustees of Base Trust have overall
management responsibility for Advisor International Fund and
International Portfolio, respectively. See Management in the
Statement of Additional Information for the names of and other
information about the trustees and officers. Since Advisor Trust
and Base Trust have the same trustees, the trustees have adopted
conflict of interest procedures to monitor and address potential
conflicts between the interests of Advisor International Fund and
International Portfolio and other feeder funds investing in
International Portfolio that share a common Board of Trustees with
Advisor Trust and Base Trust.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
investment portfolio of International Portfolio and the business
affairs of Advisor International Fund, International Portfolio,
Advisor Trust, and Base Trust, subject to the direction of the
respective Board. The Adviser is registered as an investment
adviser under the Investment Advisers Act of 1940. The Adviser
was organized in 1986 to succeed to the business of Stein Roe &
Farnham, a partnership that had advised and managed mutual funds
since 1949. The Adviser is a wholly owned subsidiary of Liberty
Financial Companies, Inc. ("Liberty Financial"), which in turn is
a majority owned indirect subsidiary of Liberty Mutual Insurance
Company.
PORTFOLIO MANAGERS. Bruno Bertocci and David P. Harris, have been
co-portfolio managers of International Portfolio since its
inception in 1997 and of its corresponding "feeder fund" Stein Roe
International Fund (a series of Stein Roe Investment Trust) since
its inception in 1994. (Mr. Harris served as an associate
portfolio manager until May 1995.) In addition, they have been
co-portfolio managers of Stein Roe Emerging Markets Fund (a series
of Stein Roe Investment Trust), since its inception in 1997. They
joined the Adviser in 1995 as senior vice president and vice
president, respectively, to create Stein Roe Global Capital
Management, a dedicated global and international equity management
unit. Messrs. Bertocci and Harris are also employed by Colonial
Management Associates, Inc., a subsidiary of Liberty Financial and
an affiliate of the Adviser, as vice presidents. Prior to joining
the Adviser, Mr. Bertocci was a senior global equity portfolio
manager with Rockefeller & Co. ("Rockefeller") from 1983 to 1995.
While at Rockefeller, he served as portfolio manager for the
Portfolio's predecessor, when Rockefeller was that Fund's sub-
adviser. Mr. Bertocci managed Rockefeller's London office from
1987 to 1989 and its Hong Kong office from 1989 to 1990. Prior to
working at Rockefeller, he served for three years at T. Rowe Price
Associates. Mr. Bertocci is a graduate of Oberlin College and
holds an M.B.A. from Harvard University. Mr. Harris was a
portfolio manager with Rockefeller from 1990 to 1995. After
earning a bachelor's degree from the University of Michigan, he
was an actuarial associate for GEICO before returning to school to
earn an M.B.A. from Cornell University. As of December 31, 1996,
Messrs. Bertocci and Harris were responsible for managing $141
million in mutual fund net assets.
FEES AND EXPENSES. The Adviser is entitled to receive a monthly
administrative fee from Advisor International Fund, computed and
accrued daily, at an annual rate of 0.15% of average net assets;
and a monthly management fee from International Portfolio,
computed and accrued daily, at an annual rate of 0.85% of average
net assets. However, as noted above under Fee Table, the Adviser
may voluntarily undertake to reimburse Advisor International Fund
for a portion of its operating expenses and its pro rata share of
International Portfolio's operating expenses.
The Adviser provides office space and executive and other
personnel to Advisor Trust and Base Trust. All expenses of
Advisor International Fund (other than those paid by the Adviser),
including, but not limited to, printing and postage charges,
securities registration fees, custodian and transfer agency fees,
legal and auditing fees, compensation of trustees not affiliated
with the Adviser, and expenses incidental to its organization, are
paid out of the assets of Advisor International Fund.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to Advisor
International Fund and International Portfolio including
computation of net asset value and calculation of its net income
and capital gains and losses on disposition of assets.
In addition, the Adviser is free to make additional payments out
of its own assets to promote the sale of shares of Advisor
International Fund.
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
contracts for International Portfolio. In doing so, the Adviser
seeks to obtain the best combination of price and execution, which
involves a number of judgmental factors.
TRANSFER AGENT AND SHAREHOLDER SERVICES. SteinRoe Services Inc.
("SSI"), One South Wacker Drive, Chicago, Illinois 60606, a wholly
owned subsidiary of Liberty Financial, is the agent of Advisor
Trust for the transfer of shares, disbursement of dividends, and
maintenance of shareholder accounting records.
Some Intermediaries that maintain nominee accounts with Advisor
International Fund for their clients who are Fund shareholders may
be paid a fee from SSI of up to 0.25% of the average net assets
held in such accounts for shareholder servicing and accounting
services they provide with respect to the underlying Fund shares.
DISTRIBUTOR. The shares of Advisor International Fund are offered
for sale through Liberty Securities Corporation ("Distributor")
without any sales commissions. The Distributor is a wholly owned
indirect subsidiary of Liberty Financial. The business address of
the Distributor is 600 Atlantic Avenue, Boston, Massachusetts
02210; however, all Fund correspondence (including purchase and
redemption orders) should be mailed to SteinRoe Services Inc. at
P.O. Box 8900, Boston, Massachusetts 02205.
The trustees of Advisor Trust have adopted a plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("Plan"). The Plan
provides that, as compensation for the promotion and distribution
of shares of Advisor International Fund including its expenses
related to the sale and promotion of Fund shares, the Distributor
receives from Advisor International Fund a fee at an annual rate
of 0.25% of its average net assets. The Distributor generally
pays this amount to institutions that distribute Advisor
International Fund shares and provide services to Advisor
International Fund and its shareholders. Those institutions may
use the payments for, among other purposes, compensating employees
engaged in sales and/or shareholder servicing. The amount of fees
paid by Advisor International Fund during any year may be more or
less than the cost of distribution or other services provided to
Advisor International Fund. NASD rules limit the amount of annual
distribution fees that may be paid by a mutual fund and impose a
ceiling on the cumulative distribution fees paid. Advisor Trust's
Plan complies with those rules.
CUSTODIAN. State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, Massachusetts 02101, is the custodian for
Advisor International Fund and International Portfolio. Foreign
securities are maintained in the custody of foreign banks and
trust companies that are members of the Bank's Global Custody
Network or foreign depositories used by such members. (See
Custodian in the Statement of Additional Information.)
ORGANIZATION AND DESCRIPTION OF SHARES
Advisor Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
July 31, 1996, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either Advisor
Trust's shareholders or its trustees. Advisor Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, seven series are authorized and outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Advisor Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of Advisor Trust.
The Declaration of Trust provides that persons extending credit
to, contracting with, or having any claim against, Advisor Trust
or any particular series shall look only to the assets of Advisor
Trust or of the respective series for payment under such credit,
contract or claim, and that the shareholders, trustees and
officers of Advisor Trust shall have no personal liability
therefor. The Declaration of Trust requires that notice of such
disclaimer of liability be given in each contract, instrument or
undertaking executed or made on behalf of Advisor Trust. The
Declaration of Trust provides for indemnification of any
shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Advisor Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Advisor
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
SPECIAL CONSIDERATIONS REGARDING THE
MASTER FUND/FEEDER FUND STRUCTURE
Advisor International Fund, an open-end management investment
company, seeks to achieve its objective by investing all of its
assets in shares of another mutual fund having an investment
objective identical to that of Advisor International Fund. The
initial shareholder of Advisor International Fund approved this
policy of permitting Advisor International Fund to act as a feeder
fund by investing in International Portfolio. Please refer to the
Investment Policies, Portfolio Investments and Strategies, and
Investment Restrictions for a description of the investment
objectives, policies, and restrictions of Advisor International
Fund and International Portfolio. The management and expenses of
both Advisor International Fund and International Portfolio are
described under the Fee Table and Management. Advisor
International Fund bears its proportionate share of Portfolio
expenses.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
SR&F International Portfolio is a separate series of SR&F Base
Trust ("Base Trust"), a Massachusetts common law trust organized
under an Agreement and Declaration of Trust ("Declaration of
Trust") dated August 23, 1993. The Declaration of Trust of Base
Trust provides that Advisor International Fund and other investors
in International Portfolio will each be liable for all obligations
of International Portfolio that are not satisfied by the
Portfolio. However, the risk of Advisor International Fund
incurring financial loss on account of such liability is limited
to circumstances in which both inadequate insurance existed and
International Portfolio itself were unable to meet its
obligations. Accordingly, the trustees of Advisor Trust believe
that neither Advisor International Fund nor its shareholders will
be adversely affected by reason of Advisor International Fund's
investing in International Portfolio.
The Declaration of Trust of Base Trust provides that International
Portfolio will terminate 120 days after the withdrawal of Advisor
International Fund or any other investor in International
Portfolio, unless the remaining investors vote to agree to
continue the business of International Portfolio. The trustees of
Advisor Trust may vote Advisor International Fund's interests in
International Portfolio for such continuation without approval of
Advisor International Fund's shareholders.
The common investment objective of Advisor International Fund and
International Portfolio is non-fundamental and may be changed
without shareholder approval. The fundamental policies of Advisor
International Fund and the corresponding fundamental policies of
International Portfolio can be changed only with shareholder
approval.
If Advisor International Fund, as a Portfolio investor, is
requested to vote on a proposed change in fundamental policy of
International Portfolio or any other matter pertaining to
International Portfolio (other than continuation of the business
of International Portfolio after withdrawal of another investor),
Advisor International Fund will solicit proxies from its
shareholders and vote its interest in International Portfolio for
and against such matters proportionately to the instructions to
vote for and against such matters received from Advisor
International Fund shareholders. Advisor International Fund will
vote shares for which it receives no voting instructions in the
same proportion as the shares for which it receives voting
instructions. If there are other investors in International
Portfolio, there can be no assurance that any matter receiving a
majority of votes cast by Fund shareholders will receive a
majority of votes cast by all International Portfolio investors.
If other investors hold a majority interest in International
Portfolio, they could have voting control over International
Portfolio.
In the event that International Portfolio's fundamental policies
were changed so as to be inconsistent with those of Advisor
International Fund, the Board of Trustees of Advisor Trust would
consider what action might be taken, including changes to Advisor
International Fund's fundamental policies, withdrawal of Advisor
International Fund's assets from International Portfolio and
investment of such assets in another pooled investment entity, or
the retention of another investment adviser. Any of these actions
would require the approval of Advisor International Fund's
shareholders. Advisor International Fund's inability to find a
substitute master fund or comparable investment management could
have a significant impact upon its shareholders' investments. Any
withdrawal of Advisor International Fund's assets could result in
a distribution in kind of portfolio securities (as opposed to a
cash distribution) to Advisor International Fund. Should such a
distribution occur, Advisor International Fund would incur
brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for Advisor
International Fund and could affect the liquidity of Advisor
International Fund.
Each investor in International Portfolio, including Advisor
International Fund, may add to or reduce its investment in
International Portfolio on each day the NYSE is open for business.
The investor's percentage of the aggregate interests in
International Portfolio will be computed as the percentage equal
to the fraction (i) the numerator of which is the beginning of the
day value of such investor's investment in International Portfolio
on such day plus or minus, as the case may be, the amount of any
additions to or withdrawals from the investor's investment in
International Portfolio effected on such day; and (ii) the
denominator of which is the aggregate beginning of the day net
asset value of International Portfolio on such day plus or minus,
as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in International
Portfolio by all investors in International Portfolio. The
percentage so determined will then be applied to determine the
value of the investor's interest in International Portfolio as of
the close of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in International Portfolio, but
members of the general public may not invest directly in
International Portfolio. Other investors in International
Portfolio are not required to sell their shares at the same public
offering price as Advisor International Fund, might incur
different administrative fees and expenses than Advisor
International Fund, and their shares might be sold with a sales
commission. Therefore, Advisor International Fund shareholders
might have different investment returns than shareholders in
another investment company that invests exclusively in
International Portfolio. Investment by such other investors in
International Portfolio would provide funds for the purchase of
additional portfolio securities and would tend to reduce the
Portfolio's operating expenses as a percentage of its net assets.
Conversely, large-scale redemptions by any such other investors in
International Portfolio could result in untimely liquidations of
International Portfolio's security holdings, loss of investment
flexibility, and increases in the operating expenses of
International Portfolio as a percentage of its net assets. As a
result, International Portfolio's security holdings may become
less diverse, resulting in increased risk.
International Portfolio commenced operations in February 1997 when
Stein Roe International Fund, a mutual fund that had invested
directly in securities since 1994, converted into a feeder fund by
investing all of its assets in the Portfolio. Currently Stein Roe
International Fund, which is a series of Stein Roe Investment
Trust, is the only other investment company investing in
International Portfolio. Information regarding any investment
company that may invest in International Portfolio in the future
may be obtained by writing to SR&F Base Trust, Suite 3200, One
South Wacker Drive, Chicago, Illinois 60606 or by calling 800-338-
2550. The Adviser may provide administrative or other services to
one or more of such investors.
FOR MORE INFORMATION
For more information about Advisor International Fund, call
Retirement Services at 800-322-1130 or Advisor/Broker Services at
800-322-0593.
______________________
<PAGE> 1
STEIN ROE ADVISOR YOUNG INVESTOR FUND
The investment objective of Advisor Young Investor Fund is to
provide long-term capital appreciation. Advisor Young Investor
Fund invests all of its net investable assets in SR&F
Growth Investor Portfolio, a portfolio of SR&F Base Trust that has
the same investment objective and substantially the same
investment policies as Advisor Young Investor Fund. (SEE SPECIAL
CONSIDERATIONS REGARDING MASTER FUND/FEEDER FUND STRUCTURE.)
Advisor Young Investor Fund also has an educational objective. It
seeks to provide a financial education to young investors and
their parents.
Shares of Advisor Young Investor Fund may be purchased only
through Intermediaries, including retirement plan service
providers.
Advisor Young Investor Fund has no sales or redemption charges.
Advisor Young Investor Fund is a series of Stein Roe Advisor Trust
and Growth Investor Portfolio is a series of SR&F Base Trust.
Each Trust is a diversified open-end management investment
company.
This prospectus contains information you should know before
investing in Advisor Young Investor Fund. Please read it
carefully and retain it for future reference.
A Statement of Additional Information dated February 14, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information may be obtained without charge
by writing to Stein Roe Mutual Funds, Suite 3200, One South Wacker
Drive, Chicago, Illinois 60606, or by calling the Adviser. For
additional information, call Retirement Services at 800-322-1130
or Advisor/Broker Services at 800-322-0593.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 14, 1997.
<PAGE> 2
TABLE OF CONTENTS
. Page
Summary.................................2
Fee Table ..............................3
The Fund................................4
Investment Policies.....................5
Performance Information.................5
Risks and Investment Considerations ....6
Investment Restrictions ................7
Portfolio Investments and Strategies....8
Net Asset Value .......................10
How to Purchase Shares.................11
How to Redeem Shares ..................12
Distributions and Income Taxes.........13
Management ............................13
Organization and Description of Shares.16
Special Considerations Regarding the
Master Fund/Feeder Fund Structure....16
For More Information ..................19
SUMMARY
Stein Roe Advisor Young Investor Fund ("Advisor Young Investor
Fund") is a series of Stein Roe Advisor Trust, an open-end
diversified management investment company organized as a
Massachusetts business trust. (See The Fund and Organization and
Description of Shares.) This prospectus is not a solicitation in
any jurisdiction in which shares of Advisor Young Investor Fund
are not qualified for sale.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of
Advisor Young Investor Fund is to provide long-term capital
appreciation by investing in common stocks and other equity-type
securities that the Adviser believes to have long-term
appreciation potential. Advisor Young Investor Fund invests all
of its net investable assets in SR&F Growth Investor Portfolio
("Growth Investor Portfolio") which has the same investment
objective and investment policies substantially similar to those
of Advisor Young Investor Fund. Growth Investor Portfolio invests
primarily in securities of companies that affect the lives of
young people. Advisor Young Investor Fund is designed for long-
term investors.
In addition to the investment objective and policies, Advisor
Young Investor Fund also has an educational objective. It seeks
to teach young people about Advisor Young Investor Fund, basic
economic principles, and personal finance through a variety of
educational materials prepared and paid for by Advisor Young
Investor Fund.
For a more detailed discussion of the investment objectives and
policies, please see Investment Policies and Portfolio Investments
and Strategies. There is, of course, no assurance that Advisor
Young Investor Fund and Growth Investor Portfolio will achieve
their common investment objective.
INVESTMENT RISKS. Advisor Young Investor Fund is designed for
long-term investors who desire to participate in the stock market
and places an emphasis on companies that affect the lives of young
people. These investors can accept more investment risk and
volatility than the stock market in general but want less
investment risk and volatility than aggressive capital
appreciation funds. Growth Investor Portfolio may invest in
foreign securities, which may entail a greater degree of risk than
investing in securities of domestic issuers. Please see
Investment Restrictions and Risks and Investment Considerations
for further information.
PURCHASES AND REDEMPTIONS. Shares of Advisor Young Investor Fund
may be purchased only through Intermediaries, including retirement
plan service providers. For information on purchasing and
redeeming Advisor Young Investor Fund shares, please see How to
Purchase Shares, How to Redeem Shares, and Management--
Distributor.
MANAGEMENT AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") is investment adviser to Growth Investor Portfolio. In
addition, it provides administrative services to Advisor Young
Investor Fund and Growth Investor Portfolio. For a description of
the Adviser and these service arrangements, see Management.
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases................None
Sales Load Imposed on Reinvested Dividends.....None
Deferred Sales Load............................None
Redemption Fees................................None
Exchange Fees..................................None
ANNUAL FUND OPERATING EXPENSES (as a
percentage of average net assets; after
reimbursement)
Management and Administrative Fees (after
reimbursement)..............................0.65%
12b-1 Fees.....................................0.25%
Other Expenses ................................0.60%
-----
Total Operating Expenses (after reimbursement).1.50%
=====
EXAMPLE.
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return; and (2) redemption at the end of
each time period:
1 year 3 years
------ -------
$15 $47
The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in Advisor Young Investor Fund. The Fee
Table reflects the combined expenses of both Advisor Young
Investor Fund and Growth Investor Portfolio. Anticipated Total
Operating Expenses for Advisor Young Investor Fund are annualized
projections based upon current administrative fees and management
fees. Other Expenses are estimated amounts for the current fiscal
year. The figures assume that the percentage amounts listed under
Annual Fund Operating Expenses remain the same during each of the
periods and that all income dividends and capital gain
distributions are reinvested in additional shares.
From time to time, the Adviser may voluntarily undertake to
reimburse Advisor Young Investor Fund for a portion of its
operating expenses and its pro rata share of the fees and expenses
payable by Growth Investor Portfolio. The Adviser has undertaken
to reimburse Advisor Young Investor Fund for its operating
expenses and its pro rata share of Growth Investor Portfolio's
operating expenses to the extent such expenses exceed 1.50% of
Advisor Young Investor Fund's annual average net assets. This
commitment expires on January 31, 1998, subject to earlier review
and possible termination by the Adviser on 30 days' notice to
Advisor Young Investor Fund. Absent such reimbursement, Advisor
Young Investor Fund's share of Growth Investor Portfolio's
Management Fee and the Fund's Administrative Fee, and Total
Operating Expenses would be 0.80% and 1.65%, respectively. Any
such reimbursement will lower Advisor Young Investor Fund's
overall expense ratio and increase its overall return to
investors. (Also see Management--Fees and Expenses.)
Advisor Young Investor Fund pays the Adviser an administrative fee
based on its average daily net assets and Growth Investor
Portfolio pays the Adviser a management fee based on its average
daily net assets. The trustees of Advisor Trust have considered
whether the annual operating expenses of Advisor Young Investor
Fund, including its share of the expenses of Growth Investor
Portfolio, would be more or less than if Advisor Young Investor
Fund invested directly in the securities held by Growth Investor
Portfolio, and concluded that Advisor Young Investor Fund's
expenses would not be materially greater in such case.
The figures in the Example are not necessarily indicative of past
or future expenses, and actual expenses may be greater or less
than those shown. Although information such as that shown in the
Example and Fee Table is useful in reviewing Advisor Young
Investor Fund's expenses and in providing a basis for comparison
with other mutual funds, it should not be used for comparison with
other investments using different assumptions or time periods.
Because Advisor Young Investor Fund pays a 12b-1 fee, long-term
investors in Advisor Young Investor Fund may pay more over long
periods of time in distribution expenses than the maximum front-
end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD"). For further information on
Advisor Young Investor Fund's 12b-1 fee, see Management--
Distributor or call your financial representative.
THE FUND
STEIN ROE ADVISOR YOUNG INVESTOR FUND ("Advisor Young Investor
Fund") is a series of Stein Roe Advisor Trust ("Advisor Trust"),
which is an open-end diversified management investment company
authorized to issue shares of beneficial interest in separate
series.
Rather than invest in securities directly, Advisor Young Investor
Fund seeks to achieve its investment objective by using the
"master fund/feeder fund structure." Under that structure, a
feeder fund and one or more feeder funds pool their assets in a
master portfolio that has the same investment objective and
substantially the same investment policies as the feeder funds.
(See Special Considerations Regarding Master Fund/Feeder Fund
Structure.) Advisor Young Investor Fund invests all of its net
investable assets in SR&F Growth Investor Portfolio ("Growth
Investor Portfolio"), which is a series of SR&F Base Trust ("Base
Trust").
Stein Roe & Farnham Incorporated (the "Adviser") provides
portfolio management services to Growth Investor Portfolio and
administrative services to Advisor Young Investor Fund and Growth
Investor Portfolio.
INVESTMENT POLICIES
The investment objective of Advisor Young Investor Fund is to
provide long-term capital appreciation. Advisor Young Investor
Fund invests all of its net investable assets in Growth Investor
Portfolio, which has the same investment objective and investment
policies substantially similar to Advisor Young Investor Fund.
Growth Investor Portfolio seeks to achieve this objective by
investing primarily in common stocks and other equity-type
securities that, in the opinion of the Adviser, have long-term
appreciation potential.
Under normal circumstances, at least 65% of the total assets of
Growth Investor Portfolio will be invested in securities of
companies that, in the opinion of the Adviser, directly or through
one or more subsidiaries, affect the lives of young people. Such
companies may include companies that produce products or services
that young people use, are aware of, or could potentially have an
interest in. Although Growth Investor Portfolio invests primarily
in common stocks and other equity-type securities (such as
preferred stocks, securities convertible into or exchangeable for
common stocks, and warrants or rights to purchase common stocks),
it may invest up to 35% of its total assets in debt securities.
Further information on investment techniques that may be employed
by Growth Investor Portfolio and the risks associated with such
techniques may be found under Risks and Investment Considerations
and Portfolio Investments and Strategies in this prospectus and in
the Statement of Additional Information.
In addition to the investment objective and policies, Advisor
Young Investor Fund also has an educational objective. Advisor
Young Investor Fund seeks to educate its shareholders by providing
educational materials regarding personal finance and investing as
well as materials on the Fund and its portfolio holdings.
PERFORMANCE INFORMATION
The total return from an investment in Advisor Young Investor Fund
is measured by the distributions received (assuming reinvestment),
plus or minus the change in the net asset value per share for a
given period. A total return percentage may be calculated by
dividing the value of a share at the end of the period (including
reinvestment of distributions) by the value of the share at the
beginning of the period and subtracting one. For a given period,
an average annual total return may be calculated by finding the
average annual compounded rate that would equate a hypothetical
$1,000 investment to the ending redeemable value.
Comparison of Advisor Young Investor Fund's total return with
alternative investments should consider differences between the
Fund and the alternative investments, the periods and methods used
in calculation of the return being compared, and the impact of
taxes on alternative investments. Of course, past performance is
not necessarily indicative of future results. Share prices may
vary, and your shares when redeemed may be worth more or less than
your original purchase price.
As of the date of this Prospectus, Advisor Young Investor Fund had
no past performance. However, Stein Roe Young Investor Fund, a
different Stein Roe Fund which is a series of Stein Roe Investment
Trust and has a similar name, the same investment objective and
substantially the same investment policies as Advisor Young
Investor Fund, also invests all of its net investable assets in
Growth Investor Portfolio. The average annual total return for
the periods ended September 30, 1996 for a 1-year and since-
inception (April 24, 1994) investment in Stein Roe Young Investor
Fund were 35.55% and 31.82%, respectively. Stein Roe Young
Investor Fund has a different fee structure than Advisor Young
Investor Fund, and does not pay 12b-1 fees. Had these fees been
reflected, the total returns shown in the table would have been
lower. The information shown above reflects the performance of
Stein Roe Young Investor Fund, and should not be interpreted as
indicative of Advisor Young Investor Fund's future performance.
RISKS AND INVESTMENT CONSIDERATIONS
Advisor Young Investor Fund is designed for long-term investors
who desire to participate in the stock market and places an
emphasis on companies that affect the lives of young people.
These investors can accept more investment risk and volatility
than the stock market in general but want less investment risk and
volatility than aggressive capital appreciation funds. Growth
Investor Portfolio usually allocates its investments among a
number of different industries rather than concentrating in a
particular industry or group of industries, but this does not
eliminate all risk. It will not, however, invest more than 25% of
the total value of its assets (at the time of investment) in the
securities of companies in any one industry. There can be no
guarantee that Advisor Young Investor Fund or Growth Investor
Portfolio will achieve its objective. Advisor Young Investor Fund
also has an educational objective. It seeks to provide a
financial education to young investors and their parents.
Growth Investor Portfolio may invest up to 35% of its total assets
in debt securities. Debt securities rated in the fourth highest
grade may have some speculative characteristics, and changes in
economic conditions or other circumstances may lead to a weakened
capacity of the issuers of such securities to make principal and
interest payments. Securities rated below investment grade may
possess speculative characteristics, and changes in economic
conditions are more likely to affect the issuer's capacity to pay
interest or repay principal.
Growth Investor Portfolio may invest in securities of smaller
emerging companies as well as securities of well-seasoned
companies of any size. Smaller companies, however, involve higher
risks in that they typically have limited product lines, markets,
and financial or management resources. In addition, the
securities of smaller companies may trade less frequently and have
greater price fluctuation than larger companies, particularly
those operating in countries with developing markets.
Growth Investor Portfolio may invest up to 25% of its total assets
in foreign securities. For purposes of this limit, foreign
securities exclude American Depositary Receipts (ADRs), foreign
debt securities denominated in U.S. dollars, and securities
guaranteed by a U.S. person. Investment in foreign securities may
represent a greater degree of risk (including risk related to
exchange rate fluctuations, tax provisions, exchange and currency
controls, and expropriation of assets) than investment in
securities of domestic issuers. Other risks of foreign investing
include less complete financial information on issuers, different
accounting, auditing and financial reporting standards, different
settlement practices, less market liquidity, more market
volatility, less developed and regulated markets, and greater
political instability. In addition, various restrictions by
foreign governments on investments by non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.
Further information on investment techniques that may be employed
by Growth Investor Portfolio may be found under Portfolio
Investments and Strategies.
INVESTMENT RESTRICTIONS
Neither Advisor Young Investor Fund nor Growth Investor Portfolio
may invest more than 5% of its assets in the securities of any one
issuer. This restriction applies only to 75% of its investment
portfolio, and does not apply to securities of the U.S. Government
or repurchase agreements /1/ for such securities. This
restriction also does not prevent Advisor Young Investor Fund from
investing all of its assets in shares of another investment
company having the identical investment objective under a
master/feeder structure.
- ---------------
/1/ A repurchase agreement involves a sale of securities to Growth
Investor Portfolio in which the seller agrees to repurchase the
securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, Growth Investor
Portfolio could experience both losses and delays in liquidating
its collateral.
- ---------------
Neither Advisor Young Investor Fund nor Growth Investor Portfolio
will acquire more than 10% of the outstanding voting securities of
any one issuer. Advisor Young Investor Fund may, however, invest
all of its assets in shares of another investment company having
the identical investment objective under a master/feeder
structure.
Neither Advisor Young Investor Fund nor Growth Investor Portfolio
may make loans except that it may (1) purchase money market
instruments and enter into repurchase agreements; (2) acquire
publicly-distributed or privately-placed debt securities; (3) lend
its portfolio securities under certain conditions; and (4)
participate in an interfund lending program with other Stein Roe
Funds and Portfolios. Advisor Young Investor Fund and Growth
Investor Portfolio may not borrow money, except for non-
leveraging, temporary, or emergency purposes or in connection with
participation in the interfund lending program. Neither the
aggregate borrowings (including reverse repurchase agreements) nor
the aggregate loans at any one time may exceed 33 1/3% of the
value of total assets. Additional securities may not be purchased
when borrowings less proceeds receivable from sales of portfolio
securities exceed 5% of total assets.
Advisor Young Investor Fund and Growth Investor Portfolio may
invest in repurchase agreements, provided that neither will invest
more than 15% of its net assets in illiquid securities, including
repurchase agreements maturing in more than seven days.
The policies summarized in the first three paragraphs under this
section and the policy with respect to concentration of
investments in any one industry described under Risks and
Investment Considerations are fundamental policies of Advisor
Young Investor Fund and Growth Investor Portfolio and, as such,
can be changed only with the approval of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940. The common investment objective of Advisor
Young Investor Fund and Growth Investor Portfolio is non-
fundamental and, as such, may be changed by the Board of Trustees
without shareholder approval. All of the investment restrictions
are set forth in the Statement of Additional Information.
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES.
A debt security is an obligation of a borrower to make payments of
principal and interest to the holder of the security. To the
extent Growth Investor Portfolio invests in debt securities, such
holdings will be subject to interest rate risk and credit risk.
Interest rate risk is the risk that the value of a portfolio will
fluctuate in response to changes in interest rates. Generally,
the debt component of a portfolio will tend to decrease in value
when interest rates rise and increase in value when interest rates
fall. Credit risk is the risk that an issuer will be unable to
make principal and interest payments when due. Investments in
debt securities are limited to those that are rated within the
four highest grades (generally referred to as "investment grade")
assigned by a nationally recognized statistical rating
organization. Investments in unrated debt securities are limited
to those deemed to be of comparable quality by the Adviser.
Securities rated within the fourth highest grade may possess
speculative characteristics. If the rating of a security held by
Growth Investor Portfolio is lost or reduced below investment
grade, Growth Investor Portfolio is not required to dispose of the
security--the Adviser will, however, consider that fact in
determining whether it should continue to hold the security. When
the Adviser considers a temporary defensive position advisable,
Growth Investor Portfolio may invest without limitation in high-
quality fixed income securities, or hold assets in cash or cash
equivalents.
FOREIGN SECURITIES.
Growth Investor Portfolio may invest in sponsored or unsponsored
ADRs. In addition to, or in lieu of, such direct investment,
Growth Investor Portfolio may construct a synthetic foreign debt
position by (a) purchasing a debt instrument denominated in one
currency, generally U.S. dollars; and (b) concurrently entering
into a forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and
at a specified rate of exchange. Because of the availability of a
variety of highly liquid U.S. dollar debt instruments, a synthetic
foreign debt position utilizing such U.S. dollar instruments may
offer greater liquidity than direct investment in foreign currency
debt instruments.
In connection with the purchase of foreign securities, Growth
Investor Portfolio may enter into foreign currency forward and
futures contracts to hedge the currency risk in settlement of a
particular security transaction or relative to the entire
portfolio. A forward contract to purchase an amount of foreign
currency sufficient to pay the purchase price of securities at
settlement date involves the risk that the value of the foreign
currency may decline relative to the value of the dollar prior to
the settlement date. This risk is in addition to the risk that
the value of the foreign security purchased may decline. Growth
Investor Portfolio also may enter into foreign currency contracts
as a hedging technique to limit or reduce exposure of the entire
portfolio to currency fluctuations. In addition, Growth Investor
Portfolio may use options and futures contracts, as described
below, to limit or reduce exposure to currency fluctuations.
CONVERTIBLE SECURITIES.
By investing in convertible securities, Growth Investor Portfolio
obtains the right to benefit from the capital appreciation
potential in the underlying stock upon exercise of the conversion
right, while earning higher current income than would be available
if the stock were purchased directly. In determining whether to
purchase a convertible, the Adviser will consider substantially
the same criteria that would be considered in purchasing the
underlying stock. Although convertible securities are frequently
rated investment grade, Growth Investor Portfolio also may
purchase unrated securities or securities rated below investment
grade if the securities meet the Adviser's other investment
criteria. Convertible securities rated below investment grade
tend to be more sensitive to interest rate and economic changes,
may be obligations of issuers who are less creditworthy than
issuers of higher quality convertible securities, and may be more
thinly traded due to the fact that such securities are less well
known to investors than either common stock or conventional debt
securities. As a result, the Adviser's own investment research
and analysis tends to be more important than other factors in the
purchase of convertible securities.
LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES.
Growth Investor Portfolio may make loans of its portfolio
securities to broker-dealers and banks subject to certain
restrictions described in the Statement of Additional Information.
Growth Investor Portfolio may participate in an interfund lending
program, subject to certain restrictions described in the
Statement of Additional Information. Growth Investor Portfolio
may invest in securities purchased on a when-issued or delayed-
delivery basis. Although the payment terms of these securities
are established at the time Growth Investor Portfolio enters into
the commitment, the securities may be delivered and paid for a
month or more after the date of purchase, when their value may
have changed. Growth Investor Portfolio will make such
commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.
SHORT SALES AGAINST THE BOX.
Growth Investor Portfolio may sell short securities it owns or has
the right to acquire without further consideration, using a
technique called selling short "against the box." Short sales
against the box may protect Growth Investor Portfolio against the
risk of losses in the value of its portfolio securities because
any unrealized losses with respect to such securities should be
wholly or partly offset by a corresponding gain in the short
position. However, any potential gains in such securities should
be wholly or partially offset by a corresponding loss in the short
position. Short sales against the box may be used to lock in a
profit on a security when, for tax reasons or otherwise, the
Adviser does not want to sell the security. Growth Investor
Portfolio does not expect to commit more than 5% of its net assets
to short sales against the box. For a more complete explanation,
please refer to the Statement of Additional Information.
DERIVATIVES.
Consistent with its objective, Growth Investor Portfolio may
invest in a broad array of financial instruments and securities,
including conventional exchange-traded and non-exchange-traded
options, futures contracts, futures options, securities
collateralized by underlying pools of mortgages or other
receivables, floating rate instruments, and other instruments that
securitize assets of various types ("Derivatives"). In each case,
the value of the instrument or security is "derived" from the
performance of an underlying asset or a "benchmark" such as a
security index, an interest rate, or a currency. Growth Investor
Portfolio does not expect to invest more than 5% of its net assets
in any type of Derivative except for options, futures contracts,
and futures options.
In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, Growth Investor
Portfolio may: (1) purchase and write both call options and put
options on securities, indexes and foreign currencies; (2) enter
into interest rate, index and foreign currency futures contracts;
(3) write options on such futures contracts; and (4) purchase
other types of forward or investment contracts linked to
individual securities, indexes or other benchmarks. Growth
Investor Portfolio may write a call or put option only if the
option is covered. As the writer of a covered call option, Growth
Investor Portfolio foregoes, during the option's life, the
opportunity to profit from increases in market value of the
security covering the call option above the sum of the premium and
the exercise price of the call. There can be no assurance that a
liquid market will exist when Growth Investor Portfolio seeks to
close out a position. In addition, because futures positions may
require low margin deposits, the use of futures contracts involves
a high degree of leverage and may result in losses in excess of
the amount of the margin deposit.
Derivatives are most often used to manage investment risk or to
create an investment position indirectly because they are more
efficient or less costly than direct investment. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's ability
to correctly predict changes in the levels and directions of
movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
PORTFOLIO TURNOVER.
Although Growth Investor Portfolio does not purchase securities
with a view to rapid turnover, there are no limitations on the
length of time portfolio securities must be held. Accordingly,
the portfolio turnover rate may vary significantly from year to
year, but is not expected to exceed 100% under normal market
conditions. A high rate of portfolio turnover may result in
increased transaction expenses and the realization of capital
gains and losses. (See Distributions and Income Taxes.)
NET ASSET VALUE
The purchase and redemption price of Advisor Young Investor Fund's
shares is its net asset value per share. Advisor Young Investor
Fund determines the net asset value of its shares as of the close
of trading on the New York Stock Exchange ("NYSE") (currently 3:00
p.m., central time) by dividing the difference between the value
of its assets and liabilities by the number of shares outstanding.
Growth Investor Portfolio allocates net asset value, income, and
expenses to Advisor Young Investor Fund and any other of its
feeder funds in proportion to their respective interests in Growth
Investor Portfolio.
Net asset value will not be determined on days when the NYSE is
closed unless, in the judgment of the Board of Trustees, the net
asset value of Advisor Young Investor Fund should be determined on
any such day, in which case the determination will be made at 3:00
p.m., central time.
Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation 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.
Long-term straight-debt obligations and securities convertible
into stocks are valued at a fair value using a procedure
determined in good faith by the Board of Trustees. Pricing
services approved by the Board provide valuations (some of which
may be "readily available market quotations"). These valuations
are reviewed by the Adviser. If the Adviser believes that a
valuation received from the service does not represent a fair
value, it values the obligation using a method that the Board
believes represents fair value. The Board may approve the use of
other pricing services and any pricing service used may employ
electronic data processing techniques, including a so-called
"matrix" system, to determine valuations. Other assets and
securities are valued by a method that the Board believes
represents fair value.
HOW TO PURCHASE SHARES
You may purchase Advisor Young Investor Fund shares only through
broker-dealers, banks, or other intermediaries, including
retirement plan service providers ("Intermediaries"). The Adviser
and Advisor Young Investor Fund do not recommend, endorse, or
receive payments from any Intermediary.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of Advisor Young
Investor Fund's shares is made at Advisor Young Investor Fund's
net asset value (see Net Asset Value) next determined after
receipt by the Fund or through an authorized agent of an order in
good form, including receipt of payment.
CONDITIONS OF PURCHASE. Each purchase order for Advisor Young
Investor Fund must be accepted by an authorized officer of Advisor
Trust or its authorized agent and is not binding until accepted
and entered on the books of Advisor Young Investor Fund. Once
your purchase order has been accepted, you may not cancel or
revoke it; you may, however, redeem the shares. Advisor Trust
reserves the right not to accept any purchase order that it
determines not to be in the best interests of Advisor Trust or of
Advisor Young Investor Fund's shareholders.
PURCHASES THROUGH INTERMEDIARIES. You must purchase shares
through Intermediaries. These Intermediaries may charge for their
services or place limitations on the extent to which you may use
the services offered by Advisor Trust. In addition, each
Intermediary will establish its own procedures for the purchase of
shares of Advisor Young Investor Fund, including minimum initial
and additional investments, and the acceptable methods of payment
for shares. Your Intermediary may be closed on days when the NYSE
is open. As a result, prices of Fund shares may be significantly
affected on days when you have no access to your Intermediary to
buy shares. If you wish to purchase shares, please contact your
Intermediary for instructions.
Retirement Plans. If you purchase shares through a retirement
plan, you should be aware that retirement plan administrators may
aggregate purchase and redemption orders for participants in the
plan. Therefore, there may be a delay between the time you place
your order with the plan administrator and the time the order is
forwarded for execution.
HOW TO REDEEM SHARES
You may redeem shares only through Intermediaries. Each
Intermediary will establish its own procedures for the sale of
shares of Advisor Young Investor Fund. Your Intermediary may be
closed on days when the NYSE is open. As a result, prices for
Fund shares may be significantly affected on days when you have no
access to your Intermediary to sell shares. If you wish to redeem
shares through an Intermediary, please contact the Intermediary
for instructions.
EXCHANGE PRIVILEGE. Through an account with an Intermediary, you
may redeem all or any portion of your Advisor Young Investor Fund
shares and use the proceeds to purchase shares of any other Fund
that is a series of Advisor Trust offered for sale in the state in
which the Intermediary is located. Each Intermediary will
establish its own exchange policies and procedures. In particular,
individual participants of qualified retirement plans may exchange
shares through the plan sponsor or administrator. Those
participants may exchange shares only for shares of other Advisor
Trust Funds that are included in the plan. An exchange
transaction is a sale and purchase of shares for federal income
tax purposes and may result in capital gain or loss. Before
exchanging into another Advisor Trust Fund, you should obtain the
prospectus for the Advisor Trust Fund in which you wish to invest
and read it carefully. The registration of the account to which
you are making an exchange must be exactly the same as that of the
account from which the exchange is made. Advisor Young Investor
Fund reserves the right to suspend, limit, modify, or terminate
the Exchange Privilege or its use in any manner by any person or
class; Intermediaries would be notified of such a change.
GENERAL REDEMPTION POLICIES. Redemption instructions may not be
cancelled or revoked once they have been received and accepted by
Advisor Trust. Advisor Trust cannot accept a redemption request
that specifies a particular date or price for redemption or any
special conditions.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received by the Intermediary. (See Net Asset
Value.) Because the redemption price you receive depends upon
Advisor Young Investor Fund's net asset value per share at the
time of redemption, it may be more or less than the price you
originally paid for the shares and may result in a realized
capital gain or loss.
Advisor Trust will pay redemption proceeds as soon as practicable,
and in no event later than seven days after proper instructions
are received by Advisor Young Investor Fund or its authorized
agent.
DISTRIBUTIONS AND INCOME TAXES
DISTRIBUTIONS. Income dividends are declared and paid annually.
Advisor Young Investor Fund intends to distribute by the end of
each calendar year at least 98% of any net capital gains realized
from the sale of securities during the twelve-month period ended
October 31 in that year. Advisor Young Investor Fund intends to
distribute any undistributed net investment income and net
realized capital gains in the following year.
All income dividends and capital gain distributions on shares of
Advisor Young Investor Fund will be reinvested in additional
shares unless your Intermediary elects to have distributions paid
by check. Reinvestment normally occurs on the payable date.
INCOME TAXES. For federal income tax purposes, Advisor Young
Investor Fund is treated as a separate taxable entity distinct
from the other series of Advisor Trust. Growth Investor Portfolio
intends to qualify for the special tax treatment afforded
regulated investment companies under Subchapter M of the Internal
Revenue Code, so that it will be relieved of federal income tax on
that part of its net investment income and net capital gain that
is distributed to shareholders.
Advisor Young Investor Fund will distribute substantially all of
its ordinary income and net capital gains on a current basis.
Generally distributions are taxable as ordinary income, except
that any distributions of net long-term capital gains will be
taxed as such. However, distributions by Advisor Young Investor
Fund to plans that qualify for tax-exempt treatment under federal
income tax laws will not be taxable. Special tax rules apply to
investments through such plans.
This section is not intended to be a full discussion of income tax
laws and their effect on shareholders. You may wish to consult
your own tax advisor.
MANAGEMENT
TRUSTEES AND INVESTMENT ADVISER. The Board of Trustees of Advisor
Trust and the Board of Trustees of Base Trust have overall
management responsibility for Advisor Young Investor Fund and
Growth Investor Portfolio, respectively. See Management in the
Statement of Additional Information for the names of and other
information about the trustees and officers. Since Advisor Trust
and Base Trust have the same trustees, the trustees have adopted
conflict of interest procedures to monitor and address potential
conflicts between the interests of Advisor Young Investor Fund and
Growth Investor Portfolio and other feeder funds investing in
Growth Investor Portfolio that share a common Board of Trustees
with Advisor Trust and Base Trust.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
investment portfolio of Growth Investor Portfolio and the business
affairs of Advisor Young Investor Fund, Growth Investor Portfolio,
Advisor Trust, and Base Trust, subject to the direction of the
respective Board. The Adviser is registered as an investment
adviser under the Investment Advisers Act of 1940. The Adviser
was organized in 1986 to succeed to the business of Stein Roe &
Farnham, a partnership that had advised and managed mutual funds
since 1949. The Adviser is a wholly owned subsidiary of Liberty
Financial Companies, Inc. ("Liberty Financial"), which in turn is
a majority owned indirect subsidiary of Liberty Mutual Insurance
Company.
PORTFOLIO MANAGERS. Erik P. Gustafson, David P. Brady and Arthur
J. McQueen have been portfolio managers of Growth Investor
Portfolio since its inception in 1997 and had managed its
predecessor since February 1995, March 1995 and April 1996,
respectively. As of December 31, 1996, Messrs. Gustafson, Brady
and McQueen were responsible for co-managing $877 million, $877
million and $271 million in mutual fund net assets, respectively.
Messrs. Gustafson and McQueen are senior vice presidents of the
Adviser and Mr. Brady is a vice president of the Adviser. Before
joining the Adviser, Mr. Gustafson was an attorney with Fowler,
White, Burnett, Hurley, Banick & Strickroot from 1989 to 1992. He
holds a B.A. from the University of Virginia (1985) and M.B.A. and
J.D. degrees from Florida State University (1989). Mr. Brady, who
joined the Adviser in 1993, was an equity investment analyst with
State Farm Mutual Automobile Insurance Company from 1986 to 1993.
A chartered financial analyst, Mr. Brady earned a B.S. in Finance,
graduating Magna Cum Laude, from the University of Arizona (1986),
and an M.B.A. from the University of Chicago (1989). Mr. McQueen
earned a B.S. from Villanova University (1980) and an M.B.A. from
the Wharton School of the University of Pennsylvania (1987). Mr.
McQueen has been employed by the Adviser as an equity analyst
since 1987 and was previously employed by Citibank and GTE.
FEES AND EXPENSES. The Adviser is entitled to receive a monthly
administrative fee from Advisor Young Investor Fund, computed and
accrued daily, at an annual rate of 0.20% of the first $500
million of average net assets, 0.15% of the next $500 million, and
0.125% thereafter; and a monthly management fee from Growth
Investor Portfolio, computed and accrued daily, at an annual rate
of 0.60% of the first $500 million of average net assets, 0.55% of
the next $500 million, and 0.50% thereafter. However, as noted
above under Fee Table, the Adviser may voluntarily undertake to
reimburse Advisor Young Investor Fund for a portion of its
operating expenses and its pro rata share of Growth Investor
Portfolio's operating expenses.
Because Advisor Young Investor Fund also has as an educational
objective, its non-advisory expenses may be higher than other
mutual funds due to the distribution of educational and other
reports to shareholders.
The Adviser provides office space and executive and other
personnel to Advisor Trust and Base Trust. All expenses of
Advisor Young Investor Fund (other than those paid by the
Adviser), including, but not limited to, printing and postage
charges, securities registration fees, custodian and transfer
agency fees, legal and auditing fees, compensation of trustees not
affiliated with the Adviser, and expenses incidental to its
organization, are paid out of the assets of Advisor Young Investor
Fund.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to Advisor Young
Investor Fund and Growth Investor Portfolio including computation
of net asset value and calculation of its net income and capital
gains and losses on disposition of assets.
In addition, the Adviser is free to make additional payments out
of its own assets to promote the sale of shares of Advisor Young
Investor Fund.
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
contracts for Growth Investor Portfolio. In doing so, the Adviser
seeks to obtain the best combination of price and execution, which
involves a number of judgmental factors.
TRANSFER AGENT AND SHAREHOLDER SERVICES. SteinRoe Services Inc.
("SSI"), One South Wacker Drive, Chicago, Illinois 60606, a wholly
owned subsidiary of Liberty Financial, is the agent of Advisor
Trust for the transfer of shares, disbursement of dividends, and
maintenance of shareholder accounting records.
Some Intermediaries that maintain nominee accounts with Advisor
Young Investor Fund for their clients who are Fund shareholders
may be paid a fee from SSI of up to 0.25% of the average net
assets held in such accounts for shareholder servicing and
accounting services they provide with respect to the underlying
Fund shares.
DISTRIBUTOR. The shares of Advisor Young Investor Fund are
offered for sale through Liberty Securities Corporation
("Distributor") without any sales commissions. The Distributor is
a wholly owned indirect subsidiary of Liberty Financial. The
business address of the Distributor is 600 Atlantic Avenue,
Boston, Massachusetts 02210; however, all Fund correspondence
(including purchase and redemption orders) should be mailed to
SteinRoe Services Inc. at P.O. Box 8900, Boston, Massachusetts
02205.
The trustees of Advisor Trust have adopted a plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("Plan"). The Plan
provides that, as compensation for the promotion and distribution
of shares of Advisor Young Investor Fund including its expenses
related to the sale and promotion of Fund shares, the Distributor
receives from Advisor Young Investor Fund a fee at an annual rate
of 0.25% of its average net assets. The Distributor generally
pays this amount to institutions that distribute Advisor Young
Investor Fund shares and provide services to Advisor Young
Investor Fund and its shareholders. Those institutions may use
the payments for, among other purposes, compensating employees
engaged in sales and/or shareholder servicing. The amount of fees
paid by Advisor Young Investor Fund during any year may be more or
less than the cost of distribution or other services provided to
Advisor Young Investor Fund. NASD rules limit the amount of
annual distribution fees that may be paid by a mutual fund and
impose a ceiling on the cumulative distribution fees paid.
Advisor Trust's Plan complies with those rules.
CUSTODIAN. State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, Massachusetts 02101, is the custodian for
Advisor Young Investor Fund and Growth Investor Portfolio.
Foreign securities are maintained in the custody of foreign banks
and trust companies that are members of the Bank's Global Custody
Network or foreign depositories used by such members. (See
Custodian in the Statement of Additional Information.)
ORGANIZATION AND DESCRIPTION OF SHARES
Advisor Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
July 31, 1996, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either Advisor
Trust's shareholders or its trustees. Advisor Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, seven series are authorized and outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Advisor Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of Advisor Trust.
The Declaration of Trust provides that persons extending credit
to, contracting with, or having any claim against, Advisor Trust
or any particular series shall look only to the assets of Advisor
Trust or of the respective series for payment under such credit,
contract or claim, and that the shareholders, trustees and
officers of Advisor Trust shall have no personal liability
therefor. The Declaration of Trust requires that notice of such
disclaimer of liability be given in each contract, instrument or
undertaking executed or made on behalf of Advisor Trust. The
Declaration of Trust provides for indemnification of any
shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Advisor Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Advisor
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
SPECIAL CONSIDERATIONS REGARDING THE
MASTER FUND/FEEDER FUND STRUCTURE
Advisor Young Investor Fund, an open-end management investment
company, seeks to achieve its objective by investing all of its
assets in shares of another mutual fund having an investment
objective identical to that of Advisor Young Investor Fund. The
initial shareholder of Advisor Young Investor Fund approved this
policy of permitting Advisor Young Investor Fund to act as a
feeder fund by investing in Growth Investor Portfolio. Please
refer to the Investment Policies, Portfolio Investments and
Strategies, and Investment Restrictions for a description of the
investment objectives, policies, and restrictions of Advisor Young
Investor Fund and Growth Investor Portfolio. The management and
expenses of both Advisor Young Investor Fund and Growth Investor
Portfolio are described under the Fee Table and Management.
Advisor Young Investor Fund bears its proportionate share of
Portfolio expenses.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
SR&F Growth Investor Portfolio is a separate series of SR&F Base
Trust ("Base Trust"), a Massachusetts common law trust organized
under an Agreement and Declaration of Trust ("Declaration of
Trust") dated August 23, 1993. The Declaration of Trust of Base
Trust provides that Advisor Young Investor Fund and other
investors in Growth Investor Portfolio will each be liable for all
obligations of Growth Investor Portfolio that are not satisfied by
the Portfolio. However, the risk of Advisor Young Investor Fund
incurring financial loss on account of such liability is limited
to circumstances in which both inadequate insurance existed and
Growth Investor Portfolio itself were unable to meet its
obligations. Accordingly, the trustees of Advisor Trust believe
that neither Advisor Young Investor Fund nor its shareholders will
be adversely affected by reason of Advisor Young Investor Fund's
investing in Growth Investor Portfolio.
The Declaration of Trust of Base Trust provides that Growth
Investor Portfolio will terminate 120 days after the withdrawal of
Advisor Young Investor Fund or any other investor in Growth
Investor Portfolio, unless the remaining investors vote to agree
to continue the business of Growth Investor Portfolio. The
trustees of Advisor Trust may vote Advisor Young Investor Fund's
interests in Growth Investor Portfolio for such continuation
without approval of Advisor Young Investor Fund's shareholders.
The common investment objective of Advisor Young Investor Fund and
Growth Investor Portfolio is non-fundamental and may be changed
without shareholder approval. The fundamental policies of Advisor
Young Investor Fund and the corresponding fundamental policies of
Growth Investor Portfolio can be changed only with shareholder
approval.
If Advisor Young Investor Fund, as a Portfolio investor, is
requested to vote on a proposed change in fundamental policy of
Growth Investor Portfolio or any other matter pertaining to Growth
Investor Portfolio (other than continuation of the business of
Growth Investor Portfolio after withdrawal of another investor),
Advisor Young Investor Fund will solicit proxies from its
shareholders and vote its interest in Growth Investor Portfolio
for and against such matters proportionately to the instructions
to vote for and against such matters received from Advisor Young
Investor Fund shareholders. Advisor Young Investor Fund will vote
shares for which it receives no voting instructions in the same
proportion as the shares for which it receives voting
instructions. If there are other investors in Growth Investor
Portfolio, there can be no assurance that any matter receiving a
majority of votes cast by Fund shareholders will receive a
majority of votes cast by all Growth Investor Portfolio investors.
If other investors hold a majority interest in Growth Investor
Portfolio, they could have voting control over Growth Investor
Portfolio.
In the event that Growth Investor Portfolio's fundamental policies
were changed so as to be inconsistent with those of Advisor Young
Investor Fund, the Board of Trustees of Advisor Trust would
consider what action might be taken, including changes to Advisor
Young Investor Fund's fundamental policies, withdrawal of Advisor
Young Investor Fund's assets from Growth Investor Portfolio and
investment of such assets in another pooled investment entity, or
the retention of another investment adviser. Any of these actions
would require the approval of Advisor Young Investor Fund's
shareholders. Advisor Young Investor Fund's inability to find a
substitute master fund or comparable investment management could
have a significant impact upon its shareholders' investments. Any
withdrawal of Advisor Young Investor Fund's assets could result in
a distribution in kind of portfolio securities (as opposed to a
cash distribution) to Advisor Young Investor Fund. Should such a
distribution occur, Advisor Young Investor Fund would incur
brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for Advisor
Young Investor Fund and could affect the liquidity of Advisor
Young Investor Fund.
Each investor in Growth Investor Portfolio, including Advisor
Young Investor Fund, may add to or reduce its investment in Growth
Investor Portfolio on each day the NYSE is open for business. The
investor's percentage of the aggregate interests in Growth
Investor Portfolio will be computed as the percentage equal to the
fraction (i) the numerator of which is the beginning of the day
value of such investor's investment in Growth Investor Portfolio
on such day plus or minus, as the case may be, the amount of any
additions to or withdrawals from the investor's investment in
Growth Investor Portfolio effected on such day; and (ii) the
denominator of which is the aggregate beginning of the day net
asset value of Growth Investor Portfolio on such day plus or
minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in Growth Investor
Portfolio by all investors in Growth Investor Portfolio. The
percentage so determined will then be applied to determine the
value of the investor's interest in Growth Investor Portfolio as
of the close of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in Growth Investor Portfolio,
but members of the general public may not invest directly in
Growth Investor Portfolio. Other investors in Growth Investor
Portfolio are not required to sell their shares at the same public
offering price as Advisor Young Investor Fund, might incur
different administrative fees and expenses than Advisor Young
Investor Fund, and their shares might be sold with a sales
commission. Therefore, Advisor Young Investor Fund shareholders
might have different investment returns than shareholders in
another investment company that invests exclusively in Growth
Investor Portfolio. Investment by such other investors in Growth
Investor Portfolio would provide funds for the purchase of
additional portfolio securities and would tend to reduce the
Portfolio's operating expenses as a percentage of its net assets.
Conversely, large-scale redemptions by any such other investors in
Growth Investor Portfolio could result in untimely liquidations of
Growth Investor Portfolio's security holdings, loss of investment
flexibility, and increases in the operating expenses of Growth
Investor Portfolio as a percentage of its net assets. As a
result, Growth Investor Portfolio's security holdings may become
less diverse, resulting in increased risk.
Growth Investor Portfolio commenced operations in February 1997
when Stein Roe Young Investor Fund, a mutual fund that had
invested directly in securities since 1994, converted into a
feeder fund by investing all of its assets in the Portfolio.
Currently Stein Roe Young Investor Fund, which is a series of
Stein Roe Investment Trust, is the only other investment company
investing in Growth Investor Portfolio. Information regarding any
investment company that may invest in Growth Investor Portfolio in
the future may be obtained by writing to SR&F Base Trust, Suite
3200, One South Wacker Drive, Chicago, Illinois 60606 or by
calling 800-338-2550. The Adviser may provide administrative or
other services to one or more of such investors.
FOR MORE INFORMATION
For more information about Advisor Young Investor Fund, call
Retirement Services at 800-322-1130 or Advisor/Broker Services at
800-322-0593.
______________________
<PAGE> 1
STEIN ROE ADVISOR SPECIAL VENTURE FUND
The investment objective of Advisor Special Venture Fund is to
provide long-term capital appreciation by investing primarily in a
diversified portfolio of equity securities of entrepreneurially
managed companies. It emphasizes investments in financially
strong small and medium-sized companies, based principally on
management appraisal and stock valuation. Advisor Special Venture
Fund invests all of its net investable assets in SR&F Special
Venture Portfolio, a portfolio of SR&F Base Trust that has the
same investment objective and substantially the same investment
policies as Advisor Special Venture Fund. (SEE SPECIAL
CONSIDERATIONS REGARDING MASTER FUND/FEEDER FUND STRUCTURE.)
Shares of Advisor Special Venture Fund may be purchased only
through Intermediaries, including retirement plan service
providers.
Advisor Special Venture Fund has no sales or redemption charges.
Advisor Special Venture Fund is a series of Stein Roe Advisor
Trust and Special Venture Portfolio is a series of SR&F Base
Trust. Each Trust is a diversified open-end management investment
company.
This prospectus contains information you should know before
investing in Advisor Special Venture Fund. Please read it
carefully and retain it for future reference.
A Statement of Additional Information dated February 14, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information may be obtained without charge
by writing to Stein Roe Mutual Funds, Suite 3200, One South Wacker
Drive, Chicago, Illinois 60606, or by calling the Adviser. For
additional information, call Retirement Services at 800-322-1130
or Advisor/Broker Services at 800-322-0593.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 14, 1997.
<PAGE> 2
TABLE OF CONTENTS
Page
Summary.................................2
Fee Table ..............................3
The Fund................................4
Investment Policies.....................5
Performance Information.................5
Risks and Investment Considerations ....6
Investment Restrictions ................7
Portfolio Investments and Strategies....8
Net Asset Value .......................10
How to Purchase Shares.................11
How to Redeem Shares ..................12
Distributions and Income Taxes.........13
Management ............................13
Organization and Description of Shares.15
Special Considerations Regarding the
Master Fund/Feeder Fund Structure....16
For More Information ..................18
SUMMARY
Stein Roe Advisor Special Venture Fund ("Advisor Special Venture
Fund") is a series of Stein Roe Advisor Trust, an open-end
diversified management investment company organized as a
Massachusetts business trust. (See The Fund and Organization and
Description of Shares.) This prospectus is not a solicitation in
any jurisdiction in which shares of Advisor Special Venture Fund
are not qualified for sale.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of
Advisor Special Venture Fund is to provide long-term capital
appreciation by investing primarily in a diversified portfolio of
equity securities of entrepreneurially managed companies. It
emphasizes investments in financially strong small and medium-
sized companies, based principally on management appraisal and
stock valuation. Advisor Special Venture Fund invests all of its
net investable assets in SR&F Special Venture Portfolio ("Special
Venture Portfolio") which has the same investment objective and
investment policies substantially similar to those of Advisor
Special Venture Fund. Special Venture Portfolio emphasizes
investments in financially strong small and medium-sized
companies, based principally on management appraisal and stock
valuation.
For a more detailed discussion of the investment objectives and
policies, please see Investment Policies and Portfolio Investments
and Strategies. There is, of course, no assurance that Advisor
Special Venture Fund and Special Venture Portfolio will achieve
their common investment objective.
INVESTMENT RISKS. Advisor Special Venture Fund is designed for
long-term investors who want greater return potential than is
available from the stock market in general, and who are willing to
tolerate the greater investment risk and market volatility
associated with investments in small and medium-sized companies.
Special Venture Portfolio may invest in foreign securities, which
may entail a greater degree of risk than investing in securities
of domestic issuers. Please see Investment Restrictions and Risks
and Investment Considerations for further information.
PURCHASES AND REDEMPTIONS. Shares of Advisor Special Venture Fund
may be purchased only through Intermediaries, including retirement
plan service providers. For information on purchasing and
redeeming Advisor Special Venture Fund shares, please see How to
Purchase Shares, How to Redeem Shares, and Management--
Distributor.
MANAGEMENT AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") is investment adviser to Special Venture Portfolio. In
addition, it provides administrative services to Advisor Special
Venture Fund and Special Venture Portfolio. For a description of
the Adviser and these service arrangements, see Management.
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.......................None
Sales Load Imposed on Reinvested Dividends............None
Deferred Sales Load...................................None
Redemption Fees.......................................None
Exchange Fees.........................................None
ANNUAL FUND OPERATING EXPENSES (as a percentage of
average net assets; after reimbursement)
Management and Administrative Fees (after
reimbursement).....................................0.75%
12b-1 Fees............................................0.25%
Other Expenses (after reimbursement)..................0.50%
-----
Total Operating Expenses (after reimbursement)........1.50%
=====
EXAMPLE.
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return; and (2) redemption at the end of
each time period:
1 year 3 years
------ -------
$15 $47
The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in Advisor Special Venture Fund. The
Fee Table reflects the combined expenses of both Advisor Special
Venture Fund and Special Venture Portfolio. Anticipated Total
Operating Expenses for Advisor Special Venture Fund are annualized
projections based upon current administrative fees and management
fees. Other Expenses are estimated amounts for the current fiscal
year. The figures assume that the percentage amounts listed under
Annual Fund Operating Expenses remain the same during each of the
periods and that all income dividends and capital gain
distributions are reinvested in additional shares.
From time to time, the Adviser may voluntarily undertake to
reimburse Advisor Special Venture Fund for a portion of its
operating expenses and its pro rata share of the fees and expenses
payable by Special Venture Portfolio. The Adviser has undertaken
to reimburse Advisor Special Venture Fund for its operating
expenses and its pro rata share of Special Venture Portfolio's
operating expenses to the extent such expenses exceed 1.50% of
Advisor Special Venture Fund's annual average net assets. This
commitment expires on January 31, 1998, subject to earlier review
and possible termination by the Adviser on 30 days' notice to
Advisor Special Venture Fund. Absent such reimbursement, Advisor
Special Venture Fund's share of Special Venture Portfolio's
Management Fee and the Fund's Administrative Fee, Other Expenses
and Total Operating Expenses would be 0.90%, 0.55% and 1.70%,
respectively. Any such reimbursement will lower Advisor Special
Venture Fund's overall expense ratio and increase its overall
return to investors. (Also see Management--Fees and Expenses.)
Advisor Special Venture Fund pays the Adviser an administrative
fee based on its average daily net assets and Special Venture
Portfolio pays the Adviser a management fee based on its average
daily net assets. The trustees of Advisor Trust have considered
whether the annual operating expenses of Advisor Special Venture
Fund, including its proportionate share of the expenses of Special
Venture Portfolio, would be more or less than if Advisor Special
Venture Fund invested directly in the securities held by Special
Venture Portfolio, and concluded that Advisor Special Venture
Fund's expenses would not be materially greater in such case.
The figures in the Example are not necessarily indicative of past
or future expenses, and actual expenses may be greater or less
than those shown. Although information such as that shown in the
Example and Fee Table is useful in reviewing Advisor Special
Venture Fund's expenses and in providing a basis for comparison
with other mutual funds, it should not be used for comparison with
other investments using different assumptions or time periods.
Because Advisor Special Venture Fund pays a 12b-1 fee, long-term
investors in Advisor Special Venture Fund may pay more over long
periods of time in distribution expenses than the maximum front-
end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD"). For further information on
Advisor Special Venture Fund's 12b-1 fee, see Management--
Distributor or call your financial representative.
THE FUND
STEIN ROE ADVISOR SPECIAL VENTURE FUND ("Advisor Special Venture
Fund") is a series of Stein Roe Advisor Trust ("Advisor Trust"),
which is an open-end diversified management investment company
authorized to issue shares of beneficial interest in separate
series.
Rather than invest in securities directly, Advisor Special Venture
Fund seeks to achieve its investment objective by using the
"master fund/feeder fund structure." Under that structure, a
feeder fund and one or more feeder funds pool their assets in a
master portfolio that has the same investment objective and
substantially the same investment policies as the feeder funds.
(See Special Considerations Regarding Master Fund/Feeder Fund
Structure.) Advisor Special Venture Fund invests all of its net
investable assets in SR&F Special Venture Portfolio ("Special
Venture Portfolio"), which is a series of SR&F Base Trust ("Base
Trust").
Stein Roe & Farnham Incorporated (the "Adviser") provides
portfolio management services to Special Venture Portfolio and
administrative services to Advisor Special Venture Fund and
Special Venture Portfolio.
INVESTMENT POLICIES
The investment objective of Advisor Special Venture Fund is to
provide long-term capital appreciation by investing primarily in a
diversified portfolio of equity securities of entrepreneurially
managed companies. It emphasizes investments in financially
strong small and medium-sized companies, based principally on
management appraisal and stock valuation. Advisor Special Venture
Fund invests all of its net investable assets in Special Venture
Portfolio, which has the same investment objective and investment
policies substantially similar to Advisor Special Venture Fund.
The Adviser considers "small" and "medium-sized" companies to be
those with market capitalizations of less than $1 billion and $1
to $3 billion, respectively.
In both its initial and ongoing appraisals of a company's
management, the Adviser seeks to know both the principal owners
and senior management and to assess their business judgment and
strategies through personal visits. The Adviser favors companies
whose management has an owner/operator, risk-averse orientation
and a demonstrated ability to create wealth for investors.
Attractive company characteristics include unit growth, favorable
cost structures or competitive positions, and financial strength
that enables management to execute business strategies under
difficult conditions. A company is attractively valued when its
stock can be purchased at a meaningful discount to the value of
the underlying business.
Further information on investment techniques that may be employed
by Special Venture Portfolio and the risks associated with such
techniques may be found under Risks and Investment Considerations
and Portfolio Investments and Strategies in this prospectus and in
the Statement of Additional Information.
PERFORMANCE INFORMATION
The total return from an investment in Advisor Special Venture
Fund is measured by the distributions received (assuming
reinvestment), plus or minus the change in the net asset value per
share for a given period. A total return percentage may be
calculated by dividing the value of a share at the end of the
period (including reinvestment of distributions) by the value of
the share at the beginning of the period and subtracting one. For
a given period, an average annual total return may be calculated
by finding the average annual compounded rate that would equate a
hypothetical $1,000 investment to the ending redeemable value.
Comparison of Advisor Special Venture Fund's total return with
alternative investments should consider differences between the
Fund and the alternative investments, the periods and methods used
in calculation of the return being compared, and the impact of
taxes on alternative investments. Of course, past performance is
not necessarily indicative of future results. Share prices may
vary, and your shares when redeemed may be worth more or less than
your original purchase price.
As of the date of this Prospectus, Advisor Special Venture Fund
had no past performance. However, Stein Roe Special Venture Fund,
a different Stein Roe Fund which is a series of Stein Roe
Investment Trust and has a similar name, the same investment
objective and substantially the same investment policies as
Advisor Special Venture Fund, also invests all of its net
investable assets in Special Venture Portfolio. The average
annual total return for the periods ended September 30, 1996 for a
1-year and since-inception (October 17, 1994) investment in Stein
Roe Special Venture Fund were 31.81% and 30.22%, respectively.
Stein Roe Special Venture Fund has a different fee structure than
Advisor Special Venture Fund, and does not pay 12b-1 fees. Had
these fees been reflected, the total returns shown in the table
would have been lower. The information shown above reflects the
performance of Stein Roe Special Venture Fund, and should not be
interpreted as indicative of Advisor Special Venture Fund's future
performance.
RISKS AND INVESTMENT CONSIDERATIONS
Advisor Special Venture Fund is designed for long-term investors
who want greater return potential than is available from the stock
market in general, and who are willing to tolerate the greater
investment risk and market volatility associated with investments
in small and medium-sized companies. Special Venture Portfolio
usually allocates its investments among a number of different
industries rather than concentrating in a particular industry or
group of industries, but this does not eliminate all risk. It
will not, however, invest more than 25% of the total value of its
assets (at the time of investment) in the securities of companies
in any one industry. There can be no guarantee that Advisor
Special Venture Fund or Special Venture Portfolio will achieve its
objective.
Special Venture Portfolio may invest up to 35% of its total assets
in debt securities. Debt securities rated in the fourth highest
grade may have some speculative characteristics, and changes in
economic conditions or other circumstances may lead to a weakened
capacity of the issuers of such securities to make principal and
interest payments. Securities rated below investment grade may
possess speculative characteristics, and changes in economic
conditions are more likely to affect the issuer's capacity to pay
interest or repay principal.
Special Venture Portfolio may invest up to 25% of its total assets
in foreign securities. For purposes of this limit, foreign
securities exclude American Depositary Receipts (ADRs), foreign
debt securities denominated in U.S. dollars, and securities
guaranteed by a U.S. person. Investment in foreign securities may
represent a greater degree of risk (including risk related to
exchange rate fluctuations, tax provisions, exchange and currency
controls, and expropriation of assets) than investment in
securities of domestic issuers. Other risks of foreign investing
include less complete financial information on issuers, different
accounting, auditing and financial reporting standards, different
settlement practices, less market liquidity, more market
volatility, less developed and regulated markets, and greater
political instability. In addition, various restrictions by
foreign governments on investments by non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.
Further information on investment techniques that may be employed
by Special Venture Portfolio may be found under Portfolio
Investments and Strategies.
INVESTMENT RESTRICTIONS
Neither Advisor Special Venture Fund nor Special Venture Portfolio
may invest more than 5% of its assets in the securities of any one
issuer. This restriction applies only to 75% of its investment
portfolio, and does not apply to securities of the U.S. Government
or repurchase agreements /1/ for such securities. This
restriction also does not prevent Advisor Special Venture Fund
from investing all of its assets in shares of another investment
company having the identical investment objective under a
master/feeder structure.
- ----------------
/1/ A repurchase agreement involves a sale of securities to
Special Venture Portfolio in which the seller agrees to repurchase
the securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, Special Venture
Portfolio could experience both losses and delays in liquidating
its collateral.
- ----------------
Neither Advisor Special Venture Fund nor Special Venture Portfolio
will acquire more than 10% of the outstanding voting securities of
any one issuer. Advisor Special Venture Fund may, however, invest
all of its assets in shares of another investment company having
the identical investment objective under a master/feeder
structure.
Neither Advisor Special Venture Fund nor Special Venture Portfolio
may make loans except that it may (1) purchase money market
instruments and enter into repurchase agreements; (2) acquire
publicly-distributed or privately-placed debt securities; (3) lend
its portfolio securities under certain conditions; and (4)
participate in an interfund lending program with other Stein Roe
Funds and Portfolios. Advisor Special Venture Fund and Special
Venture Portfolio may not borrow money, except for non-leveraging,
temporary, or emergency purposes or in connection with
participation in the interfund lending program. Neither the
aggregate borrowings (including reverse repurchase agreements) nor
the aggregate loans at any one time may exceed 33 1/3% of the
value of total assets. Additional securities may not be purchased
when borrowings less proceeds receivable from sales of portfolio
securities exceed 5% of total assets.
Advisor Special Venture Fund and Special Venture Portfolio may
invest in repurchase agreements, provided that neither will invest
more than 15% of its net assets in illiquid securities, including
repurchase agreements maturing in more than seven days.
The policies summarized in the first three paragraphs under this
section and the policy with respect to concentration of
investments in any one industry described under Risks and
Investment Considerations are fundamental policies of Advisor
Special Venture Fund and Special Venture Portfolio and, as such,
can be changed only with the approval of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940. The common investment objective of Advisor
Special Venture Fund and Special Venture Portfolio is non-
fundamental and, as such, may be changed by the Board of Trustees
without shareholder approval. All of the investment restrictions
are set forth in the Statement of Additional Information.
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES.
Special Venture Portfolio may invest up to 35% of its net assets
in debt securities, but it does not currently intend to invest
more than 5% of its net assets in debt securities rated below
investment grade. The risks inherent in debt securities depend
primarily on the term and quality of the obligations in Special
Venture Portfolio's portfolio as well as on market conditions. A
decline in the prevailing levels of interest rates generally
increases the value of debt securities, while an increase in rates
usually reduces the value of those securities. When the Adviser
determines that adverse market or economic conditions exist and
considers a temporary defensive position advisable, Special
Venture Portfolio may invest without limitation in high-quality
fixed income securities or hold assets in cash or cash
equivalents.
FOREIGN SECURITIES.
Special Venture Portfolio may invest in sponsored or unsponsored
ADRs. In addition to, or in lieu of, such direct investment,
Special Venture Portfolio may construct a synthetic foreign debt
position by (a) purchasing a debt instrument denominated in one
currency, generally U.S. dollars; and (b) concurrently entering
into a forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and
at a specified rate of exchange. Because of the availability of a
variety of highly liquid U.S. dollar debt instruments, a synthetic
foreign debt position utilizing such U.S. dollar instruments may
offer greater liquidity than direct investment in foreign currency
debt instruments.
In connection with the purchase of foreign securities, Special
Venture Portfolio may enter into foreign currency forward and
futures contracts to hedge the currency risk in settlement of a
particular security transaction or relative to the entire
portfolio. A forward contract to purchase an amount of foreign
currency sufficient to pay the purchase price of securities at
settlement date involves the risk that the value of the foreign
currency may decline relative to the value of the dollar prior to
the settlement date. This risk is in addition to the risk that
the value of the foreign security purchased may decline. Special
Venture Portfolio also may enter into foreign currency contracts
as a hedging technique to limit or reduce exposure of the entire
portfolio to currency fluctuations. In addition, Special Venture
Portfolio may use options and futures contracts, as described
below, to limit or reduce exposure to currency fluctuations.
CONVERTIBLE SECURITIES.
By investing in convertible securities, Special Venture Portfolio
obtains the right to benefit from the capital appreciation
potential in the underlying stock upon exercise of the conversion
right, while earning higher current income than would be available
if the stock were purchased directly. In determining whether to
purchase a convertible, the Adviser will consider substantially
the same criteria that would be considered in purchasing the
underlying stock. Although convertible securities are frequently
rated investment grade, Special Venture Portfolio also may
purchase unrated securities or securities rated below investment
grade if the securities meet the Adviser's other investment
criteria. Convertible securities rated below investment grade
tend to be more sensitive to interest rate and economic changes,
may be obligations of issuers who are less creditworthy than
issuers of higher quality convertible securities, and may be more
thinly traded due to the fact that such securities are less well
known to investors than either common stock or conventional debt
securities. As a result, the Adviser's own investment research
and analysis tends to be more important than other factors in the
purchase of convertible securities.
LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES.
Special Venture Portfolio may make loans of its portfolio
securities to broker-dealers and banks subject to certain
restrictions described in the Statement of Additional Information.
Special Venture Portfolio may participate in an interfund lending
program, subject to certain restrictions described in the
Statement of Additional Information. Special Venture Portfolio
may invest in securities purchased on a when-issued or delayed-
delivery basis. Although the payment terms of these securities
are established at the time Special Venture Portfolio enters into
the commitment, the securities may be delivered and paid for a
month or more after the date of purchase, when their value may
have changed. Special Venture Portfolio will make such
commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.
SHORT SALES AGAINST THE BOX.
Special Venture Portfolio may sell short securities it owns or has
the right to acquire without further consideration, using a
technique called selling short "against the box." Short sales
against the box may protect Special Venture Portfolio against the
risk of losses in the value of its portfolio securities because
any unrealized losses with respect to such securities should be
wholly or partly offset by a corresponding gain in the short
position. However, any potential gains in such securities should
be wholly or partially offset by a corresponding loss in the short
position. Short sales against the box may be used to lock in a
profit on a security when, for tax reasons or otherwise, the
Adviser does not want to sell the security. Special Venture
Portfolio does not expect to commit more than 5% of its net assets
to short sales against the box. For a more complete explanation,
please refer to the Statement of Additional Information.
DERIVATIVES.
Consistent with its objective, Special Venture Portfolio may
invest in a broad array of financial instruments and securities,
including conventional exchange-traded and non-exchange-traded
options, futures contracts, futures options, securities
collateralized by underlying pools of mortgages or other
receivables, floating rate instruments, and other instruments that
securitize assets of various types ("Derivatives"). In each case,
the value of the instrument or security is "derived" from the
performance of an underlying asset or a "benchmark" such as a
security index, an interest rate, or a currency. Special Venture
Portfolio does not expect to invest more than 5% of its net assets
in any type of Derivative except for options, futures contracts,
and futures options.
In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, Special Venture
Portfolio may: (1) purchase and write both call options and put
options on securities, indexes and foreign currencies; (2) enter
into interest rate, index and foreign currency futures contracts;
(3) write options on such futures contracts; and (4) purchase
other types of forward or investment contracts linked to
individual securities, indexes or other benchmarks. Special
Venture Portfolio may write a call or put option only if the
option is covered. As the writer of a covered call option,
Special Venture Portfolio foregoes, during the option's life, the
opportunity to profit from increases in market value of the
security covering the call option above the sum of the premium and
the exercise price of the call. There can be no assurance that a
liquid market will exist when Special Venture Portfolio seeks to
close out a position. In addition, because futures positions may
require low margin deposits, the use of futures contracts involves
a high degree of leverage and may result in losses in excess of
the amount of the margin deposit.
Derivatives are most often used to manage investment risk or to
create an investment position indirectly because they are more
efficient or less costly than direct investment. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's ability
to correctly predict changes in the levels and directions of
movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
PORTFOLIO TURNOVER.
Although Special Venture Portfolio does not purchase securities
with a view to rapid turnover, there are no limitations on the
length of time portfolio securities must be held. Accordingly,
the portfolio turnover rate may vary significantly from year to
year, but is not expected to exceed 100% under normal market
conditions. Flexibility of investment and emphasis on capital
appreciation may involve greater portfolio turnover than that of
mutual funds that have the objectives of income or maintenance of
a balanced investment position. A high rate of portfolio turnover
may result in increased transaction expenses and the realization
of capital gains and losses. (See Distributions and Income
Taxes.)
NET ASSET VALUE
The purchase and redemption price of Advisor Special Venture
Fund's shares is its net asset value per share. Advisor Special
Venture Fund determines the net asset value of its shares as of
the close of trading on the New York Stock Exchange ("NYSE")
(currently 3:00 p.m., central time) by dividing the difference
between the value of its assets and liabilities by the number of
shares outstanding. Special Venture Portfolio allocates net asset
value, income, and expenses to Advisor Special Venture Fund and
any other of its feeder funds in proportion to their respective
interests in Special Venture Portfolio.
Net asset value will not be determined on days when the NYSE is
closed unless, in the judgment of the Board of Trustees, the net
asset value of Advisor Special Venture Fund should be determined
on any such day, in which case the determination will be made at
3:00 p.m., central time.
Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation 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.
Long-term straight-debt obligations and securities convertible
into stocks are valued at a fair value using a procedure
determined in good faith by the Board of Trustees. Pricing
services approved by the Board provide valuations (some of which
may be "readily available market quotations"). These valuations
are reviewed by the Adviser. If the Adviser believes that a
valuation received from the service does not represent a fair
value, it values the obligation using a method that the Board
believes represents fair value. The Board may approve the use of
other pricing services and any pricing service used may employ
electronic data processing techniques, including a so-called
"matrix" system, to determine valuations. Other assets and
securities are valued by a method that the Board believes
represents fair value.
HOW TO PURCHASE SHARES
You may purchase Advisor Special Venture Fund shares only through
broker-dealers, banks, or other intermediaries, including
retirement plan service providers ("Intermediaries"). The Adviser
and Advisor Special Venture Fund do not recommend, endorse, or
receive payments from any Intermediary.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of Advisor
Special Venture Fund's shares is made at Advisor Special Venture
Fund's net asset value (see Net Asset Value) next determined after
receipt by the Fund or through an authorized agent of an order in
good form, including receipt of payment.
CONDITIONS OF PURCHASE. Each purchase order for Advisor Special
Venture Fund must be accepted by an authorized officer of Advisor
Trust or its authorized agent and is not binding until accepted
and entered on the books of Advisor Special Venture Fund. Once
your purchase order has been accepted, you may not cancel or
revoke it; you may, however, redeem the shares. Advisor Trust
reserves the right not to accept any purchase order that it
determines not to be in the best interests of Advisor Trust or of
Advisor Special Venture Fund's shareholders.
PURCHASES THROUGH INTERMEDIARIES. You must purchase shares
through Intermediaries. These Intermediaries may charge for their
services or place limitations on the extent to which you may use
the services offered by Advisor Trust. In addition, each
Intermediary will establish its own procedures for the purchase of
shares of Advisor Special Venture Fund, including minimum initial
and additional investments, and the acceptable methods of payment
for shares. Your Intermediary may be closed on days when the NYSE
is open. As a result, prices of Fund shares may be significantly
affected on days when you have no access to your Intermediary to
buy shares. If you wish to purchase shares, please contact your
Intermediary for instructions.
Retirement Plans. If you purchase shares through a retirement
plan, you should be aware that retirement plan administrators may
aggregate purchase and redemption orders for participants in the
plan. Therefore, there may be a delay between the time you place
your order with the plan administrator and the time the order is
forwarded for execution.
HOW TO REDEEM SHARES
You may redeem shares only through Intermediaries. Each
Intermediary will establish its own procedures for the sale of
shares of Advisor Special Venture Fund. Your Intermediary may be
closed on days when the NYSE is open. As a result, prices for
Fund shares may be significantly affected on days when you have no
access to your Intermediary to sell shares. If you wish to redeem
shares through an Intermediary, please contact the Intermediary
for instructions.
EXCHANGE PRIVILEGE. Through an account with an Intermediary, you
may redeem all or any portion of your Advisor Special Venture Fund
shares and use the proceeds to purchase shares of any other Fund
that is a series of Advisor Trust offered for sale in the state in
which the Intermediary is located. Each Intermediary will
establish its own exchange policies and procedures. In particular,
individual participants of qualified retirement plans may exchange
shares through the plan sponsor or administrator. Those
participants may exchange shares only for shares of other Advisor
Trust Funds that are included in the plan. An exchange
transaction is a sale and purchase of shares for federal income
tax purposes and may result in capital gain or loss. Before
exchanging into another Advisor Trust Fund, you should obtain the
prospectus for the Advisor Trust Fund in which you wish to invest
and read it carefully. The registration of the account to which
you are making an exchange must be exactly the same as that of the
account from which the exchange is made. Advisor Special Venture
Fund reserves the right to suspend, limit, modify, or terminate
the Exchange Privilege or its use in any manner by any person or
class; Intermediaries would be notified of such a change.
GENERAL REDEMPTION POLICIES. Redemption instructions may not be
cancelled or revoked once they have been received and accepted by
Advisor Trust. Advisor Trust cannot accept a redemption request
that specifies a particular date or price for redemption or any
special conditions.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received by the Intermediary. (See Net Asset
Value.) Because the redemption price you receive depends upon
Advisor Special Venture Fund's net asset value per share at the
time of redemption, it may be more or less than the price you
originally paid for the shares and may result in a realized
capital gain or loss.
Advisor Trust will pay redemption proceeds as soon as practicable,
and in no event later than seven days after proper instructions
are received by Advisor Special Venture Fund or its authorized
agent.
DISTRIBUTIONS AND INCOME TAXES
DISTRIBUTIONS. Income dividends are declared and paid annually.
Advisor Special Venture Fund intends to distribute by the end of
each calendar year at least 98% of any net capital gains realized
from the sale of securities during the twelve-month period ended
October 31 in that year. Advisor Special Venture Fund intends to
distribute any undistributed net investment income and net
realized capital gains in the following year.
All income dividends and capital gain distributions on shares of
Advisor Special Venture Fund will be reinvested in additional
shares unless your Intermediary elects to have distributions paid
by check. Reinvestment normally occurs on the payable date.
INCOME TAXES. For federal income tax purposes, Advisor Special
Venture Fund is treated as a separate taxable entity distinct from
the other series of Advisor Trust. Special Venture Portfolio
intends to qualify for the special tax treatment afforded
regulated investment companies under Subchapter M of the Internal
Revenue Code, so that it will be relieved of federal income tax on
that part of its net investment income and net capital gain that
is distributed to shareholders.
Advisor Special Venture Fund will distribute substantially all of
its ordinary income and net capital gains on a current basis.
Generally distributions are taxable as ordinary income, except
that any distributions of net long-term capital gains will be
taxed as such. However, distributions by Advisor Special Venture
Fund to plans that qualify for tax-exempt treatment under federal
income tax laws will not be taxable. Special tax rules apply to
investments through such plans.
This section is not intended to be a full discussion of income tax
laws and their effect on shareholders. You may wish to consult
your own tax advisor.
MANAGEMENT
TRUSTEES AND INVESTMENT ADVISER. The Board of Trustees of Advisor
Trust and the Board of Trustees of Base Trust have overall
management responsibility for Advisor Special Venture Fund and
Special Venture Portfolio, respectively. See Management in the
Statement of Additional Information for the names of and other
information about the trustees and officers. Since Advisor Trust
and Base Trust have the same trustees, the trustees have adopted
conflict of interest procedures to monitor and address potential
conflicts between the interests of Advisor Special Venture Fund
and Special Venture Portfolio and other feeder funds investing in
Special Venture Portfolio that share a common Board of Trustees
with Advisor Trust and Base Trust.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
investment portfolio of Special Venture Portfolio and the business
affairs of Advisor Special Venture Fund, Special Venture
Portfolio, Advisor Trust, and Base Trust, subject to the direction
of the respective Board. The Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940. The
Adviser was organized in 1986 to succeed to the business of Stein
Roe & Farnham, a partnership that had advised and managed mutual
funds since 1949. The Adviser is a wholly owned subsidiary of
Liberty Financial Companies, Inc. ("Liberty Financial"), which in
turn is a majority owned indirect subsidiary of Liberty Mutual
Insurance Company.
PORTFOLIO MANAGERS. E. Bruce Dunn and Richard B. Peterson have
been co-portfolio managers of Special Venture Portfolio since its
inception in 1997 and had managed its predecessor since 1994.
Each is a senior vice president of the Adviser. Mr. Dunn has been
associated with the Adviser since 1964. He received his A.B.
degree from Yale University (1956) and his M.B.A. from Harvard
University (1958) and is a chartered investment counselor. Mr.
Peterson, who began his investment career with the Adviser in 1965
after graduating with a B.A. from Carleton College (1962) and the
Woodrow Wilson School at Princeton University with a Masters in
Public Administration (1964), rejoined the Adviser in 1991 after
15 years of equity research and portfolio management experience
with State Farm Investment Management Corp. As of December 31,
1996, Messrs. Dunn and Peterson were responsible for co-managing
$1.5 billion in mutual fund net assets.
FEES AND EXPENSES. The Adviser is entitled to receive a monthly
administrative fee from Advisor Special Venture Fund, computed and
accrued daily, at an annual rate of 0.15% of average net assets;
and a monthly management fee from Special Venture Portfolio,
computed and accrued daily, at an annual rate of 0.75% of average
net assets. However, as noted above under Fee Table, the Adviser
may voluntarily undertake to reimburse Advisor Special Venture
Fund for a portion of its operating expenses and its pro rata
share of Special Venture Portfolio's operating expenses.
The Adviser provides office space and executive and other
personnel to Advisor Trust and Base Trust. All expenses of
Advisor Special Venture Fund (other than those paid by the
Adviser), including, but not limited to, printing and postage
charges, securities registration fees, custodian and transfer
agency fees, legal and auditing fees, compensation of trustees not
affiliated with the Adviser, and expenses incidental to its
organization, are paid out of the assets of Advisor Special
Venture Fund.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to Advisor Special
Venture Fund and Special Venture Portfolio including computation
of net asset value and calculation of its net income and capital
gains and losses on disposition of assets.
In addition, the Adviser is free to make additional payments out
of its own assets to promote the sale of shares of Advisor Special
Venture Fund.
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
contracts for Special Venture Portfolio. In doing so, the Adviser
seeks to obtain the best combination of price and execution, which
involves a number of judgmental factors.
TRANSFER AGENT AND SHAREHOLDER SERVICES. SteinRoe Services Inc.
("SSI"), One South Wacker Drive, Chicago, Illinois 60606, a wholly
owned subsidiary of Liberty Financial, is the agent of Advisor
Trust for the transfer of shares, disbursement of dividends, and
maintenance of shareholder accounting records.
Some Intermediaries that maintain nominee accounts with Advisor
Special Venture Fund for their clients who are Fund shareholders
may be paid a fee from SSI of up to 0.25% of the average net
assets held in such accounts for shareholder servicing and
accounting services they provide with respect to the underlying
Fund shares.
DISTRIBUTOR. The shares of Advisor Special Venture Fund are
offered for sale through Liberty Securities Corporation
("Distributor") without any sales commissions. The Distributor is
a wholly owned indirect subsidiary of Liberty Financial. The
business address of the Distributor is 600 Atlantic Avenue,
Boston, Massachusetts 02210; however, all Fund correspondence
(including purchase and redemption orders) should be mailed to
SteinRoe Services Inc. at P.O. Box 8900, Boston, Massachusetts
02205.
The trustees of Advisor Trust have adopted a plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("Plan"). The Plan
provides that, as compensation for the promotion and distribution
of shares of Advisor Special Venture Fund including its expenses
related to the sale and promotion of Fund shares, the Distributor
receives from Advisor Special Venture Fund a fee at an annual rate
of 0.25% of its average net assets. The Distributor generally
pays this amount to institutions that distribute Advisor Special
Venture Fund shares and provide services to Advisor Special
Venture Fund and its shareholders. Those institutions may use the
payments for, among other purposes, compensating employees engaged
in sales and/or shareholder servicing. The amount of fees paid by
Advisor Special Venture Fund during any year may be more or less
than the cost of distribution or other services provided to
Advisor Special Venture Fund. NASD rules limit the amount of
annual distribution fees that may be paid by a mutual fund and
impose a ceiling on the cumulative distribution fees paid.
Advisor Trust's Plan complies with those rules.
CUSTODIAN. State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, Massachusetts 02101, is the custodian for
Advisor Special Venture Fund and Special Venture Portfolio.
Foreign securities are maintained in the custody of foreign banks
and trust companies that are members of the Bank's Global Custody
Network or foreign depositories used by such members. (See
Custodian in the Statement of Additional Information.)
ORGANIZATION AND DESCRIPTION OF SHARES
Advisor Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
July 31, 1996, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either Advisor
Trust's shareholders or its trustees. Advisor Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, seven series are authorized and outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Advisor Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of Advisor Trust.
The Declaration of Trust provides that persons extending credit
to, contracting with, or having any claim against, Advisor Trust
or any particular series shall look only to the assets of Advisor
Trust or of the respective series for payment under such credit,
contract or claim, and that the shareholders, trustees and
officers of Advisor Trust shall have no personal liability
therefor. The Declaration of Trust requires that notice of such
disclaimer of liability be given in each contract, instrument or
undertaking executed or made on behalf of Advisor Trust. The
Declaration of Trust provides for indemnification of any
shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Advisor Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Advisor
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
SPECIAL CONSIDERATIONS REGARDING THE
MASTER FUND/FEEDER FUND STRUCTURE
Advisor Special Venture Fund, an open-end management investment
company, seeks to achieve its objective by investing all of its
assets in shares of another mutual fund having an investment
objective identical to that of Advisor Special Venture Fund. The
initial shareholder of Advisor Special Venture Fund approved this
policy of permitting Advisor Special Venture Fund to act as a
feeder fund by investing in Special Venture Portfolio. Please
refer to the Investment Policies, Portfolio Investments and
Strategies, and Investment Restrictions for a description of the
investment objectives, policies, and restrictions of Advisor
Special Venture Fund and Special Venture Portfolio. The
management and expenses of both Advisor Special Venture Fund and
Special Venture Portfolio are described under the Fee Table and
Management. Advisor Special Venture Fund bears its proportionate
share of Portfolio expenses.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
SR&F Special Venture Portfolio is a separate series of SR&F Base
Trust ("Base Trust"), a Massachusetts common law trust organized
under an Agreement and Declaration of Trust ("Declaration of
Trust") dated August 23, 1993. The Declaration of Trust of Base
Trust provides that Advisor Special Venture Fund and other
investors in Special Venture Portfolio will each be liable for all
obligations of Special Venture Portfolio that are not satisfied by
the Portfolio. However, the risk of Advisor Special Venture Fund
incurring financial loss on account of such liability is limited
to circumstances in which both inadequate insurance existed and
Special Venture Portfolio itself were unable to meet its
obligations. Accordingly, the trustees of Advisor Trust believe
that neither Advisor Special Venture Fund nor its shareholders
will be adversely affected by reason of Advisor Special Venture
Fund's investing in Special Venture Portfolio.
The Declaration of Trust of Base Trust provides that Special
Venture Portfolio will terminate 120 days after the withdrawal of
Advisor Special Venture Fund or any other investor in Special
Venture Portfolio, unless the remaining investors vote to agree to
continue the business of Special Venture Portfolio. The trustees
of Advisor Trust may vote Advisor Special Venture Fund's interests
in Special Venture Portfolio for such continuation without
approval of Advisor Special Venture Fund's shareholders.
The common investment objective of Advisor Special Venture Fund
and Special Venture Portfolio is non-fundamental and may be
changed without shareholder approval. The fundamental policies of
Advisor Special Venture Fund and the corresponding fundamental
policies of Special Venture Portfolio can be changed only with
shareholder approval.
If Advisor Special Venture Fund, as a Portfolio investor, is
requested to vote on a proposed change in fundamental policy of
Special Venture Portfolio or any other matter pertaining to
Special Venture Portfolio (other than continuation of the business
of Special Venture Portfolio after withdrawal of another
investor), Advisor Special Venture Fund will solicit proxies from
its shareholders and vote its interest in Special Venture
Portfolio for and against such matters proportionately to the
instructions to vote for and against such matters received from
Advisor Special Venture Fund shareholders. Advisor Special
Venture Fund will vote shares for which it receives no voting
instructions in the same proportion as the shares for which it
receives voting instructions. If there are other investors in
Special Venture Portfolio, there can be no assurance that any
matter receiving a majority of votes cast by Fund shareholders
will receive a majority of votes cast by all Special Venture
Portfolio investors. If other investors hold a majority interest
in Special Venture Portfolio, they could have voting control over
Special Venture Portfolio.
In the event that Special Venture Portfolio's fundamental policies
were changed so as to be inconsistent with those of Advisor
Special Venture Fund, the Board of Trustees of Advisor Trust would
consider what action might be taken, including changes to Advisor
Special Venture Fund's fundamental policies, withdrawal of Advisor
Special Venture Fund's assets from Special Venture Portfolio and
investment of such assets in another pooled investment entity, or
the retention of another investment adviser. Any of these actions
would require the approval of Advisor Special Venture Fund's
shareholders. Advisor Special Venture Fund's inability to find a
substitute master fund or comparable investment management could
have a significant impact upon its shareholders' investments. Any
withdrawal of Advisor Special Venture Fund's assets could result
in a distribution in kind of portfolio securities (as opposed to a
cash distribution) to Advisor Special Venture Fund. Should such a
distribution occur, Advisor Special Venture Fund would incur
brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for Advisor
Special Venture Fund and could affect the liquidity of Advisor
Special Venture Fund.
Each investor in Special Venture Portfolio, including Advisor
Special Venture Fund, may add to or reduce its investment in
Special Venture Portfolio on each day the NYSE is open for
business. The investor's percentage of the aggregate interests in
Special Venture Portfolio will be computed as the percentage equal
to the fraction (i) the numerator of which is the beginning of the
day value of such investor's investment in Special Venture
Portfolio on such day plus or minus, as the case may be, the
amount of any additions to or withdrawals from the investor's
investment in Special Venture Portfolio effected on such day; and
(ii) the denominator of which is the aggregate beginning of the
day net asset value of Special Venture Portfolio on such day plus
or minus, as the case may be, the amount of the net additions to
or withdrawals from the aggregate investments in Special Venture
Portfolio by all investors in Special Venture Portfolio. The
percentage so determined will then be applied to determine the
value of the investor's interest in Special Venture Portfolio as
of the close of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in Special Venture Portfolio,
but members of the general public may not invest directly in
Special Venture Portfolio. Other investors in Special Venture
Portfolio are not required to sell their shares at the same public
offering price as Advisor Special Venture Fund, might incur
different administrative fees and expenses than Advisor Special
Venture Fund, and their shares might be sold with a sales
commission. Therefore, Advisor Special Venture Fund shareholders
might have different investment returns than shareholders in
another investment company that invests exclusively in Special
Venture Portfolio. Investment by such other investors in Special
Venture Portfolio would provide funds for the purchase of
additional portfolio securities and would tend to reduce the
Portfolio's operating expenses as a percentage of its net assets.
Conversely, large-scale redemptions by any such other investors in
Special Venture Portfolio could result in untimely liquidations of
Special Venture Portfolio's security holdings, loss of investment
flexibility, and increases in the operating expenses of Special
Venture Portfolio as a percentage of its net assets. As a result,
Special Venture Portfolio's security holdings may become less
diverse, resulting in increased risk.
Special Venture Portfolio commenced operations in February 1997
when Stein Roe Special Venture Fund, a mutual fund that had
invested directly in securities since 1994, converted into a
feeder fund by investing all of its assets in the Portfolio.
Currently Stein Roe Special Venture Fund, which is a series of
Stein Roe Investment Trust, is the only other investment company
investing in Special Venture Portfolio. Information regarding any
investment company that may invest in Special Venture Portfolio in
the future may be obtained by writing to SR&F Base Trust, Suite
3200, One South Wacker Drive, Chicago, Illinois 60606 or by
calling 800-338-2550. The Adviser may provide administrative or
other services to one or more of such investors.
FOR MORE INFORMATION
For more information about Advisor Special Venture Fund, contact
Retirement Services at 800-322-1130 or Advisor/Broker Services at
800-322-0593.
______________________
<PAGE> 1
STEIN ROE ADVISOR BALANCED FUND
The investment objective of Advisor Balanced Fund is to provide
long-term growth of capital and current income, consistent with
reasonable investment risk. Advisor Balanced Fund invests all of
its net investable assets in SR&F Balanced Portfolio, a
portfolio of SR&F Base Trust that has the same investment
objective and substantially the same investment policies as
Advisor Balanced Fund. (SEE SPECIAL CONSIDERATIONS REGARDING
MASTER FUND/FEEDER FUND STRUCTURE.)
Shares of Advisor Balanced Fund may be purchased only through
Intermediaries, including retirement plan service providers.
Advisor Balanced Fund has no sales or redemption charges. Advisor
Balanced Fund is a series of Stein Roe Advisor Trust and Balanced
Portfolio is a series of SR&F Base Trust. Each Trust is a
diversified open-end management investment company.
This prospectus contains information you should know before
investing in Advisor Balanced Fund. Please read it carefully and
retain it for future reference.
A Statement of Additional Information dated February 14, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information may be obtained without charge
by writing to Stein Roe Mutual Funds, Suite 3200, One South Wacker
Drive, Chicago, Illinois 60606, or by calling the Adviser. For
additional information, call Retirement Services at 800-322-1130
or Advisor/Broker Services at 800-322-0593.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 14, 1997.
<PAGE> 2
TABLE OF CONTENTS
Page
Summary..................................2
Fee Table ...............................3
The Fund.................................4
Investment Policies......................4
Performance Information..................5
Risks and Investment Considerations .....5
Investment Restrictions .................6
Portfolio Investments and Strategies.....7
Net Asset Value ........................10
How to Purchase Shares..................10
How to Redeem Shares ...................11
Distributions and Income Taxes..........12
Management .............................13
Organization and Description of Shares..15
Special Considerations Regarding the
Master Fund/Feeder Fund Structure.....15
For More Information ...................18
SUMMARY
Stein Roe Advisor Balanced Fund ("Advisor Balanced Fund") is a
series of Stein Roe Advisor Trust, an open-end diversified
management investment company organized as a Massachusetts
business trust. (See The Fund and Organization and Description of
Shares.) This prospectus is not a solicitation in any
jurisdiction in which shares of Advisor Balanced Fund are not
qualified for sale.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of
Advisor Balanced Fund is to provide long-term growth of capital
and current income, consistent with reasonable investment risk.
Advisor Balanced Fund invests all of its net investable assets in
SR&F Balanced Portfolio ("Balanced Portfolio") which has the same
investment objective and investment policies substantially similar
to those of Advisor Balanced Fund. The assets of Balanced
Portfolio are allocated among equities, debt securities, and cash.
The portfolio manager determines those allocations based on the
views of the Adviser's investment strategists regarding economic,
market, and other factors relative to investment opportunities.
For a more detailed discussion of the investment objectives and
policies, please see Investment Policies and Portfolio Investments
and Strategies. There is, of course, no assurance that Advisor
Balanced Fund and Balanced Portfolio will achieve their common
investment objective.
INVESTMENT RISKS. Advisor Balanced Fund is designed for long-term
investors who can accept the fluctuations in portfolio value and
other risks associated with seeking long-term capital appreciation
through investments in securities. Balanced Portfolio may invest
in foreign securities, which may entail a greater degree of risk
than investing in securities of domestic issuers. Please see
Investment Restrictions and Risks and Investment Considerations
for further information.
PURCHASES AND REDEMPTIONS. Shares of Advisor Balanced Fund may be
purchased only through Intermediaries, including retirement plan
service providers. For information on purchasing and redeeming
Advisor Balanced Fund shares, please see How to Purchase Shares,
How to Redeem Shares, and Management--Distributor.
MANAGEMENT AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") is investment adviser to Balanced Portfolio. In
addition, it provides administrative services to Advisor Balanced
Fund and Balanced Portfolio. For a description of the Adviser and
these service arrangements, see Management.
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.......................None
Sales Load Imposed on Reinvested Dividends............None
Deferred Sales Load...................................None
Redemption Fees.......................................None
Exchange Fees.........................................None
ANNUAL FUND OPERATING EXPENSES (as a percentage of
average net assets; after reimbursement)
Management and Administrative Fees (after
reimbursement)......................................0.55%
12b-1 Fees............................................0.25%
Other Expenses .......................................0.55%
-----
Total Operating Expenses (after reimbursement)........1.35%
=====
EXAMPLE.
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return; and (2) redemption at the end of
each time period:
1 year 3 years
------ -------
$14 $43
The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in Advisor Balanced Fund. The Fee Table
reflects the combined expenses of both Advisor Balanced Fund and
Balanced Portfolio. Anticipated Total Operating Expenses for
Advisor Balanced Fund are annualized projections based upon
current administrative fees and management fees. Other Expenses
are estimated amounts for the current fiscal year. The figures
assume that the percentage amounts listed under Annual Fund
Operating Expenses remain the same during each of the periods and
that all income dividends and capital gain distributions are
reinvested in additional shares.
From time to time, the Adviser may voluntarily undertake to
reimburse Advisor Balanced Fund for a portion of its operating
expenses and its pro rata share of the fees and expenses payable
by Balanced Portfolio. The Adviser has undertaken to reimburse
Advisor Balanced Fund for its operating expenses and its pro rata
share of Balanced Portfolio's operating expenses to the extent
such expenses exceed 1.35% of Advisor Balanced Fund's annual
average net assets. This commitment expires on January 31, 1998,
subject to earlier review and possible termination by the Adviser
on 30 days' notice to Advisor Balanced Fund. Absent such
reimbursement, Advisor Balanced Fund's share of Balanced
Portfolio's Management Fee and the Fund's Administrative Fee and
Total Operating Expenses would be 0.70% and 1.50%, respectively.
Any such reimbursement will lower Advisor Balanced Fund's overall
expense ratio and increase its overall return to investors. (Also
see Management--Fees and Expenses.)
Advisor Balanced Fund pays the Adviser an administrative fee based
on its average daily net assets and Balanced Portfolio pays the
Adviser a management fee based on its average daily net assets.
The trustees of Advisor Trust have considered whether the annual
operating expenses of Advisor Balanced Fund, including its share
of the expenses of Balanced Portfolio, would be more or less than
if Advisor Balanced Fund invested directly in the securities held
by Balanced Portfolio, and concluded that Advisor Balanced Fund's
expenses would not be materially greater in such case.
The figures in the Example are not necessarily indicative of past
or future expenses, and actual expenses may be greater or less
than those shown. Although information such as that shown in the
Example and Fee Table is useful in reviewing Advisor Balanced
Fund's expenses and in providing a basis for comparison with other
mutual funds, it should not be used for comparison with other
investments using different assumptions or time periods.
Because Advisor Balanced Fund pays a 12b-1 fee, long-term
investors in Advisor Balanced Fund may pay more over long periods
of time in distribution expenses than the maximum front-end sales
charge permitted by the National Association of Securities
Dealers, Inc. ("NASD"). For further information on Advisor
Balanced Fund's 12b-1 fee, see Management--Distributor or call
your financial representative.
THE FUND
STEIN ROE ADVISOR BALANCED FUND ("Advisor Balanced Fund") is a
series of Stein Roe Advisor Trust ("Advisor Trust"), which is an
open-end diversified management investment company authorized to
issue shares of beneficial interest in separate series.
Rather than invest in securities directly, Advisor Balanced Fund
seeks to achieve its investment objective by using the "master
fund/feeder fund structure." Under that structure, a feeder fund
and one or more feeder funds pool their assets in a master
portfolio that has the same investment objective and substantially
the same investment policies as the feeder funds. (See Special
Considerations Regarding Master Fund/Feeder Fund Structure.)
Advisor Balanced Fund invests all of its net investable assets in
SR&F Balanced Portfolio ("Balanced Portfolio"), which is
a series of SR&F Base Trust ("Base Trust").
Stein Roe & Farnham Incorporated (the "Adviser") provides
portfolio management services to Balanced Portfolio and
administrative services to Advisor Balanced Fund and Balanced
Portfolio.
INVESTMENT POLICIES
The investment objective of Advisor Balanced Fund is to provide
long-term growth of capital and current income, consistent with
reasonable investment risk. Advisor Balanced Fund invests all of
its net investable assets in Balanced Portfolio, which has the
same investment objective and investment policies substantially
similar to Advisor Balanced Fund. The assets of Balanced
Portfolio are allocated among equities, debt securities and cash.
The portfolio manager determines those allocations based on views
of the Adviser's investment strategists regarding economic, market
and other factors relative to investment opportunities.
The equity portion of the portfolio is invested primarily in well-
established companies having market capitalizations in excess of
$1 billion. Debt securities will make up at least 25% of Balanced
Portfolio's total assets. Investments in debt securities are
limited to those that are within the four highest grades
(generally referred to as "investment grade") assigned by a
nationally recognized statistical rating organization or, if
unrated, determined by the Adviser to be of comparable quality.
Further information on investment techniques that may be employed
by Balanced Portfolio and the risks associated with such
techniques may be found under Risks and Investment Considerations
and Portfolio Investments and Strategies in this prospectus and in
the Statement of Additional Information.
PERFORMANCE INFORMATION
The total return from an investment in Advisor Balanced Fund is
measured by the distributions received (assuming reinvestment),
plus or minus the change in the net asset value per share for a
given period. A total return percentage may be calculated by
dividing the value of a share at the end of the period (including
reinvestment of distributions) by the value of the share at the
beginning of the period and subtracting one. For a given period,
an average annual total return may be calculated by finding the
average annual compounded rate that would equate a hypothetical
$1,000 investment to the ending redeemable value.
Comparison of Advisor Balanced Fund's total return with
alternative investments should consider differences between the
Fund and the alternative investments, the periods and methods used
in calculation of the return being compared, and the impact of
taxes on alternative investments. Of course, past performance is
not necessarily indicative of future results. Share prices may
vary, and your shares when redeemed may be worth more or less than
your original purchase price.
As of the date of this Prospectus, Advisor Balanced Fund had no
past performance. However, Stein Roe Balanced Fund, a different
Stein Roe Fund which is a series of Stein Roe Investment Trust and
has a similar name, the same investment objective and
substantially the same investment policies as Advisor Balanced
Fund, also invests all of its net investable assets in Balanced
Portfolio. The average annual total return for the periods ended
September 30, 1996 for a 1-year, 5-year and 10-year investment in
Stein Roe Balanced Fund were 14.83%, 10.93% and 10.58%,
respectively. Stein Roe Balanced Fund has a different fee
structure than Advisor Balanced Fund, and does not pay 12b-1 fees.
Had these fees been reflected, the total returns shown in the
table would have been lower. The information shown above reflects
the performance of Stein Roe Balanced Fund, and should not be
interpreted as indicative of Advisor Balanced Fund's future
performance.
RISKS AND INVESTMENT CONSIDERATIONS
Advisor Balanced Fund is designed for long-term investors who can
accept the fluctuations in portfolio value and other risks
associated with seeking long-term capital appreciation through
investments in securities. Balanced Portfolio usually allocates
its investments among a number of different industries rather than
concentrating in a particular industry or group of industries, but
this does not eliminate all risk. It will not, however, invest
more than 25% of the total value of its assets (at the time of
investment) in the securities of companies in any one industry.
There can be no guarantee that Advisor Balanced Fund or Balanced
Portfolio will achieve its objective.
Balanced Portfolio may invest up to 35% of its total assets in
debt securities. Debt securities rated in the fourth highest
grade may have some speculative characteristics, and changes in
economic conditions or other circumstances may lead to a weakened
capacity of the issuers of such securities to make principal and
interest payments. Securities rated below investment grade may
possess speculative characteristics, and changes in economic
conditions are more likely to affect the issuer's capacity to pay
interest or repay principal.
Balanced Portfolio may invest up to 25% of its total assets in
foreign securities. For purposes of this limit, foreign
securities exclude American Depositary Receipts (ADRs), foreign
debt securities denominated in U.S. dollars, and securities
guaranteed by a U.S. person. Investment in foreign securities may
represent a greater degree of risk (including risk related to
exchange rate fluctuations, tax provisions, exchange and currency
controls, and expropriation of assets) than investment in
securities of domestic issuers. Other risks of foreign investing
include less complete financial information on issuers, different
accounting, auditing and financial reporting standards, different
settlement practices, less market liquidity, more market
volatility, less developed and regulated markets, and greater
political instability. In addition, various restrictions by
foreign governments on investments by non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.
Further information on investment techniques that may be employed
by Balanced Portfolio may be found under Portfolio Investments and
Strategies.
INVESTMENT RESTRICTIONS
Neither Advisor Balanced Fund nor Balanced Portfolio may invest
more than 5% of its assets in the securities of any one issuer.
This restriction applies only to 75% of its investment portfolio,
and does not apply to securities of the U.S. Government or
repurchase agreements /1/ for such securities. This restriction
also does not prevent Advisor Balanced Fund from investing all of
its assets in shares of another investment company having the
identical investment objective under a master/feeder structure.
- -------------
/1/ A repurchase agreement involves a sale of securities to
Balanced Portfolio in which the seller agrees to repurchase the
securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, Balanced
Portfolio could experience both losses and delays in liquidating
its collateral.
- -------------
Neither Advisor Balanced Fund nor Balanced Portfolio will acquire
more than 10% of the outstanding voting securities of any one
issuer. Advisor Balanced Fund may, however, invest all of its
assets in shares of another investment company having the
identical investment objective under a master/feeder structure.
Neither Advisor Balanced Fund nor Balanced Portfolio may make
loans except that it may (1) purchase money market instruments and
enter into repurchase agreements; (2) acquire publicly-distributed
or privately-placed debt securities; (3) lend its portfolio
securities under certain conditions; and (4) participate in an
interfund lending program with other Stein Roe Funds and
Portfolios. Advisor Balanced Fund and Balanced Portfolio may not
borrow money, except for non-leveraging, temporary, or emergency
purposes or in connection with participation in the interfund
lending program. Neither the aggregate borrowings (including
reverse repurchase agreements) nor the aggregate loans at any one
time may exceed 33 1/3% of the value of total assets. Additional
securities may not be purchased when borrowings less proceeds
receivable from sales of portfolio securities exceed 5% of total
assets.
Advisor Balanced Fund and Balanced Portfolio may invest in
repurchase agreements, provided that neither will invest more than
15% of its net assets in illiquid securities, including repurchase
agreements maturing in more than seven days.
The policies summarized in the first three paragraphs under this
section and the policy with respect to concentration of
investments in any one industry described under Risks and
Investment Considerations are fundamental policies of Advisor
Balanced Fund and Balanced Portfolio and, as such, can be changed
only with the approval of a "majority of the outstanding voting
securities" as defined in the Investment Company Act of 1940. The
common investment objective of Advisor Balanced Fund and Balanced
Portfolio is non-fundamental and, as such, may be changed by the
Board of Trustees without shareholder approval. All of the
investment restrictions are set forth in the Statement of
Additional Information.
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES.
Investment in debt securities is limited to those that are rated
within the four highest grades (generally referred to as
investment grade). If the rating of a security held by Balanced
Portfolio is lost or reduced below investment grade, the Portfolio
is not required to dispose of the security--the Adviser will,
however, consider that fact in determining whether Balanced
Portfolio should continue to hold the security. When the Adviser
deems a temporary defensive position advisable, Balanced Portfolio
may invest, without limitation, in high-quality fixed income
securities, or hold assets in cash or cash equivalents.
FOREIGN SECURITIES.
Balanced Portfolio may invest in sponsored or unsponsored ADRs.
In addition to, or in lieu of, such direct investment, Balanced
Portfolio may construct a synthetic foreign debt position by (a)
purchasing a debt instrument denominated in one currency,
generally U.S. dollars; and (b) concurrently entering into a
forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and
at a specified rate of exchange. Because of the availability of a
variety of highly liquid U.S. dollar debt instruments, a synthetic
foreign debt position utilizing such U.S. dollar instruments may
offer greater liquidity than direct investment in foreign currency
debt instruments.
In connection with the purchase of foreign securities, Balanced
Portfolio may enter into foreign currency forward and futures
contracts to hedge the currency risk in settlement of a particular
security transaction or relative to the entire portfolio. A
forward contract to purchase an amount of foreign currency
sufficient to pay the purchase price of securities at settlement
date involves the risk that the value of the foreign currency may
decline relative to the value of the dollar prior to the
settlement date. This risk is in addition to the risk that the
value of the foreign security purchased may decline. Balanced
Portfolio also may enter into foreign currency contracts as a
hedging technique to limit or reduce exposure of the entire
portfolio to currency fluctuations. In addition, Balanced
Portfolio may use options and futures contracts, as described
below, to limit or reduce exposure to currency fluctuations.
CONVERTIBLE SECURITIES.
By investing in convertible securities, Balanced Portfolio obtains
the right to benefit from the capital appreciation potential in
the underlying stock upon exercise of the conversion right, while
earning higher current income than would be available if the stock
were purchased directly. In determining whether to purchase a
convertible, the Adviser will consider substantially the same
criteria that would be considered in purchasing the underlying
stock. Although convertible securities are frequently rated
investment grade, Balanced Portfolio also may purchase unrated
securities or securities rated below investment grade if the
securities meet the Adviser's other investment criteria.
Convertible securities rated below investment grade tend to be
more sensitive to interest rate and economic changes, may be
obligations of issuers who are less creditworthy than issuers of
higher quality convertible securities, and may be more thinly
traded due to the fact that such securities are less well known to
investors than either common stock or conventional debt
securities. As a result, the Adviser's own investment research
and analysis tends to be more important than other factors in the
purchase of convertible securities.
LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES.
Balanced Portfolio may make loans of its portfolio securities to
broker-dealers and banks subject to certain restrictions described
in the Statement of Additional Information. Balanced Portfolio
may participate in an interfund lending program, subject to
certain restrictions described in the Statement of Additional
Information. Balanced Portfolio may invest in securities
purchased on a when-issued or delayed-delivery basis. Although
the payment terms of these securities are established at the time
Balanced Portfolio enters into the commitment, the securities may
be delivered and paid for a month or more after the date of
purchase, when their value may have changed. Balanced Portfolio
will make such commitments only with the intention of actually
acquiring the securities, but may sell the securities before
settlement date if it is deemed advisable for investment reasons.
SHORT SALES AGAINST THE BOX.
Balanced Portfolio may sell short securities it owns or has the
right to acquire without further consideration, using a technique
called selling short "against the box." Short sales against the
box may protect Balanced Portfolio against the risk of losses in
the value of its portfolio securities because any unrealized
losses with respect to such securities should be wholly or partly
offset by a corresponding gain in the short position. However,
any potential gains in such securities should be wholly or
partially offset by a corresponding loss in the short position.
Short sales against the box may be used to lock in a profit on a
security when, for tax reasons or otherwise, the Adviser does not
want to sell the security. Balanced Portfolio does not expect to
commit more than 20% of its net assets to short sales against the
box. For a more complete explanation, please refer to the
Statement of Additional Information.
DERIVATIVES.
Consistent with its objective, Balanced Portfolio may invest in a
broad array of financial instruments and securities, including
conventional exchange-traded and non-exchange-traded options,
futures contracts, futures options, securities collateralized by
underlying pools of mortgages or other receivables, floating rate
instruments, and other instruments that securitize assets of
various types ("Derivatives"). In each case, the value of the
instrument or security is "derived" from the performance of an
underlying asset or a "benchmark" such as a security index, an
interest rate, or a currency. Balanced Portfolio does not expect
to invest more than 5% of its net assets in any type of Derivative
except for options, futures contracts, and futures options.
In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, Balanced
Portfolio may: (1) purchase and write both call options and put
options on securities, indexes and foreign currencies; (2) enter
into interest rate, index and foreign currency futures contracts;
(3) write options on such futures contracts; and (4) purchase
other types of forward or investment contracts linked to
individual securities, indexes or other benchmarks. Balanced
Portfolio may write a call or put option only if the option is
covered. As the writer of a covered call option, Balanced
Portfolio foregoes, during the option's life, the opportunity to
profit from increases in market value of the security covering the
call option above the sum of the premium and the exercise price of
the call. There can be no assurance that a liquid market will
exist when Balanced Portfolio seeks to close out a position. In
addition, because futures positions may require low margin
deposits, the use of futures contracts involves a high degree of
leverage and may result in losses in excess of the amount of the
margin deposit.
Derivatives are most often used to manage investment risk or to
create an investment position indirectly because they are more
efficient or less costly than direct investment. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's ability
to correctly predict changes in the levels and directions of
movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
PORTFOLIO TURNOVER.
Although Balanced Portfolio does not purchase securities with a
view to rapid turnover, there are no limitations on the length of
time portfolio securities must be held. Accordingly, the
portfolio turnover rate may vary significantly from year to year,
but is not expected to exceed 100% under normal market conditions.
A high rate of portfolio turnover may result in increased
transaction expenses and the realization of capital gains and
losses. (See Distributions and Income Taxes.)
NET ASSET VALUE
The purchase and redemption price of Advisor Balanced Fund's
shares is its net asset value per share. Advisor Balanced Fund
determines the net asset value of its shares as of the close of
trading on the New York Stock Exchange ("NYSE") (currently 3:00
p.m., central time) by dividing the difference between the value
of its assets and liabilities by the number of shares outstanding.
Balanced Portfolio allocates net asset value, income, and expenses
to Advisor Balanced Fund and any other of its feeder funds in
proportion to their respective interests in Balanced Portfolio.
Net asset value will not be determined on days when the NYSE is
closed unless, in the judgment of the Board of Trustees, the net
asset value of Advisor Balanced Fund should be determined on any
such day, in which case the determination will be made at 3:00
p.m., central time.
Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation 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.
Long-term straight-debt obligations and securities convertible
into stocks are valued at a fair value using a procedure
determined in good faith by the Board of Trustees. Pricing
services approved by the Board provide valuations (some of which
may be "readily available market quotations"). These valuations
are reviewed by the Adviser. If the Adviser believes that a
valuation received from the service does not represent a fair
value, it values the obligation using a method that the Board
believes represents fair value. The Board may approve the use of
other pricing services and any pricing service used may employ
electronic data processing techniques, including a so-called
"matrix" system, to determine valuations. Other assets and
securities are valued by a method that the Board believes
represents fair value.
HOW TO PURCHASE SHARES
You may purchase Advisor Balanced Fund shares only through broker-
dealers, banks, or other intermediaries, including retirement plan
service providers ("Intermediaries"). The Adviser and Advisor
Balanced Fund do not recommend, endorse, or receive payments from
any Intermediary.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of Advisor
Balanced Fund's shares is made at Advisor Balanced Fund's net
asset value (see Net Asset Value) next determined after receipt by
the Fund or through an authorized agent of an order in good form,
including receipt of payment.
CONDITIONS OF PURCHASE. Each purchase order for Advisor Balanced
Fund must be accepted by an authorized officer of Advisor Trust or
its authorized agent and is not binding until accepted and entered
on the books of Advisor Balanced Fund. Once your purchase order
has been accepted, you may not cancel or revoke it; you may,
however, redeem the shares. Advisor Trust reserves the right not
to accept any purchase order that it determines not to be in the
best interests of Advisor Trust or of Advisor Balanced Fund's
shareholders.
PURCHASES THROUGH INTERMEDIARIES. You must purchase shares
through Intermediaries. These Intermediaries may charge for their
services or place limitations on the extent to which you may use
the services offered by Advisor Trust. In addition, each
Intermediary will establish its own procedures for the purchase of
shares of Advisor Balanced Fund, including minimum initial and
additional investments, and the acceptable methods of payment for
shares. Your Intermediary may be closed on days when the NYSE is
open. As a result, prices of Fund shares may be significantly
affected on days when you have no access to your Intermediary to
buy shares. If you wish to purchase shares, please contact your
Intermediary for instructions.
Retirement Plans. If you purchase shares through a retirement
plan, you should be aware that retirement plan administrators may
aggregate purchase and redemption orders for participants in the
plan. Therefore, there may be a delay between the time you place
your order with the plan administrator and the time the order is
forwarded for execution.
HOW TO REDEEM SHARES
You may redeem shares only through Intermediaries. Each
Intermediary will establish its own procedures for the sale of
shares of Advisor Balanced Fund. Your Intermediary may be closed
on days when the NYSE is open. As a result, prices for Fund
shares may be significantly affected on days when you have no
access to your Intermediary to sell shares. If you wish to redeem
shares through an Intermediary, please contact the Intermediary
for instructions.
EXCHANGE PRIVILEGE. Through an account with an Intermediary, you
may redeem all or any portion of your Advisor Balanced Fund shares
and use the proceeds to purchase shares of any other Fund that is
a series of Advisor Trust offered for sale in the state in which
the Intermediary is located. Each Intermediary will establish its
own exchange policies and procedures. In particular, individual
participants of qualified retirement plans may exchange shares
through the plan sponsor or administrator. Those participants may
exchange shares only for shares of other Advisor Trust Funds that
are included in the plan. An exchange transaction is
a sale and purchase of shares for federal income tax purposes and
may result in capital gain or loss. Before exchanging into
another Advisor Trust Fund, you should obtain the prospectus for
the Advisor Trust Fund in which you wish to invest and read it
carefully. The registration of the account to which you are
making an exchange must be exactly the same as that of the account
from which the exchange is made. Advisor Balanced Fund reserves
the right to suspend, limit, modify, or terminate the Exchange
Privilege or its use in any manner by any person or class;
Intermediaries would be notified of such a change.
GENERAL REDEMPTION POLICIES. Redemption instructions may not be
cancelled or revoked once they have been received and accepted by
Advisor Trust. Advisor Trust cannot accept a redemption request
that specifies a particular date or price for redemption or any
special conditions.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received by the Intermediary. (See Net Asset
Value.) Because the redemption price you receive depends upon
Advisor Balanced Fund's net asset value per share at the time of
redemption, it may be more or less than the price you originally
paid for the shares and may result in a realized capital gain or
loss.
Advisor Trust will pay redemption proceeds as soon as practicable,
and in no event later than seven days after proper instructions
are received by Advisor Balanced Fund or its authorized agent.
DISTRIBUTIONS AND INCOME TAXES
DISTRIBUTIONS. Income dividends are declared and paid each
calendar quarter. Advisor Balanced Fund intends to distribute by
the end of each calendar year at least 98% of any net capital
gains realized from the sale of securities during the twelve-month
period ended October 31 in that year. Advisor Balanced Fund
intends to distribute any undistributed net investment income and
net realized capital gains in the following year.
All income dividends and capital gain distributions on shares of
Advisor Balanced Fund will be reinvested in additional shares
unless your Intermediary elects to have distributions paid by
check. Reinvestment normally occurs on the payable date.
INCOME TAXES. For federal income tax purposes, Advisor Balanced
Fund is treated as a separate taxable entity distinct from the
other series of Advisor Trust. Balanced Portfolio intends to
qualify for the special tax treatment afforded regulated
investment companies under Subchapter M of the Internal Revenue
Code, so that it will be relieved of federal income tax on that
part of its net investment income and net capital gain that is
distributed to shareholders.
Advisor Balanced Fund will distribute substantially all of its
ordinary income and net capital gains on a current basis.
Generally distributions are taxable as ordinary income, except
that any distributions of net long-term capital gains will be
taxed as such. However, distributions by Advisor Balanced Fund to
plans that qualify for tax-exempt treatment under federal income
tax laws will not be taxable. Special tax rules apply to
investments through such plans.
This section is not intended to be a full discussion of income tax
laws and their effect on shareholders. You may wish to consult
your own tax advisor.
MANAGEMENT
TRUSTEES AND INVESTMENT ADVISER. The Board of Trustees of Advisor
Trust and the Board of Trustees of Base Trust have overall
management responsibility for Advisor Balanced Fund and Balanced
Portfolio, respectively. See Management in the Statement of
Additional Information for the names of and other information
about the trustees and officers. Since Advisor Trust and Base
Trust have the same trustees, the trustees have adopted conflict
of interest procedures to monitor and address potential conflicts
between the interests of Advisor Balanced Fund and Balanced
Portfolio and other feeder funds investing in Balanced Portfolio
that share a common Board of Trustees with Advisor Trust and Base
Trust.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
investment portfolio of Balanced Portfolio and the business
affairs of Advisor Balanced Fund, Balanced Portfolio, Advisor
Trust, and Base Trust, subject to the direction of the respective
Board. The Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940. The Adviser was organized in
1986 to succeed to the business of Stein Roe & Farnham, a
partnership that had advised and managed mutual funds since 1949.
The Adviser is a wholly owned subsidiary of Liberty Financial
Companies, Inc. ("Liberty Financial"), which in turn is a majority
owned indirect subsidiary of Liberty Mutual Insurance Company.
PORTFOLIO MANAGERS. Harvey B. Hirschhorn has been portfolio
manager of Balanced Portfolio since its inception in 1997 and had
managed its predecessor since April 1996. Mr. Hirschhorn is
Executive Vice President and Chief Economist & Investment
Strategist of the Adviser, which he joined in 1973. He received
an A.B. degree from Rutgers College (1971) and an M.B.A. from the
University of Chicago (1973), and is a chartered financial
analyst. As of December 31, 1996, Mr. Hirschhorn was responsible
for managing $557 million in mutual fund net assets. William
Garrison and Sandra L. Knight are associate portfolio managers of
Balanced Portfolio. Mr. Garrison joined the Adviser in 1989. He
received his A.B. from Princeton University (1988) and M.B.A. from
the University of Chicago (1995). Ms. Knight earned a B.S. degree
from Lawrence Technological University (1984) and an M.B.A. from
Loyola University of Chicago (1991). She has been employed by the
Adviser as a quantitative analyst since 1991.
FEES AND EXPENSES. The Adviser is entitled to receive a monthly
administrative fee from Advisor Balanced Fund, computed and
accrued daily, at an annual rate of 0.15% of the first $500
million of average net assets, 0.125% of the next $500 million,
and 0.10% thereafter; and a monthly management fee from Balanced
Portfolio, computed and accrued daily, at an annual rate of 0.55%
of the first $500 million of average net assets, 0.50% of the next
$500 million, and 0.45% thereafter. However, as noted above under
Fee Table, the Adviser may voluntarily undertake to reimburse
Advisor Balanced Fund for a portion of its operating expenses and
its pro rata share of Balanced Portfolio's operating expenses.
The Adviser provides office space and executive and other
personnel to Advisor Trust and Base Trust. All expenses of
Advisor Balanced Fund (other than those paid by the Adviser),
including, but not limited to, printing and postage charges,
securities registration fees, custodian and transfer agency fees,
legal and auditing fees, compensation of trustees not affiliated
with the Adviser, and expenses incidental to its organization, are
paid out of the assets of Advisor Balanced Fund.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to Advisor Balanced
Fund and Balanced Portfolio including computation of net asset
value and calculation of its net income and capital gains and
losses on disposition of assets.
In addition, the Adviser is free to make additional payments out
of its own assets to promote the sale of shares of Advisor
Balanced Fund.
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
contracts for Balanced Portfolio. In doing so, the Adviser seeks
to obtain the best combination of price and execution, which
involves a number of judgmental factors.
TRANSFER AGENT AND SHAREHOLDER SERVICES. SteinRoe Services Inc.
("SSI"), One South Wacker Drive, Chicago, Illinois 60606, a wholly
owned subsidiary of Liberty Financial, is the agent of Advisor
Trust for the transfer of shares, disbursement of dividends, and
maintenance of shareholder accounting records.
Some Intermediaries that maintain nominee accounts with Advisor
Balanced Fund for their clients who are Fund shareholders may be
paid a fee from SSI of up to 0.25% of the average net assets held
in such accounts for shareholder servicing and accounting services
they provide with respect to the underlying Fund shares.
DISTRIBUTOR. The shares of Advisor Balanced Fund are offered for
sale through Liberty Securities Corporation ("Distributor")
without any sales commissions. The Distributor is a wholly owned
indirect subsidiary of Liberty Financial. The business address of
the Distributor is 600 Atlantic Avenue, Boston, Massachusetts
02210; however, all Fund correspondence (including purchase and
redemption orders) should be mailed to SteinRoe Services Inc. at
P.O. Box 8900, Boston, Massachusetts 02205.
The trustees of Advisor Trust have adopted a plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("Plan"). The Plan
provides that, as compensation for the promotion and distribution
of shares of Advisor Balanced Fund including its expenses related
to the sale and promotion of Fund shares, the Distributor receives
from Advisor Balanced Fund a fee at an annual rate of 0.25% of its
average net assets. The Distributor generally pays this amount to
institutions that distribute Advisor Balanced Fund shares and
provide services to Advisor Balanced Fund and its shareholders.
Those institutions may use the payments for, among other purposes,
compensating employees engaged in sales and/or shareholder
servicing. The amount of fees paid by Advisor Balanced Fund
during any year may be more or less than the cost of distribution
or other services provided to Advisor Balanced Fund. NASD rules
limit the amount of annual distribution fees that may be paid by a
mutual fund and impose a ceiling on the cumulative distribution
fees paid. Advisor Trust's Plan complies with those rules.
CUSTODIAN. State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, Massachusetts 02101, is the custodian for
Advisor Balanced Fund and Balanced Portfolio. Foreign securities
are maintained in the custody of foreign banks and trust companies
that are members of the Bank's Global Custody Network or foreign
depositories used by such members. (See Custodian in the
Statement of Additional Information.)
ORGANIZATION AND DESCRIPTION OF SHARES
Advisor Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
July 31, 1996, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either Advisor
Trust's shareholders or its trustees. Advisor Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, seven series are authorized and outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Advisor Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of Advisor Trust.
The Declaration of Trust provides that persons extending credit
to, contracting with, or having any claim against, Advisor Trust
or any particular series shall look only to the assets of Advisor
Trust or of the respective series for payment under such credit,
contract or claim, and that the shareholders, trustees and
officers of Advisor Trust shall have no personal liability
therefor. The Declaration of Trust requires that notice of such
disclaimer of liability be given in each contract, instrument or
undertaking executed or made on behalf of Advisor Trust. The
Declaration of Trust provides for indemnification of any
shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Advisor Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Advisor
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
SPECIAL CONSIDERATIONS REGARDING THE
MASTER FUND/FEEDER FUND STRUCTURE
Advisor Balanced Fund, an open-end management investment company,
seeks to achieve its objective by investing all of its assets in
shares of another mutual fund having an investment objective
identical to that of Advisor Balanced Fund. The initial
shareholder of Advisor Balanced Fund approved this policy of
permitting Advisor Balanced Fund to act as a feeder fund by
investing in Balanced Portfolio. Please refer to the Investment
Policies, Portfolio Investments and Strategies, and Investment
Restrictions for a description of the investment objectives,
policies, and restrictions of Advisor Balanced Fund and Balanced
Portfolio. The management and expenses of both Advisor Balanced
Fund and Balanced Portfolio are described under the Fee Table and
Management. Advisor Balanced Fund bears its proportionate share
of Portfolio expenses.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
SR&F Balanced Portfolio is a separate series of SR&F Base Trust
("Base Trust"), a Massachusetts common law trust organized under
an Agreement and Declaration of Trust ("Declaration of Trust")
dated August 23, 1993. The Declaration of Trust of Base Trust
provides that Advisor Balanced Fund and other investors in
Balanced Portfolio will each be liable for all obligations of
Balanced Portfolio that are not satisfied by the Portfolio.
However, the risk of Advisor Balanced Fund incurring financial
loss on account of such liability is limited to circumstances in
which both inadequate insurance existed and Balanced Portfolio
itself were unable to meet its obligations. Accordingly, the
trustees of Advisor Trust believe that neither Advisor Balanced
Fund nor its shareholders will be adversely affected by reason of
Advisor Balanced Fund's investing in Balanced Portfolio.
The Declaration of Trust of Base Trust provides that Balanced
Portfolio will terminate 120 days after the withdrawal of Advisor
Balanced Fund or any other investor in Balanced Portfolio, unless
the remaining investors vote to agree to continue the business of
Balanced Portfolio. The trustees of Advisor Trust may vote
Advisor Balanced Fund's interests in Balanced Portfolio for such
continuation without approval of Advisor Balanced Fund's
shareholders.
The common investment objective of Advisor Balanced Fund and
Balanced Portfolio is non-fundamental and may be changed without
shareholder approval. The fundamental policies of Advisor
Balanced Fund and the corresponding fundamental policies of
Balanced Portfolio can be changed only with shareholder approval.
If Advisor Balanced Fund, as a Portfolio investor, is requested to
vote on a proposed change in fundamental policy of Balanced
Portfolio or any other matter pertaining to Balanced Portfolio
(other than continuation of the business of Balanced Portfolio
after withdrawal of another investor), Advisor Balanced Fund will
solicit proxies from its shareholders and vote its interest in
Balanced Portfolio for and against such matters proportionately to
the instructions to vote for and against such matters received
from Advisor Balanced Fund shareholders. Advisor Balanced Fund
will vote shares for which it receives no voting instructions in
the same proportion as the shares for which it receives voting
instructions. If there are other investors in Balanced Portfolio,
there can be no assurance that any matter receiving a majority of
votes cast by Fund shareholders will receive a majority of votes
cast by all Balanced Portfolio investors. If other investors hold
a majority interest in Balanced Portfolio, they could have voting
control over Balanced Portfolio.
In the event that Balanced Portfolio's fundamental policies were
changed so as to be inconsistent with those of Advisor Balanced
Fund, the Board of Trustees of Advisor Trust would consider what
action might be taken, including changes to Advisor Balanced
Fund's fundamental policies, withdrawal of Advisor Balanced Fund's
assets from Balanced Portfolio and investment of such assets in
another pooled investment entity, or the retention of another
investment adviser. Any of these actions would require the
approval of Advisor Balanced Fund's shareholders. Advisor
Balanced Fund's inability to find a substitute master fund or
comparable investment management could have a significant impact
upon its shareholders' investments. Any withdrawal of Advisor
Balanced Fund's assets could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) to
Advisor Balanced Fund. Should such a distribution occur, Advisor
Balanced Fund would incur brokerage fees or other transaction
costs in converting such securities to cash. In addition, a
distribution in kind could result in a less diversified portfolio
of investments for Advisor Balanced Fund and could affect the
liquidity of Advisor Balanced Fund.
Each investor in Balanced Portfolio, including Advisor Balanced
Fund, may add to or reduce its investment in Balanced Portfolio on
each day the NYSE is open for business. The investor's percentage
of the aggregate interests in Balanced Portfolio will be computed
as the percentage equal to the fraction (i) the numerator of which
is the beginning of the day value of such investor's investment in
Balanced Portfolio on such day plus or minus, as the case may be,
the amount of any additions to or withdrawals from the investor's
investment in Balanced Portfolio effected on such day; and (ii)
the denominator of which is the aggregate beginning of the day net
asset value of Balanced Portfolio on such day plus or minus, as
the case may be, the amount of the net additions to or withdrawals
from the aggregate investments in Balanced Portfolio by all
investors in Balanced Portfolio. The percentage so determined
will then be applied to determine the value of the investor's
interest in Balanced Portfolio as of the close of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in Balanced Portfolio, but
members of the general public may not invest directly in Balanced
Portfolio. Other investors in Balanced Portfolio are not required
to sell their shares at the same public offering price as Advisor
Balanced Fund, might incur different administrative fees and
expenses than Advisor Balanced Fund, and their shares might be
sold with a sales commission. Therefore, Advisor Balanced Fund
shareholders might have different investment returns than
shareholders in another investment company that invests
exclusively in Balanced Portfolio. Investment by such other
investors in Balanced Portfolio would provide funds for the
purchase of additional portfolio securities and would tend to
reduce the Portfolio's operating expenses as a percentage of its
net assets. Conversely, large-scale redemptions by any such other
investors in Balanced Portfolio could result in untimely
liquidations of Balanced Portfolio's security holdings, loss of
investment flexibility, and increases in the operating expenses of
Balanced Portfolio as a percentage of its net assets. As a
result, Balanced Portfolio's security holdings may become less
diverse, resulting in increased risk.
Balanced Portfolio commenced operations in February 1997 when
Stein Roe Balanced Fund, a mutual fund that, together with its
corporate predecessor, had invested directly in securities since
1949, converted into a feeder fund by investing all of its assets
in the Portfolio. Currently Stein Roe Balanced Fund, which is a
series of Stein Roe Investment Trust, is the only other investment
company investing in Balanced Portfolio. Information regarding
any investment company that may invest in Balanced Portfolio in
the future may be obtained by writing to SR&F Base Trust, Suite
3200, One South Wacker Drive, Chicago, Illinois 60606 or by
calling 800-338-2550. The Adviser may provide administrative or
other services to one or more of such investors.
FOR MORE INFORMATION
For more information about Advisor Balanced Fund, call Retirement
Services at 800-322-1130 or Advisor/Broker Services at 800-322-
0593.
______________________
<PAGE> 1
STEIN ROE ADVISOR GROWTH STOCK FUND
The investment objective of Advisor Growth Stock Fund is to
provide long-term capital appreciation by investing in common
stocks and other equity-type securities. Advisor Growth Stock
Fund invests all of its net investable assets in SR&F
Growth Stock Portfolio, a portfolio of SR&F Base Trust that has
the same investment objective and substantially the same
investment policies as Advisor Growth Stock Fund. (SEE SPECIAL
CONSIDERATIONS REGARDING MASTER FUND/FEEDER FUND STRUCTURE.)
Shares of Advisor Growth Stock Fund may be purchased only through
Intermediaries, including retirement plan service providers.
Advisor Growth Stock Fund has no sales or redemption charges.
Advisor Growth Stock Fund is a series of Stein Roe Advisor Trust
and Growth Stock Portfolio is a series of SR&F Base Trust. Each
Trust is a diversified open-end management investment company.
This prospectus contains information you should know before
investing in Advisor Growth Stock Fund. Please read it carefully
and retain it for future reference.
A Statement of Additional Information dated February 14, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information may be obtained without charge
by writing to Stein Roe Mutual Funds, Suite 3200, One South Wacker
Drive, Chicago, Illinois 60606, or by calling the Adviser. For
additional information, call Retirement Services at 800-322-1130
or Advisor/Broker Services at 800-322-0593.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 14, 1997.
<PAGE> 2
TABLE OF CONTENTS
Page
Summary...................................2
Fee Table ................................3
The Fund..................................4
Investment Policies.......................5
Performance Information...................5
Risks and Investment Considerations ......6
Investment Restrictions ..................6
Portfolio Investments and Strategies......7
Net Asset Value .........................10
How to Purchase Shares...................11
How to Redeem Shares ....................11
Distributions and Income Taxes...........12
Management ..............................13
Organization and Description of Shares...15
Special Considerations Regarding the
Master Fund/Feeder Fund Structure......16
For More Information ....................18
SUMMARY
Stein Roe Advisor Growth Stock Fund ("Advisor Growth Stock Fund")
is a series of Stein Roe Advisor Trust, an open-end diversified
management investment company organized as a Massachusetts
business trust. (See The Fund and Organization and Description of
Shares.) This prospectus is not a solicitation in any
jurisdiction in which shares of Advisor Growth Stock Fund are not
qualified for sale.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of
Advisor Growth Stock Fund is to provide long-term capital
appreciation by investing in common stocks and other equity-type
securities. Advisor Growth Stock Fund invests all of its net
investable assets in SR&F Growth Stock Portfolio ("Growth Stock
Portfolio") which has the same investment objective and investment
policies substantially similar to those of Advisor Growth Stock
Fund. Growth Stock Portfolio normally invests at least 65% of its
total assets in common stocks and other equity-type securities
that the Adviser believes to have long-term appreciation
possibilities.
For a more detailed discussion of the investment objectives and
policies, please see Investment Policies and Portfolio Investments
and Strategies. There is, of course, no assurance that Advisor
Growth Stock Fund and Growth Stock Portfolio will achieve their
common investment objective.
INVESTMENT RISKS. Advisor Growth Stock Fund is designed for long-
term investors who desire to participate in the stock market with
more investment risk and volatility than the stock market in
general, but with less investment risk and volatility than an
aggressive capital appreciation fund. Growth Stock Portfolio may
invest in foreign securities, which may entail a greater degree of
risk than investing in securities of domestic issuers. Please see
Investment Restrictions and Risks and Investment Considerations
for further information.
PURCHASES AND REDEMPTIONS. Shares of Advisor Growth Stock Fund
may be purchased only through Intermediaries, including retirement
plan service providers. For information on purchasing and
redeeming Advisor Growth Stock Fund shares, please see How to
Purchase Shares, How to Redeem Shares, and Management--
Distributor.
MANAGEMENT AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") is investment adviser to Growth Stock Portfolio. In
addition, it provides administrative services to Advisor Growth
Stock Fund and Growth Stock Portfolio. For a description of the
Adviser and these service arrangements, see Management.
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.........................None
Sales Load Imposed on Reinvested Dividends..............None
Deferred Sales Load.....................................None
Redemption Fees.........................................None
Exchange Fees...........................................None
ANNUAL FUND OPERATING EXPENSES (as a percentage of
average net assets; after reimbursement)
Management and Administrative Fees (after
reimbursement).......................................0.60%
12b-1 Fees..............................................0.25%
Other Expenses (after reimbursement)....................0.50%
-----
Total Operating Expenses (after reimbursement)..........1.35%
=====
EXAMPLE.
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return; and (2) redemption at the end of
each time period:
1 year 3 years
------ -------
$14 $43
The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in Advisor Growth Stock Fund. The Fee
Table reflects the combined expenses of both Advisor Growth Stock
Fund and Growth Stock Portfolio. Anticipated Total Operating
Expenses for Advisor Growth Stock Fund are annualized projections
based upon current administrative fees and management fees. Other
Expenses are estimated amounts for the current fiscal year. The
figures assume that the percentage amounts listed under Annual
Fund Operating Expenses remain the same during each of the periods
and that all income dividends and capital gain distributions are
reinvested in additional shares.
From time to time, the Adviser may voluntarily undertake to
reimburse Advisor Growth Stock Fund for a portion of its operating
expenses and its pro rata share of the fees and expenses payable
by Growth Stock Portfolio. The Adviser has undertaken to
reimburse Advisor Growth Stock Fund for its operating expenses and
its pro rata share of Growth Stock Portfolio's operating expenses
to the extent such expenses exceed 1.35% of Advisor Growth Stock
Fund's annual average net assets. This commitment expires on
January 31, 1998, subject to earlier review and possible
termination by the Adviser on 30 days' notice to Advisor Growth
Stock Fund. Absent such reimbursement, Advisor Growth Stock
Fund's share of Growth Stock Portfolio's Management Fee and the
Fund's Administrative Fee, Other Expenses and Total Operating
Expenses would be 0.75%, 0.55% and 1.55%, respectively. Any such
reimbursement will lower Advisor Growth Stock Fund's overall
expense ratio and increase its overall return to investors. (Also
see Management--Fees and Expenses.)
Advisor Growth Stock Fund pays the Adviser an administrative fee
based on its average daily net assets and Growth Stock Portfolio
pays the Adviser a management fee based on its average daily net
assets. The trustees of Advisor Trust have considered whether the
annual operating expenses of Advisor Growth Stock Fund, including
its share of the expenses of Growth Stock Portfolio, would be more
or less than if Advisor Growth Stock Fund invested directly in the
securities held by Growth Stock Portfolio, and concluded that
Advisor Growth Stock Fund's expenses would not be materially
greater in such case.
The figures in the Example are not necessarily indicative of past
or future expenses, and actual expenses may be greater or less
than those shown. Although information such as that shown in the
Example and Fee Table is useful in reviewing Advisor Growth Stock
Fund's expenses and in providing a basis for comparison with other
mutual funds, it should not be used for comparison with other
investments using different assumptions or time periods.
Because Advisor Growth Stock Fund pays a 12b-1 fee, long-term
investors in Advisor Growth Stock Fund may pay more over long
periods of time in distribution expenses than the maximum front-
end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD"). For further information on
Advisor Growth Stock Fund's 12b-1 fee, see Management--Distributor
or call your financial representative.
THE FUND
STEIN ROE ADVISOR GROWTH STOCK FUND ("Advisor Growth Stock Fund")
is a series of Stein Roe Advisor Trust ("Advisor Trust"), which is
an open-end diversified management investment company authorized
to issue shares of beneficial interest in separate series.
Rather than invest in securities directly, Advisor Growth Stock
Fund seeks to achieve its investment objective by using the
"master fund/feeder fund structure." Under that structure, a
feeder fund and one or more feeder funds pool their assets in a
master portfolio that has the same investment objective and
substantially the same investment policies as the feeder funds.
(See Special Considerations Regarding Master Fund/Feeder Fund
Structure.) Advisor Growth Stock Fund invests all of its net
investable assets in SR&F Growth Stock Portfolio ("Growth Stock
Portfolio"), which is a series of SR&F Base Trust ("Base Trust").
Stein Roe & Farnham Incorporated (the "Adviser") provides
portfolio management services to Growth Stock Portfolio and
administrative services to Advisor Growth Stock Fund and Growth
Stock Portfolio.
INVESTMENT POLICIES
The investment objective of Advisor Growth Stock Fund is to
provide long-term capital appreciation by investing in common
stocks and other equity-type securities. Advisor Growth Stock
Fund invests all of its net investable assets in Growth Stock
Portfolio, which has the same investment objective and investment
policies substantially similar to Advisor Growth Stock Fund.
Growth Stock Portfolio attempts to achieve its objective by
normally investing at least 65% of its total assets in common
stocks and other equity-type securities (such as preferred stocks,
securities convertible into or exchangeable for common stocks, and
warrants or rights to purchase common stocks) that, in the opinion
of the Adviser, have long-term appreciation possibilities.
Further information on investment techniques that may be employed
by Growth Stock Portfolio and the risks associated with such
techniques may be found under Risks and Investment Considerations
and Portfolio Investments and Strategies in this prospectus and in
the Statement of Additional Information.
PERFORMANCE INFORMATION
The total return from an investment in Advisor Growth Stock Fund
is measured by the distributions received (assuming reinvestment),
plus or minus the change in the net asset value per share for a
given period. A total return percentage may be calculated by
dividing the value of a share at the end of the period (including
reinvestment of distributions) by the value of the share at the
beginning of the period and subtracting one. For a given period,
an average annual total return may be calculated by finding the
average annual compounded rate that would equate a hypothetical
$1,000 investment to the ending redeemable value.
Comparison of Advisor Growth Stock Fund's total return with
alternative investments should consider differences between the
Fund and the alternative investments, the periods and methods used
in calculation of the return being compared, and the impact of
taxes on alternative investments. Of course, past performance is
not necessarily indicative of future results. Share prices may
vary, and your shares when redeemed may be worth more or less than
your original purchase price.
As of the date of this Prospectus, Advisor Growth Stock Fund had
no past performance. However, Stein Roe Growth Stock Fund, a
different Stein Roe Fund which is a series of Stein Roe Investment
Trust and has a similar name, the same investment objective and
substantially the same investment policies as Advisor Growth Stock
Fund, also invests all of its net investable assets in Growth
Stock Portfolio. The average annual total return for the periods
ended September 30, 1996 for a 1-year, 5-year and 10-year
investment in Stein Roe Growth Stock Fund were 21.04%, 13.75% and
14.12%, respectively. Stein Roe Growth Stock Fund has a different
fee structure than Advisor Growth Stock Fund, and does not pay
12b-1 fees. Had these fees been reflected, the total returns
shown in the table would have been lower. The information shown
above reflects the performance of Stein Roe Growth Stock Fund, and
should not be interpreted as indicative of Advisor Growth Stock
Fund's future performance.
RISKS AND INVESTMENT CONSIDERATIONS
Advisor Growth Stock Fund is designed for long-term investors who
desire to participate in the stock market with more investment
risk and volatility than the stock market in general, but with
less investment risk and volatility than an aggressive capital
appreciation fund. Growth Stock Portfolio usually allocates its
investments among a number of different industries rather than
concentrating in a particular industry or group of industries, but
this does not eliminate all risk. It will not, however, invest
more than 25% of the total value of its assets (at the time of
investment) in the securities of companies in any one industry.
There can be no guarantee that Advisor Growth Stock Fund or Growth
Stock Portfolio will achieve its objective.
Growth Stock Portfolio may invest up to 35% of its total assets in
debt securities. Debt securities rated in the fourth highest
grade may have some speculative characteristics, and changes in
economic conditions or other circumstances may lead to a weakened
capacity of the issuers of such securities to make principal and
interest payments. Securities rated below investment grade may
possess speculative characteristics, and changes in economic
conditions are more likely to affect the issuer's capacity to pay
interest or repay principal.
Growth Stock Portfolio may invest up to 25% of its total assets in
foreign securities. For purposes of this limit, foreign
securities exclude American Depositary Receipts (ADRs), foreign
debt securities denominated in U.S. dollars, and securities
guaranteed by a U.S. person. Investment in foreign securities may
represent a greater degree of risk (including risk related to
exchange rate fluctuations, tax provisions, exchange and currency
controls, and expropriation of assets) than investment in
securities of domestic issuers. Other risks of foreign investing
include less complete financial information on issuers, different
accounting, auditing and financial reporting standards, different
settlement practices, less market liquidity, more market
volatility, less developed and regulated markets, and greater
political instability. In addition, various restrictions by
foreign governments on investments by non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.
Further information on investment techniques that may be employed
by Growth Stock Portfolio may be found under Portfolio Investments
and Strategies.
INVESTMENT RESTRICTIONS
Neither Advisor Growth Stock Fund nor Growth Stock Portfolio may
invest more than 5% of its assets in the securities of any one
issuer. This restriction applies only to 75% of its investment
portfolio, and does not apply to securities of the U.S. Government
or repurchase agreements /1/ for such securities. This
restriction also does not prevent Advisor Growth Stock Fund from
investing all of its assets in shares of another investment
company having the identical investment objective under a
master/feeder structure.
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/1/ A repurchase agreement involves a sale of securities to Growth
Stock Portfolio in which the seller agrees to repurchase the
securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, Growth Stock
Portfolio could experience both losses and delays in liquidating
its collateral.
- -------------
Neither Advisor Growth Stock Fund nor Growth Stock Portfolio will
acquire more than 10% of the outstanding voting securities of any
one issuer. Advisor Growth Stock Fund may, however, invest all of
its assets in shares of another investment company having the
identical investment objective under a master/feeder structure.
Neither Advisor Growth Stock Fund nor Growth Stock Portfolio may
make loans except that it may (1) purchase money market
instruments and enter into repurchase agreements; (2) acquire
publicly-distributed or privately-placed debt securities; (3) lend
its portfolio securities under certain conditions; and (4)
participate in an interfund lending program with other Stein Roe
Funds and Portfolios. Advisor Growth Stock Fund and Growth Stock
Portfolio may not borrow money, except for non-leveraging,
temporary, or emergency purposes or in connection with
participation in the interfund lending program. Neither the
aggregate borrowings (including reverse repurchase agreements) nor
the aggregate loans at any one time may exceed 33 1/3% of the
value of total assets. Additional securities may not be purchased
when borrowings less proceeds receivable from sales of portfolio
securities exceed 5% of total assets.
Advisor Growth Stock Fund and Growth Stock Portfolio may invest in
repurchase agreements, provided that neither will invest more than
15% of its net assets in illiquid securities, including repurchase
agreements maturing in more than seven days.
The policies summarized in the first three paragraphs under this
section and the policy with respect to concentration of
investments in any one industry described under Risks and
Investment Considerations are fundamental policies of Advisor
Growth Stock Fund and Growth Stock Portfolio and, as such, can be
changed only with the approval of a "majority of the outstanding
voting securities" as defined in the Investment Company Act of
1940. The common investment objective of Advisor Growth Stock
Fund and Growth Stock Portfolio is non-fundamental and, as such,
may be changed by the Board of Trustees without shareholder
approval. All of the investment restrictions are set forth in the
Statement of Additional Information.
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES.
In pursuing its investment objective, Growth Stock Portfolio may
invest up to 35% of its total assets in debt securities of
corporate and governmental issuers. Investment in debt securities
is limited to those that are rated within the four highest grades
(generally referred to as investment grade). If the rating of a
security held by Growth Stock Portfolio is lost or reduced below
investment grade, it is not required to dispose of the security--
the Adviser will, however, consider that fact in determining
whether Growth Stock Portfolio should continue to hold the
security. When the Adviser deems a temporary defensive position
advisable, Growth Stock Portfolio may invest, without limitation,
in high-quality fixed income securities, or hold assets in cash or
cash equivalents.
FOREIGN SECURITIES.
Growth Stock Portfolio may invest in sponsored or unsponsored
ADRs. In addition to, or in lieu of, such direct investment,
Growth Stock Portfolio may construct a synthetic foreign debt
position by (a) purchasing a debt instrument denominated in one
currency, generally U.S. dollars; and (b) concurrently entering
into a forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and
at a specified rate of exchange. Because of the availability of a
variety of highly liquid U.S. dollar debt instruments, a synthetic
foreign debt position utilizing such U.S. dollar instruments may
offer greater liquidity than direct investment in foreign currency
debt instruments.
In connection with the purchase of foreign securities, Growth
Stock Portfolio may enter into foreign currency forward and
futures contracts to hedge the currency risk in settlement of a
particular security transaction or relative to the entire
portfolio. A forward contract to purchase an amount of foreign
currency sufficient to pay the purchase price of securities at
settlement date involves the risk that the value of the foreign
currency may decline relative to the value of the dollar prior to
the settlement date. This risk is in addition to the risk that
the value of the foreign security purchased may decline. Growth
Stock Portfolio also may enter into foreign currency contracts as
a hedging technique to limit or reduce exposure of the entire
portfolio to currency fluctuations. In addition, Growth Stock
Portfolio may use options and futures contracts, as described
below, to limit or reduce exposure to currency fluctuations.
CONVERTIBLE SECURITIES.
By investing in convertible securities, Growth Stock Portfolio
obtains the right to benefit from the capital appreciation
potential in the underlying stock upon exercise of the conversion
right, while earning higher current income than would be available
if the stock were purchased directly. In determining whether to
purchase a convertible, the Adviser will consider substantially
the same criteria that would be considered in purchasing the
underlying stock. Although convertible securities are frequently
rated investment grade, Growth Stock Portfolio also may purchase
unrated securities or securities rated below investment grade if
the securities meet the Adviser's other investment criteria.
Convertible securities rated below investment grade tend to be
more sensitive to interest rate and economic changes, may be
obligations of issuers who are less creditworthy than issuers of
higher quality convertible securities, and may be more thinly
traded due to the fact that such securities are less well known to
investors than either common stock or conventional debt
securities. As a result, the Adviser's own investment research
and analysis tends to be more important than other factors in the
purchase of convertible securities.
LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES.
Growth Stock Portfolio may make loans of its portfolio securities
to broker-dealers and banks subject to certain restrictions
described in the Statement of Additional Information. Growth
Stock Portfolio may participate in an interfund lending program,
subject to certain restrictions described in the Statement of
Additional Information. Growth Stock Portfolio may invest in
securities purchased on a when-issued or delayed-delivery basis.
Although the payment terms of these securities are established at
the time Growth Stock Portfolio enters into the commitment, the
securities may be delivered and paid for a month or more after the
date of purchase, when their value may have changed. Growth Stock
Portfolio will make such commitments only with the intention of
actually acquiring the securities, but may sell the securities
before settlement date if it is deemed advisable for investment
reasons.
SHORT SALES AGAINST THE BOX.
Growth Stock Portfolio may sell short securities it owns or has
the right to acquire without further consideration, using a
technique called selling short "against the box." Short sales
against the box may protect Growth Stock Portfolio against the
risk of losses in the value of its portfolio securities because
any unrealized losses with respect to such securities should be
wholly or partly offset by a corresponding gain in the short
position. However, any potential gains in such securities should
be wholly or partially offset by a corresponding loss in the short
position. Short sales against the box may be used to lock in a
profit on a security when, for tax reasons or otherwise, the
Adviser does not want to sell the security. Growth Stock
Portfolio does not expect to commit more than 5% of its net assets
to short sales against the box. For a more complete explanation,
please refer to the Statement of Additional Information.
DERIVATIVES.
Consistent with its objective, Growth Stock Portfolio may invest
in a broad array of financial instruments and securities,
including conventional exchange-traded and non-exchange-traded
options, futures contracts, futures options, securities
collateralized by underlying pools of mortgages or other
receivables, floating rate instruments, and other instruments that
securitize assets of various types ("Derivatives"). In each case,
the value of the instrument or security is "derived" from the
performance of an underlying asset or a "benchmark" such as a
security index, an interest rate, or a currency. Growth Stock
Portfolio does not expect to invest more than 5% of its net assets
in any type of Derivative except for options, futures contracts,
and futures options.
In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, Growth Stock
Portfolio may: (1) purchase and write both call options and put
options on securities, indexes and foreign currencies; (2) enter
into interest rate, index and foreign currency futures contracts;
(3) write options on such futures contracts; and (4) purchase
other types of forward or investment contracts linked to
individual securities, indexes or other benchmarks. Growth Stock
Portfolio may write a call or put option only if the option is
covered. As the writer of a covered call option, Growth Stock
Portfolio foregoes, during the option's life, the opportunity to
profit from increases in market value of the security covering the
call option above the sum of the premium and the exercise price of
the call. There can be no assurance that a liquid market will
exist when Growth Stock Portfolio seeks to close out a position.
In addition, because futures positions may require low margin
deposits, the use of futures contracts involves a high degree of
leverage and may result in losses in excess of the amount of the
margin deposit.
Derivatives are most often used to manage investment risk or to
create an investment position indirectly because they are more
efficient or less costly than direct investment. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's ability
to correctly predict changes in the levels and directions of
movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
PORTFOLIO TURNOVER.
Although Growth Stock Portfolio does not purchase securities with
a view to rapid turnover, there are no limitations on the length
of time portfolio securities must be held. Accordingly, the
portfolio turnover rate may vary significantly from year to year,
but is not expected to exceed 100% under normal market conditions.
A high rate of portfolio turnover may result in increased
transaction expenses and the realization of capital gains and
losses. (See Distributions and Income Taxes.)
NET ASSET VALUE
The purchase and redemption price of Advisor Growth Stock Fund's
shares is its net asset value per share. Advisor Growth Stock
Fund determines the net asset value of its shares as of the close
of trading on the New York Stock Exchange ("NYSE") (currently 3:00
p.m., central time) by dividing the difference between the value
of its assets and liabilities by the number of shares outstanding.
Growth Stock Portfolio allocates net asset value, income, and
expenses to Advisor Growth Stock Fund and any other of its feeder
funds in proportion to their respective interests in Growth Stock
Portfolio.
Net asset value will not be determined on days when the NYSE is
closed unless, in the judgment of the Board of Trustees, the net
asset value of Advisor Growth Stock Fund should be determined on
any such day, in which case the determination will be made at 3:00
p.m., central time.
Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation 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.
Long-term straight-debt obligations and securities convertible
into stocks are valued at a fair value using a procedure
determined in good faith by the Board of Trustees. Pricing
services approved by the Board provide valuations (some of which
may be "readily available market quotations"). These valuations
are reviewed by the Adviser. If the Adviser believes that a
valuation received from the service does not represent a fair
value, it values the obligation using a method that the Board
believes represents fair value. The Board may approve the use of
other pricing services and any pricing service used may employ
electronic data processing techniques, including a so-called
"matrix" system, to determine valuations. Other assets and
securities are valued by a method that the Board believes
represents fair value.
HOW TO PURCHASE SHARES
You may purchase Advisor Growth Stock Fund shares only through
broker-dealers, banks, or other intermediaries, including
retirement plan service providers ("Intermediaries"). The Adviser
and Advisor Growth Stock Fund do not recommend, endorse, or
receive payments from any Intermediary.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of Advisor
Growth Stock Fund's shares is made at Advisor Growth Stock Fund's
net asset value (see Net Asset Value) next determined after
receipt by the Fund or through an authorized agent of an order in
good form, including receipt of payment.
CONDITIONS OF PURCHASE. Each purchase order for Advisor Growth
Stock Fund must be accepted by an authorized officer of Advisor
Trust or its authorized agent and is not binding until accepted
and entered on the books of Advisor Growth Stock Fund. Once your
purchase order has been accepted, you may not cancel or revoke it;
you may, however, redeem the shares. Advisor Trust reserves the
right not to accept any purchase order that it determines not to
be in the best interests of Advisor Trust or of Advisor Growth
Stock Fund's shareholders.
PURCHASES THROUGH INTERMEDIARIES. You must purchase shares
through Intermediaries. These Intermediaries may charge for their
services or place limitations on the extent to which you may use
the services offered by Advisor Trust. In addition, each
Intermediary will establish its own procedures for the purchase of
shares of Advisor Growth Stock Fund, including minimum initial and
additional investments, and the acceptable methods of payment for
shares. Your Intermediary may be closed on days when the NYSE is
open. As a result, prices of Fund shares may be significantly
affected on days when you have no access to your Intermediary to
buy shares. If you wish to purchase shares, please contact your
Intermediary for instructions.
Retirement Plans. If you purchase shares through a retirement
plan, you should be aware that retirement plan administrators may
aggregate purchase and redemption orders for participants in the
plan. Therefore, there may be a delay between the time you place
your order with the plan administrator and the time the order is
forwarded for execution.
HOW TO REDEEM SHARES
You may redeem shares only through Intermediaries. Each
Intermediary will establish its own procedures for the sale of
shares of Advisor Growth Stock Fund. Your Intermediary may be
closed on days when the NYSE is open. As a result, prices for
Fund shares may be significantly affected on days when you have no
access to your Intermediary to sell shares. If you wish to redeem
shares through an Intermediary, please contact the Intermediary
for instructions.
EXCHANGE PRIVILEGE. Through an account with an Intermediary, you
may redeem all or any portion of your Advisor Growth Stock Fund
shares and use the proceeds to purchase shares of any other Fund
that is a series of Advisor Trust offered for sale in the state in
which the Intermediary is located. Each Intermediary will
establish its own exchange policies and procedures. In particular,
individual participants of qualified retirement plans may exchange
shares through the plan sponsor or administrator. Those
participants may exchange shares only for shares of other Advisor
Trust Funds that are included in the plan. An exchange
transaction is a sale and purchase of shares for federal income
tax purposes and may result in capital gain or loss. Before
exchanging into another Advisor Trust Fund, you should obtain the
prospectus for the Advisor Trust Fund in which you wish to invest
and read it carefully. The registration of the account to which
you are making an exchange must be exactly the same as that of the
account from which the exchange is made. Advisor Growth Stock
Fund reserves the right to suspend, limit, modify, or terminate
the Exchange Privilege or its use in any manner by any person or
class; Intermediaries would be notified of such a change.
GENERAL REDEMPTION POLICIES. Redemption instructions may not be
cancelled or revoked once they have been received and accepted by
Advisor Trust. Advisor Trust cannot accept a redemption request
that specifies a particular date or price for redemption or any
special conditions.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received by the Intermediary. (See Net Asset
Value.) Because the redemption price you receive depends upon
Advisor Growth Stock Fund's net asset value per share at the time
of redemption, it may be more or less than the price you
originally paid for the shares and may result in a realized
capital gain or loss.
Advisor Trust will pay redemption proceeds as soon as practicable,
and in no event later than seven days after proper instructions
are received by Advisor Growth Stock Fund or its authorized agent.
DISTRIBUTIONS AND INCOME TAXES
DISTRIBUTIONS. Income dividends are declared and paid annually.
Advisor Growth Stock Fund intends to distribute by the end of each
calendar year at least 98% of any net capital gains realized from
the sale of securities during the twelve-month period ended
October 31 in that year. Advisor Growth Stock Fund intends to
distribute any undistributed net investment income and net
realized capital gains in the following year.
All income dividends and capital gain distributions on shares of
Advisor Growth Stock Fund will be reinvested in additional shares
unless your Intermediary elects to have distributions paid by
check. Reinvestment normally occurs on the payable date.
INCOME TAXES. For federal income tax purposes, Advisor Growth
Stock Fund is treated as a separate taxable entity distinct from
the other series of Advisor Trust. Growth Stock Portfolio intends
to qualify for the special tax treatment afforded regulated
investment companies under Subchapter M of the Internal Revenue
Code, so that it will be relieved of federal income tax on that
part of its net investment income and net capital gain that is
distributed to shareholders.
Advisor Growth Stock Fund will distribute substantially all of its
ordinary income and net capital gains on a current basis.
Generally distributions are taxable as ordinary income, except
that any distributions of net long-term capital gains will be
taxed as such. However, distributions by Advisor Growth Stock
Fund to plans that qualify for tax-exempt treatment under federal
income tax laws will not be taxable. Special tax rules apply to
investments through such plans.
This section is not intended to be a full discussion of income tax
laws and their effect on shareholders. You may wish to consult
your own tax advisor.
MANAGEMENT
TRUSTEES AND INVESTMENT ADVISER. The Board of Trustees of Advisor
Trust and the Board of Trustees of Base Trust have overall
management responsibility for Advisor Growth Stock Fund and Growth
Stock Portfolio, respectively. See Management in the Statement of
Additional Information for the names of and other information
about the trustees and officers. Since Advisor Trust and Base
Trust have the same trustees, the trustees have adopted conflict
of interest procedures to monitor and address potential conflicts
between the interests of Advisor Growth Stock Fund and Growth
Stock Portfolio and other feeder funds investing in Growth Stock
Portfolio that share a common Board of Trustees with Advisor Trust
and Base Trust.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
investment portfolio of Growth Stock Portfolio and the business
affairs of Advisor Growth Stock Fund, Growth Stock Portfolio,
Advisor Trust, and Base Trust, subject to the direction of the
respective Board. The Adviser is registered as an investment
adviser under the Investment Advisers Act of 1940. The Adviser
was organized in 1986 to succeed to the business of Stein Roe &
Farnham, a partnership that had advised and managed mutual funds
since 1949. The Adviser is a wholly owned subsidiary of Liberty
Financial Companies, Inc. ("Liberty Financial"), which in turn is
a majority owned indirect subsidiary of Liberty Mutual Insurance
Company.
PORTFOLIO MANAGERS. Erik P. Gustafson has been portfolio manager
of Growth Stock Portfolio since its inception in 1997 and had
managed its predecessor since 1994. Mr. Gustafson is a senior
vice president of the Adviser, having joined it in 1992. From
1989 to 1992 he was an attorney with Fowler, White, Burnett,
Hurley, Banick & Strickroot. He holds a B.A. from the University
of Virginia (1985) and M.B.A. and J.D. degrees from Florida State
University (1989). As of December 31, 1996, Mr. Gustafson was
responsible for managing $877 million in mutual fund net assets.
David P. Brady is associate portfolio manager. Mr. Brady is a
vice president of the Adviser, which he joined in 1993, and was an
equity investment analyst with State Farm Mutual Automobile
Insurance Company from 1986 to 1993. A chartered financial
analyst, Mr. Brady earned a B.S. in Finance, graduating Magna Cum
Laude, from the University of Arizona (1986), and an M.B.A. from
the University of Chicago (1989).
FEES AND EXPENSES. The Adviser is entitled to receive a monthly
administrative fee from Advisor Growth Stock Fund, computed and
accrued daily, at an annual rate of 0.15% of the first $500
million of average net assets, 0.125% of the next $500 million,
and 0.10% thereafter; and a monthly management fee from Growth
Stock Portfolio, computed and accrued daily, at an annual rate of
0.60% of the first $500 million of average net assets, 0.55% of
the next $500 million, and 0.50% thereafter. However, as noted
above under Fee Table, the Adviser may voluntarily undertake to
reimburse Advisor Growth Stock Fund for a portion of its operating
expenses and its pro rata share of Growth Stock Portfolio's
operating expenses.
The Adviser provides office space and executive and other
personnel to Advisor Trust and Base Trust. All expenses of
Advisor Growth Stock Fund (other than those paid by the Adviser),
including, but not limited to, printing and postage charges,
securities registration fees, custodian and transfer agency fees,
legal and auditing fees, compensation of trustees not affiliated
with the Adviser, and expenses incidental to its organization, are
paid out of the assets of Advisor Growth Stock Fund.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to Advisor Growth
Stock Fund and Growth Stock Portfolio including computation of net
asset value and calculation of its net income and capital gains
and losses on disposition of assets.
In addition, the Adviser is free to make additional payments out
of its own assets to promote the sale of shares of Advisor Growth
Stock Fund.
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
contracts for Growth Stock Portfolio. In doing so, the Adviser
seeks to obtain the best combination of price and execution, which
involves a number of judgmental factors.
TRANSFER AGENT AND SHAREHOLDER SERVICES. SteinRoe Services Inc.
("SSI"), One South Wacker Drive, Chicago, Illinois 60606, a wholly
owned subsidiary of Liberty Financial, is the agent of Advisor
Trust for the transfer of shares, disbursement of dividends, and
maintenance of shareholder accounting records.
Some Intermediaries that maintain nominee accounts with Advisor
Growth Stock Fund for their clients who are Fund shareholders may
be paid a fee from SSI of up to 0.25% of the average net assets
held in such accounts for shareholder servicing and accounting
services they provide with respect to the underlying Fund shares.
DISTRIBUTOR. The shares of Advisor Growth Stock Fund are offered
for sale through Liberty Securities Corporation ("Distributor")
without any sales commissions. The Distributor is a wholly owned
indirect subsidiary of Liberty Financial. The business address of
the Distributor is 600 Atlantic Avenue, Boston, Massachusetts
02210; however, all Fund correspondence (including purchase and
redemption orders) should be mailed to SteinRoe Services Inc. at
P.O. Box 8900, Boston, Massachusetts 02205.
The trustees of Advisor Trust have adopted a plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("Plan"). The Plan
provides that, as compensation for the promotion and distribution
of shares of Advisor Growth Stock Fund including its expenses
related to the sale and promotion of Fund shares, the Distributor
receives from Advisor Growth Stock Fund a fee at an annual rate of
0.25% of its average net assets. The Distributor generally pays
this amount to institutions that distribute Advisor Growth Stock
Fund shares and provide services to Advisor Growth Stock Fund and
its shareholders. Those institutions may use the payments for,
among other purposes, compensating employees engaged in sales
and/or shareholder servicing. The amount of fees paid by Advisor
Growth Stock Fund during any year may be more or less than the
cost of distribution or other services provided to Advisor Growth
Stock Fund. NASD rules limit the amount of annual distribution
fees that may be paid by a mutual fund and impose a ceiling on the
cumulative distribution fees paid. Advisor Trust's Plan complies
with those rules.
CUSTODIAN. State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, Massachusetts 02101, is the custodian for
Advisor Growth Stock Fund and Growth Stock Portfolio. Foreign
securities are maintained in the custody of foreign banks and
trust companies that are members of the Bank's Global Custody
Network or foreign depositories used by such members. (See
Custodian in the Statement of Additional Information.)
ORGANIZATION AND DESCRIPTION OF SHARES
Advisor Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
July 31, 1996, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either Advisor
Trust's shareholders or its trustees. Advisor Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, seven series are authorized and outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Advisor Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of Advisor Trust.
The Declaration of Trust provides that persons extending credit
to, contracting with, or having any claim against, Advisor Trust
or any particular series shall look only to the assets of Advisor
Trust or of the respective series for payment under such credit,
contract or claim, and that the shareholders, trustees and
officers of Advisor Trust shall have no personal liability
therefor. The Declaration of Trust requires that notice of such
disclaimer of liability be given in each contract, instrument or
undertaking executed or made on behalf of Advisor Trust. The
Declaration of Trust provides for indemnification of any
shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Advisor Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Advisor
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
SPECIAL CONSIDERATIONS REGARDING THE
MASTER FUND/FEEDER FUND STRUCTURE
Advisor Growth Stock Fund, an open-end management investment
company, seeks to achieve its objective by investing all of its
assets in shares of another mutual fund having an investment
objective identical to that of Advisor Growth Stock Fund. The
initial shareholder of Advisor Growth Stock Fund approved this
policy of permitting Advisor Growth Stock Fund to act as a feeder
fund by investing in Growth Stock Portfolio. Please refer to the
Investment Policies, Portfolio Investments and Strategies, and
Investment Restrictions for a description of the investment
objectives, policies, and restrictions of Advisor Growth Stock
Fund and Growth Stock Portfolio. The management and expenses of
both Advisor Growth Stock Fund and Growth Stock Portfolio are
described under the Fee Table and Management. Advisor Growth
Stock Fund bears its proportionate share of Portfolio expenses.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
SR&F Growth Stock Portfolio is a separate series of SR&F Base
Trust ("Base Trust"), a Massachusetts common law trust organized
under an Agreement and Declaration of Trust ("Declaration of
Trust") dated August 23, 1993. The Declaration of Trust of Base
Trust provides that Advisor Growth Stock Fund and other investors
in Growth Stock Portfolio will each be liable for all obligations
of Growth Stock Portfolio that are not satisfied by the Portfolio.
However, the risk of Advisor Growth Stock Fund incurring financial
loss on account of such liability is limited to circumstances in
which both inadequate insurance existed and Growth Stock Portfolio
itself were unable to meet its obligations. Accordingly, the
trustees of Advisor Trust believe that neither Advisor Growth
Stock Fund nor its shareholders will be adversely affected by
reason of Advisor Growth Stock Fund's investing in Growth Stock
Portfolio.
The Declaration of Trust of Base Trust provides that Growth Stock
Portfolio will terminate 120 days after the withdrawal of Advisor
Growth Stock Fund or any other investor in Growth Stock Portfolio,
unless the remaining investors vote to agree to continue the
business of Growth Stock Portfolio. The trustees of Advisor Trust
may vote Advisor Growth Stock Fund's interests in Growth Stock
Portfolio for such continuation without approval of Advisor Growth
Stock Fund's shareholders.
The common investment objective of Advisor Growth Stock Fund and
Growth Stock Portfolio is non-fundamental and may be changed
without shareholder approval. The fundamental policies of Advisor
Growth Stock Fund and the corresponding fundamental policies of
Growth Stock Portfolio can be changed only with shareholder
approval.
If Advisor Growth Stock Fund, as a Portfolio investor, is
requested to vote on a proposed change in fundamental policy of
Growth Stock Portfolio or any other matter pertaining to Growth
Stock Portfolio (other than continuation of the business of Growth
Stock Portfolio after withdrawal of another investor), Advisor
Growth Stock Fund will solicit proxies from its shareholders and
vote its interest in Growth Stock Portfolio for and against such
matters proportionately to the instructions to vote for and
against such matters received from Advisor Growth Stock Fund
shareholders. Advisor Growth Stock Fund will vote shares for
which it receives no voting instructions in the same proportion as
the shares for which it receives voting instructions. If there
are other investors in Growth Stock Portfolio, there can be no
assurance that any matter receiving a majority of votes cast by
Fund shareholders will receive a majority of votes cast by all
Growth Stock Portfolio investors. If other investors hold a
majority interest in Growth Stock Portfolio, they could have
voting control over Growth Stock Portfolio.
In the event that Growth Stock Portfolio's fundamental policies
were changed so as to be inconsistent with those of Advisor Growth
Stock Fund, the Board of Trustees of Advisor Trust would consider
what action might be taken, including changes to Advisor Growth
Stock Fund's fundamental policies, withdrawal of Advisor Growth
Stock Fund's assets from Growth Stock Portfolio and investment of
such assets in another pooled investment entity, or the retention
of another investment adviser. Any of these actions would require
the approval of Advisor Growth Stock Fund's shareholders. Advisor
Growth Stock Fund's inability to find a substitute master fund or
comparable investment management could have a significant impact
upon its shareholders' investments. Any withdrawal of Advisor
Growth Stock Fund's assets could result in a distribution in kind
of portfolio securities (as opposed to a cash distribution) to
Advisor Growth Stock Fund. Should such a distribution occur,
Advisor Growth Stock Fund would incur brokerage fees or other
transaction costs in converting such securities to cash. In
addition, a distribution in kind could result in a less
diversified portfolio of investments for Advisor Growth Stock Fund
and could affect the liquidity of Advisor Growth Stock Fund.
Each investor in Growth Stock Portfolio, including Advisor Growth
Stock Fund, may add to or reduce its investment in Growth Stock
Portfolio on each day the NYSE is open for business. The
investor's percentage of the aggregate interests in Growth Stock
Portfolio will be computed as the percentage equal to the fraction
(i) the numerator of which is the beginning of the day value of
such investor's investment in Growth Stock Portfolio on such day
plus or minus, as the case may be, the amount of any additions to
or withdrawals from the investor's investment in Growth Stock
Portfolio effected on such day; and (ii) the denominator of which
is the aggregate beginning of the day net asset value of Growth
Stock Portfolio on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate
investments in Growth Stock Portfolio by all investors in Growth
Stock Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in
Growth Stock Portfolio as of the close of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in Growth Stock Portfolio, but
members of the general public may not invest directly in Growth
Stock Portfolio. Other investors in Growth Stock Portfolio are
not required to sell their shares at the same public offering
price as Advisor Growth Stock Fund, might incur different
administrative fees and expenses than Advisor Growth Stock Fund,
and their shares might be sold with a sales commission.
Therefore, Advisor Growth Stock Fund shareholders might have
different investment returns than shareholders in another
investment company that invests exclusively in Growth Stock
Portfolio. Investment by such other investors in Growth Stock
Portfolio would provide funds for the purchase of additional
portfolio securities and would tend to reduce the Portfolio's
operating expenses as a percentage of its net assets. Conversely,
large-scale redemptions by any such other investors in Growth
Stock Portfolio could result in untimely liquidations of Growth
Stock Portfolio's security holdings, loss of investment
flexibility, and increases in the operating expenses of Growth
Stock Portfolio as a percentage of its net assets. As a result,
Growth Stock Portfolio's security holdings may become less
diverse, resulting in increased risk.
Growth Stock Portfolio commenced operations in February 1997 when
Stein Roe Growth Stock Fund, a mutual fund that, together with its
corporate predecessor, had invested directly in securities since
1958, converted into a feeder fund by investing all of its assets
in the Portfolio. Currently Stein Roe Growth Stock Fund, which is
a series of Stein Roe Investment Trust, is the only other
investment company investing in Growth Stock Portfolio.
Information regarding any investment company that may invest in
Growth Stock Portfolio in the future may be obtained by writing to
SR&F Base Trust, Suite 3200, One South Wacker Drive, Chicago,
Illinois 60606 or by calling 800-338-2550. The Adviser may
provide administrative or other services to one or more of such
investors.
FOR MORE INFORMATION
For more information about Advisor Growth Stock Fund, call
Retirement Services at 800-322-1130 or Advisor/Broker Services at
800-322-0593.
______________________
<PAGE> 1
STEIN ROE ADVISOR SPECIAL FUND
The investment objective of Advisor Special Fund is to provide
capital appreciation by investing in securities that are
considered to have limited downside risk relative to their
potential for above-average growth, including securities of
undervalued, underfollowed, or out-of-favor companies. Advisor
Special Fund invests all of its net investable assets in
SR&F Special Portfolio, a portfolio of SR&F Base Trust that has
the same investment objective and substantially the same
investment policies as Advisor Special Fund. (SEE SPECIAL
CONSIDERATIONS REGARDING MASTER FUND/FEEDER FUND STRUCTURE.)
Shares of Advisor Special Fund may be purchased only through
Intermediaries, including retirement plan service providers.
Advisor Special Fund has no sales or redemption charges. Advisor
Special Fund is a series of Stein Roe Advisor Trust and Special
Portfolio is a series of SR&F Base Trust. Each Trust is a
diversified open-end management investment company.
This prospectus contains information you should know before
investing in Advisor Special Fund. Please read it carefully and
retain it for future reference.
A Statement of Additional Information dated February 14, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information may be obtained without charge
by writing to Stein Roe Mutual Funds, Suite 3200, One South Wacker
Drive, Chicago, Illinois 60606, or by calling the Adviser. For
additional information, call Retirement Services at 800-322-1130
or Advisor/Broker Services at 800-322-0593.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK OR OTHER DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 14, 1997.
<PAGE> 2
TABLE OF CONTENTS
Page
Summary........... .2
Fee Table ......... ...3
The Fund......... ...4
Investment Policies.......... ..5
Performance Information........... .5
Risks and Investment Considerations .........6
Investment Restrictions .....................7
Portfolio Investments and Strategies.........8
Net Asset Value ............................10
How to Purchase Shares......................11
How to Redeem Shares .......................12
Distributions and Income Taxes..............12
Management .................................13
Organization and Description of Shares......15
Special Considerations Regarding the
Master Fund/Feeder Fund Structure.........16
For More Information .......................18
SUMMARY
Stein Roe Advisor Special Fund ("Advisor Special Fund") is a
series of Stein Roe Advisor Trust, an open-end diversified
management investment company organized as a Massachusetts
business trust. (See The Fund and Organization and Description of
Shares.) This prospectus is not a solicitation in any
jurisdiction in which shares of Advisor Special Fund are not
qualified for sale.
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of
Advisor Special Fund is to provide capital appreciation by
investing in securities that are considered to have limited
downside risk relative to their potential for above-average
growth, including securities of undervalued, underfollowed, or
out-of-favor companies. Advisor Special Fund invests all of its
net investable assets in SR&F Special Portfolio ("Special
Portfolio") which has the same investment objective and investment
policies substantially similar to those of Advisor Special Fund.
Particular emphasis is placed on securities that are considered to
have limited downside risk relative to their potential for above-
average growth--including securities of undervalued, underfollowed
or out-of-favor companies, and companies that are low-cost
producers of goods or services, financially strong, or run by
well-respected managers. Special Portfolio's investments may
include securities of seasoned, established companies that appear
to have appreciation potential, as well as securities of
relatively small, new companies; securities with limited
marketability; new issues of securities; securities of companies
that, in the Adviser's opinion, will benefit from management
change, new technology, new product or service development, or
change in demand; and other securities that the Adviser believes
have capital appreciation possibilities.
For a more detailed discussion of the investment objectives and
policies, please see Investment Policies and Portfolio Investments
and Strategies. There is, of course, no assurance that Advisor
Special Fund and Special Portfolio will achieve their common
investment objective.
INVESTMENT RISKS. Advisor Special Fund is designed for long-term
investors who desire to participate in the stock market with more
investment risk and volatility than the stock market in general,
but with less investment risk and volatility than aggressive
capital appreciation funds. Special Portfolio may invest in
foreign securities, which may entail a greater degree of risk than
investing in securities of domestic issuers. Please see
Investment Restrictions and Risks and Investment Considerations
for further information.
PURCHASES AND REDEMPTIONS. Shares of Advisor Special Fund may be
purchased only through Intermediaries, including retirement plan
service providers. For information on purchasing and redeeming
Advisor Special Fund shares, please see How to Purchase Shares,
How to Redeem Shares, and Management--Distributor.
MANAGEMENT AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") is investment adviser to Special Portfolio. In
addition, it provides administrative services to Advisor Special
Fund and Special Portfolio. For a description of the Adviser and
these service arrangements, see Management.
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.....................None
Sales Load Imposed on Reinvested Dividends..........None
Deferred Sales Load.................................None
Redemption Fees.....................................None
Exchange Fees.......................................None
ANNUAL FUND OPERATING EXPENSES (as a percentage
of average net assets; after reimbursement)
Management and Administrative Fees (after
reimbursement)...................................0.65%
12b-1 Fees..........................................0.25%
Other Expenses .....................................0.55%
-----
Total Operating Expenses (after reimbursement)......1.45%
=====
EXAMPLE.
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return; and (2) redemption at the end of
each time period:
1 year 3 years
------ -------
$15 $46
The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in Advisor Special Fund. The Fee Table
reflects the combined expenses of both Advisor Special Fund and
Special Portfolio. Anticipated Total Operating Expenses for
Advisor Special Fund are annualized projections based upon current
administrative fees and management fees. Other Expenses are
estimated amounts for the current fiscal year. The figures assume
that the percentage amounts listed under Annual Fund Operating
Expenses remain the same during each of the periods and that all
income dividends and capital gain distributions are reinvested in
additional shares.
From time to time, the Adviser may voluntarily undertake to
reimburse Advisor Special Fund for a portion of its operating
expenses and its pro rata share of the fees and expenses payable
by Special Portfolio. For the period ending June 30, 1997, the
Adviser has agreed to reduce the portion of Adviser Special Fund's
fee payable by Special Portfolio by subtracting 0.05% from the
applicable annual rate of management fee. In addition, the
Adviser has undertaken to reimburse Advisor Special Fund for its
operating expenses and its pro rata share of Special Portfolio's
operating expenses to the extent such expenses exceed 1.45% of
Advisor Special Fund's annual average net assets. This commitment
expires on January 31, 1998, subject to earlier review and
possible termination by the Adviser on 30 days' notice to Advisor
Special Fund. Absent the rebate and reimbursement, Advisor
Special Fund's share of Special Portfolio's Management Fee and the
Fund Administrative Fee and Total Operating Expenses would be
0.85% and 1.65%, respectively. Any such reimbursement will lower
Advisor Special Fund's overall expense ratio and increase its
overall return to investors. (Also see Management--Fees and
Expenses.)
Advisor Special Fund pays the Adviser an administrative fee based
on its average daily net assets and Special Portfolio pays the
Adviser a management fee based on its average daily net assets.
The trustees of Advisor Trust have considered whether the annual
operating expenses of Advisor Special Fund, including its share of
the expenses of Special Portfolio, would be more or less than if
Advisor Special Fund invested directly in the securities held by
Special Portfolio, and concluded that Advisor Special Fund's
expenses would not be materially greater in such case.
The figures in the Example are not necessarily indicative of past
or future expenses, and actual expenses may be greater or less
than those shown. Although information such as that shown in the
Example and Fee Table is useful in reviewing Advisor Special
Fund's expenses and in providing a basis for comparison with other
mutual funds, it should not be used for comparison with other
investments using different assumptions or time periods.
Because Advisor Special Fund pays a 12b-1 fee, long-term investors
in Advisor Special Fund may pay more over long periods of time in
distribution expenses than the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
("NASD"). For further information on Advisor Special Fund's 12b-1
fee, see Management--Distributor or call your financial
representative.
THE FUND
STEIN ROE ADVISOR SPECIAL FUND ("Advisor Special Fund") is a
series of Stein Roe Advisor Trust ("Advisor Trust"), which is an
open-end diversified management investment company authorized to
issue shares of beneficial interest in separate series.
Rather than invest in securities directly, Advisor Special Fund
seeks to achieve its investment objective by using the "master
fund/feeder fund structure." Under that structure, a feeder fund
and one or more feeder funds pool their assets in a master
portfolio that has the same investment objective and substantially
the same investment policies as the feeder funds. (See Special
Considerations Regarding Master Fund/Feeder Fund Structure.)
Advisor Special Fund invests all of its net investable assets in
SR&F Special Portfolio ("Special Portfolio"), which is a
series of SR&F Base Trust ("Base Trust").
Stein Roe & Farnham Incorporated (the "Adviser") provides
portfolio management services to Special Portfolio and
administrative services to Advisor Special Fund and Special
Portfolio.
INVESTMENT POLICIES
The investment objective of Advisor Special Fund is to provide
capital appreciation by investing in securities that are
considered to have limited downside risk relative to their
potential for above-average growth, including securities of
undervalued, underfollowed, or out-of-favor companies. Advisor
Special Fund invests all of its net investable assets in Special
Portfolio, which has the same investment objective and investment
policies substantially similar to Advisor Special Fund. Special
Portfolio may invest in securities of seasoned, established
companies that appear to have appreciation potential, as well as
securities of relatively small, new companies. In addition, it
may invest in securities with limited marketability; new issues of
securities; securities of companies that, in the Adviser's
opinion, will benefit from management change, new technology, new
product or service development, or change in demand; and other
securities that the Adviser believes have capital appreciation
possibilities. Securities of smaller, newer companies may be
subject to greater price volatility than securities of larger,
well-established companies. In addition, many smaller companies
are less well known to the investing public and may not be as
widely followed by the investment community. Although Special
Portfolio invests primarily in common stocks, it may also invest
in other equity-type securities, including preferred stocks and
securities convertible into equity securities.
Further information on investment techniques that may be employed
by Special Portfolio and the risks associated with such techniques
may be found under Risks and Investment Considerations and
Portfolio Investments and Strategies in this prospectus and in the
Statement of Additional Information.
PERFORMANCE INFORMATION
The total return from an investment in Advisor Special Fund is
measured by the distributions received (assuming reinvestment),
plus or minus the change in the net asset value per share for a
given period. A total return percentage may be calculated by
dividing the value of a share at the end of the period (including
reinvestment of distributions) by the value of the share at the
beginning of the period and subtracting one. For a given period,
an average annual total return may be calculated by finding the
average annual compounded rate that would equate a hypothetical
$1,000 investment to the ending redeemable value.
Comparison of Advisor Special Fund's total return with alternative
investments should consider differences between the Fund and the
alternative investments, the periods and methods used in
calculation of the return being compared, and the impact of taxes
on alternative investments. Of course, past performance is not
necessarily indicative of future results. Share prices may vary,
and your shares when redeemed may be worth more or less than your
original purchase price.
As of the date of this Prospectus, Advisor Special Fund had no
past performance. However, Stein Roe Special Fund, a different
Stein Roe Fund which is a series of Stein Roe Investment Trust and
has a similar name, the same investment objective and
substantially the same investment policies as Advisor Special
Fund, also invests all of its net investable assets in Special
Portfolio. The average annual total return for the periods ended
September 30, 1996 for a 1-year, 5-year and 10-year investment in
Stein Roe Special Fund were 17.89%, 13.85% and 15.53%,
respectively. Stein Roe Special Fund has a different fee
structure than Advisor Special Fund, and does not pay 12b-1 fees.
Had these fees been reflected, the total returns shown in the
table would have been lower. The information shown above reflects
the performance of Stein Roe Special Fund, and should not be
interpreted as indicative of Advisor Special Fund's future
performance.
RISKS AND INVESTMENT CONSIDERATIONS
Advisor Special Fund is designed for long-term investors who
desire to participate in the stock market with more investment
risk and volatility than the stock market in general, but with
less investment risk and volatility than aggressive capital
appreciation funds. Special Portfolio usually allocates its
investments among a number of different industries rather than
concentrating in a particular industry or group of industries, but
this does not eliminate all risk. It will not, however, invest
more than 25% of the total value of its assets (at the time of
investment) in the securities of companies in any one industry.
There can be no guarantee that Advisor Special Fund or Special
Portfolio will achieve its objective.
Special Portfolio may invest up to 35% of its total assets in debt
securities. Debt securities rated in the fourth highest grade may
have some speculative characteristics, and changes in economic
conditions or other circumstances may lead to a weakened capacity
of the issuers of such securities to make principal and interest
payments. Securities rated below investment grade may possess
speculative characteristics, and changes in economic conditions
are more likely to affect the issuer's capacity to pay interest or
repay principal.
Special Portfolio may invest up to 25% of its total assets in
foreign securities. For purposes of this limit, foreign
securities exclude American Depositary Receipts (ADRs), foreign
debt securities denominated in U.S. dollars, and securities
guaranteed by a U.S. person. Investment in foreign securities may
represent a greater degree of risk (including risk related to
exchange rate fluctuations, tax provisions, exchange and currency
controls, and expropriation of assets) than investment in
securities of domestic issuers. Other risks of foreign investing
include less complete financial information on issuers, different
accounting, auditing and financial reporting standards, different
settlement practices, less market liquidity, more market
volatility, less developed and regulated markets, and greater
political instability. In addition, various restrictions by
foreign governments on investments by non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.
Further information on investment techniques that may be employed
by Special Portfolio may be found under Portfolio Investments and
Strategies.
INVESTMENT RESTRICTIONS
Neither Advisor Special Fund nor Special Portfolio may invest more
than 5% of its assets in the securities of any one issuer. This
restriction applies only to 75% of its investment portfolio, and
does not apply to securities of the U.S. Government or repurchase
agreements /1/ for such securities. This restriction also does
not prevent Advisor Special Fund from investing all of its assets
in shares of another investment company having the identical
investment objective under a master/feeder structure.
- ----------------
/1/ A repurchase agreement involves a sale of securities to
Special Portfolio in which the seller agrees to repurchase the
securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, Special Portfolio
could experience both losses and delays in liquidating its
collateral.
- ----------------
Neither Advisor Special Fund nor Special Portfolio will acquire
more than 10% of the outstanding voting securities of any one
issuer. Advisor Special Fund may, however, invest all of its
assets in shares of another investment company having the
identical investment objective under a master/feeder structure.
Neither Advisor Special Fund nor Special Portfolio may make loans
except that it may (1) purchase money market instruments and enter
into repurchase agreements; (2) acquire publicly-distributed or
privately-placed debt securities; (3) lend its portfolio
securities under certain conditions; and (4) participate in an
interfund lending program with other Stein Roe Funds and
Portfolios. Advisor Special Fund and Special Portfolio may not
borrow money, except for non-leveraging, temporary, or emergency
purposes or in connection with participation in the interfund
lending program. Neither the aggregate borrowings (including
reverse repurchase agreements) nor the aggregate loans at any one
time may exceed 33 1/3% of the value of total assets. Additional
securities may not be purchased when borrowings less proceeds
receivable from sales of portfolio securities exceed 5% of total
assets.
Advisor Special Fund and Special Portfolio may invest in
repurchase agreements, provided that neither will invest more than
15% of its net assets in illiquid securities, including repurchase
agreements maturing in more than seven days.
The policies summarized in the third paragraph under this section
and the policy with respect to concentration of investments in any
one industry described under Risks and Investment Considerations
are fundamental policies of Advisor Special Fund and Special
Portfolio and, as such, can be changed only with the approval of a
"majority of the outstanding voting securities" as defined in the
Investment Company Act of 1940. The common investment objective
of Advisor Special Fund and Special Portfolio is non-fundamental
and, as such, may be changed by the Board of Trustees without
shareholder approval. All of the investment restrictions are set
forth in the Statement of Additional Information.
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES.
Special Portfolio may invest up to 35% of its net assets in debt
securities, but does not expect to invest more than 5% of its net
assets in debt securities that are rated below investment grade
and that, on balance, are considered predominantly speculative
with respect to the issuer's capacity to pay interest and repay
principal according to the terms of the obligation and, therefore,
carry greater investment risk, including the possibility of issuer
default and bankruptcy. When the Adviser deems a temporary
defensive position advisable, Special Portfolio may invest,
without limitation, in high-quality fixed income securities, or
hold assets in cash or cash equivalents.
FOREIGN SECURITIES.
Special Portfolio may invest in sponsored or unsponsored ADRs. In
addition to, or in lieu of, such direct investment, Special
Portfolio may construct a synthetic foreign debt position by (a)
purchasing a debt instrument denominated in one currency,
generally U.S. dollars; and (b) concurrently entering into a
forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and
at a specified rate of exchange. Because of the availability of a
variety of highly liquid U.S. dollar debt instruments, a synthetic
foreign debt position utilizing such U.S. dollar instruments may
offer greater liquidity than direct investment in foreign currency
debt instruments.
In connection with the purchase of foreign securities, Special
Portfolio may enter into foreign currency forward and futures
contracts to hedge the currency risk in settlement of a particular
security transaction or relative to the entire portfolio. A
forward contract to purchase an amount of foreign currency
sufficient to pay the purchase price of securities at settlement
date involves the risk that the value of the foreign currency may
decline relative to the value of the dollar prior to the
settlement date. This risk is in addition to the risk that the
value of the foreign security purchased may decline. Special
Portfolio also may enter into foreign currency contracts as a
hedging technique to limit or reduce exposure of the entire
portfolio to currency fluctuations. In addition, Special
Portfolio may use options and futures contracts, as described
below, to limit or reduce exposure to currency fluctuations.
CONVERTIBLE SECURITIES.
By investing in convertible securities, Special Portfolio obtains
the right to benefit from the capital appreciation potential in
the underlying stock upon exercise of the conversion right, while
earning higher current income than would be available if the stock
were purchased directly. In determining whether to purchase a
convertible, the Adviser will consider substantially the same
criteria that would be considered in purchasing the underlying
stock. Although convertible securities are frequently rated
investment grade, Special Portfolio also may purchase unrated
securities or securities rated below investment grade if the
securities meet the Adviser's other investment criteria.
Convertible securities rated below investment grade tend to be
more sensitive to interest rate and economic changes, may be
obligations of issuers who are less creditworthy than issuers of
higher quality convertible securities, and may be more thinly
traded due to the fact that such securities are less well known to
investors than either common stock or conventional debt
securities. As a result, the Adviser's own investment research
and analysis tends to be more important than other factors in the
purchase of convertible securities.
LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES.
Special Portfolio may make loans of its portfolio securities to
broker-dealers and banks subject to certain restrictions described
in the Statement of Additional Information. Special Portfolio may
participate in an interfund lending program, subject to certain
restrictions described in the Statement of Additional Information.
Special Portfolio may invest in securities purchased on a when-
issued or delayed-delivery basis. Although the payment terms of
these securities are established at the time Special Portfolio
enters into the commitment, the securities may be delivered and
paid for a month or more after the date of purchase, when their
value may have changed. Special Portfolio will make such
commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.
SHORT SALES AGAINST THE BOX.
Special Portfolio may sell short securities it owns or has the
right to acquire without further consideration, using a technique
called selling short "against the box." Short sales against the
box may protect Special Portfolio against the risk of losses in
the value of its portfolio securities because any unrealized
losses with respect to such securities should be wholly or partly
offset by a corresponding gain in the short position. However,
any potential gains in such securities should be wholly or
partially offset by a corresponding loss in the short position.
Short sales against the box may be used to lock in a profit on a
security when, for tax reasons or otherwise, the Adviser does not
want to sell the security. Special Portfolio does not expect to
commit more than 5% of its net assets to short sales against the
box. For a more complete explanation, please refer to the
Statement of Additional Information.
DERIVATIVES.
Consistent with its objective, Special Portfolio may invest in a
broad array of financial instruments and securities, including
conventional exchange-traded and non-exchange-traded options,
futures contracts, futures options, securities collateralized by
underlying pools of mortgages or other receivables, floating rate
instruments, and other instruments that securitize assets of
various types ("Derivatives"). In each case, the value of the
instrument or security is "derived" from the performance of an
underlying asset or a "benchmark" such as a security index, an
interest rate, or a currency. Special Portfolio does not expect
to invest more than 5% of its net assets in any type of Derivative
except for options, futures contracts, and futures options.
In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, Special Portfolio
may: (1) purchase and write both call options and put options on
securities, indexes and foreign currencies; (2) enter into
interest rate, index and foreign currency futures contracts; (3)
write options on such futures contracts; and (4) purchase other
types of forward or investment contracts linked to individual
securities, indexes or other benchmarks. Special Portfolio may
write a call or put option only if the option is covered. As the
writer of a covered call option, Special Portfolio foregoes,
during the option's life, the opportunity to profit from increases
in market value of the security covering the call option above the
sum of the premium and the exercise price of the call. There can
be no assurance that a liquid market will exist when Special
Portfolio seeks to close out a position. In addition, because
futures positions may require low margin deposits, the use of
futures contracts involves a high degree of leverage and may
result in losses in excess of the amount of the margin deposit.
Derivatives are most often used to manage investment risk or to
create an investment position indirectly because they are more
efficient or less costly than direct investment. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's ability
to correctly predict changes in the levels and directions of
movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
PORTFOLIO TURNOVER.
Although Special Portfolio does not purchase securities with a
view to rapid turnover, there are no limitations on the length of
time portfolio securities must be held. Accordingly, the
portfolio turnover rate may vary significantly from year to year,
but is not expected to exceed 100% under normal market conditions.
At times the Fund may invest for short-term capital appreciation.
Flexibility of investment and emphasis on capital appreciation may
involve greater portfolio turnover than that of mutual funds that
have the objectives of income or maintenance of a balanced
investment position. A high rate of portfolio turnover may result
in increased transaction expenses and the realization of capital
gains and losses. (See Distributions and Income Taxes.)
NET ASSET VALUE
The purchase and redemption price of Advisor Special Fund's shares
is its net asset value per share. Advisor Special Fund determines
the net asset value of its shares as of the close of trading on
the New York Stock Exchange ("NYSE") (currently 3:00 p.m., central
time) by dividing the difference between the value of its assets
and liabilities by the number of shares outstanding. Special
Portfolio allocates net asset value, income, and expenses to
Advisor Special Fund and any other of its feeder funds in
proportion to their respective interests in Special Portfolio.
Net asset value will not be determined on days when the NYSE is
closed unless, in the judgment of the Board of Trustees, the net
asset value of Advisor Special Fund should be determined on any
such day, in which case the determination will be made at 3:00
p.m., central time.
Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation 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.
Long-term straight-debt obligations and securities convertible
into stocks are valued at a fair value using a procedure
determined in good faith by the Board of Trustees. Pricing
services approved by the Board provide valuations (some of which
may be "readily available market quotations"). These valuations
are reviewed by the Adviser. If the Adviser believes that a
valuation received from the service does not represent a fair
value, it values the obligation using a method that the Board
believes represents fair value. The Board may approve the use of
other pricing services and any pricing service used may employ
electronic data processing techniques, including a so-called
"matrix" system, to determine valuations. Other assets and
securities are valued by a method that the Board believes
represents fair value.
HOW TO PURCHASE SHARES
You may purchase Advisor Special Fund shares only through broker-
dealers, banks, or other intermediaries, including retirement plan
service providers ("Intermediaries"). The Adviser and Advisor
Special Fund do not recommend, endorse, or receive payments from
any Intermediary.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of Advisor
Special Fund's shares is made at Advisor Special Fund's net asset
value (see Net Asset Value) next determined after receipt by the
Fund or through an authorized agent of an order in good form,
including receipt of payment.
CONDITIONS OF PURCHASE. Each purchase order for Advisor Special
Fund must be accepted by an authorized officer of Advisor Trust or
its authorized agent and is not binding until accepted and entered
on the books of Advisor Special Fund. Once your purchase order
has been accepted, you may not cancel or revoke it; you may,
however, redeem the shares. Advisor Trust reserves the right not
to accept any purchase order that it determines not to be in the
best interests of Advisor Trust or of Advisor Special Fund's
shareholders.
PURCHASES THROUGH INTERMEDIARIES. You must purchase shares
through Intermediaries. These Intermediaries may charge for their
services or place limitations on the extent to which you may use
the services offered by Advisor Trust. In addition, each
Intermediary will establish its own procedures for the purchase of
shares of Advisor Special Fund, including minimum initial and
additional investments, and the acceptable methods of payment for
shares. Your Intermediary may be closed on days when the NYSE is
open. As a result, prices of Fund shares may be significantly
affected on days when you have no access to your Intermediary to
buy shares. If you wish to purchase shares, please contact your
Intermediary for instructions.
Retirement Plans. If you purchase shares through a retirement
plan, you should be aware that retirement plan administrators may
aggregate purchase and redemption orders for participants in the
plan. Therefore, there may be a delay between the time you place
your order with the plan administrator and the time the order is
forwarded for execution.
HOW TO REDEEM SHARES
You may redeem shares only through Intermediaries. Each
Intermediary will establish its own procedures for the sale of
shares of Advisor Special Fund. Your Intermediary may be closed
on days when the NYSE is open. As a result, prices for Fund
shares may be significantly affected on days when you have no
access to your Intermediary to sell shares. If you wish to redeem
shares through an Intermediary, please contact the Intermediary
for instructions.
EXCHANGE PRIVILEGE. Through an account with an Intermediary, you
may redeem all or any portion of your Advisor Special Fund shares
and use the proceeds to purchase shares of any other Fund that is
a series of Advisor Trust offered for sale in the state in which
the Intermediary is located. Each Intermediary will establish its
own exchange policies and procedures. In particular, individual
participants of qualified retirement plans may exchange shares
through the plan sponsor or administrator. Those participants may
exchange shares only for shares of other Advisor Trust Funds that
are included in the plan. An exchange transaction is
a sale and purchase of shares for federal income tax purposes and
may result in capital gain or loss. Before exchanging into
another Advisor Trust Fund, you should obtain the prospectus for
the Advisor Trust Fund in which you wish to invest and read it
carefully. The registration of the account to which you are
making an exchange must be exactly the same as that of the account
from which the exchange is made. Advisor Special Fund reserves
the right to suspend, limit, modify, or terminate the Exchange
Privilege or its use in any manner by any person or class;
Intermediaries would be notified of such a change.
GENERAL REDEMPTION POLICIES. Redemption instructions may not be
cancelled or revoked once they have been received and accepted by
Advisor Trust. Advisor Trust cannot accept a redemption request
that specifies a particular date or price for redemption or any
special conditions.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received by the Intermediary. (See Net Asset
Value.) Because the redemption price you receive depends upon
Advisor Special Fund's net asset value per share at the time of
redemption, it may be more or less than the price you originally
paid for the shares and may result in a realized capital gain or
loss.
Advisor Trust will pay redemption proceeds as soon as practicable,
and in no event later than seven days after proper instructions
are received by Advisor Special Fund or its authorized agent.
DISTRIBUTIONS AND INCOME TAXES
DISTRIBUTIONS. Income dividends are declared and paid annually.
Advisor Special Fund intends to distribute by the end of each
calendar year at least 98% of any net capital gains realized from
the sale of securities during the twelve-month period ended
October 31 in that year. Advisor Special Fund intends to
distribute any undistributed net investment income and net
realized capital gains in the following year.
All income dividends and capital gain distributions on shares of
Advisor Special Fund will be reinvested in additional shares
unless your Intermediary elects to have distributions paid by
check. Reinvestment normally occurs on the payable date.
INCOME TAXES. For federal income tax purposes, Advisor Special
Fund is treated as a separate taxable entity distinct from the
other series of Advisor Trust. Special Portfolio intends to
qualify for the special tax treatment afforded regulated
investment companies under Subchapter M of the Internal Revenue
Code, so that it will be relieved of federal income tax on that
part of its net investment income and net capital gain that is
distributed to shareholders.
Advisor Special Fund will distribute substantially all of its
ordinary income and net capital gains on a current basis.
Generally distributions are taxable as ordinary income, except
that any distributions of net long-term capital gains will be
taxed as such. However, distributions by Advisor Special Fund to
plans that qualify for tax-exempt treatment under federal income
tax laws will not be taxable. Special tax rules apply to
investments through such plans.
This section is not intended to be a full discussion of income tax
laws and their effect on shareholders. You may wish to consult
your own tax advisor.
MANAGEMENT
TRUSTEES AND INVESTMENT ADVISER. The Board of Trustees of Advisor
Trust and the Board of Trustees of Base Trust have overall
management responsibility for Advisor Special Fund and Special
Portfolio, respectively. See Management in the Statement of
Additional Information for the names of and other information
about the trustees and officers. Since Advisor Trust and Base
Trust have the same trustees, the trustees have adopted conflict
of interest procedures to monitor and address potential conflicts
between the interests of Advisor Special Fund and Special
Portfolio and other feeder funds investing in Special Portfolio
that share a common Board of Trustees with Advisor Trust and Base
Trust.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
investment portfolio of Special Portfolio and the business affairs
of Advisor Special Fund, Special Portfolio, Advisor Trust, and
Base Trust, subject to the direction of the respective Board. The
Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940. The Adviser was organized in
1986 to succeed to the business of Stein Roe & Farnham, a
partnership that had advised and managed mutual funds since 1949.
The Adviser is a wholly owned subsidiary of Liberty Financial
Companies, Inc. ("Liberty Financial"), which in turn is a majority
owned indirect subsidiary of Liberty Mutual Insurance Company.
PORTFOLIO MANAGERS. E. Bruce Dunn and Richard B. Peterson have
been co-portfolio managers of Special Portfolio since its
inception in 1997 and had managed its predecessor since 1991.
Each is a senior vice president of the Adviser. Mr. Dunn has been
associated with the Adviser since 1964. He received his A.B.
degree from Yale University (1956) and his M.B.A. from Harvard
University (1958) and is a chartered investment counselor. Mr.
Peterson, who began his investment career with the Adviser in 1965
after graduating with a B.A. from Carleton College (1962) and the
Woodrow Wilson School at Princeton University with a Masters in
Public Administration (1964), rejoined the Adviser in 1991 after
15 years of equity research and portfolio management experience
with State Farm Investment Management Corp. As of December 31,
1996, Messrs. Dunn and Peterson were responsible for co-managing
$1.5 billion in mutual net fund assets.
FEES AND EXPENSES. The Adviser is entitled to receive a monthly
administrative fee from Advisor Special Fund, computed and accrued
daily, at an annual rate of 0.15% of the first $500 million of
average net assets, 0.125% of the next $500 million, and 0.10%
thereafter; and a monthly management fee from Special Portfolio,
computed and accrued daily, at an annual rate of 0.75% of the
first $500 million of average net assets, 0.70% of the next $500
million, 0.65% of the next $500 million, and 0.60% thereafter.
However, as noted above under Fee Table, the Adviser may
voluntarily undertake to reimburse Advisor Special Fund for a
portion of its operating expenses and its pro rata share of
Special Portfolio's operating expenses.
The Adviser provides office space and executive and other
personnel to Advisor Trust and Base Trust. All expenses of
Advisor Special Fund (other than those paid by the Adviser),
including, but not limited to, printing and postage charges,
securities registration fees, custodian and transfer agency fees,
legal and auditing fees, compensation of trustees not affiliated
with the Adviser, and expenses incidental to its organization, are
paid out of the assets of Advisor Special Fund.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to Advisor Special
Fund and Special Portfolio including computation of net asset
value and calculation of its net income and capital gains and
losses on disposition of assets.
In addition, the Adviser is free to make additional payments out
of its own assets to promote the sale of shares of Advisor Special
Fund.
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
contracts for Special Portfolio. In doing so, the Adviser seeks
to obtain the best combination of price and execution, which
involves a number of judgmental factors.
TRANSFER AGENT AND SHAREHOLDER SERVICES. SteinRoe Services Inc.
("SSI"), One South Wacker Drive, Chicago, Illinois 60606, a wholly
owned subsidiary of Liberty Financial, is the agent of Advisor
Trust for the transfer of shares, disbursement of dividends, and
maintenance of shareholder accounting records.
Some Intermediaries that maintain nominee accounts with Advisor
Special Fund for their clients who are Fund shareholders may be
paid a fee from SSI of up to 0.25% of the average net assets held
in such accounts for shareholder servicing and accounting services
they provide with respect to the underlying Fund shares.
DISTRIBUTOR. The shares of Advisor Special Fund are offered for
sale through Liberty Securities Corporation ("Distributor")
without any sales commissions. The Distributor is a wholly owned
indirect subsidiary of Liberty Financial. The business address of
the Distributor is 600 Atlantic Avenue, Boston, Massachusetts
02210; however, all Fund correspondence (including purchase and
redemption orders) should be mailed to SteinRoe Services Inc. at
P.O. Box 8900, Boston, Massachusetts 02205.
The trustees of Advisor Trust have adopted a plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("Plan"). The Plan
provides that, as compensation for the promotion and distribution
of shares of Advisor Special Fund including its expenses related
to the sale and promotion of Fund shares, the Distributor receives
from Advisor Special Fund a fee at an annual rate of 0.25% of its
average net assets. The Distributor generally pays this amount to
institutions that distribute Advisor Special Fund shares and
provide services to Advisor Special Fund and its shareholders.
Those institutions may use the payments for, among other purposes,
compensating employees engaged in sales and/or shareholder
servicing. The amount of fees paid by Advisor Special Fund during
any year may be more or less than the cost of distribution or
other services provided to Advisor Special Fund. NASD rules limit
the amount of annual distribution fees that may be paid by a
mutual fund and impose a ceiling on the cumulative distribution
fees paid. Advisor Trust's Plan complies with those rules.
CUSTODIAN. State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, Massachusetts 02101, is the custodian for
Advisor Special Fund and Special Portfolio. Foreign securities
are maintained in the custody of foreign banks and trust companies
that are members of the Bank's Global Custody Network or foreign
depositories used by such members. (See Custodian in the
Statement of Additional Information.)
ORGANIZATION AND DESCRIPTION OF SHARES
Advisor Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
July 31, 1996, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either Advisor
Trust's shareholders or its trustees. Advisor Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, seven series are authorized and outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Advisor Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of Advisor Trust.
The Declaration of Trust provides that persons extending credit
to, contracting with, or having any claim against, Advisor Trust
or any particular series shall look only to the assets of Advisor
Trust or of the respective series for payment under such credit,
contract or claim, and that the shareholders, trustees and
officers of Advisor Trust shall have no personal liability
therefor. The Declaration of Trust requires that notice of such
disclaimer of liability be given in each contract, instrument or
undertaking executed or made on behalf of Advisor Trust. The
Declaration of Trust provides for indemnification of any
shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Advisor Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Advisor
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
SPECIAL CONSIDERATIONS REGARDING THE
MASTER FUND/FEEDER FUND STRUCTURE
Advisor Special Fund, an open-end management investment company,
seeks to achieve its objective by investing all of its assets in
shares of another mutual fund having an investment objective
identical to that of Advisor Special Fund. The initial
shareholder of Advisor Special Fund approved this policy of
permitting Advisor Special Fund to act as a feeder fund by
investing in Special Portfolio. Please refer to the Investment
Policies, Portfolio Investments and Strategies, and Investment
Restrictions for a description of the investment objectives,
policies, and restrictions of Advisor Special Fund and Special
Portfolio. The management and expenses of both Advisor Special
Fund and Special Portfolio are described under the Fee Table and
Management. Advisor Special Fund bears its proportionate share of
Portfolio expenses.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
SR&F Special Portfolio is a separate series of SR&F Base Trust
("Base Trust"), a Massachusetts common law trust organized under
an Agreement and Declaration of Trust ("Declaration of Trust")
dated August 23, 1993. The Declaration of Trust of Base Trust
provides that Advisor Special Fund and other investors in Special
Portfolio will each be liable for all obligations of Special
Portfolio that are not satisfied by the Portfolio. However, the
risk of Advisor Special Fund incurring financial loss on account
of such liability is limited to circumstances in which both
inadequate insurance existed and Special Portfolio itself were
unable to meet its obligations. Accordingly, the trustees of
Advisor Trust believe that neither Advisor Special Fund nor its
shareholders will be adversely affected by reason of Advisor
Special Fund's investing in Special Portfolio.
The Declaration of Trust of Base Trust provides that Special
Portfolio will terminate 120 days after the withdrawal of Advisor
Special Fund or any other investor in Special Portfolio, unless
the remaining investors vote to agree to continue the business of
Special Portfolio. The trustees of Advisor Trust may vote Advisor
Special Fund's interests in Special Portfolio for such
continuation without approval of Advisor Special Fund's
shareholders.
The common investment objective of Advisor Special Fund and
Special Portfolio is non-fundamental and may be changed without
shareholder approval. The fundamental policies of Advisor Special
Fund and the corresponding fundamental policies of Special
Portfolio can be changed only with shareholder approval.
If Advisor Special Fund, as a Portfolio investor, is requested to
vote on a proposed change in fundamental policy of Special
Portfolio or any other matter pertaining to Special Portfolio
(other than continuation of the business of Special Portfolio
after withdrawal of another investor), Advisor Special Fund will
solicit proxies from its shareholders and vote its interest in
Special Portfolio for and against such matters proportionately to
the instructions to vote for and against such matters received
from Advisor Special Fund shareholders. Advisor Special Fund will
vote shares for which it receives no voting instructions in the
same proportion as the shares for which it receives voting
instructions. If there are other investors in Special Portfolio,
there can be no assurance that any matter receiving a majority of
votes cast by Fund shareholders will receive a majority of votes
cast by all Special Portfolio investors. If other investors hold
a majority interest in Special Portfolio, they could have voting
control over Special Portfolio.
In the event that Special Portfolio's fundamental policies were
changed so as to be inconsistent with those of Advisor Special
Fund, the Board of Trustees of Advisor Trust would consider what
action might be taken, including changes to Advisor Special Fund's
fundamental policies, withdrawal of Advisor Special Fund's assets
from Special Portfolio and investment of such assets in another
pooled investment entity, or the retention of another investment
adviser. Any of these actions would require the approval of
Advisor Special Fund's shareholders. Advisor Special Fund's
inability to find a substitute master fund or comparable
investment management could have a significant impact upon its
shareholders' investments. Any withdrawal of Advisor Special
Fund's assets could result in a distribution in kind of portfolio
securities (as opposed to a cash distribution) to Advisor Special
Fund. Should such a distribution occur, Advisor Special Fund
would incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution
in kind could result in a less diversified portfolio of
investments for Advisor Special Fund and could affect the
liquidity of Advisor Special Fund.
Each investor in Special Portfolio, including Advisor Special
Fund, may add to or reduce its investment in Special Portfolio on
each day the NYSE is open for business. The investor's percentage
of the aggregate interests in Special Portfolio will be computed
as the percentage equal to the fraction (i) the numerator of which
is the beginning of the day value of such investor's investment in
Special Portfolio on such day plus or minus, as the case may be,
the amount of any additions to or withdrawals from the investor's
investment in Special Portfolio effected on such day; and (ii) the
denominator of which is the aggregate beginning of the day net
asset value of Special Portfolio on such day plus or minus, as the
case may be, the amount of the net additions to or withdrawals
from the aggregate investments in Special Portfolio by all
investors in Special Portfolio. The percentage so determined will
then be applied to determine the value of the investor's interest
in Special Portfolio as of the close of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in Special Portfolio, but
members of the general public may not invest directly in Special
Portfolio. Other investors in Special Portfolio are not required
to sell their shares at the same public offering price as Advisor
Special Fund, might incur different administrative fees and
expenses than Advisor Special Fund, and their shares might be sold
with a sales commission. Therefore, Advisor Special Fund
shareholders might have different investment returns than
shareholders in another investment company that invests
exclusively in Special Portfolio. Investment by such other
investors in Special Portfolio would provide funds for the
purchase of additional portfolio securities and would tend to
reduce the Portfolio's operating expenses as a percentage of its
net assets. Conversely, large-scale redemptions by any such other
investors in Special Portfolio could result in untimely
liquidations of Special Portfolio's security holdings, loss of
investment flexibility, and increases in the operating expenses of
Special Portfolio as a percentage of its net assets. As a result,
Special Portfolio's security holdings may become less diverse,
resulting in increased risk.
Special Portfolio commenced operations in February 1997 when Stein
Roe Special Fund, a mutual fund that, together with its corporate
predecessor, had invested directly in securities since 1968,
converted into a feeder fund by investing all of its assets in the
Portfolio. Currently Stein Roe Special Fund, which is a series of
Stein Roe Investment Trust, is the only other investment company
investing in Special Portfolio. Information regarding any
investment company that may invest in Special Portfolio in the
future may be obtained by writing to SR&F Base Trust, Suite 3200,
One South Wacker Drive, Chicago, Illinois 60606 or by calling 800-
338-2550. The Adviser may provide administrative or other
services to one or more of such investors.
FOR MORE INFORMATION
For more information about Advisor Special Fund, call Retirement
Services at 800-322-1130 or Advisor/Broker Services at 800-322-
0593.
______________________
<PAGE> 1
Statement of Additional Information Dated February 14, 1997
STEIN ROE ADVISOR TRUST
Suite 3200, One South Wacker Drive, Chicago, Illinois 60606
Stein Roe Advisor Balanced Fund
Stein Roe Advisor Growth & Income Fund
Stein Roe Advisor Growth Stock Fund
Stein Roe Advisor Young Investor Fund
Stein Roe Advisor Special Fund
Stein Roe Advisor Special Venture Fund
Stein Roe Advisor International Fund
This Statement of Additional Information is not a prospectus,
but provides additional information that should be read in
conjunction with each Fund's prospectus dated February 14, 1997,
and any supplements thereto ("Prospectus"). A Prospectus may be
obtained at no charge by calling the Adviser. For additional
information, call Retirement Services at 800-322-1130 or
Advisor/Broker Services at 800-322-0593.
TABLE OF CONTENTS
Page
General Information and History..........................2
Investment Policies......................................3
Stein Roe Advisor Balanced Fund.......................3
Stein Roe Advisor Growth & Income Fund................3
Stein Roe Advisor Growth Stock Fund...................4
Stein Roe Advisor Young Investor Fund.................4
Stein Roe Advisor Special Fund........................4
Stein Roe Advisor Special Venture Fund................5
Stein Roe Advisor International Fund..................5
Portfolio Investments and Strategies.....................6
Investment Restrictions.................................23
Additional Investment Considerations....................26
Purchases and Redemptions...............................27
Management..............................................28
Principal Shareholders..................................32
Investment Advisory Services............................32
Distributor.............................................34
Transfer Agent And Shareholder Servicing................35
Custodian...............................................35
Independent Public Accountants..........................36
Portfolio Transactions..................................36
Additional Income Tax Considerations....................37
Investment Performance..................................39
Appendix--Ratings.......................................44
Balance Sheets .........................................47
<PAGE> 2
GENERAL INFORMATION AND HISTORY
The seven mutual funds listed on the cover page (referred to
collectively as the "Funds") are separate series of Stein Roe
Advisor Trust ("Advisor Trust"). On September 13, 1996, the
spelling of the name of the Trust was changed from Stein Roe
Adviser Trust to Stein Roe Advisor Trust.
Currently seven series of Advisor Trust are authorized and
outstanding. Each share of a series, without par value, is
entitled to participate pro rata in any dividends and other
distributions declared by the Board on shares of that series, and
all shares of a series have equal rights in the event of
liquidation of that series. Each whole share (or fractional
share) outstanding on the record date established in accordance
with the By-Laws shall be entitled to a number of votes on any
matter on which it is entitled to vote equal to the net asset
value of the share (or fractional share) in United States dollars
determined at the close of business on the record date (for
example, a share having a net asset value of $10.50 would be
entitled to 10.5 votes). As a business trust, Advisor Trust is
not required to hold annual shareholder meetings. However,
special meetings may be called for purposes such as electing or
removing trustees, changing fundamental policies, or approving an
investment advisory contract. If requested to do so by the
holders of at least 10% of Advisor Trust's outstanding shares,
Advisor Trust will call a special meeting for the purpose of
voting upon the question of removal of a trustee or trustees and
will assist in the communications with other shareholders as if
Advisor Trust were subject to Section 16(c) of the Investment
Company Act of 1940. All shares of all series of Advisor Trust
are voted together in the election of trustees. On any other
matter submitted to a vote of shareholders, shares are voted in
the aggregate and not by individual series, except that shares are
voted by individual series when required by the Investment Company
Act of 1940 or other applicable law, or when the Board of Trustees
determines that the matter affects only the interests of one or
more series, in which case shareholders of the unaffected series
are not entitled to vote on such matters.
SPECIAL CONSIDERATIONS REGARDING MASTER FUND/FEEDER FUND STRUCTURE
Rather than invest in securities directly, each Fund acts as
a "feeder fund"; that is, it seeks to achieve its objective by
pooling its assets with assets of other investment companies for
investment in a separate "master fund" having the same investment
objective and substantially the same investment policies as the
Fund. The purpose of such an arrangement is to achieve greater
operational efficiencies and reduce costs. Each master fund is a
series of SR&F Base Trust ("Base Trust") (the master funds are
referred to collectively as the "Portfolios"). For more
information, please refer to each Fund's Prospectus under the
caption Special Considerations Regarding the Master Fund/Feeder
Fund Structure.
Stein Roe & Farnham Incorporated (the "Adviser") provides
administrative and accounting and recordkeeping services to each
Fund and each Portfolio and provides investment advisory services
to each Portfolio.
INVESTMENT POLICIES
In pursuing its respective objective, each Portfolio will
invest as described below and may employ the investment techniques
described under Portfolio Investments and Strategies. The
investment objective is a non-fundamental policy and may be
changed by the Board of Trustees without the approval of a
"majority of the outstanding voting securities"./1/
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/1/ A "majority of the outstanding voting securities" means the
approval of the lesser of (i) 67% or more of the shares at a
meeting if the holders of more than 50% of the outstanding shares
of the Fund or the Portfolio are present or represented by proxy
or (ii) more than 50% of the outstanding shares of the Fund or the
Portfolio.
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STEIN ROE ADVISOR BALANCED FUND
Stein Roe Advisor Balanced Fund ("Advisor Balanced Fund")
seeks to achieve its objective by investing in SR&F Balanced
Portfolio ("Balanced Portfolio"). Their common investment
objective is to seek long-term growth of capital and current
income, consistent with reasonable investment risk. Balanced
Portfolio allocates its investments among equities, debt
securities and cash. The portfolio manager determines those
allocations based on the views of the Adviser's investment
strategists regarding economic, market and other factors relative
to investment opportunities.
The equity portion of the investment portfolio is invested
primarily in well-established companies having market
capitalizations in excess of $1 billion. Fixed-income senior
securities will make up at least 25% of Balanced Portfolio's total
assets. Investments in debt securities are limited to those that
are within the four highest grades (generally referred to as
"investment grade") assigned by a nationally recognized
statistical rating organization or, if unrated, determined by the
Adviser to be of comparable quality.
STEIN ROE ADVISOR GROWTH & INCOME FUND
Stein Roe Advisor Growth & Income Fund ("Advisor Growth &
Income Fund") seeks to achieve its objective by investing in SR&F
Growth & Income Portfolio ("Growth & Income "Portfolio"). Their
common investment objective is to provide both growth of capital
and current income. Advisor Growth & Income Fund is designed for
investors seeking a diversified portfolio of securities that
offers the opportunity for long-term growth of capital while also
providing a steady stream of income. Growth & Income Portfolio
invests primarily in well-established companies whose common
stocks are believed to have both the potential to appreciate in
value and to pay dividends to shareholders.
Although it may invest in a broad range of securities
(including common stocks, preferred stocks, securities convertible
into or exchangeable for common stocks, and warrants or rights to
purchase common stocks), normally Growth & Income Portfolio
emphasizes investments in equity securities of companies having
market capitalizations in excess of $1 billion. Securities of
these well-established companies are believed to be generally less
volatile than those of companies with smaller capitalizations
because companies with larger capitalizations tend to have
experienced management; broad, highly diversified product lines;
deep resources; and easy access to credit.
STEIN ROE ADVISOR GROWTH STOCK FUND
Stein Roe Advisor Growth Stock Fund ("Advisor Growth Stock
Fund") seeks to achieve its objective by investing in SR&F Growth
Stock Portfolio ("Growth Stock Portfolio"). Their common
investment objective is long-term capital appreciation. Growth
Stock Portfolio attempts to achieve this objective by normally
investing at least 65% of its total assets in common stocks and
other equity-type securities (such as preferred stocks, securities
convertible into or exchangeable for common stocks, and warrants
or rights to purchase common stocks) that, in the opinion of the
Adviser, have long-term appreciation possibilities.
STEIN ROE ADVISOR YOUNG INVESTOR FUND
Stein Roe Advisor Young Investor Fund ("Advisor Young
Investor Fund") seeks to achieve its objective by investing in
SR&F Growth Investor Portfolio ("Growth Investor Portfolio").
Their common investment objective is long-term capital
appreciation. Growth Investor Portfolio invests primarily in
common stocks and other equity-type securities that, in the
opinion of the Adviser, have long-term appreciation potential.
Under normal circumstances, at least 65% of the total assets
of Growth Investor Portfolio will be invested in securities of
companies that, in the opinion of the Adviser, directly or through
one or more subsidiaries, affect the lives of young people. Such
companies may include companies that produce products or services
that young people use, are aware of, or could potentially have an
interest in. Although Growth Investor Portfolio invests primarily
in common stocks and other equity-type securities (such as
preferred stocks, securities convertible into or exchangeable for
common stocks, and warrants or rights to purchase common stocks),
it may invest up to 35% of its total assets in debt securities.
STEIN ROE ADVISOR SPECIAL FUND
Stein Roe Advisor Special Fund ("Advisor Special Fund") seeks
to achieve its objective by investing in SR&F Special Portfolio
("Special Portfolio"). Their common investment objective is to
invest in securities selected for possible capital appreciation.
Particular emphasis is placed on securities that are considered to
have limited downside risk relative to their potential for above-
average growth, including securities of undervalued, underfollowed
or out-of-favor companies, and companies that are low-cost
producers of goods or services, financially strong or run by well-
respected managers. Special Portfolio may invest more than 5% of
its net assets in securities of seasoned, established companies
that appear to have appreciation potential, as well as securities
of relatively small, new companies. In addition, it may invest in
securities with limited marketability, new issues of securities,
securities of companies that, in the Adviser's opinion, will
benefit from management change, new technology, new product or
service development or change in demand, and other securities that
the Adviser believes have capital appreciation possibilities;
however, Special Portfolio does not currently intend to invest
more than 5% of its net assets in any of these types of
securities. Securities of smaller, newer companies may be subject
to greater price volatility than securities of larger more well-
established companies. In addition, many smaller companies are
less well known to the investing public and may not be as widely
followed by the investment community. Although Special Portfolio
will invest primarily in common stocks, it may also invest in
other equity-type securities, including preferred stocks and
securities convertible into equity securities.
STEIN ROE ADVISOR SPECIAL VENTURE FUND
Stein Roe Advisor Special Venture Fund ("Advisor Special
Venture Fund") seeks to achieve its objective by investing in SR&F
Special Venture Portfolio ("Special Venture Portfolio"). Their
common investment objective is to seek long-term capital
appreciation. Special Venture Portfolio invests primarily in a
diversified portfolio of common stocks and other equity-type
securities (such as preferred stocks, securities convertible or
exchangeable for common stocks, and warrants or rights to purchase
common stocks) of entrepreneurially managed companies that the
Adviser believes represent special opportunities. Special Venture
Portfolio emphasizes investments in financially strong small and
medium-sized companies based principally on appraisal of their
management and stock valuations. The Adviser considers "small"
and "medium-sized" companies to be those with market
capitalizations of less than $1 billion and $1 to $3 billion,
respectively.
In both its initial and ongoing appraisals of a company's
management, the Adviser seeks to know both the principal owners
and senior management and to assess their business judgment and
strategies through personal visits. The Adviser favors companies
whose management has an owner/operator, risk-averse orientation
and a demonstrated ability to create wealth for investors.
Attractive company characteristics include unit growth, favorable
cost structures or competitive positions, and financial strength
that enables management to execute business strategies under
difficult conditions. A company is attractively valued when its
stock can be purchased at a meaningful discount to the value of
the underlying business.
STEIN ROE ADVISOR INTERNATIONAL FUND
Stein Roe Advisor International Fund ("Advisor International
Fund") pursues its objective by investing in SR&F International
Portfolio ("International Portfolio"). Their common investment
objective is to seek long-term growth of capital. International
Portfolio seeks to achieve this objective by investing primarily
in a diversified portfolio of foreign securities. Current income
is not a primary factor in the selection of portfolio securities.
International Portfolio invests primarily in common stocks and
other equity-type securities (such as preferred stocks, securities
convertible or exchangeable for common stocks, and warrants or
rights to purchase common stocks). International Portfolio may
invest in securities of smaller emerging companies as well as
securities of well-seasoned companies of any size. Smaller
companies, however, involve higher risks in that they typically
have limited product lines, markets, and financial or management
resources. In addition, the securities of smaller companies may
trade less frequently and have greater price fluctuation than
larger companies, particularly those operating in countries with
developing markets.
International Portfolio diversifies its investments among
several countries and does not concentrate investments in any
particular industry. In pursuing its objective, International
Portfolio varies the geographic allocation and types of securities
in which it invests based on the Adviser's continuing evaluation
of economic, market, and political trends throughout the world.
While International Portfolio has not established limits on
geographic asset distribution, it ordinarily invests in the
securities markets of at least three countries outside the United
States, including but not limited to Western European countries
(such as Belgium, France, Germany, Ireland, Italy, The
Netherlands, the countries of Scandinavia, Spain, Switzerland, and
the United Kingdom); countries in the Pacific Basin (such as
Australia, Hong Kong, Japan, Malaysia, the Philippines, Singapore,
and Thailand); and countries in the Americas (such as Argentina,
Brazil, Colombia, and Mexico). In addition, it does not currently
intend to invest more than 1% of its total assets in Russian
securities.
Under normal market conditions, International Portfolio will
invest at least 65% of its total assets (taken at market value) in
foreign securities. If, however, investments in foreign
securities appear to be relatively unattractive in the judgment of
the Adviser because of current or anticipated adverse political or
economic conditions, International Portfolio may hold cash or
invest any portion of its assets in securities of the U.S.
Government and equity and debt securities of U.S. companies, as a
temporary defensive strategy. To meet liquidity needs,
International Portfolio may also hold cash in domestic and foreign
currencies and invest in domestic and foreign money market
securities (including repurchase agreements and "synthetic"
foreign money market positions).
In the past, the U.S. Government has from time to time
imposed restrictions, through taxation and otherwise, on foreign
investments by U.S. investors such as International Portfolio. If
such restrictions should be reinstated, it might become necessary
for International Portfolio to invest all or substantially all of
its assets in U.S. securities. In such an event, International
Portfolio would review its investment objective and policies to
determine whether changes are appropriate.
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES
In pursuing its investment objective, each Portfolio may
invest in debt securities of corporate and governmental issuers.
The risks inherent in debt securities depend primarily on the term
and quality of the obligations in the investment portfolio as well
as on market conditions. A decline in the prevailing levels of
interest rates generally increases the value of debt securities,
while an increase in rates usually reduces the value of those
securities.
Investments in debt securities by Growth & Income Portfolio,
Balanced Portfolio, Growth Stock Portfolio, and International
Portfolio are limited to those that are within the four highest
grades (generally referred to as "investment grade") assigned by a
nationally recognized statistical rating organization or, if
unrated, deemed to be of comparable quality by the Adviser. Each
of Special Venture Portfolio, Growth Investor Portfolio, and
Special Portfolio may invest up to 35% of its net assets in debt
securities, but do not expect to invest more than 5% of net assets
in debt securities that are rated below investment grade.
Securities in the fourth highest grade may possess
speculative characteristics, and changes in economic conditions
are more likely to affect the issuer's capacity to pay interest
and repay principal. If the rating of a security held by a
Portfolio is lost or reduced below investment grade, the Portfolio
is not required to dispose of the security, but the Adviser will
consider that fact in determining whether that Portfolio should
continue to hold the security.
Securities that are rated below investment grade are
considered predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal according to the
terms of the obligation and therefore carry greater investment
risk, including the possibility of issuer default and bankruptcy.
When the Adviser determines that adverse market or economic
conditions exist and considers a temporary defensive position
advisable, the Portfolios may invest without limitation in high-
quality fixed income securities or hold assets in cash or cash
equivalents.
DERIVATIVES
Consistent with its objective, each Portfolio may invest in a
broad array of financial instruments and securities, including
conventional exchange-traded and non-exchange-traded options,
futures contracts, futures options, securities collateralized by
underlying pools of mortgages or other receivables, floating rate
instruments, and other instruments that securitize assets of
various types ("Derivatives"). In each case, the value of the
instrument or security is "derived" from the performance of an
underlying asset or a "benchmark" such as a security index, an
interest rate, or a currency.
Derivatives are most often used to manage investment risk or
to create an investment position indirectly because it is more
efficient or less costly than direct investment that cannot be
readily established directly due to portfolio size, cash
availability, or other factors. They also may be used in an
effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's
ability to correctly predict changes in the levels and directions
of movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives.
No Portfolio, other than International Portfolio, currently
intends to invest more than 5% of its net assets in any type of
Derivative except for options, futures contracts, and futures
options. International Portfolio currently intends to invest no
more than 5% of its net assets in any type of Derivative other
than options, futures contracts, futures options, and forward
contracts. (See Options and Futures below.)
Some mortgage-backed debt securities are of the "modified
pass-through type," which means the interest and principal
payments on mortgages in the pool are "passed through" to
investors. During periods of declining interest rates, there is
increased likelihood that mortgages will be prepaid, with a
resulting loss of the full-term benefit of any premium paid by a
Portfolio on purchase of such securities; in addition, the
proceeds of prepayment would likely be invested at lower interest
rates.
Mortgage-backed securities provide either a pro rata interest
in underlying mortgages or an interest in collateralized mortgage
obligations ("CMOs") that represent a right to interest and/or
principal payments from an underlying mortgage pool. CMOs are not
guaranteed by either the U.S. Government or by its agencies or
instrumentalities, and are usually issued in multiple classes each
of which has different payment rights, prepayment risks, and yield
characteristics. Mortgage-backed securities involve the risk of
prepayment on the underlying mortgages at a faster or slower rate
than the established schedule. Prepayments generally increase
with falling interest rates and decrease with rising rates but
they also are influenced by economic, social, and market factors.
If mortgages are pre-paid during periods of declining interest
rates, there would be a resulting loss of the full-term benefit of
any premium paid by the Portfolio on purchase of the CMO, and the
proceeds of prepayment would likely be invested at lower interest
rates.
Non-mortgage asset-backed securities usually have less
prepayment risk than mortgage-backed securities, but have the risk
that the collateral will not be available to support payments on
the underlying loans that finance payments on the securities
themselves.
Floating rate instruments provide for periodic adjustments in
coupon interest rates that are automatically reset based on
changes in amount and direction of specified market interest
rates. In addition, the adjusted duration of some of these
instruments may be materially shorter than their stated
maturities. To the extent such instruments are subject to
lifetime or periodic interest rate caps or floors, such
instruments may experience greater price volatility than debt
instruments without such features. Adjusted duration is an
inverse relationship between market price and interest rates and
refers to the approximate percentage change in price for a 100
basis point change in yield. For example, if interest rates
decrease by 100 basis points, a market price of a security with an
adjusted duration of 2 would increase by approximately 2%.
CONVERTIBLE SECURITIES
By investing in convertible securities, a Portfolio obtains
the right to benefit from the capital appreciation potential in
the underlying stock upon exercise of the conversion right, while
earning higher current income than would be available if the stock
were purchased directly. In determining whether to purchase a
convertible, the Adviser will consider substantially the same
criteria that would be considered in purchasing the underlying
stock. While convertible securities purchased by a Portfolio are
frequently rated investment grade, each Portfolio may purchase
unrated securities or securities rated below investment grade if
the securities meet the Adviser's other investment criteria.
Convertible securities rated below investment grade (a) tend to be
more sensitive to interest rate and economic changes, (b) may be
obligations of issuers who are less creditworthy than issuers of
higher quality convertible securities, and (c) may be more thinly
traded due to such securities being less well known to investors
than either common stock or conventional debt securities. As a
result, the Adviser's own investment research and analysis tends
to be more important in the purchase of such securities than other
factors.
FOREIGN SECURITIES
Each Portfolio other than International Portfolio, which
invests primarily in foreign securities, may invest up to 25% of
its total assets in foreign securities, which may entail a greater
degree of risk (including risks relating to exchange rate
fluctuations, tax provisions, or expropriation of assets) than
investment in securities of domestic issuers. For this purpose,
foreign securities do not include American Depositary Receipts
(ADRs) or securities guaranteed by a United States person. ADRs
are receipts typically issued by an American bank or trust company
evidencing ownership of the underlying securities. The Portfolios
may invest in sponsored or unsponsored ADRs. In the case of an
unsponsored ADR, a Portfolio is likely to bear its proportionate
share of the expenses of the depositary and it may have greater
difficulty in receiving shareholder communications than it would
have with a sponsored ADR. No Portfolio, other than International
Portfolio, intends to invest more than 5% of its net assets in
unsponsored ADRs. International Portfolio may also purchase
foreign securities in the form of European Depositary Receipts
(EDRs) or other securities representing underlying shares of
foreign issuers. Positions in these securities are not
necessarily denominated in the same currency as the common stocks
into which they may be converted. EDRs are European receipts
evidencing a similar arrangement. Generally, ADRs, in registered
form, are designed for the U.S. securities markets and EDRs, in
bearer form, are designed for use in European securities markets.
With respect to portfolio securities that are issued by
foreign issuers or denominated in foreign currencies, a
Portfolio's investment performance is affected by the strength or
weakness of the U.S. dollar against these currencies. For
example, if the dollar falls in value relative to the Japanese
yen, the dollar value of a yen-denominated stock held in the
portfolio will rise even though the price of the stock remains
unchanged. Conversely, if the dollar rises in value relative to
the yen, the dollar value of the yen-denominated stock will fall.
(See discussion of transaction hedging and portfolio hedging under
Currency Exchange Transactions.)
Investors should understand and consider carefully the risks
involved in foreign investing. Investing in foreign securities,
positions in which are generally denominated in foreign
currencies, and utilization of forward foreign currency exchange
contracts involve certain considerations comprising both risks and
opportunities not typically associated with investing in U.S.
securities. These considerations include: fluctuations in
exchange rates of foreign currencies; possible imposition of
exchange control regulation or currency restrictions that would
prevent cash from being brought back to the United States; less
public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers,
and issuers of securities; lack of uniform accounting, auditing,
and financial reporting standards; lack of uniform settlement
periods and trading practices; less liquidity and frequently
greater price volatility in foreign markets than in the United
States; possible imposition of foreign taxes; possible investment
in securities of companies in developing as well as developed
countries; and sometimes less advantageous legal, operational, and
financial protections applicable to foreign sub-custodial
arrangements.
Although the Portfolios will try to invest in companies and
governments of countries having stable political environments,
there is the possibility of expropriation or confiscatory
taxation, seizure or nationalization of foreign bank deposits or
other assets, establishment of exchange controls, the adoption of
foreign government restrictions, or other adverse political,
social or diplomatic developments that could affect investment in
these nations.
Currency Exchange Transactions. Currency exchange
transactions may be conducted either on a spot (i.e., cash) basis
at the spot rate for purchasing or selling currency prevailing in
the foreign exchange market or through forward currency exchange
contracts ("forward contracts"). Forward contracts are
contractual agreements to purchase or sell a specified currency at
a specified future date (or within a specified time period) and
price set at the time of the contract. Forward contracts are
usually entered into with banks and broker-dealers, are not
exchange traded, and are usually for less than one year, but may
be renewed.
The Portfolios' foreign currency exchange transactions are
limited to transaction and portfolio hedging involving either
specific transactions or portfolio positions. Transaction hedging
is the purchase or sale of forward contracts with respect to
specific receivables or payables of a Portfolio arising in
connection with the purchase and sale of its portfolio securities.
Portfolio hedging is the use of forward contracts with respect to
portfolio security positions denominated or quoted in a particular
foreign currency. Portfolio hedging allows the Portfolio to limit
or reduce its exposure in a foreign currency by entering into a
forward contract to sell such foreign currency (or another foreign
currency that acts as a proxy for that currency) at a future date
for a price payable in U.S. dollars so that the value of the
foreign-denominated portfolio securities can be approximately
matched by a foreign-denominated liability. A Portfolio may not
engage in portfolio hedging with respect to the currency of a
particular country to an extent greater than the aggregate market
value (at the time of making such sale) of the securities held in
its portfolio denominated or quoted in that particular currency,
except that a Portfolio may hedge all or part of its foreign
currency exposure through the use of a basket of currencies or a
proxy currency where such currencies or currency act as an
effective proxy for other currencies. In such a case, a Portfolio
may enter into a forward contract where the amount of the foreign
currency to be sold exceeds the value of the securities
denominated in such currency. The use of this basket hedging
technique may be more efficient and economical than entering into
separate forward contracts for each currency held in a Portfolio.
No Portfolio may engage in "speculative" currency exchange
transactions.
At the maturity of a forward contract to deliver a particular
currency, a Portfolio may either sell the portfolio security
related to such contract and make delivery of the currency, or it
may retain the security and either acquire the currency on the
spot market or terminate its contractual obligation to deliver the
currency by purchasing an offsetting contract with the same
currency trader obligating it to purchase on the same maturity
date the same amount of the currency.
It is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of a
forward contract. Accordingly, it may be necessary for a
Portfolio to purchase additional currency on the spot market (and
bear the expense of such purchase) if the market value of the
security is less than the amount of currency the Portfolio is
obligated to deliver and if a decision is made to sell the
security and make delivery of the currency. Conversely, it may be
necessary to sell on the spot market some of the currency received
upon the sale of the portfolio security if its market value
exceeds the amount of currency a Portfolio is obligated to
deliver.
If a Portfolio retains the portfolio security and engages in
an offsetting transaction, the Portfolio will incur a gain or a
loss to the extent that there has been movement in forward
contract prices. If a Portfolio engages in an offsetting
transaction, it may subsequently enter into a new forward contract
to sell the currency. Should forward prices decline during the
period between a Portfolio's entering into a forward contract for
the sale of a currency and the date it enters into an offsetting
contract for the purchase of the currency, the Portfolio will
realize a gain to the extent the price of the currency it has
agreed to sell exceeds the price of the currency it has agreed to
purchase. Should forward prices increase, a Portfolio will suffer
a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.
A default on the contract would deprive the Portfolio of
unrealized profits or force the Portfolio to cover its commitments
for purchase or sale of currency, if any, at the current market
price.
Hedging against a decline in the value of a currency does not
eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. Such
transactions also preclude the opportunity for gain if the value
of the hedged currency should rise. Moreover, it may not be
possible for a Portfolio to hedge against a devaluation that is so
generally anticipated that the Portfolio is not able to contract
to sell the currency at a price above the devaluation level it
anticipates. The cost to a Portfolio of engaging in currency
exchange transactions varies with such factors as the currency
involved, the length of the contract period, and prevailing market
conditions. Since currency exchange transactions are usually
conducted on a principal basis, no fees or commissions are
involved.
Synthetic Foreign Money Market Positions. International
Portfolio may invest in money market instruments denominated in
foreign currencies. In addition to, or in lieu of, such direct
investment, International Portfolio may construct a synthetic
foreign money market position by (a) purchasing a money market
instrument denominated in one currency, generally U.S. dollars,
and (b) concurrently entering into a forward contract to deliver a
corresponding amount of that currency in exchange for a different
currency on a future date and at a specified rate of exchange.
For example, a synthetic money market position in Japanese yen
could be constructed by purchasing a U.S. dollar money market
instrument, and entering concurrently into a forward contract to
deliver a corresponding amount of U.S. dollars in exchange for
Japanese yen on a specified date and at a specified rate of
exchange. Because of the availability of a variety of highly
liquid short-term U.S. dollar money market instruments, a
synthetic money market position utilizing such U.S. dollar
instruments may offer greater liquidity than direct investment in
foreign currency money market instruments. The result of a direct
investment in a foreign currency and a concurrent construction of
a synthetic position in such foreign currency, in terms of both
income yield and gain or loss from changes in currency exchange
rates, in general should be similar, but would not be identical
because the components of the alternative investments would not be
identical. Except to the extent a synthetic foreign money market
position consists of a money market instrument denominated in a
foreign currency, the synthetic foreign money market position
shall not be deemed a "foreign security" for purposes of the
policy that, under normal conditions, International Portfolio will
invest at least 65% of its total assets in foreign securities.
LENDING OF PORTFOLIO SECURITIES
Subject to restriction (5) under Investment Restrictions in
this Statement of Additional Information, each Portfolio may lend
its portfolio securities to broker-dealers and banks. Any such
loan must be continuously secured by collateral in cash or cash
equivalents maintained on a current basis in an amount at least
equal to the market value of the securities loaned by the
Portfolio. The Portfolio would continue to receive the equivalent
of the interest or dividends paid by the issuer on the securities
loaned, and would also receive an additional return that may be in
the form of a fixed fee or a percentage of the collateral. The
Portfolio would have the right to call the loan and obtain the
securities loaned at any time on notice of not more than five
business days. The Portfolio would not have the right to vote the
securities during the existence of the loan but would call the
loan to permit voting of the securities if, in the Adviser's
judgment, a material event requiring a shareholder vote would
otherwise occur before the loan was repaid. In the event of
bankruptcy or other default of the borrower, the Portfolio could
experience both delays in liquidating the loan collateral or
recovering the loaned securities and losses, including (a)
possible decline in the value of the collateral or in the value of
the securities loaned during the period while the Portfolio seeks
to enforce its rights thereto, (b) possible subnormal levels of
income and lack of access to income during this period, and (c)
expenses of enforcing its rights.
REPURCHASE AGREEMENTS
Each Portfolio may invest in repurchase agreements, provided
that it will not invest more than 15% of net assets in repurchase
agreements maturing in more than seven days and any other illiquid
securities. A repurchase agreement is a sale of securities to a
Portfolio in which the seller agrees to repurchase the securities
at a higher price, which includes an amount representing interest
on the purchase price, within a specified time. In the event of
bankruptcy of the seller, a Portfolio could experience both losses
and delays in liquidating its collateral.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES; REVERSE REPURCHASE
AGREEMENTS
Each Portfolio may purchase securities on a when-issued or
delayed-delivery basis. Although the payment and interest terms
of these securities are established at the time a Portfolio enters
into the commitment, the securities may be delivered and paid for
a month or more after the date of purchase, when their value may
have changed. The Portfolios make such commitments only with the
intention of actually acquiring the securities, but may sell the
securities before settlement date if the Adviser deems it
advisable for investment reasons. No Portfolio currently intends
to make commitments to purchase when-issued securities in excess
of 5% of its net assets. International Portfolio may utilize spot
and forward foreign currency exchange transactions to reduce the
risk inherent in fluctuations in the exchange rate between one
currency and another when securities are purchased or sold on a
when-issued or delayed-delivery basis.
Each Portfolio may enter into reverse repurchase agreements
with banks and securities dealers. A reverse repurchase agreement
is a repurchase agreement in which a Portfolio is the seller of,
rather than the investor in, securities and agrees to repurchase
them at an agreed-upon time and price. Use of a reverse
repurchase agreement may be preferable to a regular sale and later
repurchase of securities because it avoids certain market risks
and transaction costs.
At the time a Portfolio enters into a binding obligation to
purchase securities on a when-issued basis or enters into a
reverse repurchase agreement, liquid assets (cash, U.S. Government
securities or other "high-grade" debt obligations) of the
Portfolio having a value at least as great as the purchase price
of the securities to be purchased will be segregated on the books
of the Portfolio and held by the custodian throughout the period
of the obligation. The use of these investment strategies, as
well as borrowing under a line of credit as described below, may
increase net asset value fluctuation.
SHORT SALES "AGAINST THE BOX"
Each Portfolio may sell securities short against the box;
that is, enter into short sales of securities that it currently
owns or has the right to acquire through the conversion or
exchange of other securities that it owns at no additional cost.
A Portfolio may make short sales of securities only if at all
times when a short position is open the Portfolio owns at least an
equal amount of such securities or securities convertible into or
exchangeable for securities of the same issue as, and equal in
amount to, the securities sold short, at no additional cost.
In a short sale against the box, a Portfolio does not deliver
from its portfolio the securities sold. Instead, the Portfolio
borrows the securities sold short from a broker-dealer through
which the short sale is executed, and the broker-dealer delivers
such securities, on behalf of the Portfolio, to the purchaser of
such securities. The Portfolio is required to pay to the broker-
dealer the amount of any dividends paid on shares sold short.
Finally, to secure its obligation to deliver to such broker-dealer
the securities sold short, the Portfolio must deposit and
continuously maintain in a separate account with the Portfolio's
custodian an equivalent amount of the securities sold short or
securities convertible into or exchangeable for such securities at
no additional cost. A Portfolio is said to have a short position
in the securities sold until it delivers to the broker-dealer the
securities sold. A Portfolio may close out a short position by
purchasing on the open market and delivering to the broker-dealer
an equal amount of the securities sold short, rather than by
delivering portfolio securities.
Short sales may protect a Portfolio against the risk of
losses in the value of its portfolio securities because any
unrealized losses with respect to such portfolio securities should
be wholly or partially offset by a corresponding gain in the short
position. However, any potential gains in such portfolio
securities should be wholly or partially offset by a corresponding
loss in the short position. The extent to which such gains or
losses are offset will depend upon the amount of securities sold
short relative to the amount the Portfolio owns, either directly
or indirectly, and, in the case where the Portfolio owns
convertible securities, changes in the conversion premium.
Short sale transactions involve certain risks. If the price
of the security sold short increases between the time of the short
sale and the time a Portfolio replaces the borrowed security, the
Portfolio will incur a loss and if the price declines during this
period, the Portfolio will realize a short-term capital gain. Any
realized short-term capital gain will be decreased, and any
incurred loss increased, by the amount of transaction costs and
any premium, dividend or interest which the Portfolio may have to
pay in connection with such short sale. Certain provisions of the
Internal Revenue Code may limit the degree to which a Portfolio is
able to enter into short sales. There is no limitation on the
amount of each Portfolio's assets that, in the aggregate, may be
deposited as collateral for the obligation to replace securities
borrowed to effect short sales and allocated to segregated
accounts in connection with short sales. Balanced Portfolio may
invest up to 20% of its total assets in short sales against the
box; no other Portfolio will invest more than 5% of its total
assets in short sales against the box.
RULE 144A SECURITIES
Each Portfolio may purchase securities that have been
privately placed but that are eligible for purchase and sale under
Rule 144A under the 1933 Act. That Rule permits certain qualified
institutional buyers, such as the Portfolio, to trade in privately
placed securities that have not been registered for sale under the
1933 Act. The Adviser, under the supervision of the Board of
Trustees, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the Portfolio's restriction
of investing no more than 15% of its net assets in illiquid
securities. A determination of whether a Rule 144A security is
liquid or not is a question of fact. In making this
determination, the Adviser will consider the trading markets for
the specific security, taking into account the unregistered nature
of a Rule 144A security. In addition, the Adviser could consider
the (1) frequency of trades and quotes, (2) number of dealers and
potential purchasers, (3) dealer undertakings to make a market,
and (4) nature of the security and of marketplace trades (e.g.,
the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer). The liquidity
of Rule 144A securities would be monitored and if, as a result of
changed conditions, it is determined that a Rule 144A security is
no longer liquid, the Portfolio's holdings of illiquid securities
would be reviewed to determine what, if any, steps are required to
assure that the Portfolio does not invest more than 15% of its
assets in illiquid securities. Investing in Rule 144A securities
could have the effect of increasing the amount of a Portfolio's
assets invested in illiquid securities if qualified institutional
buyers are unwilling to purchase such securities. No Portfolio
expects to invest as much as 5% of its total assets in Rule 144A
securities that have not been deemed to be liquid by the Adviser.
(See restriction (n) under Investment Restrictions.)
LINE OF CREDIT
Subject to restriction (6) under Investment Restrictions in
this Statement of Additional Information, each Portfolio may
establish and maintain a line of credit with a major bank in order
to permit borrowing on a temporary basis to meet share redemption
requests in circumstances in which temporary borrowing may be
preferable to liquidation of portfolio securities.
INTERFUND BORROWING AND LENDING PROGRAM
Pursuant to an exemptive order issued by the Securities and
Exchange Commission, each Fund has received permission to lend
money to, and borrow money from, other mutual funds advised by the
Adviser. A Fund will borrow through the program when borrowing is
necessary and appropriate and the costs are equal to or lower than
the costs of bank loans.
PORTFOLIO TURNOVER
Although the Portfolios do not purchase securities with a
view to rapid turnover, there are no limitations on the length of
time that portfolio securities must be held. At times, Special
Portfolio may invest for short-term capital appreciation.
Portfolio turnover can occur for a number of reasons such as
general conditions in the securities markets, more favorable
investment opportunities in other securities, or other factors
relating to the desirability of holding or changing a portfolio
investment. Because of the Portfolios' flexibility of investment
and emphasis on growth of capital, they may have greater portfolio
turnover than that of mutual funds that have primary objectives of
income or maintenance of a balanced investment position. The
future turnover rate may vary greatly from year to year. A high
rate of portfolio turnover in a Portfolio, if it should occur,
would result in increased transaction expenses, which must be
borne by that Portfolio. High portfolio turnover may also result
in the realization of capital gains or losses and, to the extent
net short-term capital gains are realized, any distributions
resulting from such gains will be considered ordinary income for
federal income tax purposes. (See Risks and Investment
Considerations and Distributions and Income Taxes in each Fund's
Prospectus, and Additional Income Tax Considerations in this
Statement of Additional Information.)
OPTIONS ON SECURITIES AND INDEXES
Each Portfolio may purchase and sell put options and call
options on securities, indexes or foreign currencies in
standardized contracts traded on recognized securities exchanges,
boards of trade, or similar entities, or quoted on Nasdaq. Each
Portfolio may purchase agreements, sometimes called cash puts,
that may accompany the purchase of a new issue of bonds from a
dealer.
An option on a security (or index) is a contract that gives
the purchaser (holder) of the option, in return for a premium, the
right to buy from (call) or sell to (put) the seller (writer) of
the option the security underlying the option (or the cash value
of the index) at a specified exercise price at any time during the
term of the option (normally not exceeding nine months). The
writer of an option on an individual security or on a foreign
currency has the obligation upon exercise of the option to deliver
the underlying security or foreign currency upon payment of the
exercise price or to pay the exercise price upon delivery of the
underlying security or foreign currency. Upon exercise, the
writer of an option on an index is obligated to pay the difference
between the cash value of the index and the exercise price
multiplied by the specified multiplier for the index option. (An
index is designed to reflect specified facets of a particular
financial or securities market, a specific group of financial
instruments or securities, or certain economic indicators.)
A Portfolio will write call options and put options only if
they are "covered." For example, in the case of a call option on
a security, the option is "covered" if the Portfolio owns the
security underlying the call or has an absolute and immediate
right to acquire that security without additional cash
consideration (or, if additional cash consideration is required,
cash or cash equivalents in such amount are held in a segregated
account by its custodian) upon conversion or exchange of other
securities held in its portfolio.
If an option written by a Portfolio expires, the Portfolio
realizes a capital gain equal to the premium received at the time
the option was written. If an option purchased by a Portfolio
expires, the Portfolio realizes a capital loss equal to the
premium paid.
Prior to the earlier of exercise or expiration, an option may
be closed out by an offsetting purchase or sale of an option of
the same series (type, exchange, underlying security or index,
exercise price, and expiration). There can be no assurance,
however, that a closing purchase or sale transaction can be
effected when a Portfolio desires.
A Portfolio will realize a capital gain from a closing
purchase transaction if the cost of the closing option is less
than the premium received from writing the option, or, if it is
more, the Portfolio will realize a capital loss. If the premium
received from a closing sale transaction is more than the premium
paid to purchase the option, the Portfolio will realize a capital
gain or, if it is less, the Portfolio will realize a capital loss.
The principal factors affecting the market value of a put or a
call option include supply and demand, interest rates, the current
market price of the underlying security or index in relation to
the exercise price of the option, the volatility of the underlying
security or index, and the time remaining until the expiration
date.
A put or call option purchased by a Portfolio is an asset of
the Portfolio, valued initially at the premium paid for the
option. The premium received for an option written by a Portfolio
is recorded as a deferred credit. The value of an option
purchased or written is marked-to-market daily and is valued at
the closing price on the exchange on which it is traded or, if not
traded on an exchange or no closing price is available, at the
mean between the last bid and asked prices.
Risks Associated with Options on Securities and Indexes.
There are several risks associated with transactions in options.
For example, there are significant differences between the
securities markets, the currency markets, and the options markets
that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its
objectives. A decision as to whether, when and how to use options
involves the exercise of skill and judgment, and even a well-
conceived transaction may be unsuccessful to some degree because
of market behavior or unexpected events.
There can be no assurance that a liquid market will exist
when a Portfolio seeks to close out an option position. If a
Portfolio were unable to close out an option that it had purchased
on a security, it would have to exercise the option in order to
realize any profit or the option would expire and become
worthless. If a Portfolio were unable to close out a covered call
option that it had written on a security, it would not be able to
sell the underlying security until the option expired. As the
writer of a covered call option on a security, a Portfolio
foregoes, during the option's life, the opportunity to profit from
increases in the market value of the security covering the call
option above the sum of the premium and the exercise price of the
call.
If trading were suspended in an option purchased or written
by a Portfolio, the Portfolio would not be able to close out the
option. If restrictions on exercise were imposed, the Portfolio
might be unable to exercise an option it has purchased.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Each Portfolio may use interest rate futures contracts, index
futures contracts, and foreign currency futures contracts. An
interest rate, index or foreign currency futures contract provides
for the future sale by one party and purchase by another party of
a specified quantity of a financial instrument or the cash value
of an index /2/ at a specified price and time. A public market
exists in futures contracts covering a number of indexes
(including, but not limited to: the Standard & Poor's 500 Index,
the Value Line Composite Index, and the New York Stock Exchange
Composite Index) as well as financial instruments (including, but
not limited to: U.S. Treasury bonds, U.S. Treasury notes,
Eurodollar certificates of deposit, and foreign currencies).
Other index and financial instrument futures contracts are
available and it is expected that additional futures contracts
will be developed and traded.
- ------------
/2/ A futures contract on an index is an agreement pursuant to
which two parties agree to take or make delivery of an amount of
cash equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at
which the index contract was originally written. Although the
value of a securities index is a function of the value of certain
specified securities, no physical delivery of those securities is
made.
- ------------
The Portfolios may purchase and write call and put futures
options. Futures options possess many of the same characteristics
as options on securities, indexes and foreign currencies
(discussed above). A futures option gives the holder the right,
in return for the premium paid, to assume a long position (call)
or short position (put) in a futures contract at a specified
exercise price at any time during the period of the option. Upon
exercise of a call option, the holder acquires a long position in
the futures contract and the writer is assigned the opposite short
position. In the case of a put option, the opposite is true. A
Portfolio might, for example, use futures contracts to hedge
against or gain exposure to fluctuations in the general level of
stock prices, anticipated changes in interest rates or currency
fluctuations that might adversely affect either the value of the
Portfolio's securities or the price of the securities that the
Portfolio intends to purchase. Although other techniques could be
used to reduce or increase that Portfolio's exposure to stock
price, interest rate and currency fluctuations, the Portfolio may
be able to achieve its exposure more effectively and perhaps at a
lower cost by using futures contracts and futures options.
Each Portfolio will only enter into futures contracts and
futures options that are standardized and traded on an exchange,
board of trade, or similar entity, or quoted on an automated
quotation system.
The success of any futures transaction depends on the Adviser
correctly predicting changes in the level and direction of stock
prices, interest rates, currency exchange rates and other factors.
Should those predictions be incorrect, a Portfolio's return might
have been better had the transaction not been attempted; however,
in the absence of the ability to use futures contracts, the
Adviser might have taken portfolio actions in anticipation of the
same market movements with similar investment results but,
presumably, at greater transaction costs.
When a purchase or sale of a futures contract is made by a
Portfolio, the Portfolio is required to deposit with its custodian
(or broker, if legally permitted) a specified amount of cash or
U.S. Government securities or other securities acceptable to the
broker ("initial margin"). The margin required for a futures
contract is set by the exchange on which the contract is traded
and may be modified during the term of the contract. The initial
margin is in the nature of a performance bond or good faith
deposit on the futures contract, which is returned to the
Portfolio upon termination of the contract, assuming all
contractual obligations have been satisfied. A Portfolio expects
to earn interest income on its initial margin deposits. A futures
contract held by a Portfolio is valued daily at the official
settlement price of the exchange on which it is traded. Each day
the Portfolio pays or receives cash, called "variation margin,"
equal to the daily change in value of the futures contract. This
process is known as "marking-to-market." Variation margin paid or
received by a Portfolio does not represent a borrowing or loan by
the Portfolio but is instead settlement between the Portfolio and
the broker of the amount one would owe the other if the futures
contract had expired at the close of the previous day. In
computing daily net asset value, each Portfolio will mark-to-
market its open futures positions.
Each Portfolio is also required to deposit and maintain
margin with respect to put and call options on futures contracts
written by it. Such margin deposits will vary depending on the
nature of the underlying futures contract (and the related initial
margin requirements), the current market value of the option, and
other futures positions held by the Portfolio.
Although some futures contracts call for making or taking
delivery of the underlying securities, usually these obligations
are closed out prior to delivery by offsetting purchases or sales
of matching futures contracts (same exchange, underlying security
or index, and delivery month). If an offsetting purchase price is
less than the original sale price, the Portfolio engaging in the
transaction realizes a capital gain, or if it is more, the
Portfolio realizes a capital loss. Conversely, if an offsetting
sale price is more than the original purchase price, the Portfolio
engaging in the transaction realizes a capital gain, or if it is
less, the Portfolio realizes a capital loss. The transaction
costs must also be included in these calculations.
RISKS ASSOCIATED WITH FUTURES
There are several risks associated with the use of futures
contracts and futures options. A purchase or sale of a futures
contract may result in losses in excess of the amount invested in
the futures contract. In trying to increase or reduce market
exposure, there can be no guarantee that there will be a
correlation between price movements in the futures contract and in
the portfolio exposure sought. In addition, there are significant
differences between the securities and futures markets that could
result in an imperfect correlation between the markets, causing a
given transaction not to achieve its objectives. The degree of
imperfection of correlation depends on circumstances such as:
variations in speculative market demand for futures, futures
options and the related securities, including technical influences
in futures and futures options trading and differences between the
securities market and the securities underlying the standard
contracts available for trading. For example, in the case of
index futures contracts, the composition of the index, including
the issuers and the weighting of each issue, may differ from the
composition of the Portfolio's portfolio, and, in the case of
interest rate futures contracts, the interest rate levels,
maturities, and creditworthiness of the issues underlying the
futures contract may differ from the financial instruments held in
the Portfolio's portfolio. A decision as to whether, when and how
to use futures contracts involves the exercise of skill and
judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or
unexpected stock price or interest rate trends.
Futures exchanges may limit the amount of fluctuation
permitted in certain futures contract prices during a single
trading day. The daily limit establishes the maximum amount that
the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of the current
trading session. Once the daily limit has been reached in a
futures contract subject to the limit, no more trades may be made
on that day at a price beyond that limit. The daily limit governs
only price movements during a particular trading day and therefore
does not limit potential losses because the limit may work to
prevent the liquidation of unfavorable positions. For example,
futures prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of positions and subjecting
some holders of futures contracts to substantial losses. Stock
index futures contracts are not normally subject to such daily
price change limitations.
There can be no assurance that a liquid market will exist at
a time when a Portfolio seeks to close out a futures or futures
option position. The Portfolio would be exposed to possible loss
on the position during the interval of inability to close, and
would continue to be required to meet margin requirements until
the position is closed. In addition, many of the contracts
discussed above are relatively new instruments without a
significant trading history. As a result, there can be no
assurance that an active secondary market will develop or continue
to exist.
LIMITATIONS ON OPTIONS AND FUTURES
If other options, futures contracts, or futures options of
types other than those described herein are traded in the future,
each Portfolio may also use those investment vehicles, provided
the Board of Trustees determines that their use is consistent with
the Portfolio's investment objective.
A Portfolio will not enter into a futures contract or
purchase an option thereon if, immediately thereafter, the initial
margin deposits for futures contracts held by that Portfolio plus
premiums paid by it for open futures option positions, less the
amount by which any such positions are "in-the-money," /3/ would
exceed 5% of the Portfolio's total assets.
- --------------
/3/ A call option is "in-the-money" if the value of the futures
contract that is the subject of the option exceeds the exercise
price. A put option is "in-the-money" if the exercise price
exceeds the value of the futures contract that is the subject of
the option.
- ---------------
When purchasing a futures contract or writing a put option on
a futures contract, a Portfolio must maintain with its custodian
(or broker, if legally permitted) cash or cash equivalents
(including any margin) equal to the market value of such contract.
When writing a call option on a futures contract, the Portfolio
similarly will maintain with its custodian cash or cash
equivalents (including any margin) equal to the amount by which
such option is in-the-money until the option expires or is closed
out by the Portfolio.
A Portfolio may not maintain open short positions in futures
contracts, call options written on futures contracts or call
options written on indexes if, in the aggregate, the market value
of all such open positions exceeds the current value of the
securities in its portfolio, plus or minus unrealized gains and
losses on the open positions, adjusted for the historical relative
volatility of the relationship between the portfolio and the
positions. For this purpose, to the extent the Portfolio has
written call options on specific securities in its portfolio, the
value of those securities will be deducted from the current market
value of the securities portfolio.
In order to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid being deemed a "commodity pool
operator," each Portfolio will use commodity futures or commodity
options contracts solely for bona fide hedging purposes within the
meaning and intent of Regulation 1.3(z), or, with respect to
positions in commodity futures and commodity options contracts
that do not come within the meaning and intent of 1.3(z), the
aggregate initial margin and premiums required to establish such
positions will not exceed 5% of the fair market value of the
assets of a Portfolio, after taking into account unrealized
profits and unrealized losses on any such contracts it has entered
into [in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount (as defined in Section 190.01(x)
of the Commission Regulations) may be excluded in computing such
5%].
TAXATION OF OPTIONS AND FUTURES
If a Portfolio exercises a call or put option that it holds,
the premium paid for the option is added to the cost basis of the
security purchased (call) or deducted from the proceeds of the
security sold (put). For cash settlement options and futures
options exercised by a Portfolio, the difference between the cash
received at exercise and the premium paid is a capital gain or
loss.
If a call or put option written by a Portfolio is exercised,
the premium is included in the proceeds of the sale of the
underlying security (call) or reduces the cost basis of the
security purchased (put). For cash settlement options and futures
options written by a Portfolio, the difference between the cash
paid at exercise and the premium received is a capital gain or
loss.
Entry into a closing purchase transaction will result in
capital gain or loss. If an option written by a Portfolio was in-
the-money at the time it was written and the security covering the
option was held for more than the long-term holding period prior
to the writing of the option, any loss realized as a result of a
closing purchase transaction will be long-term. The holding
period of the securities covering an in-the-money option will not
include the period of time the option is outstanding.
If a Portfolio writes an equity call option /4/ other than a
"qualified covered call option," as defined in the Internal
Revenue Code, any loss on such option transaction, to the extent
it does not exceed the unrealized gains on the securities covering
the option, may be subject to deferral until the securities
covering the option have been sold.
- -----------------
/4/ An equity option is defined to mean any option to buy or sell
stock, and any other option the value of which is determined by
reference to an index of stocks of the type that is ineligible to
be traded on a commodity futures exchange (e.g., an option
contract on a sub-index based on the price of nine hotel-casino
stocks). The definition of equity option excludes options on
broad-based stock indexes (such as the Standard & Poor's 500
index).
- -----------------
A futures contract held until delivery results in capital
gain or loss equal to the difference between the price at which
the futures contract was entered into and the settlement price on
the earlier of delivery notice date or expiration date. If a
Portfolio delivers securities under a futures contract, the
Portfolio also realizes a capital gain or loss on those
securities.
For federal income tax purposes, a Portfolio generally is
required to recognize as income for each taxable year its net
unrealized gains and losses as of the end of the year on futures,
futures options and non-equity options positions ("year-end mark-
to-market"). Generally, any gain or loss recognized with respect
to such positions (either by year-end mark-to-market or by actual
closing of the positions) is considered to be 60% long-term and
40% short-term, without regard to the holding periods of the
contracts. However, in the case of positions classified as part
of a "mixed straddle," the recognition of losses on certain
positions (including options, futures and futures options
positions, the related securities and certain successor positions
thereto) may be deferred to a later taxable year. Sale of futures
contracts or writing of call options (or futures call options) or
buying put options (or futures put options) that are intended to
hedge against a change in the value of securities held by a
Portfolio: (1) will affect the holding period of the hedged
securities; and (2) may cause unrealized gain or loss on such
securities to be recognized upon entry into the hedge.
If a Portfolio were to enter into a short index future, short
index futures option or short index option position and the
Portfolio's portfolio were deemed to "mimic" the performance of
the index underlying such contract, the option or futures contract
position and the Portfolio's stock positions would be deemed to be
positions in a mixed straddle, subject to the above-mentioned loss
deferral rules.
In order for a Portfolio to continue to qualify for federal
income tax treatment as a regulated investment company, at least
90% of its gross income for a taxable year must be derived from
qualifying income; i.e., dividends, interest, income derived from
loans of securities, and gains from the sale of securities or
foreign currencies, or other income (including but not limited to
gains from options, futures, or forward contracts). In addition,
gains realized on the sale or other disposition of securities held
for less than three months must be limited to less than 30% of the
Portfolio's annual gross income. Any net gain realized from
futures (or futures options) contracts will be considered gain
from the sale of securities and therefore be qualifying income for
purposes of the 90% requirement. In order to avoid realizing
excessive gains on securities held less than three months, the
Portfolio may be required to defer the closing out of certain
positions beyond the time when it would otherwise be advantageous
to do so.
Each Fund distributes to shareholders annually any net
capital gains that have been recognized for federal income tax
purposes (including year-end mark-to-market gains) on options and
futures transactions. Such distributions are combined with
distributions of capital gains realized on the other investments,
and shareholders are advised of the nature of the payments.
INVESTMENT RESTRICTIONS
The Funds and the Portfolios operate under the following
investment restrictions. No Fund or Portfolio may:
(1) with respect to 75% of its total assets, invest more than
5% of its total assets, taken at market value at the time of a
particular purchase, in the securities of a single issuer, except
for securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities or repurchase agreements for
such securities, and [Funds only] except that all or substantially
all of the assets of the Fund may be invested in another
registered investment company having the same investment objective
and substantially similar investment policies as the Fund;
(2) acquire more than 10%, taken at the time of a particular
purchase, of the outstanding voting securities of any one issuer,
[Funds only] except that all or substantially all of the assets of
the Fund may be invested in another registered investment company
having the same investment objective and substantially similar
investment policies as the Fund;
(3) act as an underwriter of securities, except insofar as it
may be deemed an underwriter for purposes of the Securities Act of
1933 on disposition of securities acquired subject to legal or
contractual restrictions on resale, [Funds only] except that all
or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment
objective and substantially similar investment policies as the
Fund;
(4) purchase or sell real estate (although it may purchase
securities secured by real estate or interests therein, or
securities issued by companies which invest in real estate or
interests therein), commodities, or commodity contracts, except
that it may enter into (a) futures and options on futures and (b)
forward contracts;
(5) make loans, although it may (a) lend portfolio securities
and participate in an interfund lending program with other Stein
Roe Funds and Portfolios provided that no such loan may be made
if, as a result, the aggregate of such loans would exceed 33 1/3%
of the value of its total assets (taken at market value at the
time of such loans); (b) purchase money market instruments and
enter into repurchase agreements; and (c) acquire publicly-
distributed or privately-placed debt securities;
(6) borrow except that it may (a) borrow for non-leveraging,
temporary or emergency purposes, (b) engage in reverse repurchase
agreements and make other borrowings, provided that the
combination of (a) and (b) shall not exceed 33 1/3% of the value
of its total assets (including the amount borrowed) less
liabilities (other than borrowings) or such other percentage
permitted by law, and (c) enter into futures and options
transactions; it may borrow from banks, other Stein Roe Funds and
Portfolios, and other persons to the extent permitted by
applicable law;
(7) invest in a security if more than 25% of its total assets
(taken at market value at the time of a particular purchase) would
be invested in the securities of issuers in any particular
industry, /5/ except that this restriction does not apply to
securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and [Funds only] except that all or
substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment
objective and substantially similar investment policies as the
Fund; or
- ----------------
/5/ For purposes of this investment restriction, International
Portfolio uses industry classifications contained in Morgan
Stanley Capital International Perspective, which is published by
Morgan Stanley, an international investment banking and brokerage
firm.
- ----------------
(8) issue any senior security except to the extent permitted
under the Investment Company Act of 1940.
The above restrictions (other than bracketed portions thereof
and, in the case of Advisor Special Fund and Special Portfolio,
other than restrictions 1 and 2) are fundamental policies and may
not be changed without the approval of a "majority of the
outstanding voting securities" as defined above. The Funds and
the Portfolios (and, in the case of Advisor Special Fund and
Special Portfolio, together with restrictions 1 and 2 above) are
also subject to the following non-fundamental restrictions and
policies, which may be changed by the Board of Trustees. None of
the following restrictions shall prevent a Fund from investing all
or substantially all of its assets in another investment company
having the same investment objective and substantially the same
investment policies as the Fund. No Fund or Portfolio may:
(a) invest in any of the following: (i) interests in oil,
gas, or other mineral leases or exploration or development
programs (except readily marketable securities, including but not
limited to master limited partnership interests, that may
represent indirect interests in oil, gas, or other mineral
exploration or development programs); (ii) puts, calls, straddles,
spreads, or any combination thereof (except that it may enter into
transactions in options, futures, and options on futures); (iii)
shares of other open-end investment companies, except in
connection with a merger, consolidation, acquisition, or
reorganization; and (iv) limited partnerships in real estate
unless they are readily marketable;
(b) invest in companies for the purpose of exercising control
or management;
(c) purchase more than 3% of the stock of another investment
company or purchase stock of other investment companies equal to
more than 5% of the its total assets (valued at time of purchase)
in the case of any one other investment company and 10% of such
assets (valued at time of purchase) in the case of all other
investment companies in the aggregate; any such purchases are to
be made in the open market where no profit to a sponsor or dealer
results from the purchase, other than the customary broker's
commission, except for securities acquired as part of a merger,
consolidation or acquisition of assets;
(d) purchase or hold securities of an issuer if 5% of the
securities of such issuer are owned by those officers, trustees,
or directors of the Trust or of its investment adviser, who each
own beneficially more than 1/2 of 1% of the securities of that
issuer;
(e) mortgage, pledge, or hypothecate its assets, except as
may be necessary in connection with permitted borrowings or in
connection with options, futures, and options on futures;
(f) invest more than 5% of its net assets (valued at time of
purchase) in warrants, nor more than 2% of its net assets in
warrants that are not listed on the New York or American Stock
Exchange or [Advisor International Fund and International
Portfolio only] a recognized foreign exchange;
(g) write an option on a security unless the option is issued
by the Options Clearing Corporation, an exchange, or similar
entity;
(h) [all Funds and Portfolios except Advisor International
Fund and International Portfolio] invest more than 25% of its
total assets (valued at time of purchase) in securities of foreign
issuers (other than securities represented by American Depositary
Receipts (ADRs) or securities guaranteed by a U.S. person);
(i) buy or sell an option on a security, a futures contract,
or an option on a futures contract unless the option, the futures
contract, or the option on the futures contract is offered through
the facilities of a recognized securities association or listed on
a recognized exchange or similar entity;
(j) purchase a put or call option if the aggregate premiums
paid for all put and call options exceed 20% of its net assets
(less the amount by which any such positions are in-the-money),
excluding put and call options purchased as closing transactions;
(k) purchase securities on margin (except for use of short-
term credits as are necessary for the clearance of transactions),
or sell securities short unless (i) it owns or has the right to
obtain securities equivalent in kind and amount to those sold
short at no added cost or (ii) the securities sold are "when
issued" or "when distributed" securities which it expects to
receive in a recapitalization, reorganization, or other exchange
for securities the it contemporaneously owns or has the right to
obtain and provided that transactions in options, futures, and
options on futures are not treated as short sales;
(l) invest more than 5% of its total assets (taken at market
value at the time of a particular investment) in securities of
issuers (other than issuers of federal agency obligations or
securities issued or guaranteed by any foreign country or asset-
backed securities) that, together with any predecessors or
unconditional guarantors, have been in continuous operation for
less than three years ("unseasoned issuers");
(m) [all Funds and Portfolios except Advisor International
Fund and International Portfolio] invest more than 5% of its total
assets (taken at market value at the time of a particular
investment) in restricted securities, other than securities
eligible for resale pursuant to Rule 144A under the Securities Act
of 1933; [Advisor International Fund and International Portfolio
only] invest more than 10% of its total assets (taken at market
value at the time of a particular investment) in restricted
securities, other than securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933;
(n) invest more than 15% of its total assets (taken at
market value at the time of a particular investment) in restricted
securities and securities of unseasoned issuers; or
(o) invest more than 15% of its net assets (taken at market
value at the time of a particular investment) in illiquid
securities, including repurchase agreements maturing in more than
seven days.
Notwithstanding the foregoing investment restrictions,
International Portfolio may purchase securities pursuant to the
exercise of subscription rights, subject to the condition that
such purchase will not result in International Portfolio's ceasing
to be a diversified investment company. Far Eastern and European
corporations frequently issue additional capital stock by means of
subscription rights offerings to existing shareholders at a price
substantially below the market price of the shares. The failure
to exercise such rights would result in International Portfolio's
interest in the issuing company being diluted. The market for
such rights is not well developed in all cases and, accordingly,
International Portfolio may not always realize full value on the
sale of rights. The exception applies in cases where the limits
set forth in the investment restrictions would otherwise be
exceeded by exercising rights or would have already been exceeded
as a result of fluctuations in the market value of International
Portfolio's portfolio securities with the result that
International Portfolio would be forced either to sell securities
at a time when it might not otherwise have done so, to forego
exercising the rights.
ADDITIONAL INVESTMENT CONSIDERATIONS
The Adviser seeks to provide superior long-term investment
results through a disciplined, research-intensive approach to
investment selection and prudent risk management. In working to
build wealth for generations, it has been guided by three primary
objectives which it believes are the foundation of a successful
investment program. These objectives are preservation of capital,
limited volatility through managed risk, and consistent above-
average returns, as appropriate for the particular client or
managed account. Because every investor's needs are different,
Stein Roe mutual funds are designed to accommodate different
investment objectives, risk tolerance levels, and time horizons.
In selecting a mutual fund, investors should ask the following
questions:
What are my investment goals?
It is important to a choose a fund that has investment objectives
compatible with your investment goals.
What is my investment time frame?
If you have a short investment time frame (e.g., less than three
years), a mutual fund that seeks to provide a stable share price,
such as a money market fund, or one that seeks capital
preservation as one of its objectives may be appropriate. If you
have a longer investment time frame, you may seek to maximize your
investment returns by investing in a mutual fund that offers
greater yield or appreciation potential in exchange for greater
investment risk.
What is my tolerance for risk?
All investments, including those in mutual funds, have risks which
will vary depending on investment objective and security type.
However, mutual funds seek to reduce risk through professional
investment management and portfolio diversification.
In general, equity mutual funds emphasize long-term capital
appreciation and tend to have more volatile net asset values than
bond or money market mutual funds. Although there is no guarantee
that they will be able to maintain a stable net asset value of
$1.00 per share, money market funds emphasize safety of principal
and liquidity, but tend to offer lower income potential than bond
funds. Bond funds tend to offer higher income potential than
money market funds but tend to have greater risk of principal and
yield volatility.
In addition, the Adviser believes that investment in a high
yield fund provides an opportunity to diversify an investment
portfolio because the economic factors that affect the performance
of high-yield, high-risk debt securities differ from those that
affect the performance of high-quality debt securities or equity
securities.
PURCHASES AND REDEMPTIONS
Purchases and redemptions are discussed in each Prospectus
under the headings How to Purchase Shares, How to Redeem Shares,
and Net Asset Value, and that information is incorporated herein
by reference. It is the responsibility of any investment dealers,
banks, or other institutions, including retirement plan service
providers, through whom you purchase or redeem shares to establish
procedures insuring the prompt transmission to Advisor Trust of
any such purchase order.
The net asset value of each Fund and each Portfolio is
determined on days on which the New York Stock Exchange (the
"NYSE") is open for trading. The NYSE is regularly closed on
Saturdays and Sundays and on New Year's Day, the third Monday in
February, Good Friday, the last Monday in May, Independence Day,
Labor Day, Thanksgiving, and Christmas. If one of these holidays
falls on a Saturday or Sunday, the NYSE will be closed on the
preceding Friday or the following Monday, respectively. Net asset
value will not be determined on days when the NYSE is closed
unless, in the judgment of the Board of Trustees, net asset value
of a Fund should be determined on any such day, in which case the
determination will be made at 3:00 p.m., Chicago time.
Advisor Trust intends to pay all redemptions in cash and is
obligated to redeem shares solely in cash up to the lesser of
$250,000 or one percent of the net assets of Advisor Trust during
any 90-day period for any one shareholder. However, redemptions
in excess of such limit may be paid wholly or partly by a
distribution in kind of securities. If redemptions were made in
kind, the redeeming shareholders might incur transaction costs in
selling the securities received in the redemptions.
Due to the relatively high cost of maintaining smaller
accounts, Advisor Trust reserves the right to redeem shares in any
account for their then-current value (which will be promptly paid
to the investor) if at any time the shares in the account do not
have a value of at least $1,000. An investor will be notified
that the value of his account is less than that minimum and
allowed at least 30 days to bring the value of the account up to
at least $1,000 before the redemption is processed. The Agreement
and Declaration of Trust also authorizes Advisor Trust to redeem
shares under certain other circumstances as may be specified by
the Board of Trustees.
Advisor Trust reserves the right to suspend or postpone
redemptions of shares of any Fund during any period when: (a)
trading on the NYSE is restricted, as determined by the Securities
and Exchange Commission, or the NYSE is closed for other than
customary weekend and holiday closings; (b) the Securities and
Exchange Commission has by order permitted such suspension; or (c)
an emergency, as determined by the Securities and Exchange
Commission, exists, making disposal of portfolio securities or
valuation of net assets of such Fund not reasonably practicable.
MANAGEMENT
The following table sets forth certain information with
respect to the trustees and officers of Advisor Trust:
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION(S)
NAME AGE WITH THE TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
Gary A. Anetsberger 41 Senior Vice-President Chief Financial Officer of the Mutual Funds
(4) division of Stein Roe & Farnham Incorporated (the
"Adviser"); senior vice president of the Adviser
since April, 1996; vice president of the Adviser
prior thereto
Timothy K. Armour 48 President; Trustee President of the Mutual Funds division of the
(1)(2)(4) Adviser and director of the Adviser since June,
1992; senior vice president and director of
marketing of Citibank Illinois prior thereto
Jilaine Hummel Bauer 41 Executive Vice-President; General counsel and secretary of the Adviser since
(4) Secretary November 1995; senior vice president of the Adviser
since April, 1992; vice president of the Adviser
prior thereto
Bruno Bertocci 42 Vice-President Vice president of Colonial Management Associates,
Inc. since January, 1996; senior vice president of
the Adviser since May, 1995; global equity portfolio
manager with Rockefeller & Co. prior thereto
Kenneth L. Block 76 Trustee Chairman emeritus of A. T. Kearney, Inc.
(3)(4) (international management consultants)
William W. Boyd (3) 70 Trustee Chairman and director of Sterling Plumbing Group,
(4) Inc. (manufacturer of plumbing products) since
1992; chairman, president, and chief executive
officer of Sterling Plumbing Group, Inc. prior
thereto
David P. Brady 32 Vice-President Vice president of the Adviser since November, 1995;
portfolio manager for the Adviser since 1993;
equity investment analyst, State Farm Mutual
Automobile Insurance Company prior thereto
Thomas W. Butch (4) 40 Executive Vice-President Senior vice president of the Adviser since
September, 1994; first vice president, corporate
communications, of Mellon Bank Corporation prior
thereto
Daniel K. Cantor 37 Vice-President Senior vice president of the Adviser
Lindsay Cook (1)(4) 44 Trustee Senior vice president of Liberty Financial
Companies, Inc. (the indirect parent of the
Adviser)
Philip J. Crosley 50 Vice-President Senior Vice President of the Adviser since
February, 1996; Vice President, Institutional
Sales-Advisor Sales, Invesco Funds Group prior
thereto
E. Bruce Dunn 62 Vice-President Senior vice president of the Adviser
Erik P. Gustafson 33 Vice-President Senior portfolio manager of the Adviser; senior
vice president of the Adviser since April, 1996;
vice president of the Adviser from May, 1994 to
April, 1996; associate of the Adviser from April,
1992 to May, 1994; associate attorney with Fowler
White Burnett Hurley Banick & Strickroot prior
thereto
Douglas A. Hacker 41 Trustee Senior vice president and chief financial officer,
(3)(4) United Airlines, since July, 1994; senior vice
president, finance, United Airlines, February, 1993
to July, 1994; vice president, American Airlines
prior thereto
David P. Harris 32 Vice-President Vice president of Colonial Management Associates,
Inc. since January, 1996; vice president of the
Adviser since May, 1995; global equity portfolio
manager with Rockefeller & Co. prior thereto
Harvey B. Hirschhorn 47 Vice-President Executive vice president, senior portfolio manager, and
chief economist, and investment strategeist of the Adviser;
director of research of the Adviser, 1991 to 1995
Janet Langford Kelly 39 Trustee Senior Vice President, Secretary and General
(3)(4) Counsel, Sara Lee Corporation (branded, packaged,
consumer-products manufacturer), since 1995;
partner, Sidley & Austin (law firm), 1991 through
1994
Eric S. Maddix 33 Vice-President Vice president of the Adviser since November, 1995;
portfolio manager or research assistant for the
Adviser since 1987
Lynn C. Maddox 56 Vice-President Senior vice president of the Adviser
Anne E. Marcel 39 Vice-President Vice president of the Adviser since April, 1996;
manager, Mutual Fund Sales & Services of the
Adviser since October, 1994; supervisor of the
Counselor Department of the Adviser from October,
1992 to October, 1994; vice president of Selected
Financial Services prior thereto
Francis W. Morley 76 Trustee Chairman of Employer Plan Administrators and
(3)(4) Consultants Co. (designer, administrator, and
communicator of employee benefit plans)
Charles R. Nelson 54 Trustee Van Voorhis Professor of Political Economy,
(3)(4) Department of Economics of the University of
Washington
Nicolette D. Parrish 47 Vice-President; Senior compliance administrator and assistant
(4) Assistant Secretary secretary of the Adviser since November, 1995;
senior legal assistant for the Adviser prior
thereto
Richard B. Peterson 56 Vice-President Senior vice president of the Adviser since June,
1991; officer of State Farm Investment Management
Corp. prior thereto
Cynthia A. Prah (4) 34 Vice-President Manager of Shareholder Transaction Processing for
the Adviser
Sharon R. Robertson 35 Controller Accounting manager for the Adviser's Mutual Funds
(4) division
Janet B. Rysz (4) 41 Assistant Secretary Senior compliance administrator and assistant
secretary of the Adviser
Gloria J. Santella 39 Vice-President Senior vice president of the Adviser since
November, 1995; vice president of the Adviser
prior thereto
Thomas P. Sorbo 36 Vice-President Senior vice president of the Adviser since January,
1994; vice president of the Adviser from September,
1992 to December, 1993; associate of Travelers
Insurance Company prior thereto
Thomas C. Theobald 59 Trustee Managing director, William Blair Capital Partners
(3)(4) (private equity fund) since 1994; chief executive
officer and chairman of the Board of Directors of
Continental Bank Corporation, 1987-1994
Heidi J. Walter (4) 29 Vice-President Legal counsel for the Adviser since March, 1995;
associate with Beeler Schad & Diamond, P.C., prior
thereto
Stacy H. Winick (4) 32 Vice-President Senior legal counsel for the Adviser since October,
1996; associate of Bell, Boyd & Lloyd (law firm), June,
1993 to September, 1996; associate of Debevoise &
Plimpton prior thereto
Hans P. Ziegler (4) 56 Executive Vice-President Chief executive officer of the Adviser since May,
1994; president of the Investment Counsel division
of the Adviser from July, 1993 to June, 1994;
president and chief executive officer, Pitcairn
Financial Management Group prior thereto
Margaret O. Zwick(4) 30 Treasurer Compliance manager for the Adviser's Mutual Funds
division since August 1995; compliance accountant,
January 1995 to July 1995; section manager, January
1994 to January 1995; supervisor, February 1990 to
December 1993
</TABLE>
_________________________
(1) Trustee who is an "interested person" of Advisor Trust and of
the Adviser, as defined in the Investment Company Act of 1940.
(2) Member of the Executive Committee of the Board of Trustees,
which is authorized to exercise all powers of the Board with
certain statutory exceptions.
(3) Member of the Audit Committee of the Board, which makes
recommendations to the Board regarding the selection of
auditors and confers with the auditors regarding the scope and
results of the audit.
(4) This person holds the corresponding officer or trustee
position with the Base Trust.
Certain of the trustees and officers of Advisor Trust and
Base Trust are trustees or officers of other investment companies
managed by the Adviser. Mr. Armour, Ms. Bauer, Mr. Cook, and Ms.
Walter are vice presidents of the Fund's distributor, Liberty
Securities Corporation. The address of Mr. Block is 11 Woodley
Road, Winnetka, Illinois 60093; that of Mr. Boyd is 2900 Golf
Road, Rolling Meadows, Illinois 60008; that of Mr. Cook is 600
Atlantic Avenue, Boston, Massachusetts 02210; that of Mr. Hacker
is P.O. Box 66100, Chicago, IL 60666; that of Ms. Kelly is Three
First National Plaza, Chicago, Illinois 60602; that of Mr. Morley
is 20 North Wacker Drive, Suite 2275, Chicago, Illinois 60606;
that of Mr. Nelson is Department of Economics, University of
Washington, Seattle, Washington 98195; that of Mr. Theobald is
Suite 3300, 222 West Adams Street, Chicago, IL 60606; that of
Messrs. Bertocci, Cantor, and Harris is 1330 Avenue of the
Americas, New York, New York 10019; and that of the other officers
is One South Wacker Drive, Chicago, Illinois 60606.
Officers and trustees affiliated with the Adviser serve
without any compensation from Advisor Trust. In compensation for
their services to Advisor Trust, trustees who are not "interested
persons" of Advisor Trust or the Adviser are paid an annual
retainer of $8,000 (divided equally among the series of Advisor
Trust) plus an attendance fee from each series for each meeting of
the Board or standing committee thereof attended at which business
for that series is conducted. The attendance fees (other than for
a Nominating Committee meeting) are based on each series' net
assets as of the preceding December 31. For a series with net
assets of less than $50 million, the fee is $50 per meeting; with
$51 to $250 million, the fee is $200 per meeting; with $251
million to $500 million, $350; with $501 million to $750 million,
$500; with $751 million to $1 billion, $650; and with over $1
billion in net assets, $800. For Advisor High Yield Fund and any
other series of Advisor Trust participating in the master
fund/feeder fund structure, the trustees' attendance fee is paid
solely by the master portfolio. Each non-interested trustee also
receives $500 from Advisor Trust for attending each meeting of the
Nominating Committee. Advisor Trust has no retirement or pension
plan. The following table sets forth compensation paid to the
trustees by the Stein Roe Fund complex:
Estimated
Compensation from Total Compensation
Stein Roe Advisor from the Stein Roe
Trust for Fiscal Fund Complex for
Year Ending the year ended
Name of Trustee September 30, 1997* September 30, 1996**
- ------------------ ------------------- --------------------
Timothy K. Armour -0- -0-
Lindsay Cook -0- -0-
Janet Langford Kelly $6,000 -0-
Douglas A. Hacker 8,000 $11,650
Thomas C. Theobald 8,000 11,650
Kenneth L. Block 8,000 81,817
William W. Boyd 8,000 88,317
Francis W. Morley 8,000 82,017
Charles R. Nelson 8,000 88,317
Gordon R. Worley 2,000 82,217
_______________
* Assuming less than $50 million in net assets and no nominating
committee meeting held during the period.
** During this period, the Stein Roe Fund Complex consisted of six
series of Stein Roe Income Trust, four series of Stein Roe
Municipal Trust, eight series of Stein Roe Investment Trust,
and one series of SR&F Base Trust. Messrs. Hacker and Theobald
were elected trustees of those Trusts on June 18, 1996, and,
therefore, did not receive any compensation for the year ended
June 30, 1996. Mr. Worley retired as a trustee on December 31,
1996; and Ms. Kelly became a trustee on January 1, 1997.
PRINCIPAL SHAREHOLDERS
As of the date of this Statement of Additional Information,
each Fund had only one shareholder, Liberty Financial Companies,
Inc., which held 10,000 shares of each Fund.
INVESTMENT ADVISORY SERVICES
Stein Roe & Farnham Incorporated provides administrative
services to each Fund and each Portfolio and portfolio management
services to each Portfolio. The Adviser is a wholly owned
subsidiary of SteinRoe Services Inc. ("SSI"), the Funds' transfer
agent, which is a wholly owned subsidiary of Liberty Financial
Companies, Inc. ("Liberty Financial"), which is a majority owned
subsidiary of LFC Holdings, Inc., which is a wholly owned
subsidiary of Liberty Mutual Equity Corporation, which is a wholly
owned subsidiary of Liberty Mutual Insurance Company. Liberty
Mutual Insurance Company is a mutual insurance company,
principally in the property/casualty insurance field, organized
under the laws of Massachusetts in 1912.
The directors of the Adviser are Kenneth R. Leibler, Harold
W. Cogger, C. Allen Merritt, Jr., Timothy K. Armour, and Hans P.
Ziegler. Mr. Leibler is President and Chief Executive Officer of
Liberty Financial; Mr. Cogger is Executive Vice President of
Liberty Financial; Mr. Merritt is Senior Vice President and
Treasurer of Liberty Financial; Mr. Armour is President of the
Adviser's Mutual Funds division; and Mr. Ziegler is Chief
Executive Officer of the Adviser. The business address of Messrs.
Leibler, Cogger, and Merritt is Federal Reserve Plaza, Boston,
Massachusetts 02210; and that of Messrs. Armour, and Ziegler is
One South Wacker Drive, Chicago, Illinois 60606.
The Adviser and its predecessor have been providing
investment advisory services since 1932. The Adviser acts as
investment adviser to wealthy individuals, trustees, pension and
profit sharing plans, charitable organizations, and other
institutional investors. As of December 31, 1996, the Adviser
managed over $26.7 billion in assets: over $8 billion in equities
and over $18.7 billion in fixed income securities (including $1.6
billion in municipal securities). The $26.7 billion in managed
assets included over $7.5 billion held by open-end mutual funds
managed by the Adviser (approximately 16% of the mutual fund
assets were held by clients of the Adviser). These mutual funds
were owned by over 227,000 shareholders. The $7.5 billion in
mutual fund assets included over $743 million in over 47,000 IRA
accounts. In managing those assets, the Adviser utilizes a
proprietary computer-based information system that maintains and
regularly updates information for approximately 6,500 companies.
The Adviser also monitors over 1,400 issues via a proprietary
credit analysis system. At December 31, 1996, the Adviser
employed 19 research analysts and 55 account managers. The
average investment-related experience of these individuals was 22
years.
Please refer to the description of the Adviser, the
management and administrative agreements, fees, expense
limitations, and transfer agency services under Management and Fee
Table in each Prospectus, which is incorporated herein by
reference.
The Adviser provides office space and executive and other
personnel to the Funds, and bears any sales or promotional
expenses. Each Fund pays all expenses other than those paid by
the Adviser, including but not limited to printing and postage
charges and securities registration and custodian fees and
expenses incidental to its organization.
Each Fund's administrative agreement provides that the
Adviser shall reimburse the Fund to the extent that total annual
expenses of the Fund (including fees paid to the Adviser, but
excluding taxes, interest, commissions and other normal charges
incident to the purchase and sale of portfolio securities, and
expenses of litigation to the extent permitted under applicable
state law) exceed the applicable limits prescribed by any state in
which shares of the Fund are being offered for sale to the public;
provided, however, the Adviser is not required to reimburse a Fund
an amount in excess of fees paid by the Fund under that agreement
for such year. In addition, in the interest of further limiting
expenses of a Fund, the Adviser may voluntarily waive its
management fee and/or absorb certain expenses for a Fund, as
described under Fee Table in its Prospectus. Any such
reimbursement will enhance the yield of such Fund.
Each Portfolio's management agreement provides that neither
the Adviser, nor any of its directors, officers, stockholders (or
partners of stockholders), agents, or employees shall have any
liability to Advisor Trust or any shareholder of Advisor Trust for
any error of judgment, mistake of law or any loss arising out of
any investment, or for any other act or omission in the
performance by the Adviser of its duties under the agreement,
except for liability resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties
or from reckless disregard by it of its obligations and duties
under the agreement.
Any expenses that are attributable solely to the
organization, operation, or business of a Fund shall be paid
solely out of that Fund's assets. Any expenses incurred by
Advisor Trust that are not solely attributable to a particular
Fund are apportioned in such manner as the Adviser determines is
fair and appropriate, unless otherwise specified by the Board of
Trustees.
BOOKKEEPING AND ACCOUNTING AGREEMENT
Pursuant to separate agreements with Advisor Trust and Base
Trust, the Adviser receives a fee for performing certain
bookkeeping and accounting services for each Fund and each
Portfolio. For services provided to the Funds, the Adviser
receives an annual fee of $25,000 per Fund plus .0025 of 1% of
average net assets over $50 million.
DISTRIBUTOR
Shares of each Fund are distributed by Liberty Securities
Corporation ("LSC") under a Distribution Agreement as described
under Management in each Prospectus, which is incorporated herein
by reference. The Distribution Agreement continues in effect from
year to year, provided such continuance is approved annually (i)
by a majority of the trustees or by a majority of the outstanding
voting securities of Advisor Trust, and (ii) by a majority of the
trustees who are not parties to the Agreement or interested
persons of any such party. Advisor Trust has agreed to pay all
expenses in connection with registration of its shares with the
Securities and Exchange Commission and auditing and filing fees in
connection with registration of its shares under the various state
blue sky laws and assumes the cost of preparation of prospectuses
and other expenses.
As agent, LSC offers shares of each Fund to investors in
states where the shares are qualified for sale, at net asset
value, without sales commissions or other sales load to the
investor. LSC offers the Funds' shares only on a best-efforts
basis.
The trustees of Advisor Trust have adopted a plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Plan").
The Plan provides that, as compensation for the promotion and
distribution of shares of the Funds including its expenses related
to the sale and promotion of Fund shares, the Distributor receives
from each Fund a fee at an annual rate of 0.25% of its average net
assets. The Distributor generally pays this amount to
institutions that distribute Fund shares and provide services to
each Fund and its shareholders. Those institutions may use the
payments for, among other purposes, compensating employees engaged
in sales and/or shareholder servicing. The amount of fees paid by
a Fund during any year may be more or less than the cost of
distribution or other services provided to the Fund. NASD rules
limit the amount of annual distribution fees that may be paid by a
mutual fund and impose a ceiling on the cumulative distribution
fees paid. Advisor Trust's Plan complies with those rules.
TRANSFER AGENT AND SHAREHOLDER SERVICING
SSI performs certain transfer agency services for Advisor
Trust, as described under Management in each Prospectus. For
performing these services, SSI receives from each Fund a fee based
on an annual rate of 0.05% of the Fund's average net assets.
Advisor Trust believes the charges by SSI to the Funds are
comparable to those of other companies performing similar
services. (See Investment Advisory Services.)
Some intermediaries that maintain nominee accounts with the
Funds for their clients who are Fund shareholders may be paid a
fee from SSI of up to 0.25% of the average net assets held in such
accounts for shareholder servicing and accounting services they
provide with respect to the underlying Fund shares.
CUSTODIAN
State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, Massachusetts 02101, is the custodian for
Advisor Trust and Base Trust. It is responsible for holding all
securities and cash, receiving and paying for securities
purchased, delivering against payment securities sold, receiving
and collecting income from investments, making all payments
covering expenses, and performing other administrative duties, all
as directed by authorized persons. The custodian does not
exercise any supervisory function in such matters as purchase and
sale of portfolio securities, payment of dividends, or payment of
expenses.
Portfolio securities purchased in the U.S. are maintained in
the custody of the Bank or of other domestic banks or
depositories. Portfolio securities purchased outside of the U.S.
are maintained in the custody of foreign banks and trust companies
that are members of the Bank's Global Custody Network and foreign
depositories ("foreign sub-custodians"). Each of the domestic and
foreign custodial institutions holding portfolio securities has
been approved by the Board of Trustees in accordance with
regulations under the Investment Company Act of 1940.
The Board of Trustees of each Trust reviews, at least
annually, whether it is in the best interest of each Portfolio,
each Fund, and its shareholders to maintain assets in each of the
countries in which it invests with particular foreign sub-
custodians in such countries, pursuant to contracts between such
respective foreign sub-custodians and the Bank. The review
includes an assessment of the risks of holding assets in any such
country (including risks of expropriation or imposition of
exchange controls), the operational capability and reliability of
each such foreign sub-custodian, and the impact of local laws on
each such custody arrangement. The Board of Trustees is aided in
its review by the Bank, which has assembled the network of foreign
sub-custodians utilized, as well as by the Adviser and counsel.
However, with respect to foreign sub-custodians, there can be no
assurance that a Fund, and the value of its shares, will not be
adversely affected by acts of foreign governments, financial or
operational difficulties of the foreign sub-custodians,
difficulties and costs of obtaining jurisdiction over, or
enforcing judgments against, the foreign sub-custodians, or
application of foreign law to foreign sub-custodial arrangements.
Accordingly, an investor should recognize that the non-investment
risks involved in holding assets abroad are greater than those
associated with investing in the United States.
The Portfolios may invest in obligations of the custodian and
may purchase or sell securities from or to the custodian.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for each Fund and each
Portfolio are Arthur Andersen LLP, 33 West Monroe Street, Chicago,
Illinois 60603. The accountants audit and report on the annual
financial statements, review certain regulatory reports and the
federal income tax returns, and perform other professional
accounting, auditing, tax and advisory services when engaged to do
so by a Trust.
PORTFOLIO TRANSACTIONS
The Adviser places the orders for the purchase and sale of
each Portfolio's portfolio securities and options and futures
contracts. The Adviser's overriding objective in effecting
portfolio transactions is to seek to obtain the best combination
of price and execution. The best net price, giving effect to
brokerage commissions, if any, and other transaction costs,
normally is an important factor in this decision, but a number of
other judgmental factors may also enter into the decision. These
include: the Adviser's knowledge of negotiated commission rates
currently available and other current transaction costs; the
nature of the security being traded; the size of the transaction;
the desired timing of the trade; the activity existing and
expected in the market for the particular security;
confidentiality; the execution, clearance and settlement
capabilities of the broker or dealer selected and others which are
considered; the Adviser's knowledge of the financial stability of
the broker or dealer selected and such other brokers or dealers;
and the Adviser's knowledge of actual or apparent operational
problems of any broker or dealer. Recognizing the value of these
factors, a Portfolio may pay a brokerage commission in excess of
that which another broker or dealer may have charged for effecting
the same transaction. Evaluations of the reasonableness of
brokerage commissions, based on the foregoing factors, are made on
an ongoing basis by the Adviser's staff while effecting portfolio
transactions. The general level of brokerage commissions paid is
reviewed by the Adviser, and reports are made annually to the
Board of Trustees.
With respect to issues of securities involving brokerage
commissions, when more than one broker or dealer is believed to be
capable of providing the best combination of price and execution
with respect to a particular portfolio transaction for a
Portfolio, the Adviser often selects a broker or dealer that has
furnished it with research products or services such as research
reports, subscriptions to financial publications and research
compilations, compilations of securities prices, earnings,
dividends, and similar data, and computer data bases, quotation
equipment and services, research-oriented computer software and
services, and services of economic and other consultants.
Selection of brokers or dealers is not made pursuant to an
agreement or understanding with any of the brokers or dealers;
however, the Adviser uses an internal allocation procedure to
identify those brokers or dealers who provide it with research
products or services and the amount of research products or
services they provide, and endeavors to direct sufficient
commissions generated by its clients' accounts in the aggregate,
including the Portfolios, to such brokers or dealers to ensure the
continued receipt of research products or services the Adviser
feels are useful. In certain instances, the Adviser receives from
brokers and dealers products or services that are used both as
investment research and for administrative, marketing, or other
non-research purposes. In such instances, the Adviser makes a
good faith effort to determine the relative proportion of such
products or services which may be considered as investment
research. The portion of the costs of such products or services
attributable to research usage may be defrayed by the Adviser
(without prior agreement or understanding, as noted above) through
brokerage commissions generated by transactions by clients
(including the Portfolios), while the portion of the costs
attributable to non-research usage of such products or services is
paid by the Adviser in cash. No person acting on behalf of a
Portfolio is authorized, in recognition of the value of research
products or services, to pay a commission in excess of that which
another broker or dealer might have charged for effecting the same
transaction. The Adviser may also receive research in connection
with selling concessions and designations in fixed price offerings
in which the Portfolios participate. Research products or services
furnished by brokers and dealers may be used in servicing any or
all of the clients of the Adviser and not all such research
products or services are used in connection with the management of
the Portfolios.
With respect to a Portfolio's purchases and sales of
portfolio securities transacted with a broker or dealer on a net
basis, the Adviser may also consider the part, if any, played by
the broker or dealer in bringing the security involved to the
Adviser's attention, including investment research related to the
security and provided to the Portfolio.
Advisor Trust and Base Trust have arranged for the custodian
to act as a soliciting dealer to accept any fees available to the
custodian as a soliciting dealer in connection with any tender
offer for portfolio securities. The custodian will credit any
such fees received against its custodial fees. In addition, the
Board of Trustees has reviewed the legal developments pertaining
to and the practicability of attempting to recapture underwriting
discounts or selling concessions when portfolio securities are
purchased in underwritten offerings. However, the Board has been
advised by counsel that recapture by a mutual fund currently is
not permitted under the Rules of Fair Practice of the National
Association of Securities Dealers.
ADDITIONAL INCOME TAX CONSIDERATIONS
Each Fund and each Portfolio intend to comply with the
special provisions of the Internal Revenue Code that relieve it of
federal income tax to the extent of its net investment income and
capital gains currently distributed to shareholders.
Because dividend and capital gain distributions reduce net
asset value, a shareholder who purchases shares shortly before a
record date will, in effect, receive a return of a portion of his
investment in such distribution. The distribution would
nonetheless be taxable to him, even if the net asset value of
shares were reduced below his cost. However, for federal income
tax purposes the shareholder's original cost would continue as his
tax basis.
Each Fund expects that less than 100% of its dividends will
qualify for the deduction for dividends received by corporate
shareholders.
To the extent a Portfolio invests in foreign securities, it
may be subject to withholding and other taxes imposed by foreign
countries. Tax treaties between certain countries and the United
States may reduce or eliminate such taxes. Investors may be
entitled to claim U.S. foreign tax credits with respect to such
taxes, subject to certain provisions and limitations contained in
the Code. Specifically, if more than 50% its total assets at the
close of any fiscal year consist of stock or securities of foreign
corporations, the Portfolio may file an election with the Internal
Revenue Service pursuant to which shareholders of the Fund will be
required to (i) include in ordinary gross income (in addition to
taxable dividends actually received) their pro rata shares of
foreign income taxes paid even though not actually received, (ii)
treat such respective pro rata shares as foreign income taxes paid
by them, and (iii) deduct such pro rata shares in computing their
taxable incomes, or, alternatively, use them as foreign tax
credits, subject to applicable limitations, against their United
States income taxes. Shareholders who do not itemize deductions
for federal income tax purposes will not, however, be able to
deduct their pro rata portion of foreign taxes paid by the Fund,
although such shareholders will be required to include their share
of such taxes in gross income. Shareholders who claim a foreign
tax credit may be required to treat a portion of dividends
received from the Fund as separate category income for purposes of
computing the limitations on the foreign tax credit available to
such shareholders. Tax-exempt shareholders will not ordinarily
benefit from this election relating to foreign taxes. Each year,
the Fund will notify shareholders of the amount of (i) each
shareholder's pro rata share of foreign income taxes paid by the
Fund and (ii) the portion of Fund dividends which represents
income from each foreign country, if the Fund qualifies to pass
along such credit.
Passive Foreign Investment Companies. International
Portfolio may purchase the securities of certain foreign
investment funds or trusts called passive foreign investment
companies ("PFICs"). In addition to bearing their proportionate
share of International Portfolio's expenses (management fees and
operating expenses), shareholders will also indirectly bear
similar expenses of PFICs. Capital gains on the sale of PFIC
holdings will be deemed to be ordinary income regardless of how
long International Portfolio holds its investment. In addition,
International Portfolio may be subject to corporate income tax and
an interest charge on certain dividends and capital gains earned
from PFICs, regardless of whether such income and gains are
distributed to shareholders.
In accordance with tax regulations, International Portfolio
intends to treat PFICs as sold on the last day of International
Portfolio's fiscal year and recognize any gains for tax purposes
at that time; losses will not be recognized. Such gains will be
considered ordinary income which International Portfolio will be
required to distribute even though it has not sold the security
and received cash to pay such distributions.
INVESTMENT PERFORMANCE
A Fund may quote certain total return figures from time to
time. A "Total Return" on a per share basis is the amount of
dividends distributed per share plus or minus the change in the
net asset value per share for a period. A "Total Return
Percentage" may be calculated by dividing the value of a share at
the end of a period by the value of the share at the beginning of
the period and subtracting one. For a given period, an "Average
Annual Total Return" may be computed by finding the average annual
compounded rate that would equate a hypothetical initial amount
invested of $1,000 to the ending redeemable value.
n
Average Annual Total Return is computed as follows: ERV = P(1+T)
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period at the
end of the period (or fractional portion thereof).
The Funds commenced operations on the date of this Statement
of Additional Information, and have no past performance. However,
seven mutual funds that are series of Stein Roe Investment Trust,
each of which has a name similar to a Fund, the same investment
objective, and substantially the same investment policies as that
Fund (each a "Corresponding Fund"), also invest in the seven
Portfolios described herein. The following information shows the
total return for each Corresponding Fund, and should not be
interpreted as indicative of the Funds' future performance. The
Corresponding Funds have a different fee structure than the Funds
(and do not pay 12b-1 fees). Had these fees been reflected, the
total returns shown below would have been lower. The average
annual returns for the Corresponding Funds as of September 30,
1996 were as follows:
TOTAL RETURN AVERAGE ANNUAL
PERCENTAGE TOTAL RETURN
------------ --------------
Stein Roe Growth & Income Fund
1 year 22.67% 22.67%
5 years 107.90 15.76
Life of Fund* 189.30 11.80
Stein Roe Balanced Fund
1 year 14.83 14.83
5 years 67.99 10.93
10 years 173.47 10.58
Stein Roe Growth Stock Fund
1 year 21.04 21.04
5 years 58.40 13.75
10 years 274.49 14.12
Stein Roe Young Investor Fund
1 year 35.55 35.55
Life of Fund* 95.13 31.82
Stein Roe Special Fund
1 year 17.89 17.89
5 years 91.27 13.85
10 years 323.62 15.53
Stein Roe Special Venture Fund
1 year 31.81 31.81
Life of Fund* 67.35 30.22
Stein Roe International Fund
1 year 8.23 8.23
Life of Fund* 13.37 4.98
______________________________________
*Life of Fund is from its date of public offering: 3/23/87 for
Stein Roe Growth & Income Fund, 10/17/94 for Stein Roe Special
Venture Fund, 4/29/94 for Stein Roe Young Investor Fund, and
3/1/94 for Stein Roe International Fund.
Investment performance figures assume reinvestment of all
dividends and distributions and do not take into account any
federal, state, or local income taxes which shareholders must pay
on a current basis. They are not necessarily indicative of future
results. The performance of a Fund is a result of conditions in
the securities markets, portfolio management, and operating
expenses. Although investment performance information is useful
in reviewing a Fund's performance and in providing some basis for
comparison with other investment alternatives, it should not be
used for comparison with other investments using different
reinvestment assumptions or time periods.
In advertising and sales literature, a Fund may compare its
performance with that of other mutual funds, indexes or averages
of other mutual funds, indexes of related financial assets or
data, and other competing investment and deposit products
available from or through other financial institutions. The
composition of these indexes or averages differs from that of the
Funds. Comparison of a Fund to an alternative investment should
be made with consideration of differences in features and expected
performance.
All of the indexes and averages noted below will be obtained
from the indicated sources or reporting services, which the Funds
believe to be generally accurate. A Fund may also note its
mention or recognition in newspapers, magazines, or other media
from time to time. However, the Funds assume no responsibility
for the accuracy of such data. Newspapers and magazines which
might mention the Funds include, but are not limited to, the
following:
Architectural Digest
Arizona Republic
Atlanta Constitution
Associated Press
Barron's
Bloomberg
Boston Herald
Business Week
Chicago Tribune
Chicago Sun-Times
Cleveland Plain Dealer
CNBC
CNN
Crain's Chicago Business
Consumer Reports
Consumer Digest
Dow Jones Newswire
Fee Advisor
Financial Planning
Financial World
Forbes
Fortune
Fund Action
Fund Decoder
Gourmet
Individual Investor
Investment Adviser
Investment Dealers' Digest
Investor's Business Daily
Kiplinger's Personal Finance Magazine
Knight-Ridder
Lipper Analytical Services
Los Angeles Times
Louis Rukeyser's Wall Street
Money
Morningstar
Mutual Fund Market News
Mutual Fund News Service
Mutual Funds Magazine
Newsweek
The New York Times
No-Load Fund Investor
Pension World
Pensions and Investment
Personal Investor
Physicians Financial News
Jane Bryant Quinn (syndicated column)
The San Francisco Chronicle
Securities Industry Daily
Smart Money
Smithsonian
Strategic Insight
Time
Travel & Leisure
USA Today
U.S. News & World Report
Value Line
The Wall Street Journal
The Washington Post
Working Women
Worth
Your Money
All of the Funds may compare their performance to the
Consumer Price Index (All Urban), a widely recognized measure of
inflation.
Each Fund's performance may be compared to the following
indexes or averages:
Dow-Jones Industrial Average New York Stock Exchange Composite Index
Standard & Poor's 500 Stock Index American Stock Exchange Composite Index
Standard & Poor's 400 Industrials NASDAQ Composite
Wilshire 5000 NASDAQ Industrials
(These indexes are widely (These indexes generally reflect
recognized indicators of the performance of stocks
general U.S. stock market traded in the indicated
results.) markets.)
In addition, the Funds may compare performance as indicated
below:
BENCHMARK FUND(S)
- ------------------------------------- ----------------------------
Lipper Balanced Fund Average Advisor Balanced Fund
Lipper Balanced Fund Index Advisor Balanced Fund
Lipper Equity Fund Average All Funds
Lipper General Equity Fund Average All Funds
Lipper Growth & Income Fund Average Advisor Growth & Income Fund
Lipper Growth & Income Fund Index Advisor Growth & Income Fund
Lipper Growth Fund Average Advisor Growth Stock Fund, Advisor
Young Investor Fund, Advisor
Special Fund
Lipper Growth Fund Index Advisor Growth Stock Fund, Advisor
Young Investor Fund, Advisor
Special Fund
Lipper International & Global Funds Average Advisor International Fund
Lipper International Fund Index Advisor International Fund
Lipper Small Company Growth Fund Average Advisor Special Venture Fund
Lipper Small Company Growth Fund Index Advisor Special Venture Fund
Morningstar All Equity Funds Average Advisor Young Investor Fund,
Advisor International Fund
Morningstar Advisor Balanced Fund Average Advisor Balanced Fund
Morningstar Domestic Stock Average All Funds except Advisor
International Fund
Morningstar Equity Fund Average Advisor Young Investor Fund,
Advisor International Fund
Morningstar General Equity Average* Advisor Young Investor Fund,
Advisor International Fund
Morningstar Growth & Income Fund Average Advisor Growth & Income Fund
Morningstar Growth Fund Average Advisor Growth Stock Fund, Young
Investor Fund, Advisor Special
Fund
Morningstar Hybrid Fund Average Advisor Balanced Fund, Advisor
Young Investor Fund, Advisor
International Fund
Morningstar International Stock Average Advisor International Fund
Morningstar Small Company Growth Fund
Average Advisor Special Venture Fund
Morningstar Total Fund Average All Funds
Morningstar U.S. Diversified Average Advisor Young Investor Fund,
Advisor International Fund
Value Line Index Advisor Special Fund, Advisor
Widely recognized indicator of Special Venture Fund
the performance of small- and medium-
sized company stocks)
The Lipper averages are unweighted averages of total return
performance as classified, calculated, and published by Lipper.
Lipper Growth Fund index reflects the net asset value weighted
total return of the largest thirty growth funds and thirty growth
and income funds, respectively, as calculated and published by
Lipper.
The Lipper and Morningstar averages are unweighted averages
of total return performance of mutual funds as classified,
calculated, and published by these independent services that
monitor the performance of mutual funds. The Funds may also use
comparative performance as computed in a ranking by Lipper or
category averages and rankings provided by another independent
service. Should Lipper or another service reclassify a Fund to a
different category or develop (and place a Fund into) a new
category, that Fund may compare its performance or ranking with
those of other funds in the newly assigned category, as published
by the service.
A Fund may also cite its rating, recognition, or other
mention by Morningstar or any other entity. Morningstar's rating
system is based on risk-adjusted total return performance and is
expressed in a star-rating format. The risk-adjusted number is
computed by subtracting a fund's risk score (which is a function
of the fund's monthly returns less the 3-month T-bill return) from
its load-adjusted total return score. This numerical score is
then translated into rating categories, with the top 10% labeled
five star, the next 22.5% labeled four star, the next 35% labeled
three star, the next 22.5% labeled two star, and the bottom 10%
one star. A high rating reflects either above-average returns or
below-average risk, or both.
Of course, past performance is not indicative of future
results.
________________
To illustrate the historical returns on various types of
financial assets, the Funds may use historical data provided by
Ibbotson Associates, Inc. ("Ibbotson"), a Chicago-based investment
firm. Ibbotson constructs (or obtains) very long-term (since
1926) total return data (including, for example, total return
indexes, total return percentages, average annual total returns
and standard deviations of such returns) for the following asset
types:
Common stocks
Small company stocks
Long-term corporate bonds
Long-term government bonds
Intermediate-term government bonds
U.S. Treasury bills
Consumer Price Index
_____________________
A Fund may also use hypothetical returns to be used as an
example in a mix of asset allocation strategies. One such example
is reflected in the chart below, which shows the effect of tax
deferral on a hypothetical investment. This chart assumes that an
investor invested $2,000 a year on January 1, for any specified
period, in both a Tax-Deferred Investment and a Taxable
Investment, that both investments earn either 6%, 8% or 10%
compounded annually, and that the investor withdrew the entire
amount at the end of the period. (A tax rate of 39.6% is applied
annually to the Taxable Investment and on the withdrawal of
earnings on the Tax-Deferred Investment.)
TAX-DEFERRED INVESTMENT VS. TAXABLE INVESTMENT
INTEREST RATE 6% 8% 10% 6% 8% 10%
Compounding
Years Tax-Deferred Investment Taxable Investment
30 $124,992 $171,554 $242,340 $109,197 $135,346 $168,852
25 90,053 115,177 150,484 82,067 97,780 117,014
20 62,943 75,543 91,947 59,362 68,109 78,351
15 41,684 47,304 54,099 40,358 44,675 49,514
10 24,797 26,820 29,098 24,453 26,165 28,006
5 11,178 11,613 12,072 11,141 11,546 11,965
1 2,072 2,096 2,121 2,072 2,096 2,121
Dollar Cost Averaging. Dollar cost averaging is an
investment strategy that requires investing a fixed amount of
money in Fund shares at set intervals. This allows you to
purchase more shares when prices are low and fewer shares when
prices are high. Over time, this tends to lower your average cost
per share.
Like any investment strategy, dollar cost averaging can't
guarantee a profit or protect against losses in a steadily
declining market. Dollar cost averaging involves uninterrupted
investing regardless of share price and therefore may not be
appropriate for every investor.
APPENDIX--RATINGS
RATINGS IN GENERAL
A rating of a rating service represents the service's opinion
as to the credit quality of the security being rated. However,
the ratings are general and are not absolute standards of quality
or guarantees as to the creditworthiness of an issuer.
Consequently, the Adviser believes that the quality of debt
securities in which a Fund invests should be continuously reviewed
and that individual analysts give different weightings to the
various factors involved in credit analysis. A rating is not a
recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a
particular investor. When a security has received a rating from
more than one service, each rating should be evaluated
independently. Ratings are based on current information furnished
by the issuer or obtained by the rating services from other
sources which they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability
of such information, or for other reasons.
The following is a description of the characteristics of
ratings of corporate debt securities used by Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P").
RATINGS BY MOODY'S
Aaa. Bonds rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or an exceptionally stable margin and principal is secure.
Although the various protective elements are likely to change,
such changes as can be visualized are more unlikely to impair the
fundamentally strong position of such bonds.
Aa. Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa bonds.
A. Bonds rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa. Bonds rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba. Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B. Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any
long period of time may be small.
Caa. Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with
respect to principal or interest.
Ca. Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
NOTE: Moody's applies numerical modifiers 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate
bond rating system. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic
rating category.
RATINGS BY S&P
AAA. Debt rated AAA has the highest rating. Capacity to pay
interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A. Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this
category than for debt in higher rated categories.
BB, B, CCC, CC, and C. Debt rated BB, B, CCC, CC, or C is
regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with
the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C1. This rating is reserved for income bonds on which no interest
is being paid.
D. Debt rated D is in default, and payment of interest and/or
repayment of principal is in arrears. The D rating is also used
upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
NOTES:
The ratings from AA to CCC may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within the
major rating categories. Foreign debt is rated on the same basis
as domestic debt measuring the creditworthiness of the issuer;
ratings of foreign debt do not take into account currency exchange
and related uncertainties.
The "r" is attached to highlight derivative, hybrid, and certain
other obligations that S&P believes may experience high volatility
or high variability in expected returns due to non-credit risks.
Examples of such obligations are: securities whose principal or
interest return is indexed to equities, commodities, or
currencies; certain swaps and options; and interest only and
principal only mortgage securities. The absence of an "r" symbol
should not be taken as an indication that an obligation will
exhibit no volatility or variability in total return.
BALANCE SHEET
Stein Roe Advisor Trust
Statements of Net Assets
February 6, 1997
<TABLE>
<CAPTION>
Advisor Advisor Advisor Advisor Advisor Advisor Advisor
Balanced Growth & Income Growth Stock Special Special Venture International Young Investor
Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Cash $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000
Unamortized organization
costs 35,000 35,000 35,000 35,000 35,000 35,000 35,000
-------- -------- -------- -------- -------- -------- --------
Total Assets 135,000 135,000 135,000 135,000 135,000 135,000 135,000
======== ======== ======== ======== ======== ======== ========
Liabilities:
Payable to the Adviser for
organization costs incurred 35,000 35,000 35,000 35,000 35,000 35,000 35,000
Capital:
Paid in Capital (net assets) 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Total Liablities and
Capital $135,000 $135,000 $135,000 $135,000 $135,000 $135,000 $135,000
======== ======== ======== ======== ======== ======== ========
Shares Outstanding (Unlimited
number authorized) 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Net Asset Value (Capital) Per
Share $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
======== ======== ======== ======== ======== ======== ========
</TABLE>
Stein Roe Advisor Trust
Notes to Statements of Net Assets
February 6, 1997
Note 1. Organization:
Stein Roe Advisor Balanced Fund, Advisor Growth & Income Fund,
Advisor Growth Stock Fund, Advisor Special Fund, Advisor Special
Venture Fund, Advisor International Fund, and Advisor Young
Investor Fund (the "Funds") are separate series of the Stein Roe
Advisor Trust (the "Trust"), an open-end diversified management
investment company organized as a Massachusetts business trust.
Each Fund will invest all of its net investable assets in SR&F
Balanced Portfolio, SR&F Growth & Income Portfolio, SR&F Growth
Stock Portfolio, SR&F Special Portfolio, SR&F Special Venture
Portfolio, SR&F International Portfolio, or SR&F Growth Investor
Portfolio (the "Portfolios"), respectively, each a separate
series of the SR&F Base Trust. The Funds are inactive except
for matters relating to their organization and registration as
open-end investment companies under the Investment Company Act
of 1940, and the sale of 10,000 shares of each of the Funds for
$100,000 to Liberty Financial Companies, Inc. Organization
costs will be amortized on a straight-line basis against income
over various periods of up to sixty months from the commencement
of public offering by the Funds, depending on the nature of the
individual costs.
Note 2. Transactions with Affiliates:
Stein Roe & Farnham Incorporated (the "Adviser") receives a management
fee from each Portfolio computed and accrued daily, at an annual
rate, as a percentage of average net assets as follows:
Management Fees
($ amounts in thousands)
------------------------
Balanced Portfolio .55% up to $500,
.50 next $500,
.45% thereafter.
Growth & Income Portfolio, and .60% up to $500,
Growth Stock Portfolio, and .55% next $500,
Growth Investor Portfolio .50% thereafter.
Special Portfolio .75% up to $500,
.70% next $500,
.65% next $500,
.60% thereafter.
Special Venture Portfolio .75% of average net assets
International Portfolio .85% of average net assets
The Adviser also receives an administrative fee from each Fund
computed and accrued daily, at an annual rate, as a percentage
of average net assets as follows:
Administrative Fee
($ amounts in thousands)
------------------------
Advisor Balanced Fund, and .15% up to $500,
Advisor Growth & Income Fund, and .125% next $500,
Advisor Growth Stock Fund .10% thereafter.
Advisor Young Investor Fund .20% up to $500,
.15% next $500,
.125% thereafter
Advisor Special Fund .15% up to $500,
.125% next $500,
.10% next $500,
.075% thereafter.
Advisor Special Venture Fund, and .15% of average net assets
Advisor International Fund
<PAGE>
To the Shareholder and Board of Trustees of
Stein Roe Advisor Trust
We have audited the accompanying statements of net assets of Stein
Roe Advisor Trust (a Massachusetts business trust), comprising the
Stein Roe Advisor Balanced Fund, Stein Roe Advisor Growth & Income
Fund, Stein Roe Advisor Growth Stock Fund, Stein Roe Advisor
Special Fund, Stein Roe Advisor Special Venture Fund, Stein Roe
Advisor International Fund and Stein Roe Advisor Young Investor
Fund (the "Funds"), as of February 6, 1997. The statements of net
assets are the responsibility of Stein Roe Advisor Trust's
management. Our responsibility is to express an opinion on the
statements of net assets based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statements of net assets are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements of net assets. Our
procedures included confirmation of cash held by the custodian as
of February 6, 1997. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit of the statements of net
assets provides a reasonable basis for our opinion.
In our opinion, the statements of net assets referred to above
present fairly, in all material respects, the net assets of the
Funds constituting the Stein Roe Advisor Trust as of February 6,
1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 6, 1997
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) 1. Financial statements included in Part A of this
Registration Statement: None.
2. Financial statements included in Part B of this
Registration Statement:
(a) Balance sheet as of February 6, 1997.
(b) Report of independent public accountants.
(b) Exhibits:
1. Agreement and Declaration of Trust as amended through
December 13, 1996. (Incorporated by reference to Exhibit
1 to pre-effective amendment no. 1 to Registrant's
Registration Statement on Form N-1A, No. 333-17255.)
2. By-Laws of Registrant. (Incorporated by reference to
Exhibit 2 to Registrant's Registration Statement on
Form N-1A, No. 333-17255.)
3. None.
4. None.
5. None.
6. Underwriting agreement.
7. None.
8. Custodian contract.
9. (a) Shareholder servicing and transfer agency agreement.
(b) Administrative agreement.
(c) Accounting and bookkeeping agreement.
10. Opinion and consent of Bell, Boyd & Lloyd. (Incorporated
by reference to Exhibit 10 to pre-effective amendment no.
1 to Registrant's Registration Statement on Form N-1A, No.
333-17255.)
11. Consent of Arthur Andersen LLP.
12. None.
13. Subscription agreements.
14. None.
15. Form of 12b-1 plan and agreement.
16. Inapplicable.
17. Inapplicable.
18. Inapplicable.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
The Registrant does not consider that it is directly or indirectly
controlling, controlled by, or under common control with other
persons within the meaning of this Item. See "Investment Advisory
Services," "Management," and "Transfer Agent" in the Statement of
Additional Information, each of which is incorporated herein by
reference.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record Holders
Title of Series as of February 10, 1997
--------------- ------------------------
Stein Roe Advisor Growth & Income Fund 1
Stein Roe Advisor International Fund 1
Stein Roe Advisor Young Investor Fund 1
Stein Roe Advisor Special Venture Fund 1
Stein Roe Advisor Balanced Fund 1
Stein Roe Advisor Growth Stock Fund 1
Stein Roe Advisor Special Fund 1
ITEM 27. INDEMNIFICATION.
Article VIII of the Agreement and Declaration of Trust of
Registrant (Exhibit 1), which Article is incorporated herein by
reference, provides that Registrant shall provide indemnification
of its trustees and officers (including persons who serve or
have served at Registrant's request as directors, officers, or
trustees of another organization in which Registrant has any
interest as a shareholder, creditor or otherwise) ("Covered
Persons") under specified circumstances.
Section 17(h) of the Investment Company Act of 1940 ("1940 Act")
provides that neither the Agreement and Declaration of Trust nor
the By-Laws of Registrant, nor any other instrument pursuant to
which Registrant is organized or administered, shall contain any
provision which protects or purports to protect any trustee or
officer of Registrant against any liability to Registrant or its
shareholders to which he would otherwise be subject by reason of
wilful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office. In
accordance with Section 17(h) of the 1940 Act, Article VIII shall
not protect any person against any liability to Registrant or its
shareholders to which he would otherwise be subject by reason of
wilful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Unless otherwise permitted under the 1940 Act,
(i) Article VIII does not protect any person against any
liability to Registrant or to its shareholders to which he would
otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in
the conduct of his office;
(ii) in the absence of a final decision on the merits by a
court or other body before whom a proceeding was brought that a
Covered Person was not liable to the Registrant or its
shareholders by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the
conduct of his office, indemnification is permitted under Article
VIII if (a) approved as in the best interest of the Registrant,
after notice that it involves such indemnification, by at least a
majority of the Trustees who are disinterested persons are not
"interested persons" as defined in Section 2(a)(19) of the 1940
Act ("disinterested trustees"), upon determination, based upon a
review of readily available facts (but not a full trial-type
inquiry) that such Covered Person is not liable to the Registrant
or its shareholders by reason of wilful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in
the conduct of such Covered Person's office or (b) there has been
obtained a opinion in writing of independent legal counsel, based
upon a review of readily available facts (but not a full trial-
type inquiry) to the effect that such indemnification would not
protect such Covered Person against any liability to the Trust to
which such Covered Person would otherwise be subject by reason of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office; and
(iii) Registrant will not advance expenses, including
counsel fees(but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), incurred by a
Covered Person unless Registrant receives an undertaking by or on
behalf of the Covered Person to repay the advance if it is
ultimately determined that indemnification of such expenses is not
authorized by Article VII and (a) the Covered Person provides
security for his undertaking, or (b) Registrant is insured against
losses arising by reason of such Covered Person's failure to
fulfill his undertaking, or (c) a majority of the disinterested
trustees of Registrant or an independent legal counsel as
expressed in a written opinion, determine, based on a review of
readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Covered Person ultimately
will be found entitled to indemnification.
Any approval of indemnification pursuant to Article VIII does not
prevent the recovery from any Covered Person of any amount paid to
such Covered Person in accordance with Article VIII as
indemnification if such Covered Person is subsequently adjudicated
by a court of competent jurisdiction to have been liable to the
Trust or its shareholders by reason of wilful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of such Covered Person's office.
Article VIII also provides that its indemnification provisions
are not exclusive.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a trustee, officer,
or controlling person of Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such trustee,
officer, or controlling person in connection with the securities
being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
Registrant, its trustees and officers, its investment adviser, the
other investment companies advised by the adviser, and persons
affiliated with them are insured against certain expenses in
connection with the defense of actions, suits, or proceedings, and
certain liabilities that might be imposed as a result of such
actions, suits, or proceedings. Registrant will not pay any
portion of the premiums for coverage under such insurance that
would (1) protect any trustee or officer against any liability to
Registrant or its shareholders to which he would otherwise be
subject by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the
conduct of his office or (2) protect its investment adviser or
principal underwriter, if any, against any liability to Registrant
or its shareholders to which such person would otherwise be
subject by reason of wilful misfeasance, bad faith, or gross
negligence, in the performance of its duties, or by reason of its
reckless disregard of its duties and obligations under its
contract or agreement with the Registrant; for this purpose the
Registrant will rely on an allocation of premiums determined by
the insurance company.
Registrant, its trustees, officers, employees and representatives
and each person, if any, who controls the Registrant within the
meaning of Section 15 of the Securities Act of 1933 are
indemnified by the distributor of Registrant's shares (the
"distributor"), pursuant to the terms of the distribution
agreement, which governs the distribution of Registrant's shares,
against any and all losses, liabilities, damages, claims and
expenses arising out of the acquisition of any shares of the
Registrant by any person which (i) may be based upon any wrongful
act by the distributor or any of the distributor's directors,
officers, employees or representatives or (ii) may be based upon
any untrue or alleged untrue statement of a material fact
contained in a registration statement, prospectus, statement of
additional information, shareholder report or other information
covering shares of the Registrant filed or made public by the
Registrant or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
therein not misleading if such statement or omission was made in
reliance upon information furnished to the Registrant by the
distributor in writing. In no case does the distributor's
indemnity indemnify an indemnified party against any liability to
which such indemnified party would otherwise be subject by reason
of wilful misfeasance, bad faith, or negligence in the
performance of its or his duties or by reason of its or his
reckless disregard of its or his obligations and duties under the
distribution agreement.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The Adviser is a wholly-owned subsidiary of SteinRoe Services Inc.
("SSI"), which in turn is a wholly-owned subsidiary of Liberty
Financial Companies, Inc., which is a majority owned subsidiary of
LFC Holdings, Inc., which in turn is a subsidiary of Liberty
Mutual Equity Corporation, which in turn is a subsidiary of
Liberty Mutual Insurance Company. The Adviser acts as investment
adviser to individuals, trustees, pension and profit-sharing
plans, charitable organizations, and other investors. In addition
to Registrant, it also acts as investment adviser to other
investment companies having different investment policies.
For a two-year business history of officers and directors of the
Adviser, please refer to the Form ADV of Stein Roe & Farnham
Incorporated and to the section of the statement of additional
information (part B) entitled "Investment Advisory Services."
Certain directors and officers of the Adviser also serve and have
during the past two years served in various capacities as
officers, directors, or trustees of SSI and of the Registrant,
Stein Roe Investment Trust, Stein Roe Municipal Trust, SR&F Base
Trust, Stein Roe Income Trust, Stein Roe Institutional Trust,
Stein Roe Trust, SteinRoe Variable Investment Trust and LFC
Utilities Trust, investment companies managed by the Adviser.
(The listed entities are located at One South Wacker Drive,
Chicago, Illinois 60606, except for SteinRoe Variable Investment
Trust, which is located at Federal Reserve Plaza, Boston, MA
02210 and LFC Utilities Trust, which is located at One Financial
Center, Boston, MA 02111.) A list of such capacities is given
below.
POSITION FORMERLY
HELD WITHIN
CURRENT POSITION PAST TWO YEARS
------------------- --------------
STEINROE SERVICES INC.
Gary A. Anetsberger Vice President
Timothy K. Armour Vice President
Jilaine Hummel Bauer Vice President; Secretary
Kenneth J. Kozanda Vice President; Treasurer
Kenneth R. Leibler Director
C. Allen Merritt, Jr. Director; Vice President
Hans P. Ziegler Director, President, Vice Chairman
Chairman
SR&F BASE TRUST
Gary A. Anetsberger Senior Vice-President Controller
Timothy K. Armour President; Trustee
Jilaine Hummel Bauer Executive Vice-President;Secy.
Ann H. Benjamin Vice-President
Thomas W. Butch Executive Vice-President
Michael T. Kennedy Vice-President
Lynn C. Maddox Vice-President
Jane M. Naeseth Vice-President
Thomas P. Sorbo Vice-President
Hans P. Ziegler Executive Vice-President
STEIN ROE INCOME TRUST
Gary A. Anetsberger Senior Vice-President Controller
Timothy K. Armour President; Trustee
Jilaine Hummel Bauer Executive V-P; Secretary
Ann H. Benjamin Vice-President
Thomas W. Butch Executive Vice-President Vice-President
Philip J. Crosley Vice-President
Michael T. Kennedy Vice-President
Steven P. Luetger Vice-President
Lynn C. Maddox Vice-President
Anne E. Marcel Vice-President
Jane M. Naeseth Vice-President
Thomas P. Sorbo Vice-President
Hans P. Ziegler Executive Vice-President
STEIN ROE INVESTMENT TRUST
Gary A. Anetsberger Senior Vice-President Controller
Timothy K. Armour President; Trustee
Jilaine Hummel Bauer Executive V-P; Secretary
Bruno Bertocci Vice-President
David P. Brady Vice-President
Thomas W. Butch Executive Vice-President Vice-President
Daniel K. Cantor Vice-President
Philip J. Crosley Vice-President
E. Bruce Dunn Vice-President
Erik P. Gustafson Vice-President
David P. Harris Vice-President
Harvey B. Hirschhorn Vice-President
Eric S. Maddix Vice-President
Lynn C. Maddox Vice-President
Anne E. Marcel Vice-President
Richard B. Peterson Vice-President
Gloria J. Santella Vice-President
Thomas P. Sorbo Vice-President
Hans P. Ziegler Executive Vice-President
STEIN ROE MUNICIPAL TRUST
Gary A. Anetsberger Senior Vice-President Controller
Timothy K. Armour President; Trustee
Jilaine Hummel Bauer Executive V-P; Secretary Vice-President
Thomas W. Butch Executive Vice-President
Joanne T. Costopoulos Vice-President
Philip J. Crosley Vice-President
Lynn C. Maddox Vice-President
Anne E. Marcel Vice-President
M. Jane McCart Vice-President
Thomas P. Sorbo Vice-President
Hans P. Ziegler Executive Vice-President
STEIN ROE ADVISOR TRUST
Gary A. Anetsberger Senior Vice-President
Timothy K. Armour President; Trustee
Jilaine Hummel Bauer Executive V-P; Secretary
Bruno Bertocci Vice-President
David P. Brady Vice-President
Thomas W. Butch Executive Vice-President Vice-President
Daniel K. Cantor Vice-President
Philip J. Crosley Vice-President
E. Bruce Dunn Vice-President
Erik P. Gustafson Vice-President
David P. Harris Vice-President
Harvey B. Hirschhorn Vice-President
Eric S. Maddix Vice-President
Lynn C. Maddox Vice-President
Anne E. Marcel Vice-President
Richard B. Peterson Vice-President
Gloria J. Santella Vice-President
Thomas P. Sorbo Vice-President
Hans P. Ziegler Executive Vice-President
STEIN ROE INSTITUTIONAL TRUST and STEIN ROE TRUST
Gary A. Anetsberger Senior Vice-President
Timothy K. Armour President; Trustee
Jilaine Hummel Bauer Executive V-P; Secretary
Ann H. Benjamin Vice-President
Thomas W. Butch Executive Vice-President Vice-President
Philip J. Crosley Vice-President
Michael T. Kennedy Vice-President
Steven P. Luetger Vice-President
Lynn C. Maddox Vice-President
Anne E. Marcel Vice-President
Jane M. Naeseth Vice-President
Thomas P. Sorbo Vice-President
Hans P. Ziegler Executive Vice-President
STEINROE VARIABLE INVESTMENT TRUST
Gary A. Anetsberger Treasurer
Timothy K. Armour Vice President
Jilaine Hummel Bauer Vice President
Ann H. Benjamin Vice President
E. Bruce Dunn Vice President
Erik P. Gustafson Vice President
Harvey B. Hirschhorn Vice President
Michael T. Kennedy Vice President
Jane M. Naeseth Vice President
Richard B. Peterson Vice President
LFC UTILITIES TRUST
Gary A. Anetsberger Vice President
Ophelia L. Barsketis Vice President
ITEM 29. PRINCIPAL UNDERWRITERS.
Registrant's principal underwriter, Liberty Securities
Corporation, is a wholly owned subsidiary of Liberty Investment
Services, Inc., a wholly owned subsidiary of Liberty Financial
Services, Inc. which, in turn, is a wholly owned subsidiary of
Liberty Financial Companies, Inc. Liberty Financial Companies,
Inc. is a public corporation whose majority shareholder is LFC
Holdings, Inc., a wholly owned subsidiary of Liberty Mutual Equity
Corporation. Liberty Mutual Equity Corporation is a wholly owned
subsidiary of Liberty Mutual Insurance Company.
Liberty Securities Corporation is principal underwriter for the
following investment companies:
Stein Roe Income Trust
Stein Roe Municipal Trust
Stein Roe Investment Trust
Stein Roe Insitutional Trust
Stein Roe Advisor Trust
Stein Roe Trust
Set forth below is information concerning the directors and
officers of Liberty Securities Corporation:
Positions
Positions and Offices and Offices
Name with Underwriter with Registrant
- ------------------ -------------------- ---------------
Porter P. Morgan Chairman of the Board; Director None
Frank L. Tarantino President; Chief Operating
Officer; Director None
Robert L. Spadafora Executive Vice President -
Sales and Marketing None
John T. Treece, Jr. Senior Vice President - Operations None
John W. Reading Senior Vice President and
Assistant Secretary None
Valerie A. Arendell Senior Vice President - Sales None
Gerald H. Stanney, Vice President and Compliance
Jr. Officer (Boston) None
Jilaine Hummel Bauer Vice President and Compliance Exec. V-P &
Officer (Chicago) Secretary
Bruce F. Ripepi Vice President, General Counsel None
and Assistant Secretary
Timothy K. Armour Vice President President,
Trustee
Lindsay Cook Vice President Trustee
Ralph E. Nixon Vice President None
Joyce B. Riegel Vice President None
Heidi J. Walter Vice President V-P
Glenn E. Williams Assistant Vice President None
Philip J. Iudice Treasurer None
John A. Benning Secretary None
John A. Davenport Assistant Secretary None
Marjorie M. Pluskota Assistant Secretary None
C. Allen Merritt, Jr. Assistant Treasurer; Assistant
Secretary; Director None
The principal business address of Mr. Armour,Ms. Bauer, Ms.
Pluskota, Ms. Riegel and Ms. Walter is One South Wacker Drive,
Chicago, IL 60606; that of Mr. Williams is Two Righter Parkway,
Wilmington, DE 19803; and that of the other officers is 600
Atlantic Avenue, Boston, MA 02210-2214.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Jilaine Hummel Bauer
Executive Vice-President and Secretary
One South Wacker Drive, Suite 3500
Chicago, Illinois 60606
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
Registrant hereby undertakes to file a post-effective amendment
using financial statements, which need not be certified, within
four to six months from the effective date of this Registration
Statement.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused
this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Chicago and State of Illinois on the 11th day of February,
1997.
STEIN ROE ADVISOR TRUST
By TIMOTHY K. ARMOUR
Timothy K. Armour
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
Signature* Title Date
- ------------------------ --------------------- --------------
TIMOTHY K. ARMOUR President and Trustee February 11, 1997
Timothy K. Armour
Principal Executive Officer
GARY A. ANETSBERGER Senior Vice-President February 11, 1997
Gary A. Anetsberger
Principal Financial Officer
SHARON R. ROBERTSON Controller February 11, 1997
Sharon R. Robertson
Principal Accounting Officer
KENNETH L. BLOCK Trustee February 11, 1997
Kenneth L. Block
WILLIAM W. BOYD Trustee February 11, 1997
William W. Boyd
LINDSAY COOK Trustee February 11, 1997
Lindsay Cook
_________________ Trustee __________________
Douglas A. Hacker
JANET LANGFORD KELLY Trustee February 11, 1997
Janet Langford Kelly
FRANCIS W. MORLEY Trustee February 11, 1997
Francis W. Morley
CHARLES R. NELSON Trustee February 11, 1997
Charles R. Nelson
THOMAS C. THEOBALD Trustee February 11, 1997
Thomas C. Theobald
*This Registration Statement has also been signed by the above
persons in their capacities as trustees and officers of SR&F Base
Trust
<PAGE>
STEIN ROE ADVISOR TRUST
INDEX TO EXHIBITS FILED WITH THIS REGISTRATION STATEMENT
Exhibit
Number Description
- ------- -------------
6 Underwriting agreement
8 Custodian contract
9(a) Shareholder servicing and transfer agency agreement
9(b) Administrative agreement
9(c) Accounting and bookkeeping agreement
11 Consent of Arthur Andersen LLP
13 Subscription agreements
15 12b-1 Plan
EXHIBIT 6
UNDERWRITING AGREEMENT BETWEEN
STEIN ROE ADVISOR TRUST
AND LIBERTY SECURITIES CORPORATION
THIS UNDERWRITING AGREEMENT ("Agreement"), made as of
the __ day of February, 1997 by and between Stein Roe Advisor
Trust, a business trust organized and existing under the laws
of the Commonwealth of Massachusetts (hereinafter called the
"Fund"), and Liberty Securities Corporation, a corporation
organized and existing under the laws of the State of
Delaware (hereinafter call the "Distributor").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end
management investment company registered under the Investment
Company Act of 1940, as amended ("ICA-40"); and
WHEREAS, the Distributor is registered as a broker-
dealer under the Securities Exchange Act of 1934, as amended
("SEA-34") and, the laws of each state (including the
District of Columbia and Puerto Rico) in which it engages in
business to the extent such law requires, and is a member of
the National Association of Securities Dealers ("NASD") (such
registrations and membership are referred to collectively as
the "Registrations"); and
WHEREAS, the Fund desires the Distributor to act as the
distributor in the public offering of its shares of
beneficial interest (hereinafter called "Shares");
WHEREAS, the Fund shall pay all charges of its transfer,
shareholder recordkeeping, dividend disbursing and redemption
agents, if any; all expenses of notices, proxy solicitation
material and reports to shareholders; all expenses of
preparation and printing of annual or more frequent revisions
of the Fund's Prospectus and Statement of Additional
Information and of supplying copies thereof to shareholders;
all expenses of registering and maintaining the registration
of the Fund under ICA-40 and of the Fund's Shares under the
Securities Act of 1933, as amended ("SA-33"); all expenses of
qualifying and maintaining qualification of such Fund and of
the Fund's Shares for sale under securities laws of various
states or other jurisdictions and of registration and
qualification of the Fund under all laws applicable to the
Fund or its business activities;
WHEREAS, Stein Roe & Farnham Incorporated, investment
adviser to the Funds, shall pay all expenses incurred in the
sale and promotion of the Fund;
NOW, THEREFORE, in consideration of the premises and the
mutual promises hereinafter set forth, the parties hereto
agree as follows:
1. Appointment. The Fund appoints Distributor to act
as principal underwriter (as such term is defined in Sections
2(a)(29) of ICA-40) of its Shares.
2. Delivery of Fund Documents. The Fund has furnished
Distributor with properly certified or authenticated copies
of each of the following in effect on the date hereof and
shall furnish Distributor from time to time properly
certified or authenticated copies of all amendments or
supplements thereto:
(a) Agreement and Declaration of Trust;
(b) By-Laws;
(c) Resolutions of the Board of Trustees of the Fund
(hereinafter referred to as the "Board") selecting
Distributor as distributor and approving this form
of agreement and authorizing its execution.
The Fund shall furnish Distributor promptly with copies
of any registration statements filed by it with the
Securities and Exchange Commission ("SEC") under SA-33 or
ICA-40, together with any financial statements and exhibits
included therein, and all amendments or supplements thereto
hereafter filed.
The Fund also shall furnish Distributor such other
certificates or documents which Distributor may from time to
time, in its discretion, reasonably deem necessary or
appropriate in the proper performance of its duties.
3. Solicitation of Orders for Purchase of Shares.
(a) Subject to the provisions of Paragraphs 4, 5 and 7
hereof, and to such minimum purchase requirements as
may from time to time be indicated in the Fund's
Prospectus, Distributor is authorized to solicit, as
agent on behalf of the Fund, unconditional orders
for purchases of the Fund's Shares authorized for
issuance and registered under SA-33, provided that:
(1) Distributor shall act solely as a disclosed
agent on behalf of and for the account of the
Fund;
(2) The Fund or its transfer agent shall receive
directly from investors all payments for the
purchase of the Fund's Shares and also shall pay
directly to shareholders amounts due to them for
the redemption or repurchase of all the Fund's
Shares with Distributor having no rights or
duties to accept such payment or to effect such
redemptions or repurchases;
(3) Distributor shall confirm all orders received
for purchase of the Fund's Shares which
confirmation shall clearly state (i) that
Distributor is acting as agent of the Fund in
the transaction (ii) that all certificates for
redemption, remittances, and registration
instructions should be sent directly to the
Fund, and (iii) the Fund's mailing address;
(4) Distributor shall have no liability for payment
for purchases of the Fund's Shares it sells as
agent; and
(5) Each order to purchase Shares of the Fund
received by Distributor shall be subject to
acceptance by an officer of the Fund in Chicago
and entry of the order on the Fund's records or
shareholder accounts and is not binding until so
accepted and entered.
The purchase price to the public of the Fund's
Shares shall be the public offering price as defined
in Paragraph 6 hereof.
(b) In consideration of the rights granted to the
Distributor under this Agreement, Distributor will
use its best efforts (but only in states in which
Distributor may lawfully do so) to solicit from
investors unconditional orders to purchase Shares of
the Fund. The Fund shall make available to the
Distributor without cost to the Distributor such
number of copies of the Fund's currently effective
Prospectus and Statement of Additional Information
and copies of all information, financial statements
and other papers which the Distributor may
reasonably request for use in connection with the
distribution of Shares.
3.A. Selling Agreements. Distributor is authorized, as
agent on behalf of each Fund, to enter into agreements with
other broker-dealers providing for the solicitation of
unconditional orders for purchases of Fund's Shares
authorized for issuance and registered under SA-33. All such
agreements shall be either in the form of agreement attached
hereto or in such other form as may be approved by the
officers of the Fund ("Selling Agreement"). All
solicitations made by other broker-dealers pursuant to a
Selling Agreement shall be subject to the same terms of this
Agreement which apply to solicitations made by Distributor.
4. Solicitation of Orders to Purchase Shares by Fund.
The rights granted to the Distributor shall be non-exclusive
in that the Fund reserves the right to solicit purchases
from, and sell its Shares to, investors. Further, the Fund
reserves the right to issue Shares in connection with the
merger or consolidation of any other investment company,
trust or personal holding company with the Fund, or the
Fund's acquisition, by the purchase or otherwise, of all or
substantially all of the assets of an investment company,
trust or personal holding company, or substantially all of
the outstanding shares or interests of any such entity. Any
right granted to Distributor to solicit purchases of Shares
will not apply to Shares that may be offered by the Fund to
shareholders by virtue of their being shareholders of the
Fund.
5. Shares Covered by this Agreement. This Agreement
relates to the solicitation of orders to purchase Shares that
are duly authorized and registered and available for sale by
the Fund, including redeemed or repurchased Shares if and to
the extent that they may be legally sold and if, but only if,
the Fund authorizes the Distributor to sell them.
6. Public Offering Price. All solicitations by the
Distributor pursuant to this Agreement shall be for orders to
purchase Shares of the Fund at the public offering price.
The public offering price for each accepted subscription for
the Fund's Shares will be the net asset value per share next
determined by the Fund after it accepts such subscription.
The net asset value per share shall be determined in the
manner provided in the Fund's Agreement and Declaration of
Trust as now in effect or as they may be amended, and as
reflected in the Fund's then current Prospectus and Statement
of Additional Information.
7. Suspension of Sales. If and whenever the
determination of the Fund's net asset value is suspended and
until such suspension is terminated, no further orders for
Shares shall be accepted by the Fund except such
unconditional orders placed with the Fund and accepted by it
before the suspension. In addition, the Fund reserves the
right to suspend sales of Shares if, in the judgement of the
Board of the Fund, it is in the best interest of the Fund to
do so, such suspension to continue for such period as may be
determined by the Board of the Fund; and in that event, (i)
at the direction of the Fund, Distributor shall suspend its
solicitation of orders to purchase Shares of the Fund until
otherwise instructed by the Fund and (ii) no orders to
purchase Shares shall be accepted by the Fund while such
suspension remains in effect unless otherwise directed by its
Board.
8. Authorized Representations. No Fund is authorized
by the Distributor to give on behalf of the Distributor any
information or to make any representations other than the
information and representations contained in the Fund's
registration statement filed with the SEC under SA-33 and/or
ICA-40 as it may be amended from time to time.
Distributor is not authorized by the Fund to give on
behalf of the Fund any information or to make any
representations in connection with the sale of Shares other
than the information and representations contained in the
Fund's registration statement filed with the SEC under SA-33
and/or ICA-40, covering Shares, as such registration
statement or the Fund's prospectus may be amended or
supplemented from time to time, or contained in shareholder
reports or other material that may be prepared by or on
behalf of the Fund or approved by the Fund for the
Distributor's use. No person other than Distributor is
authorized to act as principal underwriter (as such term is
defined in ICA-40, as amended) for the Funds.
9. Registration of Additional Shares. The Fund hereby
agrees to register either (i) an indefinite number of Shares
pursuant to Rule 24f-2 under ICA-40, or (ii) a definite
number of Shares as the Fund shall deem advisable pursuant to
Rule 24e-2 under ICA-40, as amended. The Fund will, in
cooperation with the Distributor, take such action as may be
necessary from time to time to qualify the Shares (so
registered or otherwise qualified for sale under SA-33), in
any state mutually agreeable to the Distributor and the Fund,
and to maintain such qualification; provided, however, that
nothing herein shall be deemed to prevent the Fund from
registering its shares without approval of the Distributor in
any state it deems appropriate.
10. Conformity With Law. Distributor agrees that in
soliciting orders to purchase Shares it shall duly conform in
all respects with applicable federal and state laws and the
rules and regulations of the NASD. Distributor will use its
best efforts to maintain its Registrations in good standing
during the term of this Agreement and will promptly notify
the Fund and Stein Roe & Farnham Incorporated in the event of
the suspension or termination of any of the Registrations.
11. Independent Contractor. Distributor shall be an
independent contractor and neither the Distributor, nor any
of its officers, directors, employees, or representatives is
or shall be an employee of the Fund in the performance of
Distributor's duties hereunder. Distributor shall be
responsible for its own conduct and the employment, control,
and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents and
employees and agrees to pay all employee taxes thereunder.
12. Indemnification. Distributor agrees to indemnify
and hold harmless the Fund and each of the members of its
Board and its officers, employees and representatives and
each person, if any, who controls the Fund within the meaning
of Section 15 of SA-33 against any and all losses,
liabilities, damages, claims and expenses (including the
reasonable costs of investigating or defending any alleged
loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which
the Fund or such of the members of its Board and of its
officers, employees, representatives, or controlling person
or persons may become subject under SA-33, under any other
statute, at common law, or otherwise, arising out of the
acquisition of any Shares of the Fund by any person which (i)
may be based upon any wrongful act by Distributor or any of
Distributor's directors, officers, employees or
representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact
contained in a registration statement, Prospectus, Statement
of Additional Information, shareholder report or other
information covering Shares of the Fund filed or made public
by the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or
omission was made in reliance upon information furnished to
the Fund by Distributor in writing. In no case (i) is
Distributor's indemnity in favor of the Fund, or any person
indemnified, to be deemed to protect the Fund or such
indemnified person against any liability to which the Fund or
such person would otherwise be subject by reason of willful
misfeasance, bad faith, or negligence in the performance of
its or his duties or by reason of its or his reckless
disregard of its or his obligations and duties under this
Agreement or (ii) is Distributor to be liable under its
indemnity agreement contained in this paragraph with respect
to any claim made against the Fund or any person indemnified
unless the Fund or such person, as the case may be, shall
have notified Distributor in writing of the claim within a
reasonable time after the summons, or other first written
notification, giving information of the nature of the claim
served upon the Fund or upon such person (or after the Fund
or such person shall have received notice of such service on
any designated agent). However, failure to notify
Distributor of any such claim shall not relieve Distributor
from any liability which Distributor may have to the Fund or
any person against whom such action is brought otherwise than
on account of Distributor's indemnity agreement contained in
this Paragraph.
Distributor shall be entitled to participate, at its own
expense, in the defense, or, if Distributor so elects, to
assume the defense of any suit brought to enforce any such
claim but, if Distributor elects to assume the defense, such
defense shall be conducted by legal counsel chosen by
Distributor and satisfactory to the persons indemnified who
are defendants in the suit. In the event that Distributor
elects to assume the defense of any such suit and retain such
legal counsel, persons indemnified who are defendants in the
suit shall bear the fees and expenses of any additional legal
counsel retained by them. If Distributor does not elect to
assume the defense of any such suit, Distributor will
reimburse persons indemnified who are defendants in such suit
for the reasonable fees of any legal counsel retained by them
in such litigation.
The Fund agrees to indemnify and hold harmless
Distributor and each of its directors, officers, employees,
and representatives and each person, if any, who controls
Distributor within the meaning of Section 15 of SA-33 against
any and all losses, liabilities, damages, claims or expenses
(including the damage, claim or expense and reasonable legal
counsel fees incurred in connection therewith) to which
Distributor or such of its directors, officers, employees,
representatives or controlling person or persons may become
subject under SA-33, under any other statute, at common law,
or otherwise arising out of the acquisition of any Shares by
any person which (i) may be based upon any wrongful act by
the Fund or any of the members of the Fund's Board, or the
Fund's officers, employees or representatives other than
Distributor, or (ii) may be based upon any untrue statement
or alleged untrue statement of a material fact contained in a
registration statement, Prospectus, Statement of Additional
Information, shareholder report or other information covering
Shares filed or made public by the Fund or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading unless such statement or omission was made in
reliance upon information furnished by Distributor to the
Fund. In no case (i) is the Fund's indemnity in favor of the
Distributor or any person indemnified to be deemed to protect
the Distributor or such indemnified person against any
liability to which Distributor or such indemnified person
would otherwise be subject by reason of willful misfeasance,
bad faith, or negligence in the performance of its or his
duties or by reason of its or his reckless disregard of its
or his obligations and duties under this Agreement, or (ii)
is the Fund to be liable under its indemnity agreement
contained in this Paragraph with respect to any claim made
against Distributor or any person indemnified unless
Distributor, or such person, as the case may be, shall have
notified the Fund in writing of the claim within a reasonable
time after the summons, or other first written notification,
giving information of the nature of the claim served upon
Distributor or upon such person (or after Distributor or such
person shall have received notice of such service on any
designated agent). However, failure to notify a Fund of any
such claim shall not relieve the Fund from any liability
which the Fund may have to Distributor or any person against
whom such action is brought otherwise than on account of the
Fund's indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own
expense, in the defense or, if the Fund so elects, to assume
the defense of any suit brought to enforce such claim but, if
the Fund elects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Fund and
satisfactory to the persons indemnified who are defendants in
the suit. In the event that the Fund elects to assume the
defense of any such suit and retain such legal counsel, the
persons indemnified who are defendants in the suit shall bear
the fees and expenses of any additional legal counsel
retained by them. If the Fund does not elect to assume the
defense of any such suit, the Fund will reimburse the persons
indemnified who are defendants in such suit for the
reasonable fees and expenses of any legal counsel retained by
them in such litigation.
13. Duration and Termination of this Agreement. With
respect to the Fund and the Distributor, this Agreement shall
become effective upon its execution ("Effective Date") and
unless terminated as provided herein, shall remain in effect
through June 30, 1997, and from year to year thereafter, but
only so long as such continuance is specifically approved at
least annually (a) by a vote of majority of the members of
the Board of the Fund who are not interested persons of the
Distributor or of the Fund, voting in person at a meeting
called for the purpose of voting on such approval, and (b) by
the vote of either the Board of the Fund or a majority of the
outstanding shares of the Fund. This Agreement may be
terminated by and between an individual Fund and Distributor
at any time, without the payment of any penalty (a) on 60
days' written notice, by the Board of the Fund or by a vote
of a majority of the outstanding Shares of the Fund, or by
Distributor, or (b) immediately, on written notice by the
Board of the Fund, in the event of termination or suspension
of any of the Registrations. This Agreement will
automatically terminate in the event of its assignment. In
interpreting the provisions of this Paragraph 13, the
definitions contained in Section 2(a) of ICA-40 (particularly
the definitions of "interested person", "assignment", and
"majority of the outstanding shares") shall be applied.
14. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by each
party against which enforcement of the change, waiver,
discharge, or termination is sought. If the Fund should at
any time deem it necessary or advisable in the best interests
of the Fund that any amendment of this Agreement be made in
order to comply with the recommendations or requirements of
the SEC or any other governmental authority or to obtain any
advantage under state or Federal tax laws and notifies
Distributor of the form of such amendment, and the reasons
therefor, and if Distributor should decline to assent to such
amendment, the Fund may terminate this Agreement forthwith.
If Distributor should at any time request that a change be
made in the Fund's Agreement and Declaration of Trust or By-
Laws or in its methods of doing business, in order to comply
with any requirements of Federal law or regulations of the
SEC, or of a national securities association of which
Distributor is or may be a member, relating to the sale of
Shares, and the Fund should not make such necessary changes
within a reasonable time, Distributor may terminate this
Agreement forthwith.
15. Liability. It is understood and expressly
stipulated that neither the shareholders of the Fund nor the
members of the Board of the Fund shall be personally liable
hereunder. The obligations of the Fund are not personally
binding upon, nor shall resort to the private property of,
any of the members of the Board of the Fund, nor of the
shareholders, officers, employees or agents of the Fund, but
only the Fund's property shall be bound.
16. Miscellaneous. The captions in this Agreement are
included for convenience or reference only, and in no way
define or limit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
17. Notice. Any notice required or permitted to be
given by a party to this Agreement or to any other party
hereunder shall be deemed sufficient if delivered in person
or sent by registered or certified mail, postage prepaid,
addressed by the party giving notice to each such other party
at the address provided below or to the last address
furnished by each such other party to the party giving
notice.
If to the Fund: One South Wacker Drive
Chicago, Illinois 60606
Attn: Secretary
If to Distributor: 600 Atlantic Avenue
Boston, Massachusetts 02210
Attn: Secretary
If to Stein Roe & Farnham
Incorporated: One South Wacker Drive
Chicago, Illinois 60606
Attn: Secretary
LIBERTY SECURITIES CORPORATION
By:_____________________________
ATTEST:
________________________
Secretary
STEIN ROE ADVISOR TRUST
By:______________________________
Timothy K. Armour
President
ATTEST:
__________________________
Nicolette D. Parrish
Assistant Secretary
ACKNOWLEDGED BY: STEIN ROE & FARNHAM INCORPORATED
By:____________________________________
Hans P. Ziegler, Chief Executive Officer
ATTEST:
_____________________________________
Nicolette D. Parrish, Assistant Secretary
<PAGE>
EXHIBIT A TO DISTRIBUTION AGREEMENT
BETWEEN THE STEIN ROE ADVISOR TRUST AND
LIBERTY SECURITIES CORPORATION
The series of the Trust covered by this agreement are:
Name of Series Effective Date
- -------------------------------------- -----------------
Stein Roe Advisor Growth & Income Fund February __, 1997
Stein Roe Advisor International Fund February __, 1997
Stein Roe Advisor Young Investor Fund February __, 1997
Stein Roe Advisor Special Venture Fund February __, 1997
Stein Roe Advisor Balanced Fund February __, 1997
Stein Roe Advisor Growth Stock Fund February __, 1997
Stein Roe Advisor Special Fund February __, 1997
Dated: February __, 1997
<PAGE>
Date _____________
LIBERTY SECURITIES CORPORATION
STEIN ROE ____ FUND
SELLING AGREEMENT
Dear Sirs:
As the principal underwriter of Stein Roe ____ Fund (the
"Fund"), a series of Stein Roe Advisor Trust (the "Trust"), a
Massachusetts business trust registered under the Investment
Company Act of 1940 as an open-end investment company, we
invite you as agent for your customer to participate in the
distribution of shares of beneficial interest in the Fund
("Shares"), subject to the following terms and conditions:
1. We hereby grant to you the right to make Shares
available to, and to solicit orders to purchase Shares by,
the public, subject to applicable federal and state law, the
Agreement and Declaration of Trust and By-laws of the Trust,
and the current Prospectus and Statement of Additional
Information relating to the Fund attached hereto (the
"Prospectus"). You will forward to us or to the Trust's
transfer agent, as we may direct from time to time, all
orders for the purchase of Shares obtained by you, subject to
such terms and conditions as to the form of payment, minimum
initial and subsequent purchase and otherwise, and in
accordance with such procedures and directions, as we may
specify from time to time. All orders are subject to
acceptance by an authorized officer of the Trust in Chicago
and the Trust reserves the right in its sole discretion to
reject any order. Share purchases are not binding on the
Trust until accepted and entered on the books of the Fund.
No Share purchase shall be effective until payment is
received by the Trust in the form of Federal funds. If a
Share purchase by check is cancelled because the check does
not clear, you will be responsible for any loss to the Fund
or to us resulting therefrom.
2. The public offering price of the Shares shall be the
net asset value per share of the outstanding Shares
determined in accordance with the then current Prospectus.
No sales charge shall apply.
3. As used in this Agreement, the term "Registration
Statement" with regard to the Fund shall mean the
Registration Statement most recently filed by the Trust with
the Securities and Exchange Commission and effective under
the Securities Act of 1933, as such Registration Statement is
amended by any amendments thereto at the time in effect, and
the terms "prospectus" and "statement of additional
information" with regard to the Fund shall mean the form of
prospectus and statement of additional information relating
to the Fund as attached hereto filed by the Trust as part of
the Registration Statement, as such form of prospectus and
statement of additional information may be amended or
supplemented from time to time.
4. You hereby represent that you are and will remain
during the term of this Agreement duly registered as a
broker-dealer under the Securities Exchange Act of 1934 and
under the securities laws of each state where your activities
require such registration, and that you are and will remain
during the term of this Agreement a member in good standing
of the National Association of Securities Dealers, Inc.
("NASD"). In the conduct of your activities hereunder, you
will abide by all applicable rules and regulations of the
NASD, including, without limitation, Rule 26 of the Rules of
Fair Practice of the NASD as in effect form time to time, and
all applicable federal and state securities laws, including
without limitation, the prospectus delivery requirements of
the Securities Act of 1933.
5. This Agreement is subject to the right of the Trust
at any time to withdraw all offerings of the Shares by
written notice to us at our principal office. You
acknowledge that the Trust will not issue certificates
representing Shares.
6. Your obligations under this Agreement are not to be
deemed exclusive, and you shall be free to render similar
services to others so long as your services hereunder are not
impaired thereby.
7. You will sell Shares only to residents of states or
other jurisdictions where we have notified you that the
Shares have been registered or qualified for sale to the
public or are exempt from such qualification or registration.
Neither we nor the Trust will have any obligation to register
or qualify the Shares in any particular jurisdiction. We
shall not be liable or responsible for the issue, form
validity, enforceability or value of the Shares or for any
matter in connection therewith, except lack of good faith on
our part, and no obligation not expressly assumed by us in
this Agreement shall be implied therefrom. Nothing herein
contained, however, shall be deemed to be a condition,
stipulation or provision binding any person acquiring any
Shares to waive compliance with any provision of the
Securities Act of 1933, or to relieve the parties hereto from
any liability arising thereunder.
8. You are not authorized to make any representations
concerning the Fund, the Trust or the Shares except those
contained in the then current prospectus and statement of
additional information relating to the Fund, or printed
information issued by the Trust or by us as information
supplemental to such prospectus and statement of additional
information. We will supply you with a reasonable number of
copies of the then current prospectus and statement of
additional information of the Fund, and reasonable quantities
of any supplemental sales literature, sales bulletins, and
additional information as may be issued by us or the Trust.
You will not use any advertising or sales material relating
to the Fund other than materials supplied by the Trust or us,
unless such other material is approved in writing by us in
advance of such use.
9. You will not have any authority to act as agent for
the Trust, for us or for any other dealer. All transactions
between you and us contemplated by this Agreement shall be as
agents.
10. Either party to this Agreement may terminate this
Agreement by giving written notice to the other. Such notice
shall be deemed to have been given on the date on which it is
either delivered personally to the other party, is mailed
postpaid or delivered by telecopier to the other party at its
address listed below. This Agreement may be amended by us at
any time, and your placing of an order after the effective
date of any such amendment shall constitute your acceptance
thereof.
Liberty Securities Corporation Dealer
600 Atlantic Avenue ________________
Boston, Massachusetts 02210 ________________
Attention: ________________ ________________
Telecopier: _______________
with copy to:
Stein Roe Advisor Trust
One South Wacker Drive
Chicago, Illinois 60606
Attention: Secretary
Telecopier: ________
11. This Agreement constitutes the entire agreement
between you and us relating to the subject matter hereof and
supersedes all prior or written agreements between us. This
Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts and shall be binding upon
both parties hereto when signed by us and accepted by you in
the space provided below.
Very truly yours,
LIBERTY SECURITIES CORPORATION
BY: ____________________
The undersigned hereby accepts your invitation to
participate in the distribution of Shares and agrees to each
of the terms and conditions set forth in this letter.
___________________________
Dealer
Date: ____________________ By: _______________________
(Signature of Officer)
Pay Office of Dealer:
__________________________ ___________________________
Street Address (Print Name of Officer)
__________________________
City/State/Zip
__________________________
Telephone Number
EXHIBIT 8
CUSTODIAN CONTRACT
Between
STEIN ROE ADVISOR TRUST
and
STATE STREET BANK AND TRUST COMPANY
Global/Series/Trust
21E593
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held By
It......................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United
States .................................................2
2.1 Holding Securities.................................2
2.2 Delivery of Securities.............................2
2.3 Registration of Securities.........................4
2.4 Bank Accounts......................................4
2.5 Availability of Federal Funds......................5
2.6 Collection of Income...............................5
2.7 Payment of Fund Monies.............................5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased...............................6
2.9 Appointment of Agents..............................7
2.10 Deposit of Fund Assets in U.S. Securities
System.............................................7
2.11 Fund Assets Held in the Custodian's Direct
Paper System.......................................8
2.12 Segregated Account.................................9
2.13 Ownership Certificates for Tax Purposes............9
2.14 Proxies...........................................10
2.15 Communications Relating to Portfolio Securities...10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States.............10
3.1 Appointment of Foreign Sub-Custodians.............10
3.2 Assets to be Held.................................10
3.3 Foreign Securities Systems........................11
3.4 Holding Securities................................11
3.5 Agreements with Foreign Banking Institutions......11
3.6 Access of Independent Accountants of the Fund.....11
3.7 Reports by Custodian..............................11
3.8 Transactions in Foreign Custody Account...........12
3.9 Liability of Foreign Sub-Custodians...............12
3.10 Liability of Custodian............................12
3.11 Reimbursement for Advances........................12
3.12 Monitoring Responsibilities.......................13
3.13 Branches of U.S. Banks............................13
3.14 Tax Law...........................................14
4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund..................................14
5. Proper Instructions....................................14
6. Actions Permitted Without Express Authority............15
7. Evidence of Authority..................................15
8 . Duties of Custodian With Respect to the Books of
Account and Calculation of Net Asset Value and Net
Income.................................................15
9. Records................................................16
10. Opinion of Fund's Independent Accountants..............16
11. Reports to Fund by Independent Public Accountants......16
12. Compensation of Custodian..............................16
13. Responsibility of Custodian............................17
14. Effective Period, Termination and Amendment............18
15. Successor Custodian....................................19
16. Interpretive and Additional Provisions.................19
17. Additional Funds.......................................20
18. Massachusetts Law to Apply.............................20
19. Prior Contracts........................................20
20. Reproduction of Documents..............................20
21. Shareholder Communications Election....................20
<PAGE>
CUSTODIAN CONTRACT
This Contract between Stein Roe Advisor Trust, a
business trust organized and existing under the laws of The
Commonwealth of Massachusetts, having its principal place of
business at One South Wacker Drive, Chicago, Illinois 60606
hereinafter called the "Fund", and State Street Bank and
Trust Company, a Massachusetts trust company, having its
principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in
separate series, with each such series representing interests
in a separate portfolio of securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in
seven series, Stein Roe Advisor Balanced Fund, Stein Roe
Advisor Growth & Income Fund, Stein Roe Advisor Growth Stock
Fund, Stein Roe Advisor Young Investor Fund, Stein Roe
Advisor Special Fund, Stein Roe Advisor Special Venture Fund,
Stein Roe Advisor International Fund (such series together
with all other series subsequently established by the Fund
and made subject to this Contract in accordance with
paragraph 17, being herein referred to as the
"Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto
agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian
of the assets of the Portfolios of the Fund, including
securities which the Fund, on behalf of the applicable
Portfolio desires to be held in places within the United
States ("domestic securities") and securities it desires to
be held outside the United States ("foreign securities")
pursuant to the provisions of the Declaration of Trust. The
Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital
distributions received by it with respect to all securities
owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares
of beneficial interest of the Fund representing interests in
the Portfolios, ("Shares") as may be issued or sold from time
to time. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Portfolio and
not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the
meaning of Article 5), the Custodian shall on behalf of the
applicable Portfolio(s) from time to time employ one or more
sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees
of the Fund on behalf of the applicable Portfolio(s), and
provided that the Custodian shall have no more or less
responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than
any such sub-custodian has to the Custodian. The Custodian
may employ as sub-custodian for the Fund's foreign
securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in
accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the
Fund Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of each Portfolio
all non-cash property, to be held by it in the United
States including all domestic securities owned by such
Portfolio, other than (a) securities which are
maintained pursuant to Section 2.10 in a clearing agency
which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury
(each, a U.S. Securities System") and (b) commercial
paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian (the "Direct Paper
System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by
the Custodian or in a U.S. Securities System account of
the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the
Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Portfolio;
3) In the case of a sale effected through a U.S.
Securities System, in accordance with the provisions
of Section 2.10 hereof;
4) To the depository agent in connection with tender or
other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise
become payable; provided that, in any such case, the
cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Portfolio or into the name of
any nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed pursuant
to Section 2.9 or into the name or nominee name of
any sub-custodian appointed pursuant to Article 1; or
for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided
that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of
the Portfolio, to the broker or its clearing agent,
against a receipt, for examination in accordance with
"street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of
such securities prior to receiving payment for such
securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities
and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of
such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities
for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Portfolio, but only against
receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund on behalf
of the Portfolio, which may be in the form of cash or
obligations issued by the United States government,
its agencies or instrumentalities, except that in
connection with any loans for which collateral is to
be credited to the Custodian's account in the book-
entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or
responsible for the delivery of securities owned by
the Portfolio prior to the receipt of such
collateral;
11) For delivery as security in connection with any
borrowings by the Fund on behalf of the Portfolio
requiring a pledge of assets by the Fund on behalf
of the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio,
the Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or
organizations, regarding escrow or other arrangements
in connection with transactions by the Portfolio of
the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio,
the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating
to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding
account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to
such Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described from time to time in the currently
effective prospectus and statement of additional
information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by
holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions from
the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of
Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary
or an Assistant Secretary, specifying the securities
of the Portfolio to be delivered, setting forth the
purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by
the Custodian (other than bearer securities) shall be
registered in the name of the Portfolio or in the name
of any nominee of the Fund on behalf of the Portfolio
or of any nominee of the Custodian which nominee shall
be assigned exclusively to the Portfolio, unless the
Fund has authorized in writing the appointment of a
nominee to be used in common with other registered
investment companies having the same investment adviser
as the Portfolio, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name
or nominee name of any sub-custodian appointed pursuant
to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good
delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely
collect income due the Fund on such securities and to
notify the Fund on a best efforts basis only of
relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the United States
in the name of each Portfolio of the Fund, subject only
to draft or order by the Custodian acting pursuant to
the terms of this Contract, and shall hold in such
account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the
Portfolio, other than cash maintained by the Portfolio
in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Custodian for a Portfolio may
be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion
deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the
funds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board of Trustees
of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement
between the Fund on behalf of each applicable Portfolio
and the Custodian, the Custodian shall, upon the receipt
of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such
Portfolio as of specified times agreed upon from time to
time by the Fund and the Custodian in the amount of
checks received in payment for Shares of such Portfolio
which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of
Section 2.3, the Custodian shall collect on a timely
basis all income and other payments with respect to
registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments
with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held
by the Custodian or its agent thereof and shall credit
such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall
collect interest when due on securities held hereunder.
Income due each Portfolio on securities loaned pursuant
to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no
duty or responsibility in connection therewith, other
than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for
the timely delivery to the Custodian of the income to
which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases
only:
1) Upon the purchase of domestic securities, options,
futures contracts or options on futures contracts for
the account of the Portfolio but only (a) against the
delivery of such securities or evidence of title to
such options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States
or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as
its agent for this purpose) registered in the name of
the Portfolio or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a U.S. Securities System,
in accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between
the Fund on behalf of the Portfolio and the
Custodian, or another bank, or a broker-dealer which
is a member of NASD, (i) against delivery of the
securities either in certificate form or through an
entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase
by the Portfolio of securities owned by the Custodian
along with written evidence of the agreement by the
Custodian to repurchase such securities from the
Portfolio or (e) for transfer to a time deposit
account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to
receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from
the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender
of securities owned by the Portfolio as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by
the Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred
by the Portfolio, including but not limited to the
following payments for the account of the Portfolio:
interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the
Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing
documents of the Fund;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund
on behalf of the Portfolio, a certified copy of a
resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer
of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to
whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. Except as specifically stated
otherwise in this Contract, in any and every case where
payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in
advance of receipt of the securities purchased in the
absence of specific written instructions from the Fund
on behalf of such Portfolio to so pay in advance, the
Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities
had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or
times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the
Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or
liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems.
The Custodian may deposit and/or maintain securities
owned by a Portfolio in a clearing agency registered
with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934,
which acts as a securities depository, or in the book-
entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively
referred to herein as "U.S. Securities System" in
accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and
regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Portfolio in
a U.S. Securities System provided that such
securities are represented in an account ("Account")
of the Custodian in the U.S. Securities System which
shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to
securities of the Portfolio which are maintained in a
U.S. Securities System shall identify by book-entry
those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for
the account of the Portfolio upon (i) receipt of
advice from the U.S. Securities System that such
securities have been transferred to the Account, and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S.
Securities System that payment for such securities
has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for the
account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish
the Fund on behalf of the Portfolio confirmation of
each transfer to or from the account of the Portfolio
in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio
copies of daily transaction sheets reflecting each
day's transactions in the U.S. Securities System for
the account of the Portfolio;
4) The Custodian shall provide the Fund for the
Portfolio with any report obtained by the Custodian
on the U.S. Securities System's accounting system,
internal accounting control and procedures for
safeguarding securities deposited in the U.S.
Securities System;
5) The Custodian shall have received from the Fund on
behalf of the Portfolio the initial or annual
certificate, as the case may be, required by Article
14 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for the benefit of the Portfolio for any loss
or damage to the Portfolio resulting from use of the
U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or
from failure of the Custodian or any such agent to
enforce effectively such rights as it may have
against the U.S. Securities System; at the election
of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any
claim against the U.S. Securities System or any other
person which the Custodian may have as a consequence
of any such loss or damage if and to the extent that
the Portfolio has not been made whole for any such
loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper
System. The Custodian may deposit and/or maintain
securities owned by a Portfolio in the Direct Paper
System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of
Proper Instructions from the Fund on behalf of the
Portfolio;
2) The Custodian may keep securities of the Portfolio in
the Direct Paper System only if such securities are
represented in an account ("Account") of the
Custodian in the Direct Paper System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to
securities of the Portfolio which are maintained in
the Direct Paper System shall identify by book-entry
those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for
the account of the Portfolio upon the making of an
entry on the records of the Custodian to reflect such
payment and transfer of securities to the account of
the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon
the making of an entry on the records of the
Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of
the Portfolio confirmation of each transfer to or
from the account of the Portfolio, in the form of a
written advice or notice, of Direct Paper on the next
business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio
copies of daily transaction sheets reflecting each
day's transaction in the U.S. Securities System for
the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of
the Portfolio with any report on its system of
internal accounting control as the Fund may
reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt
of Proper Instructions from the Fund on behalf of each
applicable Portfolio establish and maintain a segregated
account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of
the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or
any registered contract market), or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or
government securities in connection with options
purchased, sold or written by the Portfolio or commodity
futures contracts or options thereon purchased or sold
by the Portfolio, (iii) for the purposes of compliance
by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies
and (iv) for other proper corporate purposes, but only,
in the case of clause (iv), upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution
of the Board of Trustees or of the Executive Committee
signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and
declaring such purposes to be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the
domestic securities held hereunder, cause to be promptly
executed by the registered holder of such securities, if
the securities are registered otherwise than in the name
of the Portfolio or a nominee of the Portfolio, all
proxies, without indication of the manner in which such
proxies are to be voted, and shall promptly deliver to
the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities.
Subject to the provisions of Section 2.3, the Custodian
shall transmit promptly to the Fund for each Portfolio
all written information (including, without limitation,
pendency of calls and maturities of domestic securities
and expirations of rights in connection therewith and
notices of exercise of call and put options written by
the Fund on behalf of the Portfolio and the maturity of
futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or
exchange offers, the Custodian shall transmit promptly
to the Portfolio all written information received by the
Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three
business days prior to the date on which the Custodian
is to take such action.
3. Duties of the Custodian with Respect to Property of the
Fund Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby
authorizes and instructs the Custodian to employ as sub-
custodians for the Portfolio's securities and other
assets maintained outside the United States the foreign
banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-
custodians"). Upon receipt of "Proper Instructions", as
defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Trustees,
the Custodian and the Fund may agree to amend Schedule
A hereto from time to time to designate additional
foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the
Custodian to cease the employment of any one or more
such sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the
securities and other assets maintained in the custody of
the foreign sub-custodians to: (a) "foreign
securities", as defined in paragraph (c)(1) of Rule 17f-
5 under the Investment Company Act of 1940, and (b) cash
and cash equivalents in such amounts as the Custodian
or the Fund may determine to be reasonably necessary to
effect the Portfolio's foreign securities transactions.
The Custodian shall identify on its books as belonging
to the Fund, the foreign securities of the Fund held
by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be
agreed upon in writing by the Custodian and the Fund,
assets of the Portfolios shall be maintained in a
clearing agency which acts as a securities depository or
in a book-entry system for the central handling of
securities located outside the United States (each a
"Foreign Securities System") only through arrangements
implemented by the foreign banking institutions serving
as sub-custodians pursuant to the terms hereof (Foreign
Securities Systems and U.S. Securities Systems are
collectively referred to herein as the "Securities
Systems"). Where possible, such arrangements shall
include entry into agreements containing the provisions
set forth in Section 3.5 hereof.
3.4 Holding Securities. The Custodian may hold securities
and other non-cash property for all of its customers,
including the Fund, with a Foreign Sub-custodian in a
single account that is identified as belonging to the
Custodian for the benefit of its customers, provided
however, that (i) the records of the Custodian with
respect to securities and other non-cash property of the
Fund which are maintained in such account shall
identify by book-entry those securities and other non-
cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-
cash property so held by the foreign sub-custodian be
held separately from any assets of the foreign sub-
custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each
agreement with a foreign banking institution shall
provide that: (a) the assets of each Portfolio will not
be subject to any right, charge, security interest, lien
or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of
payment for their safe custody or administration; (b)
beneficial ownership for the assets of each Portfolio
will be freely transferable without the payment of money
or value other than for custody or administration; (c)
adequate records will be maintained identifying the
assets as belonging to each applicable Portfolio; (d)
officers of or auditors employed by, or other
representatives of the Custodian, including to the
extent permitted under applicable law the independent
public accountants for the Fund, will be given access
to the books and records of the foreign banking
institution relating to its actions under its agreement
with the Custodian; and (e) assets of the Portfolios
held by the foreign sub-custodian will be subject only
to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon
request of the Fund, the Custodian will use its best
efforts to arrange for the independent accountants of
the Fund to be afforded access to the books and records
of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate
to the performance of such foreign banking institution
under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the
Fund from time to time, as mutually agreed upon,
statements in respect of the securities and other assets
of the Portfolio(s) held by foreign sub-custodians,
including but not limited to an identification of
entities having possession of the Portfolio(s)
securities and other assets and advices or notifications
of any transfers of securities to or from each custodial
account maintained by a foreign banking institution for
the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio,
the identity of the entity having physical possession of
such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as
otherwise provided in paragraph (b) of this Section 3.8,
the provision of Sections 2.2 and 2.7 of this Contract
shall apply, mutatis mutandis to the foreign securities
of the Fund held outside the United States by foreign
sub-custodians.
(b) Notwithstanding any provision of this Contract to
the contrary, settlement and payment for securities
received for the account of each applicable Portfolio
and delivery of securities maintained for the account of
each applicable Portfolio may be effected in accordance
with the customary established securities trading or
securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to
the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such
securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such
entity's nominee to the same extent as set forth in
Section 2.3 of this Contract, and the Fund agrees to
hold any such nominee harmless from any liability as a
holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement
pursuant to which the Custodian employs a foreign
banking institution as a foreign sub-custodian shall
require the institution to exercise reasonable care in
the performance of its duties and to indemnify, and hold
harmless, the Custodian and the Fund from and against
any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's
performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence
of any such loss, damage, cost, expense, liability or
claim if and to the extent that the Fund has not been
made whole for any such loss, damage, cost, expense,
liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable
for the acts or omissions of a foreign banking
institution to the same extent as set forth with respect
to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the
custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian
shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding
the foregoing provisions of this paragraph 3.10, in
delegating custody duties to State Street London Ltd.,
the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such
delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange
control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed
hostilities) or (b) other losses (excluding a bankruptcy
or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the
Custodian to advance cash or securities for any purpose
for the benefit of a Portfolio including the purchase or
sale of foreign exchange or of contracts for foreign
exchange, or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except
such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful
misconduct, any property at any time held for the
account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain
reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall
furnish annually to the Fund, during the month of June,
information concerning the foreign sub-custodians
employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund
in connection with the initial approval of this
Contract. In addition, the Custodian will promptly
inform the Fund in the event that the Custodian learns
of a material adverse change in the financial condition
of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-
custodian not the subject of an exemptive order from the
Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has
declined below $200 million (in each case computed in
accordance with generally accepted U.S. accounting
principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set
forth in this Contract, the provisions hereof shall not
apply where the custody of the Portfolios assets are
maintained in a foreign branch of a banking institution
which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification
set forth in Section 26(a) of said Act. The appointment
of any such branch as a sub-custodian shall be governed
by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the
United Kingdom shall be maintained in an interest
bearing account established for the Fund with the
Custodian's London branch, which account shall be
subject to the direction of the Custodian, State Street
London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed
on the Fund or the Custodian as custodian of the Fund
by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of
the obligations imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence,
including responsibility for withholding and other
taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax
law shall be to use reasonable efforts to assist the
Fund with respect to any claim for exemption or refund
under the tax law of jurisdictions for which the Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of
Shares of the Fund
The Custodian shall receive from the distributor for the
Shares or from the Transfer Agent of the Fund and deposit
into the account of the appropriate Portfolio such payments
as are received for Shares of that Portfolio issued or sold
from time to time by the Fund. The Custodian will provide
timely notification to the Fund on behalf of each such
Portfolio and the Transfer Agent of any receipt by it of
payments for Shares of such Portfolio.
From such funds as may be available for the purpose but
subject to the limitations of the Declaration of Trust and
any applicable votes of the Board of Trustees of the Fund
pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available
for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of
their Shares. In connection with the redemption or
repurchase of Shares of a Portfolio, the Custodian is
authorized upon receipt of instructions from the Transfer
Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection with
the redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the
Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Fund
and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract
means a writing signed or initialled by one or more person or
persons as the Board of Trustees shall have from time to time
authorized. Each such writing shall set forth the specific
transaction or type of transaction involved, including a
specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to
have been given by a person authorized to give such
instructions with respect to the transaction involved. The
Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or
an Assistant Secretary as to the authorization by the Board
of Trustees of the Trust accompanied by a detailed
description of procedures approved by the Board of Trustees,
Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices
provided that the Board of Trustees and the Custodian are
satisfied that such procedures afford adequate safeguards for
the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which
requires a segregated asset account in accordance with
Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund on behalf of each applicable
Portfolio:
1) make payments to itself or others for minor expenses
of handling securities or other similar items
relating to its duties under this Contract, provided
that all such payments shall be accounted for to the
Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of the Portfolio except as
otherwise directed by the Board of Trustees of the
Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have
been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote
of the Board of Trustees of the Trust as conclusive evidence
(a) of the authority of any person to act in accordance with
such vote or (b) of any determination or of any action by the
Board of Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be considered as
in full force and effect until receipt by the Custodian of
written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board
of Trustees of the Fund to keep the books of account of each
Portfolio and/or compute the net asset value per share of the
outstanding shares of each Portfolio or, if directed in
writing to do so by the Fund on behalf of the Portfolio,
shall itself keep such books of account and/or compute such
net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus
related to such Portfolio and shall advise the Fund and the
Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to
do so, shall advise the Transfer Agent periodically of the
division of such net income among its various components.
The calculations of the net asset value per share and the
daily income of each Portfolio shall be made at the time or
times described from time to time in the Fund's currently
effective prospectus related to such Portfolio.
9. Records
The Custodian shall with respect to each Portfolio
create and maintain all records relating to its activities
and obligations under this Contract in such manner as will
meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31
thereof and Rules 31a-1 and 31a-2 thereunder. All such
records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at
the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian
and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and
the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the
Fund on behalf of each applicable Portfolio may from time to
time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its
activities hereunder in connection with the preparation of
the Fund's Form N-1A, and Form N-SAR or other annual reports
to the Securities and Exchange Commission and with respect to
any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each
of the Portfolios at such times as the Fund may reasonably
require, with reports by independent public accountants on
the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited
and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such
reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as
agreed upon from time to time between the Fund on behalf of
each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise
of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in
acting upon any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and
to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian
shall be held to the exercise of reasonable care in carrying
out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund
for any action taken or omitted by it in good faith without
negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence
or willful misconduct or the negligence or willful misconduct
of a sub-custodian or agent, the Custodian shall be without
liability to the Fund for any loss, liability, claim or
expense resulting from or caused by; (i) events or
circumstances beyond the reasonable control of the Custodian
or any sub-custodian or Securities System or any agent or
nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of
currency controls or restrictions, the interruption,
suspension or restriction of trading on or the closure of any
securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications
disruptions, acts of war or terrorism, riots, revolutions,
work stoppages, natural disasters or other similar events or
acts; (ii) errors by the Fund or the Investment Advisor in
their instructions to the Custodian provided such
instructions have been in accordance with this Contract;
(iii) the insolvency of or acts or omissions by a Securities
System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent
payment or clearing system to deliver to the Custodian's sub-
custodian or agent securities purchased or in the remittance
or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body
in charge of registering or transferring securities in the
name of the Custodian, the Fund, the Custodian's sub-
custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and
rights and other accretions or benefits; (vi) delays or
inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or
future law or regulation or order of the United States of
America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions
of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this
Contract.
If the Fund on behalf of a Portfolio requires the
Custodian to take any action with respect to securities,
which action involves the payment of money or which action
may, in the opinion of the Custodian, result in the Custodian
or its nominee assigned to the Fund being liable for the
payment of money or incurring liability of some other form,
the Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in
an amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates,
subsidiaries or agents, to advance cash or securities for any
purpose (including but not limited to securities settlements,
foreign exchange contracts and assumed settlement) or in the
event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's
own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of
the Fund shall be security therefor and should the Fund
fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the
Fund assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect,
special or consequential damages.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its
execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing
delivered or mailed, postage prepaid to the other party, such
termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided, however
that the Custodian shall not with respect to a Portfolio act
under Section 2.10 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees of the Fund has
approved the initial use of a particular Securities System by
such Portfolio, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the
Custodian shall not with respect to a Portfolio act under
Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that
the Board of Trustees has approved the initial use of the
Direct Paper System by such Portfolio; provided further,
however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust,
and further provided, that the Fund on behalf of one or more
of the Portfolios may at any time by action of its Board of
Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the
event of the appointment of a conservator or receiver for the
Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of
each applicable Portfolio shall pay to the Custodian such
compensation as may be due as of the date of such termination
and shall likewise reimburse the Custodian for its costs,
expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund, of one or more
of the Portfolios shall be appointed by the Board of Trustees
of the Fund, the Custodian shall, upon termination, deliver
to such successor custodian at the office of the Custodian,
duly endorsed and in the form for transfer, all securities of
each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities
System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Board of Trustees of the Fund, deliver
at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the Board
of Trustees shall have been delivered to the Custodian on or
before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, doing business in Boston,
Massachusetts, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian
on behalf of each applicable Portfolio and all instruments
held by the Custodian relative thereto and all other property
held by it under this Contract on behalf of each applicable
Portfolio and to transfer to an account of such successor
custodian all of the securities of each such Portfolio held
in any Securities System. Thereafter, such bank or trust
company shall be the successor of the Custodian under this
Contract.
In the event that securities, funds and other
properties remain in the possession of the Custodian after
the date of termination hereof owing to failure of the Fund
to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its
services during such period as the Custodian retains
possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties
and obligations of the Custodian shall remain in full force
and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund on behalf of each of the Portfolios,
may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Contract as may
in their joint opinion be consistent with the general tenor
of this Contract. Any such interpretive or additional
provisions shall be in a writing signed by both parties and
shall be annexed hereto, provided that no such interpretive
or additional provisions shall contravene any applicable
federal or state regulations or any provision of the
Declaration of Trust of the Fund. No interpretive or
additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more
series of Shares in addition to the Stein Roe Advisor
Balanced Fund, Stein Roe Advisor Growth & Income Fund, Stein
Roe Advisor Growth Stock Fund, Stein Roe Advisor Young
Investor Fund, Stein Roe Advisor Special Fund, Stein Roe
Advisor Special Venture Fund, Stein Roe Advisor International
Fund with respect to which it desires to have the Custodian
render services as custodian under the terms hereof, it shall
so notify the Custodian in writing, and if the Custodian
agrees in writing to provide such services, such series of
Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund on behalf of
each of the Portfolios and the Custodian relating to the
custody of the Fund's assets.
20. Reproduction of Documents
This Contract and all schedules, exhibits, attachments
and amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties hereto all/each agree
that any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and
whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement,
facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
21. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires
banks which hold securities for the account of customers to
respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of
that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In
order to comply with the rule, the Custodian needs the Fund
to indicate whether it authorizes the Custodian to provide
the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund
tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the
Custodian "yes" or does not check either "yes" or "no" below,
the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all
securities owned by the Fund or any Funds or accounts
established by the Fund. For the Fund's protection, the
Rule prohibits the requesting company from using the Fund's
name and address for any purpose other than corporate
communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives
below.
YES [ ] The Custodian is authorized to release the Fund's
name, address, and share positions.
NO [X] The Custodian is not authorized to release the
Fund's name, address, and share positions.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder
affixed as of the day of February, 1997.
ATTEST STEIN ROE ADVISOR TRUST
NICOLETTE D. PARRISH By GARY A. ANETSBERGER
Assistant Secretary Senior Vice-President
ATTEST STATE STREET BANK AND TRUST COMPANY
By CHARLES WHITTEWOOD, JR.
_____________________ Vice President
<PAGE>
Schedule A
The following foreign banking institutions and foreign
securities depositories have been approved by the Board of
Trustees of Stein Roe Advisor Trust for use as sub-
custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
GARY A. ANETSBERGER
Trust's Authorized Officer
Date_________
<PAGE>
EXHIBIT 9(a)
SHAREHOLDER SERVICING
AND TRANSFER AGENCY AGREEMENT
This agreement is made this ___ day of February, 1997,
by and between STEIN ROE ADVISOR TRUST (the "Trust"), a
Massachusetts business trust, and STEINROE SERVICES INC.
(hereinafter referred to as "SSI"), a Massachusetts
corporation.
WITNESSETH:
1. APPOINTMENT. The Trust hereby appoints SSI,
effective as of the date hereof, as its agent in connection
with the issue, redemption, and transfer of shares of
beneficial interest of the Trust, including shares of each
respective series of the Trust (hereinafter called the
"Shares"), and to process investment income and capital
gain distributions with respect to such Shares, to perform
certain duties in connection with the Trust's withdrawal
and other plans, to mail proxy and other materials to the
Trust's shareholders and to provide additional services to
shareholders upon the terms and conditions set forth
herein, and to perform such other and further duties as are
agreed upon between the parties from time to time.
2. ACKNOWLEDGMENT. SSI acknowledges that it has
received from the Trust the following documents:
A. A certified copy of the Agreement and
Declaration of Trust and any amendments
thereto;
B. A certified copy of the By-Laws of Trust;
C. A certified copy of the resolution of its Board
of Trustees authorizing this Agreement;
D. Specimens of all forms of Share certificates as
approved by its Board of Trustees with a
statement of its Secretary certifying such
approval;
E. Samples of all account application forms and
other documents relating to shareholders
accounts, including terms of its Systematic
Withdrawal Plan;
F. Certified copies of any resolutions of the
Board of Trustees authorizing the issue of
authorized but unissued Shares;
G. An opinion of counsel for the Trust with
respect to the validity of the Shares, the
status of repurchased Shares and the number of
Shares with respect to which a Registration
Statement has been filed and is in effect;
H. A certificate of incumbency bearing the
signatures of the officers of the Trust who are
authorized to sign Share certificates, to sign
checks and to sign written instructions to SSI.
3. ADDITIONAL DOCUMENTATION. The Trust will also
furnish SSI from time to time with the following documents:
A. Certified copies of each amendment to its
Agreement and Declaration of Trust and By-Laws;
B. Each Registration Statement filed with the
Securities and Exchange Commission and
amendments thereto with respect to its Shares;
C. Certified copies of each resolution of the
Board of Trustees authorizing officers to give
instructions to SSI;
D. Specimens of all new Share certificates
accompanied by certified copies of Board of
Trustees resolutions approving such forms;
E. Forms and terms with respect to new plans that
may be instituted and such other certificates,
documents or opinions that SSI may from time to
time, in its discretion, deem necessary or
appropriate in the proper performance of its
duties.
4. AUTHORIZED SHARES. The Trust certifies to SSI
that, as of the date of this Agreement, it may issue
unlimited number of Shares of the same class in one or more
series as the Board of Trustees may authorize. The series
authorized as of the date of this Agreement are listed in
Schedule B.
5. REGISTRATION OF SHARES. SSI shall record
issuances of Shares based on the information provided by
the Trust. SSI shall have no obligation to a Trust, when
countersigning and issuing Shares, whether evidenced by
certificates or in uncertificated form, to take cognizance
of any law relating to the issuance and sale of Shares,
except as specifically agreed in writing between SSI and
the Trusts, and shall have no such obligation to any
shareholder except as specifically provided in Sections 8-
205, 8-208 and 8-406 of the Uniform Commercial Code. Based
on data provided by the Trust of Shares registered or
qualified for sale in various states, SSI will advise the
Trusts when any sale of Shares to a resident of a state
would result in total sales in that state in excess of the
amount registered or qualified in that state.
6. SHARE CERTIFICATES. The Trust shall supply SSI
with a sufficient supply of serially pre-numbered blank
Share certificates, which shall contain the appropriate
series designation, if applicable. Such blank certificates
shall be properly prepared and signed by authorized
officers of Trust manually or, if authorized by Trust, by
facsimile and shall bear the seal of Trust or a facsimile
thereof. Notwithstanding the death, resignation, or
removal of any officer authorized to sign certificates, SSI
may continue to countersign certificates which bear the
manual or facsimile signature of such officer as directed
by Trust.
7. CHECKS. The Trust shall supply SSI with a
sufficient supply of serially pre-numbered blank checks for
the dividend bank accounts and for the principal bank
accounts of Trust. SSI shall prepare and sign by facsimile
signature plates, bearing the facsimiles of the signatures
of authorized signatories, dividend account checks for
payment of ordinary income dividends and capital gain
distributions and principal account checks for payment of
redemptions of Shares, including those in connection with
the Trusts' Withdrawal Plans, refunds on subscriptions and
other capital payments on Shares, in accordance with this
Agreement. SSI shall hold signature facsimile plates for
this purpose and shall exercise reasonable care in their
transportation, storage or use. SSI may deliver such
signature facsimile plates to an agent or contractor to
perform the services described herein, but shall not be
relieved of its duties hereunder by any such delivery.
8. RECORDKEEPING. SSI shall maintain records showing
for each shareholder's account in the appropriate series of
the Trust, the following information and such other
information as may be mutually agreed to from time to time
by the Trusts and SSI:
A. To the extent such information is provided by
shareholders: name(s), address, alphabetical
sort key, client number, tax identification
number, account number, the existence of any
special service or transaction privilege
offered by the Trust and applicable to the
shareholder's account including but not limited
to the telephone exchange privilege, and other
similar information;
B. Number of Shares held;
C. Amount of accrued dividends;
D. Information for the current calendar year
regarding the account of the shareholder,
including transactions to date, date of each
transaction, price per share, amount and type
of each purchase and redemption, transfers,
amount of accrued dividends, the amount and
date of all distributions paid, price per
share, and amount of all distributions
reinvested;
E. Any stop order currently in effect against the
shareholder's account;
F. Information with respect to any withholding for
the calendar year as required under applicable
Federal and state laws, rules and regulations;
G. The certificate number and date of issuance of
each Share certificate outstanding, if any,
representing a shareholder's Shares in each
account, the number of Shares so represented,
and any stop legend on each certificate;
H. Information with respect to gross proceeds of
all sales transactions as required under
applicable Federal income tax laws, rules and
regulations; and
I. Such other information as may be agreed upon by
the Trusts and SSI from time to time.
SSI shall maintain for any account that is closed
("Closed Account") the aforesaid records through the June
of the calendar year following the year in which the
account is closed or such other period as may be mutually
agreed to from time to time by such Trust and SSI.
9. ADMINISTRATIVE SERVICES. SSI shall furnish the
following administrative services to the Trust:
A. Coordination of the printing and dissemination
of Prospectuses, financial reports, and other
shareholder information as are agreed to by SSI
and the Trust from time to time.
B Maintenance of data and statistics and
preparation of reports for internal use and for
distribution to the Board of Trustees
concerning shareholder transaction and service
activity.
C. Handling of requests from third parties
involving shareholder records, including, but
not limited to, record subpoenas, tax levies,
and orders issued by courts or administrative
or regulatory agencies.
D. Development and monitoring of shareholder
service programs that may be offered from time
to time, including, but not limited to,
individual retirement account and tax-qualified
retirement plan programs, checkwriting
redemption privileges, automatic purchase,
exchange and redemption programs, audio
response services, programs involving
electronic transfer of funds, and lock box
facilities.
E. Provision of facilities, hardware and software
systems, and equipment in Chicago (and other
locations mutually agreed to by SSI and the
Trusts) to meet the needs of shareholders and
prospective shareholders, including, but not
limited to, walk-in facilities, toll-free
telephone numbers, electronic audio and other
communication, accounting and recordkeeping
systems to handle shareholder transaction,
inquiry and other activity, and to provide
management and other personnel required to
staff such facilities and administer such
systems.
10. SHAREHOLDER SERVICES. SSI shall provide the
following services as are requested by a Trust in addition
to the transactional and recordkeeping services provided
for elsewhere herein:
A. Responding to communications from shareholders
or their representatives or agents concerning
any matters pertaining to shares registered in
their names, including, but not limited to, (i)
net asset value and average cost basis
information; (ii) shareholder services, plans,
options, and privileges; and (ii) with respect
to the series of the Trust represented by such
shares, information concerning investment
policies, portfolio holdings, performance, and
shareholder distributions and the
classification thereof for tax purposes.
B. Handling of shareholder complaints and
correspondence directed to or brought to the
attention of SSI.
C. Soliciting and tabulating proxies of
shareholders and answering questions concerning
the subject matter thereof.
D. Under the direction of the officers of the
Trust, administering a program whereby
shareholders whose mail from the Trust is
returned are identified, current address
information for such shareholders is solicited,
and shares and dividend or redemption proceeds
owned by shareholders who cannot be located are
escheated to the proper authorities in
accordance with applicable laws and
regulations.
E. Preparing and disseminating special data,
notices, reports, programs, and literature for
certain categories of shareholders based on
account characteristics, or for shareholders
generally in light of industry, market,
product, tax, or legal developments.
F. Assisting any institutional servicing or
recordkeeping agent engaged by SSI and approved
by the Trust in the development,
implementation, and maintenance of special
programs and systems to enhance overall
shareholder servicing capability, consisting
of:
(i) Product and system training for personnel
of the institutional servicing agent.
(ii) Joint programs with the institutional
servicing agent to develop customized
shareholder software systems, account
statements, and other information and
reports.
(iii) Electronic and telephonic systems and other
technological means by which shareholder
information, account data, and cost of
securities may be exchanged among SSI, the
institutional servicing agent, and their
respective agents or vendors.
G. Furnishing sub-accounting services for
retirement plan shareholders and other
shareholders representing group relationships
with special recordkeeping needs.
H. Providing and supervising the services of
employees whose principal responsibility and
function will be to preserve and strengthen the
Trust's relationships with its shareholders.
I. Such other shareholder and shareholder-related
services, whether similar to or different from
those described in this section as the parties
may from time to time agree in writing.
11. PURCHASES. Upon receipt of a request for purchase
of Shares containing data required by a Trust for
processing of a purchase transaction, SSI will:
A. Compute the number of Shares of the appropriate
series of the Trust to which the purchaser is
entitled and the dollar value of the
transaction according to the price of such
Shares as provided by the Trust for purchases
made at that time and date;
B. In the case of a new shareholder, establish an
account for the shareholder, including the
information specified in Section 8 hereof; in
the case of an Exchange as described in Section
14 below by telephone or telegraph, the account
shall have exactly the same registration as
that of the account of the other series of the
Trust or any other series of another Trust from
which the Exchange was made;
C. Transmit to the shareholder by mail or
electronically a confirmation of the purchase,
as directed by the Trust, in such format as
agreed to by SSI and the Trusts, including all
information called for thereby, and, in the
case of a purchase for a new account, shall
also furnish the shareholder a current
Prospectus of the applicable series;
D. If applicable, prepare a refund check in the
amount of any overpayment of the subscription
price and deliver it to the Trust for signing;
and
E. If a certificate is requested by the
shareholder, prepare, countersign, issue and
mail, not earlier than 30 days after the date
of purchase, to the shareholder at his address
of record a Share certificate for such full
Shares purchased.
12. REDEMPTIONS. Instructions to redeem Shares of any
series of a Trust, including instructions for an Exchange
as described in Section 14 below, may be furnished in
written form, or by other means, including but not limited
to telephonic or electronic transmission or by writing a
special form of check, as may be mutually agreed to from
time to time by the Trust and SSI. Upon receipt by SSI of
instructions to redeem which are in "good order," as
defined in the Prospectus of the applicable series and
satisfactory to SSI, SSI will:
A. Compute the amount due for the Shares and the
total number of all the Shares redeemed in
accordance with the price per Share as provided
by the Trust for redemptions of such Shares at
that time and date, and transmit to the
shareholder by mail or electronically a
confirmation of the redemption, as directed by
the Trust, in such format as agreed to by SSI
and the Trust, including all information called
for thereby;
B. Confirmations of redemptions that result in the
payment of accrued dividends shall indicate the
amount of such payment and any amounts
withheld;
C. In the case of a redemption in written form
other than by Exchange, SSI shall transmit to
the shareholder by check or, as may be mutually
agreed to by the Trust and SSI and requested by
the shareholder, electronic means, an amount
equal to the redemption price and any payment
of accrued dividends occasioned by the
redemption, net of any amounts withheld under
applicable Federal and state laws, rules and
regulations on or before the seventh calendar
day following the date on which instructions to
redeem in "good order" as defined in the
Prospectus of the applicable series, which
instructions are satisfactory to SSI as
received by SSI. In the case of an Exchange,
SSI shall use the proceeds of the redemption,
net of any amounts withheld under applicable
Federal and state laws, rules and regulations,
to purchase Shares of any other series of the
Trust or any other series of another Trust
selected by the person requesting the Exchange;
D. In the case of Exchanges by telephone or
telegraph, redemptions by telephone or
electronic transmission and redemptions by
writing a special form of check, SSI shall
deliver to the Trust, on the business day
following the effective date of such
transaction, a listing of such transaction data
in a format agreed to by the Trusts and SSI
from time to time;
E. If any Share certificate or instruction to
redeem tendered to SSI is not satisfactory to
SSI, it shall promptly notify the Trust of such
fact together with the reason therefor;
F. SSI shall cancel promptly Share certificates
received in proper form for redemption and
issue, countersign and mail new Share
certificates for the Shares represented by
certificates so cancelled which are not
redeemed;
G. SSI shall advise the Trust and refuse to
process any redemption by electronic
transmission or Exchange by telephone or
telegraph or redemptions by writing a special
form of check, if such transaction would result
in the redemption of Shares represented by
outstanding certificates, unless otherwise
instructed by an officer of the Trust.
13. ADMINISTRATION OF WITHDRAWAL PLANS. A redemption
made pursuant to a Withdrawal Plan offered by the Trusts
shall be effected by SSI at the net asset value per Share
of the appropriate series of the Trust on the twentieth day
or the next business day of the month in which the
recipient is scheduled to receive the withdrawal payment.
SSI shall prepare and mail to the recipient on or before
the seventh calendar day after the date of redemption a
check in the amount of each required payment, net of any
amounts withheld under applicable Federal and state laws,
rules and regulations, and also furnish the shareholder a
confirmation of the redemption as described in Section 12
above.
14. EXCHANGES. Upon receipt by SSI of a request to
exchange Shares of a series of a Trust held in a
shareholder's account for those of any other series of the
Trust or any other series of another Trust or vice versa in
written form, by telephone or telegraph or by other
electronic means, containing data required by the Trust for
processing such a transaction, SSI will:
A. If the request is by telephone, telegraph or
other electronic means, verify that the
shareholder has furnished both the series of a
Trust from and to which the Exchange is to be
made authorization, in a form acceptable to
such Trust, to accept Exchange instructions for
his account by such means.
B. Process a redemption of the Shares of the
series of the Trust to be redeemed in
connection with the Exchange and apply the
proceeds thereof, net of any amounts withheld
under applicable Federal and state laws, rules
and regulations, to purchase shares of any
other series of the Trust or any other series
of another Trust being acquired in accordance
with the respective Trust's redemption and
purchase policies and Sections 11 and 12 of
this Agreement.
Any redemption and purchase pursuant to an Exchange
shall be effected as of the time and prices applicable to
an order for redemption or purchase received at the time
the request for Exchange is received.
15. TRANSFER OF SHARES. Upon receipt by SSI of a
request for a transfer of Shares of any series of a Trust,
and receipt of a Share certificate for transfer or an order
for the transfer of Shares in the case of an uncertificated
account, in either case with such endorsements, instruments
of assignment or evidence of succession as may be required
by SSI and accompanied by payment of such transfer taxes,
if any, as may be applicable, and satisfaction of any other
conditions for registration of transfers contained in the
Trust's By-Laws, Prospectuses, and Statements of Additional
Information, SSI will verify the balance of Shares of such
series of the Trust in the account; record the transfer of
ownership of such Shares in its Share certificate and
shareholder records for such series; cancel Share
certificates for Shares surrendered for transfer; establish
an account pursuant to Section 8 for the transferee if a
new shareholder; prepare, countersign and mail new Share
certificates for a like number of Shares in the case of a
certificated account; and transmit to the shareholder by
mail or electronically confirmation of the transfer for
each account affected, in a format agreed to by SSI and the
Trust, including all information called for thereby. SSI
shall be responsible for determining that certificates,
orders for transfer, and supporting documents, if any, are
in proper legal form for the transfer of Shares.
16. CHANGES IN SHAREHOLDER RECORDS. Changes in items
of information specified in Section 8 not relating to
change in ownership of Shares will be made by SSI upon
receipt of a request for such change in a format agreed to
by SSI and the Trusts. In the case of any change that SSI
and the Trusts agree requires confirmation, a confirmation
of such change in a format agreed to by SSI and the Trusts
shall be transmitted to the shareholder by mail or
electronically.
17. REFUSAL TO REDEEM OR TRANSFER. SSI reserves the
right to refuse to redeem or transfer Shares until
reasonably satisfied that the endorsement on the Share
certificates or written request presented is valid and
genuine, and for such purpose may require where reasonably
necessary or appropriate a guarantee of signature. SSI
also reserves the right to refuse to redeem or transfer
Shares until satisfied that the requested transfer or
redemption is legally authorized, and it shall incur no
liability for the refusal in good faith to make transfers
or redemptions which it, in its judgment, deems improper or
unauthorized. Notwithstanding the foregoing, SSI shall
redeem or transfer Shares even though not satisfied as to
the endorsement or legal authority if it is first
indemnified to its reasonable satisfaction against all
expenses and liabilities to which it might, in its
judgment, be subjected by such action.
18. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. The
Trust will promptly inform SSI of the declaration of any
dividend or other distribution with respect to Shares of
any series of the Trust, including the amount of
distribution, the amount of withholding under applicable
Federal and state laws, rules and regulations, if any,
dividend number, if any, record date, ex-dividend date,
payable date and price at which dividends or other
distributions are to be reinvested.
In the case of any series of a Trust for which
dividends shall be declared daily and paid monthly or
quarterly, SSI will credit the dividend payable to each
shareholder thereof to a dividend account of the
shareholder and will provide the Trust on each business day
with reports of the total amount of dividends credited and
such other data as are agreed upon by the Trust and SSI.
Promptly after the payable date for the Trust, SSI will
provide the Trust with reports showing the accounts which
have been paid a dividend or other distribution, the amount
received by each account, the amount withheld as required
under applicable Federal and state laws, rules and
regulations, if any, the amount of the dividend or
distribution paid in cash or reinvested in Shares, and the
total amount of cash and Shares required for payment of the
dividend or other distribution.
In the case of each other series of the Trust, SSI
will provide the Trust promptly following the record date
therefor with reports of the total amount of dividends
payable with respect thereto and such other data as are
agreed to by the Trusts and SSI. Promptly after the
payable date therefor, SSI will provide the Trust with
reports showing the accounts which are to be paid a
dividend or other distribution, the amount to be received
by each account, the amount to be withheld as required
under applicable Federal and state laws, rules and
regulations, if any, whether such dividend or distribution
is to be paid in cash or reinvested in Shares, and the
total amount of cash and Shares required for the payment of
such dividend or distribution.
At times agreed to by the Trusts and SSI, SSI will
transmit by mail or electronically to shareholders the
proceeds of such dividend or other distribution and
confirmation thereof. Where distributions are reinvested,
the price and date of reinvestment will be those supplied
by the Trusts. Confirmations will be prepared by SSI in a
format agreed to by SSI and the Trusts.
19. WITHHOLDING. Under applicable Federal and state
laws, rules and regulations requiring withholding from
dividends and other distributions and payments to
shareholders, SSI shall be responsible for determining the
amount to be withheld and the Trusts shall forward that
amount to SSI, which will deposit said amount with, and
report said amount to, the proper governmental agency as
required thereunder. Liability for any amounts withheld,
whether or not actually withheld, and for any penalties
which may be imposed upon the payor for failure to
withhold, report, or deposit the proper amount, and for any
interest due on said amount, shall be borne by the Trusts
and SSI as provided in Section 37 hereof.
Upon receipt of a certificate from a shareholder
pertaining to withholding (including exemptions therefrom)
containing such information as required by a Trust of the
shareholder under applicable Federal and state laws, rules
and regulations, SSI shall promptly process the
certificate, which shall become effective as soon as
reasonably possible after receipt by SSI, but no later than
may be required by applicable Federal and state laws, rules
and regulations.
At the time a shareholder account is established with
a Trust, the Trust shall be responsible for (i) soliciting
the shareholder's tax identification number in the manner
and form required under applicable Federal and state laws,
rules and regulations; (ii) identifying and rejecting an
obviously incorrect number (as defined under applicable
Federal and state laws, rules and regulations) and (iii)
furnishing to SSI the number and any related information
provided by or on behalf of the shareholder. SSI shall be
responsible for any subsequent communications to the
shareholder that may be required in this regard.
In the case of withholding an amount in excess of the
proper amount from a payment made by or on behalf of a
Trust to a shareholder except as otherwise provided by
applicable Federal and state laws, rules and regulations,
SSI, at the direction of the Trust, shall immediately
adjust the shareholder's account, as well as succeeding
deposits; provided, however, that when an adjustment would
result in an adjustment across calendar years, SSI shall
not be required to make such adjustment.
In the case of (i) a failure to withhold the proper
amount from a dividend or other distribution or payment
made by or on behalf of any series of a Trust to a
shareholder or (ii) any penalties attributable to (a) a
failure to withhold the proper amount or (b) the
shareholder's failure to provide the Trust or SSI with
correct information requested in order to comply with
withholding requirements under applicable Federal and state
laws, rules and regulations, SSI, at the direction of the
Trust, shall immediately cause the redemption of Shares
from the shareholder's account with such series having a
value not exceeding the sum of such deficit amount and
applicable penalties and apply the proceeds to reimburse
whomever has borne the expense resulting from the
shareholder's failure. If the value of the Shares in the
shareholder's account with the series is less than the sum
of the deficit amount and applicable penalties, SSI may
cause the redemption of Shares having a value not exceeding
such difference from any account, including a joint
account, of the shareholder with any other series of the
Trust or any other series of another Trust, subject to the
consent of the other Trust, and apply the proceeds to
reimburse whoever has borne the expense resulting from the
shareholder's failure.
20. MAILINGS. SSI shall take all steps required,
including the addressing of envelopes, to make the
following additional mailings to shareholders:
A. SSI shall mail financial reports furnished by
each series of a Trust to shareholders as
requested and will mail the current Prospectus
for each series of the Trust to shareholders of
such series once each year;
B. SSI shall mail to shareholders of each series
of a Trust proxy material for each duly
scheduled meeting of shareholders of that
series;
C. SSI shall include in any of the above mailings
such other enclosures as are compatible for
mailing purposes as reasonably requested by the
Trusts;
D. SSI shall make such other mailings upon such
terms and conditions and for such fees as are
agreed to by SSI and the Trust from time to
time.
The Trusts shall deliver all material required to be
furnished to SSI for any scheduled mailing sufficiently in
advance of the date for such mailing, so that SSI may
effect the scheduled mailing.
21. TAX INFORMATION RETURNS AND REPORTS. SSI will
prepare and file with the appropriate governmental
agencies, such information, returns and reports as are
required to be so filed for reporting (i) dividends and
other distributions made, (ii) amounts withheld on
dividends and other distributions and payments under
applicable Federal and state laws, rules and regulations,
and (iii) gross proceeds of sales transactions as required
and as the Trusts shall direct SSI. Further, SSI shall
prepare and deliver to the Trusts reports showing amounts
withheld from dividends and other distributions and
payments made for each series of the Trusts.
22. INFORMATION TO BE FURNISHED TO SHAREHOLDERS. SSI
will prepare and transmit to each shareholder of the Trust
annually in such format as is reasonably requested by the
Trust, and as agreed to by SSI, information returns and
reports for reporting dividends and other distribution and
payments, amounts withheld, if any, and gross proceeds of
sales transactions as required under applicable Federal and
state laws, rules and regulations.
23. STOP ORDERS. Upon receipt of a request from a
Trust or a shareholder that a "stop" should be placed on
the shareholder's account, SSI will maintain a record of
such "stop" and notify the Trust if any transaction request
is received from a shareholder which would reduce the
number of Shares in an account on which a "stop" has been
placed. SSI will inform the Trusts of any information SSI
receives relating to a "stop." SSI shall also maintain for
the Trusts the record of share certificates on which a
"stop" has been placed, it being understood that a
certificate "stop" does not mean a "stop" on the
shareholder's entire account to which a certificate may
relate.
24. SHARE SPLITS AND SHARE DIVIDENDS. If a Trust
elects to declare a Share dividend or split for any series,
the services and fees with respect thereto will be
negotiated by the Trust and SSI.
25. REPLACEMENT OF SHARE CERTIFICATES. SSI may issue
a new Share certificate in place of a Share certificate
represented as not having been received or as having been
lost, stolen, seized or destroyed, upon receiving
instructions from a Trust and indemnity satisfactory to
SSI, and may issue a new Share certificate in exchange for,
and upon surrender of, an identifiable mutilated Share
certificate. Such instructions from the Trust shall be in
such form as has been approved by its Board of Trustees and
shall be in accordance with the provisions of its By-Laws
governing such matters.
26. UNCLAIMED AND UNDELIVERED SHARE CERTIFICATES.
Where a Share certificate is in the possession of SSI for
any reason, and has not been claimed by the record holder
or cannot be delivered to the record holder, SSI shall
cancel said certificate and reflect as uncertificated
Shares on the shareholder's account record the Shares
represented by said cancelled certificate.
27. REPORTS AND FILES. SSI shall maintain the files
and furnish the statistical and other information listed on
Schedule C. However, SSI reserves the right to delete,
change or add to the files maintained and information
provided so long as such deletions, additions or changes do
not impair the receipt of services described elsewhere in
this Agreement. SSI shall also use its best efforts to
obtain such additional statistical and other information as
the Trusts may reasonably request within the capabilities
of SSI, for such additional consideration as may be agreed
to by SSI and the Trusts.
28. EXAMINATION OF DAILY TRANSACTIONS. The Trusts
will examine reports reflecting each day's transactions and
other data delivered to it for the accuracy of the
transactions reflected therein and failure to reflect
transactions that should have been reflected therein. If
SSI has not received from a Trust, within five (5) business
days after delivery of such reports to the Trust, written
notice, which may be in the form of an appropriate
transaction instruction submitted by the Trust for the
purpose of correcting the error or omission, as to any
errors or omissions which a reasonable inspection and
normal audit and control procedure would reveal, then all
transactions reflected in such reports shall be deemed to
be correct and accepted by the Trust, and SSI shall have no
further responsibility for the omission from or correction,
deletion, or inclusion of any transaction reflected or
which should have been reflected therein, or any liability
to the Trust or any third person on account of such error
or omission.
29. DISPOSITION OF BOOKS, RECORDS, AND CANCELLED SHARE
CERTIFICATES. SSI will periodically send to the Trust all
books, documents, and records of the Trust no longer needed
for current purposes and Share certificates which have been
cancelled in transfer or in redemption; such books,
documents, records, and Share certificates shall be safely
stored by the Trusts for future reference for such period
as is required and by any means permitted by the Investment
Company Act of 1940, or the rules and regulations issued
thereunder, or other relevant statutes. SSI shall have no
liability for loss or destruction of said books, documents,
records, or Share certificates after they are returned to
the Trusts.
30. INSPECTION OF SHARE BOOKS. In case of any request
or demand for inspection of the books of a Trust reflecting
ownership of the Shares therein ("Share books"), SSI will
make a reasonable effort to notify the Trust and to secure
instructions as to permitting or refusing such inspection.
SSI reserves the right, however, to exhibit the Share books
to any person in case it is advised by its counsel that it
may be held liable for the failure to exhibit the Share
books to such person.
31. FEES. The Trust shall pay to SSI for its
servicing function hereunder and its transfer agent
function hereunder fees computed as set forth in Schedule A
hereto.
32. OUT-OF-POCKET EXPENSES. The Trust shall reimburse
SSI for any and all out-of-pocket expenses and charges in
performing services under this Agreement (other than
charges for normal data processing services and related
software, equipment and facilities) including, but not
limited to, mailing service, postage, printing of
shareholder statements, the cost of any and all forms of
the Trust and other materials used by SSI in communicating
with shareholders of the Trust, the cost of any equipment
or service used for communicating with the Trust's
custodian bank or other agent of the Trust, and all costs
of telephone communication with or on behalf of
shareholders allocated in a manner mutually acceptable to
the Trust and SSI.
33. INSTRUCTIONS, OPINION OF COUNSEL, AND SIGNATURES.
At any time SSI may apply to a duly authorized agent of a
Trust for instructions regarding the Trust, and may consult
counsel for the Trust or its own counsel, in respect of any
matter arising in connection with this Agreement, and it
shall not be liable for any action taken or omitted by it
in good faith in accordance with such instructions or with
the advice or opinion of such counsel. SSI shall be
protected in acting upon any such instruction, advice, or
opinion and upon any other paper or document delivered by
the Trust or such counsel believed by SSI to be genuine and
to have been signed by the proper person or persons and
shall not be held to have notice of any change of authority
of any officer or agent of the Trust, until receipt of
written notice thereof from the Trust.
34. TRUSTS' LEGAL RESPONSIBILITY. The Trust assumes
full responsibility for the preparation, contents, and
distribution of each Prospectus and Statement of Additional
Information of the Trust, and for complying with all
applicable requirements of the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended,
and any laws, rules, and regulations of government
authorities having jurisdiction over the Trust except that
SSI shall be responsible for all laws, rules and
regulations of government authorities having jurisdiction
over transfer agents and their activities. SSI assumes
full responsibility for complying with due diligence
requirements of payors of reportable dividends and of
brokers under the Internal Revenue Code with respect to
shareholder accounts.
35. REGISTRATION OF SSI AS TRANSFER AGENT. SSI
represents that it is registered with the Securities and
Exchange Commission as a transfer agent under Section 17A
of the Securities Exchange Act of 1934 and will notify the
Trusts promptly if such registration is revoked or if any
proceeding is commenced before the Securities and Exchange
Commission which may lead to such revocation.
36. CONFIDENTIALITY OF RECORDS. SSI agrees not to
disclose any information received from the Trusts to any
other customer of SSI or to any other person except SSI's
employees and agents, and shall use its best efforts to
maintain such information as confidential. Upon
termination of this Agreement, SSI shall return to the
Trusts all records in the possession and control of SSI
related to the Trusts' activities, other than SSI's own
business records, it being also understood that any
programs and systems used by SSI to provide the services
rendered hereunder will not be given to the Trusts.
Notwithstanding the foregoing, it is understood and
agreed that SSI may maintain with the Trusts' records
information and data to be utilized by SSI in providing
services to entities serving as trustees and/or custodians
of prototype Tax-Qualified Retirement Plans, IRA Plans,
plans for employees of public schools or tax-exempt
organizations, or other plans which invest in the Shares.
In the event that this Agreement is terminated, SSI may
transfer and retain from the records maintained for the
Trusts such information and data relating to participants
in such aforementioned plans as may be required for SSI to
continue providing its services to such trustees and/or
custodians.
37. LIABILITY AND INDEMNIFICATION. SSI shall not be
liable to the Trusts for any action taken or thing done by
it or its agents or contractors on behalf of a Trust in
carrying out the terms and provisions of this Agreement if
done in good faith and without negligence or misconduct on
the part of SSI, its agents or contractors.
The Trust shall indemnify and hold SSI, and its
controlling persons, if any, harmless from any and all
claims, actions, suits, losses, costs, damages, and
expenses, including reasonable expenses for counsel,
incurred by it in connection with its acceptance of this
Agreement, in connection with any action or omission by it
or its agents or contractors in the performance of its
duties hereunder to the Trusts, or as a result of acting
upon any instruction believed by it to have been executed
by a duly authorized agent of a Trust or as a result of
acting upon information provided by a Trust in form and
under policies agreed to by SSI and the Trusts provided
that: (i) to the extent such claims, actions, suits,
losses, costs, damages, or expenses relate solely to a
particular series or group of series of Shares, such
indemnification shall be only out of the assets of that
series or group of series; (ii) this indemnification shall
not apply to actions or omissions constituting negligence
or misconduct of SSI or its agents or contractors,
including but not limited to willful misfeasance, bad
faith, or gross negligence in the performance of their
duties, or reckless disregard of their obligations and
duties under this Agreement; and (iii) SSI shall give a
Trust prompt notice and reasonable opportunity to defend
against any such claim or action in its own name or in the
name of SSI.
SSI shall indemnify and hold harmless the Trust from
and against any and all claims, demands, expenses and
liabilities which the Trust may sustain or incur arising
out of, or incurred because of, the negligence or
misconduct of SSI or its agents or contractors, provided
that: (i) this indemnification shall not apply to actions
or omissions constituting negligence or misconduct of the
Trust or its other agents or contractors and (ii) the Trust
shall give SSI prompt notice and reasonable opportunity to
defend against any such claim or action in its own name or
in the name of the Trust.
38. INSURANCE. SSI represents that it has available
to it the insurance coverage set forth on Schedule D
hereto, and agrees to notify the Trusts in advance of any
proposed deletion or reduction in said insurance.
39. FURTHER ASSURANCES. Each party agrees to perform
such further acts and execute such further documents as are
necessary to effectuate the purposes hereof.
40. DUAL INTERESTS. It is understood that some person
or persons may be trustees, directors, officers, or
shareholders of both the Trusts and SSI, and that the
existence of any such dual interest shall not affect the
validity hereof or of any transactions hereunder except as
otherwise provided by specific provision of applicable law.
41. AMENDMENT AND TERMINATION. This Agreement may be
modified or amended from time to time by mutual agreement
between the parties hereto and may be terminated by at
least one hundred eighty (180) days' written notice given
by one party to the other. Upon termination hereof, the
Trust shall pay to SSI such compensation as may be due as
of the date of such termination and shall reimburse SSI for
its costs, expenses, and disbursements payable under this
Agreement to such date. In the event that in connection
with termination a successor to any of the duties or
responsibilities of SSI hereunder is designated by the
Trust by written notice to SSI, it shall promptly upon such
termination and at the expense of the Trust, transfer to
such successor a certified list of shareholders of each
series of the Trust (with name, address, and tax
identification number), a record of the account of each
shareholder and status thereof, and all other relevant
books, records, and data established or maintained by SSI
under this Agreement and shall cooperate in the transfer of
such duties and responsibilities, including provision, at
the expense of the Trust, for assistance from SSI personnel
in the establishment of books, records, and other data by
such successor.
42. ASSIGNMENT.
A. Except as provided below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
B. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted
successors and assigns.
C. SSI may subcontract for the performance of any of its
duties or obligations under this Agreement with any person
if such subcontract is approved by the Board of Trustees of
a Trust provided, however, that SSI shall be as fully
responsible to the Trust for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Notwithstanding the foregoing, SSI may subcontract with any
party who holds Shares in an omnibus account for that
party's customers, for the performance of duties or
obligations to the beneficial owners of such Shares without
approval of the Board of Trustees.
43. NOTICE. Any notice under this Agreement shall be
in writing, addressed and delivered or sent by registered
mail, postage prepaid to the other party at such address as
such other party may designate for the receipt of such
notices. Until further notice to the other parties, it is
agreed that the address of the Trusts is One South Wacker
Drive, Chicago, Illinois 60606, Attention: Secretary, and
that of SSI for this purpose is One South Wacker Drive,
Chicago, Illinois 60606, Attention: Secretary.
44. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any
obligation of a Trust hereunder shall be binding only upon
the assets of that Trust (or the applicable series
thereof), as provided in its Agreement and Declaration of
Trust, and shall not be binding upon any Trustee, officer,
employee, agent or shareholder of the Trust or upon any
other Trust. Neither the authorization of any action by
the Trustees or the shareholders of a Trust, nor the
execution of this Agreement on behalf of the Trust shall
impose any liability upon any Trustee or any shareholder.
Nothing in this Agreement shall protect any Trustee against
any liability to which such Trustee would otherwise be
subject by willful misfeasance, bad faith or gross
negligence in the performance of his duties, or reckless
disregard of his obligations and duties under this
Agreement.
45. REFERENCES AND HEADINGS. In this Agreement and in
any such amendment, references to this Agreement and all
expressions such as "herein," "hereof," and "hereunder,"
shall be deemed to refer to this Agreement as amended or
affected by any such amendments. Headings are placed
herein for convenience of reference only and shall not be
taken as a part hereof or control or affect the meaning,
construction or effect of this Agreement. This Agreement
may be executed in any number of counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the day and year first above
written.
STEIN ROE ADVISOR TRUST
ATTEST: By: ____________________________
Timothy K. Armour, President
____________________________
Nicolette D. Parrish
Assistant Secretary
STEINROE SERVICES INC.
ATTEST: By: ____________________________
Hans P. Ziegler
President
____________________________
Nicolette D. Parrish,
Assistant Secretary
<PAGE>
Schedule A
Stein Roe Advisor Trust
Shareholder Servicing and Transfer Agency Agreement
Fees pursuant to Section 31 of the Agency Agreement
shall be calculated in accordance with the following
schedule. For each series, the fee shall accrue on each
calendar day and shall be payable monthly on the first
business day of the next succeeding calendar month.
The daily fee accrual shall be computed by multiplying
the fraction of one divided by the number of days in the
calendar year by the applicable annual fee and multiplying
this product by the net assets of the series, determined in
the manner established by the Board of Trustees of the
applicable Trust, as of the close of business on the last
preceding business day on which the series' net asset value
was determined.
For SSI's shareholder servicing function:
Series Annual Fee
- ----------------------------------- -----------------------
Stein Roe Advisor Growth & Income 0.25% of average daily
Fund net assets
Stein Roe Advisor International Fund
Stein Roe Advisor Young Investor Fund
Stein Roe Advisor Special Venture Fund
Stein Roe Advisor Balanced Fund
Stein Roe Advisor Growth Stock Fund
Stein Roe Advisor Special Fund
For SSI's transfer agent function:
Series Annual Fee
- ----------------------------------- -----------------------
Stein Roe Advisor Growth & Income 0.05% of average daily
Fund net assets
Stein Roe Advisor International Fund
Stein Roe Advisor Young Investor Fund
Stein Roe Advisor Special Venture Fund
Stein Roe Advisor Balanced Fund
Stein Roe Advisor Growth Stock Fund
Stein Roe Advisor Special Fund
Dated: February __, 1997
<PAGE>
Schedule B
Stein Roe Advisor Trust
Shareholder Servicing and Transfer Agency Agreement
The Series of the Trust covered by this agreement are as
follows:
Name of Series Effective Date
- -------------------------------------- -----------------
Stein Roe Advisor Growth & Income Fund February __, 1997
Stein Roe Advisor International Fund February __, 1997
Stein Roe Advisor Young Investor Fund February __, 1997
Stein Roe Advisor Special Venture Fund February __, 1997
Stein Roe Advisor Balanced Fund February __, 1997
Stein Roe Advisor Growth Stock Fund February __, 1997
Stein Roe Advisor Special Fund February __, 1997
Dated: February __, 1997
<PAGE>
SCHEDULE C
SYSTEM DESCRIPTION
TRANSACTION PROCESSING LOG - PROCESSING SPAN IN DAYS
EXPEDITED REDEMPTION FILE - BATCH MAINTENANCE
JOURNAL
DAILY CRT OPERATOR STATISTICS
DAILY BATCH MONITORING REPORT
ONLINE NEW ACCOUNT REPORT
DETAIL DAILY "AS OF" REPORT - BY ACCOUNTABILITY
SPECIAL HANDLING - DAILY CONFIRMATIONS
BANK ACCOUNT OUTSTANDING BALANCE VERIFICATION
MISCELLANEOUS FEE JOURNAL
BATCH ENTRY SUMMARY REPORT
ACCOUNT CLOSEOUT ADJUSTMENTS - SUMMARY REPORT
REDEMPTION CHECK REGISTER
WIRE INSTRUCTION REPORT FOR EXPEDITED REDEMPTIONS
DST INC. - DDPS DAILY CASH RECAP REPORT
DAILY UPDATE (MU100) ERROR LISTING
EXCHANGE DISTRIBUTION SUMMARY REPORT
BATCH TRANSMISSION ERRORS - TRANSACTION ID: DFUNP
DAILY CHECK RECONCILIATION UPDATE REGISTER UCHECK
UPDATES
WIRE INSTRUCTION REPORT FOR EXPEDITED REDEMPTIONS
WIRE INSTRUCTION REPORT FOR DIRECT REDEMPTIONS
TRANSFER RECORD DAILY DVND INCREASE JOURNAL
RECORD DATE JOURNAL
DAILY RECAP & SHARE CONTROL SHEET - SHARE AMOUNT
EXCHANGE CLOSE-OUT AUTOMATIC REINVESTMENT REPORT BY
EXCHANGE (FROM) FUND
DETAIL DAILY "AS OF" REPORT - BY REASON CODE
SHAREOWNER CHECK-CONFIRM RECONCILIATION
DAILY/FREE DAILY BALANCE LISTING - ALPHA CODE
SEQUENCE
CONSOLIDATED ERROR REPORTING
DAILY CONFIRMED UNPAID PURCHASE JOURNAL - NO LOAD
REQUESTS FOR DUPLICATE CONFIRMS
CALCULATED DAILY DIVIDEND RATE
EXTERNAL CHECK/INVESTMENT ISSUANCE REPORT
IN-HOUSE CHECK ISSUANCE REPORT
AUTOMATED CLEARING HOUSE REDEMPTION TRANSACTIONS
STEINROE FUNDS
ACH PURCHASE TRANSACTIONS REPORT
ACH MONTHLY REDEMPTION/PURCHASE - TRANSACTION REPORT
STEIN ROE & FARNHAM TRANSFER RECORD FOR DIRECT
PAYMENTS
REDEMPTION CHECK REGISTER
DAILY DIVIDEND ACCRUAL CLOSEOUTS COMBINED WITH
CLOSEOUT REDEMPTION WIRES
DAILY DIVIDEND ACCRUAL CLOSEOUTS UNMATCHED CLOSEOUT
ACCRUAL ERROR REPORT
AVERAGE COST ACCOUNT CALCULATION EXCEPTION REPORT
FOR DAILY AVERAGE COST FORMS REQUEST
NEW FOREIGN ACCOUNT REPORT
BATCH BALANCE LISTING
TRANSACTION TRACER REPORT
BATCH BALANCE LISTING - ACCOUNT DETAIL
TIMER - SWITCH UPDATE VERIFICATION
REDEMPTION & ADDRESS CHANGE PROCESSED SAME DAY
WARNING REPORT
AUTOMATE CLEARING HOUSE PRENOTE TRANSACTIONS
STEINROE FUNDS
EXRED WARNING REPORT
EXCHANGE WARNING REPORT UNLIKE TAX ID NUMBERS
INVESTOR TRANSFER TRANSACTIONS LISTING INVESTOR
DISTRIBUTOR CODE: STR
DETAIL DAILY "AS OF" REPORT BY TRANSACTION CODE
DAILY "AS OF" REPORT
DAILY FUND SHARE BALANCE ERROR LIST
DAILY BATCH BALANCE
DAILY SHAREOWNER MAINTENANCE ERROR LISTING
EXPEDITED REDEMPTION FILE STATUS JOURNAL
NEW ACCOUNT VERIFICATION QUALITY REPORT
SYSTEMATIC EXCHANGE DAILY MAINTENANCE ACTIVITY
ADDITIONAL MAIL MAINTENANCE JOURNAL
BATCH TRANSMISSION ERRORS TRANSACTION ID: ATRANS
DEALER FILE MAINTENANCE REPORT
CHECK-WRITING REDEMPTION REPORT
ASSET ALLOCATION - REALLOCATION
NEW ACCOUNT REPORT
SCHEDULE D
<TABLE>
SCHEDULE OF INSURANCE
STEIN ROE & FARNHAM INCORPORATED
ONE SOUTH WACKER DRIVE
CHICAGO, IL 60606-4685
<CAPTION>
CARRIER POLICY NO. TERM COVERAGE EXPOSURE/RATE LIMITS
PREMIUM
- --------- ------------ -------- --------- ---------------------------- -------------------------------- -----
<S> <C> <C> <C> <C> <C> <C>
Federal (96)7626-89 01/01/95 Workers' FL-8810 $213,000 .71 Workers' Compensation: Statutory $61,612
Insurance. -79 -96 Compensation NY-8810 $660,000 .57
Co sation Experience Mod. .97 Employers Liability:
Premium Disc. 10.1% Bodily Injury by Accident:
$100,000 each accident
IL-8810 $18,900,000 .42
IL-8742 $ 710,000 .92 Bodily Injury by Disease:
Experience Mod. .97 $500,000 policy limit
IL Schedule Credit 25%
Premium Discount 10.1% Bodily Injury by Disease:
$100,000 each employee
Flat Coverage Monopolistic
Fund States 50. x 6
Expense Constant 160
- ---------------------------------------------------------------------------------------------------------------------------------
Federal 681-26-32 01/01/95 Financial Blanket Personal $2,000,000 General Aggregate $21,686.92
Insurance -96 Package Property Limit $11,070,000 (other than Products Completed
Co. Policy Operations)
Two Scheduled Locations: $1,000,000 Products Completed
Puerto Rico $30,300 Operations Aggregate Limit
1510 Skokie Blvd. $600,000
$1,000,000 Personal & Advertising
Library Values: $80,000 Injury Limit
Fine Arts: $399,387 $1,000,000 Each Occurrence Limit
Inland Marine - Valuable $10,000 Medical Expense Limit
Papers
General Liability based on $100,000 Personal Property Damage
square feet to Rented Premises Limit
- ---------------------------------------------------------------------------------------------------------------------------------
Vigilant 7312-72-46 01/01/95 Foreign Liability & N.O. Auto $1,765 General Liability: $3,100
Insurance -96 Package Policy Workers' Compensation 1,335 $1,000,000 Commercial Liability
Co. for Bodily Injury or Property
General Damage Liability per occurrence
Liability $50 Per Person, per trip- & Personal Injury or Advertising
Flat. Based on: Injury caused by an offense
Automobile Total Employees - 20 $1,000,000 Annual Aggregate -
Liability-DIC/ No. of Trips 49 Products/Completed Operations
Excess Auto Total No. of Days 104
$250,000 Fire Legal Liability
Foreign Volun- $10,000 Medical Expense Per person
ary Workers'
Compensation $30,000 Medical Expense per accident
Automobile Liability - DIC/Excess Auto
$1,000,000 Bodily Injury per person
$1,000,000 Bodily Injury per occurrence
$1,000,000 Property damage per occurrence
$10,000 Medial Expense per person
$30,000 Medical Per Accident
Foreign Voluntary Workers'
Compensation - Statutory
$100,000 Employers Liability Limit
$20,000 Repatriation Expense for
any one Employee
- ---------------------------------------------------------------------------------------------------------------------------------
St. Paul IM01200804 01/01/95 Electronic Data/Media Flat $400 for Computer Equipment $4,132,731 $6,987
Insurance -96 Data $500,000 limit
Co. Processing
Business Interruption -
1,000,000 limit Valuable Papers & Records 600,000
Contingent Business Interrup-
tion: 1,000,000 - Kansas City Business Interruption 1,000,000
100,000 - Downers Grove
Deductible Contingent Business
Computer Equipment, Data and Interruption 1,100,000
Media and Extra Expense
Combined $1,000
Special Breakdown Deductible Extra Expense 500,000
$5,000
Transit
Computer Equipment $50,000
Data & Media $50,000
Valuable Papers $5,000
- ---------------------------------------------------------------------------------------------------------------------------------
Gulf GA5743948P 02/15/96 Excess Mutual $15,000,000 excess of $5,000,000 $540,935
Insurance -96 Fund D&O/E&O excess of underlying deductible
Company
- ---------------------------------------------------------------------------------------------------------------------------------
Federal 81391969-A 02/15/95 Investment Limits of Liability $25,000,000 $211,312
Insurance -96 Company Assets Extended Forgery 10,000,000
Co. Protection Bond Threats to Persons 5,000,000
Uncollectible items of Deposit 500,000
Audit Expense 100,000
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 9(b)
ADMINISTRATIVE AGREEMENT
BETWEEN
STEIN ROE ADVISOR TRUST
AND
STEIN ROE & FARNHAM INCORPORATED
STEIN ROE ADVISOR TRUST, a Massachusetts business trust
registered under the Securities Act of 1933 ("1933 Act") and
the Investment Company Act of 1940 ("1940 Act") (the
"Trust"), hereby appoints STEIN ROE & FARNHAM INCORPORATED, a
Delaware corporation, of Chicago, Illinois ("Administrator"),
to furnish certain administrative services with respect to
the Trust and the series of the Trust listed in Schedule A
hereto, as such schedule may be amended from time to time
(each such series hereinafter referred to as "Fund").
The Trust and Administrator hereby agree that:
1. ADMINISTRATIVE SERVICES. Subject to the terms of
this Agreement and the supervision and control of the Trust's
Board of Trustees ("Trustees"), Administrator shall provide
the following services with respect to the Trust:
(a) Preparation and maintenance of the Trust's registration
statement with the Securities and Exchange Commission
("SEC");
(b) Preparation and periodic updating of the prospectus and
statement of additional information for the Fund
("Prospectus");
(c) Preparation, filing with appropriate regulatory
authorities, and dissemination of various reports for the
Fund, including but not limited to semiannual reports to
shareholders under Section 30(d) of the 1940 Act, annual
and semiannual reports on Form N-SAR, and notices
pursuant to Rule 24f-2;
(d) Arrangement for all meetings of shareholders, including
the collection of all information required for
preparation of proxy statements, the preparation and
filing with appropriate regulatory agencies of such proxy
statements, the supervision of solicitation of
shareholders and shareholder nominees in connection
therewith, tabulation (or supervision of the tabulation)
of votes, response to all inquiries regarding such
meetings from shareholders, the public and the media, and
preparation and retention of all minutes and all other
records required to be kept in connection with such
meetings;
(e) Maintenance and retention of all Trust charter documents
and the filing of all documents required to maintain the
Trust's status as a Massachusetts business trust and as a
registered open-end investment company;
(f) Arrangement and preparation and dissemination of all
materials for meetings of the Board of Trustees and
committees thereof and preparation and retention of all
minutes and other records thereof;
(g) Preparation and filing of the Trust's Federal, state, and
local income tax returns and calculation of any tax
required to be paid in connection therewith;
(h) Calculation of all Trust and Fund expenses and
arrangement for the payment thereof;
(i) Calculation of and arrangement for payment of all income,
capital gain, and other distributions to shareholders of
each Fund;
(j) Determination, after consultation with the officers of
the Trust, of the jurisdictions in which shares of
beneficial interest of each Fund ("Shares") shall be
registered or qualified for sale, or may be sold pursuant
to an exemption from such registration or qualification,
and preparation and maintenance of the registration or
qualification of the Shares for sale under the securities
laws of each such jurisdiction;
(k) Provision of the services of persons who may be appointed
as officers of the Trust by the Board of Trustees (it is
agreed that some person or persons may be officers of
both the Trust and the Administrator, and that the
existence of any such dual interest shall not affect the
validity of this Agreement except as otherwise provided
by specific provision of applicable law);
(l) Preparation and, subject to approval of the Trust's Chief
Financial Officer, dissemination of the Trust's and each
Fund's quarterly financial information to the Board of
Trustees and preparation of such other reports relating
to the business and affairs of the Trust and each Fund as
the officers and Board of Trustees may from time to time
reasonably request;
(m) Administration of the Trust's Code of Ethics and periodic
reporting to the Board of Trustees of Trustee and officer
compliance therewith;
(n) Provision of internal legal, accounting, compliance,
audit, and risk management services and periodic
reporting to the Board of Trustees with respect to such
services;
(o) Negotiation, administration, and oversight of third party
services to the Trust including, but not limited to,
custody, tax, transfer agency, disaster recovery, audit,
and legal services;
(p) Negotiation and arrangement for insurance desired or
required of the Trust and administering all claims
thereunder;
(q) Response to all inquiries by regulatory agencies, the
press, and the general public concerning the business and
affairs of the Trust, including the oversight of all
periodic inspections of the operations of the Trust and
its agents by regulatory authorities and responses to
subpoenas and tax levies;
(r) Handling and resolution of any complaints registered with
the Trust by shareholders, regulatory authorities, and
the general public;
(s) Monitoring legal, tax, regulatory, and industry
developments related to the business affairs of the Trust
and communicating such developments to the officers and
Board of Trustees as they may reasonably request or as
the Administrator believes appropriate;
(t) Administration of operating policies of the Trust and
recommendation to the officers and the Board of Trustees
of the Trust of modifications to such policies to
facilitate the protection of shareholders or market
competitiveness of the Trust and Fund and to the extent
necessary to comply with new legal or regulatory
requirements;
(u) Responding to surveys conducted by third parties and
reporting of Fund performance and other portfolio
information; and
(v) Filing of claims, class actions involving portfolio
securities, and handling administrative matters in
connection with the litigation or settlement of such
claims.
2. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In
connection with the services to be provided by Administrator
under this Agreement, Administrator may, to the extent it
deems appropriate, and subject to compliance with the
requirements of applicable laws and regulations and upon
receipt of approval of the Trustees, make use of (i) its
affiliated companies and their directors, trustees, officers,
and employees and (ii) subcontractors selected by
Administrator, provided that Administrator shall supervise
and remain fully responsible for the services of all such
third parties in accordance with and to the extent provided
by this Agreement. All costs and expenses associated with
services provided by any such third parties shall be borne by
Administrator or such parties.
3. INSTRUCTIONS, OPINIONS OF COUNSEL, AND SIGNATURES.
At any time Administrator may apply to a duly authorized
agent of Trust for instructions regarding the Trust, and may
consult counsel for the Trust or its own counsel, in respect
of any matter arising in connection with this Agreement, and
it shall not be liable for any action taken or omitted by it
in good faith in accordance with such instructions or with
the advice or opinion of such counsel. Administrator shall
be protected in acting upon any such instruction, advice, or
opinion and upon any other paper or document delivered by the
Trust or such counsel believed by Administrator to be genuine
and to have been signed by the proper person or persons and
shall not be held to have notice of any change of authority
of any officer or agent of the Trust, until receipt of
written notice thereof from the Trust.
4. EXPENSES BORNE BY TRUST. Except to the extent
expressly assumed by Administrator herein or under a separate
agreement between the Trust and Administrator and except to
the extent required by law to be paid by Administrator, the
Trust shall pay all costs and expenses incidental to its
organization, operations and business. Without limitation,
such costs and expenses shall include but not be limited to:
(a) All charges of depositories, custodians and other
agencies for the safekeeping and servicing of its cash,
securities, and other property;
(b) All charges for equipment or services used for obtaining
price quotations or for communication between
Administrator or the Trust and the custodian, transfer
agent or any other agent selected by the Trust;
(c) All charges for investment advisory, portfolio
management, and accounting services provided to the Trust
by the Administrator, or any other provider of such
services;
(d) All charges for services of the Trust's independent
auditors and for services to the Trust by legal counsel;
(e) All compensation of Trustees, other than those affiliated
with Administrator, all expenses incurred in connection
with their services to the Trust, and all expenses of
meetings of the Trustees or committees thereof;
(f) All expenses incidental to holding meetings of
shareholders, including printing and of supplying each
record-date shareholder with notice and proxy
solicitation material, and all other proxy solicitation
expenses;
(g) All expenses of printing of annual or more frequent
revisions of the Trust's prospectus(es) and of supplying
each then-existing shareholder with a copy of a revised
prospectus;
(h) All expenses related to preparing and transmitting
certificates representing the Trust's shares;
(i) All expenses of bond and insurance coverage required by
law or deemed advisable by the Board of Trustees;
(j) All brokers' commissions and other normal charges
incident to the purchase, sale, or lending of Fund
securities;
(k) All taxes and governmental fees payable to Federal, state
or other governmental agencies, domestic or foreign,
including all stamp or other transfer taxes;
(l) All expenses of registering and maintaining the
registration of the Trust under the 1940 Act and, to the
extent no exemption is available, expenses of registering
the Trust's shares under the 1933 Act, of qualifying and
maintaining qualification of the Trust and of the Trust's
shares for sale under securities laws of various states
or other jurisdictions and of registration and
qualification of the Trust under all other laws
applicable to the Trust or its business activities;
(m) All interest on indebtedness, if any, incurred by the
Trust or a Fund; and
(n) All fees, dues and other expenses incurred by the Trust
in connection with membership of the Trust in any trade
association or other investment company organization.
5. ALLOCATION OF EXPENSES BORNE BY TRUST. Any expenses
borne by the Trust that are attributable solely to the
organization, operation or business of a Fund shall be paid
solely out of Fund assets. Any expense borne by the Trust
which is not solely attributable to a Fund, nor solely to any
other series of shares of the Trust, shall be apportioned in
such manner as Administrator determines is fair and
appropriate, or as otherwise specified by the Board of
Trustees.
6. EXPENSES BORNE BY ADMINISTRATOR. Administrator at
its own expense shall furnish all executive and other
personnel, office space, and office facilities required to
render the services set forth in this Agreement. However,
Administrator shall not be required to pay or provide any
credit for services provided by the Trust's custodian or
other agents without additional cost to the Trust.
In the event that Administrator pays or assumes any
expenses of the Trust or a Fund not required to be paid or
assumed by Administrator under this Agreement, Administrator
shall not be obligated hereby to pay or assume the same or
similar expense in the future; provided that nothing
contained herein shall be deemed to relieve Administrator of
any obligation to the Trust or a Fund under any separate
agreement or arrangement between the parties.
7. ADMINISTRATION FEE. For the services rendered,
facilities provided, and charges assumed and paid by
Administrator hereunder, the Trust shall pay to Administrator
out of the assets of each Fund fees at the annual rate for
such Fund as set forth in Schedule B to this Agreement. For
each Fund, the administrative fee shall accrue on each
calendar day, and shall be payable monthly on the first
business day of the next succeeding calendar month. The
daily fee accrual shall be computed by multiplying the
fraction of one divided by the number of days in the calendar
year by the applicable annual rate of fee, and multiplying
this product by the net assets of the Fund, determined in the
manner established by the Board of Trustees, as of the close
of business on the last preceding business day on which the
Fund's net asset value was determined.
8. STATE EXPENSE LIMITATION. If for any fiscal year of
a Fund, its aggregate operating expenses ("Aggregate
Operating Expenses") exceed the applicable percentage expense
limit imposed under the securities law and regulations of any
state in which Shares of the Fund are qualified for sale (the
"State Expense Limit"), the Administrator shall pay such Fund
the amount of such excess. For purposes of this State
Expense Limit, Aggregate Operating Expenses shall (a) include
(i) any fees or expense reimbursements payable to
Administrator pursuant to this Agreement and (ii) to the
extent the Fund invests all or a portion of its assets in
another investment company registered under the 1940 Act, the
pro rata portion of that company's operating expenses
allocated to the Fund, and (iii) any compensation payable to
Administrator pursuant to any separate agreement relating to
the Fund's investment operations and portfolio management,
but (b) exclude any interest, taxes, brokerage commissions,
and other normal charges incident to the purchase, sale or
loan of securities, commodity interests or other investments
held by the Fund, litigation and indemnification expense, and
other extraordinary expenses not incurred in the ordinary
course of business. Except as otherwise agreed to by the
parties or unless otherwise required by the law or regulation
of any state, any reimbursement by Administrator to a Fund
under this section shall not exceed the administrative fee
payable to Administrator by the Fund under this Agreement.
Any payment to a Fund by Administrator hereunder shall
be made monthly, by annualizing the Aggregate Operating
Expenses for each month as of the last day of the month. An
adjustment for payments made during any fiscal year of the
Fund shall be made on or before the last day of the first
month following such fiscal year of the Fund if the Annual
Operating Expenses for such fiscal year (i) do not exceed the
State Expense Limitation or (ii) for such fiscal year there
is no applicable State Expense Limit.
9. NON-EXCLUSIVITY. The services of Administrator to
the Trust hereunder are not to be deemed exclusive and
Administrator shall be free to render similar services to
others.
10. STANDARD OF CARE. Neither Administrator, nor any
of its directors, officers or stockholders, agents or
employees shall be liable to the Trust, any Fund, or its
shareholders for any action taken or thing done by it or its
subcontractors or agents on behalf of the Trust or the Fund
in carrying out the terms and provisions of this Agreement if
done in good faith and without negligence or misconduct on
the part of Administrator, its subcontractors, or agents.
11. INDEMNIFICATION. The Trust shall indemnify and
hold Administrator and its controlling persons, if any,
harmless from any and all claims, actions, suits, losses,
costs, damages, and expenses, including reasonable expenses
for counsel, incurred by it in connection with its acceptance
of this Agreement, in connection with any action or omission
by it or its agents or subcontractors in the performance of
its duties hereunder to the Trust, or as a result of acting
upon any instruction believed by it to have been executed by
a duly authorized agent of the Trust or as a result of acting
upon information provided by the Trust in form and under
policies agreed to by Administrator and the Trust, provided
that: (i) to the extent such claims, actions, suits, losses,
costs, damages, or expenses relate solely to a particular
Fund or group of Funds, such indemnification shall be only
out of the assets of that Fund or group of Funds; (ii) this
indemnification shall not apply to actions or omissions
constituting negligence or misconduct of Administrator or its
agents or subcontractors, including but not limited to
willful misfeasance, bad faith, or gross negligence in the
performance of their duties, or reckless disregard of their
obligations and duties under this Agreement; and (iii)
Administrator shall give the Trust prompt notice and
reasonable opportunity to defend against any such claim or
action in its own name or in the name of Administrator.
Administrator shall indemnify and hold harmless the
Trust from and against any and all claims, demands, expenses
and liabilities which such Trust may sustain or incur arising
out of, or incurred because of, the negligence or misconduct
of Administrator or its agents or subcontractors, provided
that such Trust shall give Administrator prompt notice and
reasonable opportunity to defend against any such claim or
action in its own name or in the name of such Trust.
12. EFFECTIVE DATE, AMENDMENT, AND TERMINATION. This
Agreement shall become effective as to any Fund as of the
effective date for that Fund specified in Schedule A hereto
and, unless terminated as hereinafter provided, shall remain
in effect with respect to such Fund thereafter from year to
year so long as such continuance is specifically approved
with respect to that Fund at least annually by a majority of
the Trustees who are not interested persons of Trust or
Administrator.
As to any Trust or Fund of that Trust, this Agreement
may be modified or amended from time to time by mutual
agreement between the Administrator and the Trust and may be
terminated by Administrator or Trust by at least sixty (60)
days' written notice given by the terminating party to the
other party. Upon termination as to any Fund, the Trust
shall pay to Administrator such compensation as may be due
under this Agreement as of the date of such termination and
shall reimburse Administrator for its costs, expenses, and
disbursements payable under this Agreement to such date. In
the event that, in connection with a termination, a successor
to any of the duties or responsibilities of Administrator
hereunder is designated by the Trust by written notice to
Administrator, upon such termination Administrator shall
promptly, and at the expense of the Trust or Fund with
respect to which this Agreement is terminated, transfer to
such successor all relevant books, records, and data
established or maintained by Administrator under this
Agreement and shall cooperate in the transfer of such duties
and responsibilities, including provision, at the expense of
such Fund, for assistance from Administrator personnel in the
establishment of books, records, and other data by such
successor.
13. ASSIGNMENT. Any interest of Administrator under
this Agreement shall not be assigned either voluntarily or
involuntarily, by operation of law or otherwise, without the
prior written consent of Trust.
14. BOOKS AND RECORDS. Administrator shall maintain,
or oversee the maintenance by such other persons as may from
time to time be approved by the Board of Trustees to
maintain, the books, documents, records, and data required to
be kept by the Trust under the 1940 Act, the laws of the
Commonwealth of Massachusetts or such other authorities
having jurisdiction over the Trust or the Fund or as may
otherwise be required for the proper operation of the
business and affairs of the Trust or the Fund (other than
those required to be maintained by any investment adviser
retained by the Trust on behalf of a Fund in accordance with
Section 15 of the 1940 Act).
Administrator will periodically send to the Trust all
books, documents, records, and data of the Trust and each of
its Funds listed in Schedule A that are no longer needed for
current purposes or required to be retained as set forth
herein. Administrator shall have no liability for loss or
destruction of said books, documents, records, or data after
they are returned to such Trust.
Administrator agrees that all such books, documents,
records, and data which it maintains shall be maintained in
accordance with Rule 31a-3 of the 1940 Act and that any such
items maintained by it shall be the property of the Trust.
Administrator further agrees to surrender promptly to the
Trust any such items it maintains upon request, provided that
the Administrator shall be permitted to retain a copy of all
such items. Administrator agrees to preserve all such items
maintained under Rule 31a-1 for the period prescribed under
Rule 31a-2 of the 1940 Act.
Trust shall furnish or otherwise make available to
Administrator such copies of the financial statements, proxy
statements, reports, and other information relating to the
business and affairs of each Fund of the Trust as
Administrator may, at any time or from time to time,
reasonably require in order to discharge its obligations
under this Agreement.
15. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any
obligation of Trust hereunder shall be binding only upon the
assets of Trust (or the applicable Fund thereof) and shall
not be binding upon any Trustee, officer, employee, agent or
shareholder of Trust. Neither the authorization of any
action by the Trustees or shareholders of Trust nor the
execution of this Agreement on behalf of Trust shall impose
any liability upon any Trustee or any shareholder.
16. USE OF ADMINISTRATOR'S NAME. The Trust may use its
name and the names of its Funds listed in Schedule A or any
other name derived from the name "Stein Roe & Farnham" only
for so long as this Agreement or any extension, renewal, or
amendment hereof remains in effect, including any similar
agreement with any organization which shall have succeeded to
the business of Administrator as it relates to the services
it has agreed to furnish under this Agreement. At such time
as this Agreement or any extension, renewal or amendment
hereof, or such other similar agreement shall no longer be in
effect, Trust will cease to use any name derived from the
name "Stein Roe & Farnham" or otherwise connected with
Administrator, or with any organization which shall have
succeeded to Administrator's business herein described.
17. REFERENCES AND HEADINGS. In this Agreement and in
any such amendment, references to this Agreement and all
expressions such as "herein," "hereof," and "hereunder" shall
be deemed to refer to this Agreement as amended or affected
by any such amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a
part hereof or control or affect the meaning, construction or
effect of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an
original.
Dated: February __, 1997
STEIN ROE ADVISOR TRUST
ATTEST: By: ____________________________
Timothy K. Armour
President
____________________________
Nicolette D. Parrish
Assistant Secretary
STEIN ROE & FARNHAM INCORPORATED.
ATTEST: By: ____________________________
Hans P. Ziegler
Chief Executive Officer
____________________________
Nicolette D. Parrish,
Assistant Secretary
<PAGE>
STEIN ROE ADVISOR TRUST
ADMINISTRATIVE AGREEMENT
SCHEDULE A
The Funds of the Trust currently subject to this Agreement
are as follows:
Name of Series Effective Date
- -------------------------------------- -----------------
Stein Roe Advisor Growth & Income Fund February __, 1997
Stein Roe Advisor International Fund February __, 1997
Stein Roe Advisor Young Investor Fund February __, 1997
Stein Roe Advisor Special Venture Fund February __, 1997
Stein Roe Advisor Balanced Fund February __, 1997
Stein Roe Advisor Growth Stock Fund February __, 1997
Stein Roe Advisor Special Fund February __, 1997
Dated: February __, 1997
<PAGE>
STEIN ROE ADVISOR TRUST
ADMINISTRATIVE AGREEMENT
SCHEDULE B
Compensation pursuant to Section 7 of this Agreement shall be
calculated with respect to each Fund in accordance with the
following schedule applicable to average daily net assets of
the Fund:
Fund Administrative Fee Schedule
- --------------------------- --------------------------------
Stein Roe Advisor Growth &
Income Fund 0.15% of the first $500 million,
0.125% of the next $500 million,
0.10% thereafter
Stein Roe Advisor Inter-
national Fund 0.15%
Stein Roe Advisor Young
Investor Fund 0.20% of the first $500 million,
0.15% of the next $500 million,
0.125% thereafter
Stein Roe Advisor Special
Venture Fund 0.15%
Stein Roe Advisor Balanced
Fund 0.15% of the first $500 million,
0.125% of the next $500 million,
0.10% thereafter
Stein Roe Advisor Growth
Stock Fund 0.15% of the first $500 million,
0.125% of the next $500 million,
0.10% thereafter
Stein Roe Advisor Special
Fund 0.15% of the first $500 million,
0.125% of the next $500 million,
0.10% of the next $500 million,
0.075% thereafter
Dated: February __, 1997
<PAGE>
EXHIBIT 9(c)
ACCOUNTING AND BOOKKEEPING AGREEMENT
This Agreement is made this ___ day of February. 1997,
by and between STEIN ROE ADVISOR TRUST, a Massachusetts
business trust, (hereinafter referred to as the "Trust") and
STEIN ROE & FARNHAM INCORPORATED ("Stein Roe"), a Delaware
corporation.
1. Appointment. The Trust hereby appoints Stein Roe to act
as its agent to perform the services described herein with
respect to each series of shares of the Trust (the "Series")
identified in and beginning on the date specified on Appendix
I to this Agreement, as may be amended from time to time.
Stein Roe hereby accepts appointment as the Trust's agent and
agrees to perform the services described herein.
2. Accounting.
(a) Pricing. For each Series of the Trust, Stein Roe
shall value all securities and other assets of the
Series, and compute the net asset value per share of
such Series, at such times and dates and in the
manner and by such methodology as is specified in the
then currently effective prospectus and statement of
additional information for such Series, and pursuant
to such other written procedures or instructions
furnished to Stein Roe by the Trust. To the extent
procedures or instructions used to value securities
or other assets of a Series under this Agreement are
at any time inconsistent with any applicable law or
regulation, the Trust shall provide Stein Roe with
written instructions for valuing such securities or
assets in a manner which the Trust represents to be
consistent with applicable law and regulation.
(b) Net Income. Stein Roe shall calculate with such
frequency as the Trust shall direct, the net income
of each Series of the Trust for dividend purposes and
on a per share basis. Such calculation shall be at
such times and dates and in such manner as the Trust
shall instruct Stein Roe in writing. For purposes of
such calculation, Stein Roe shall not be responsible
for determining whether any dividend or interest
accruable to the Trust is or will be actually paid,
but will accrue such dividend and interest unless
otherwise instructed by the Trust.
(c) Capital Gains and Losses. Stein Roe shall calculate
gains or losses of each Series of the Trust from the
sale or other disposition of assets of that Series as
the Trust shall direct.
(d) Yields. At the request of the Trust, Stein Roe shall
compute yields for each Series of the Trust for such
periods and using such formula as shall be instructed
by the Trust.
(e) Communication of Information. Stein Roe shall
provide the Trust, the Trust's transfer agent and
such other parties as directed by the Trust with the
net asset value per share, the net income per share
and yields for each Series of the Trust at such time
and in such manner and format and with such frequency
as the parties mutually agree.
(f) Information Furnished by the Trust. The Trust shall
furnish Stein Roe with any and all instructions,
explanations, information, specifications and
documentation deemed necessary by Stein Roe in the
performance of its duties hereunder, including,
without limitation, the amounts and/or written
formula for calculating the amounts, and times of
accrual of liabilities and expenses of each Series of
the Trust. The Trust shall also at any time and from
time to time furnish Stein Roe with bid, offer and/or
market values of securities owned by the Trust if the
same are not available to Stein Roe from a pricing or
similar service designated by the Trust for use by
Stein Roe to value securities or other assets. Stein
Roe shall at no time be required to commence or
maintain any utilization of, or subscriptions to, any
such service which shall be the sole responsibility
and expense of the Trust.
3. Recordkeeping.
(a) Stein Roe shall, as agent for the Trust, maintain and
keep current and preserve the general ledger and
other accounts, books, and financial records of the
Trust relating to activities and obligations under
this Agreement in accordance with the applicable
provisions of Section 31(a) of the General Rules and
Regulations under the Investment Company Act of 1940,
as amended (the "Rules").
(b) All records maintained and preserved by Stein Roe
pursuant to this Agreement which the Trust is
required to maintain and preserve in accordance with
the Rules shall be and remain the property of the
Trust and shall be surrendered to the Trust promptly
upon request in the form in which such records have
been maintained and preserved.
(c) Stein Roe shall make available on its premises during
regular business hours all records of a Trust for
reasonable audit, use and inspection by the Trust,
its agents and any regulatory agency having authority
over the Trusts.
4. Instructions, Opinion of Counsel, and Signatures.
(a) At any time Stein Roe may apply to a duly authorized
agent of the Trust for instructions regarding the
Trust, and may consult counsel for such Trust or its
own counsel, in respect of any matter arising in
connection with this Agreement, and it shall not be
liable for any action taken or omitted by it in good
faith in accordance with such instructions or with
the advice or opinion of such counsel. Stein Roe
shall be protected in acting upon any such
instruction, advice, or opinion and upon any other
paper or document delivered by the Trust or such
counsel believed by Stein Roe to be genuine and to
have been signed by the proper person or persons and
shall not be held to have notice of any change of
authority of any officer or agent of the Trust, until
receipt of written notice thereof from such Trust.
(b) Stein Roe may receive and accept a certified copy of
a vote of the Board of Trustees of the Trust as
conclusive evidence of (i) the authority of any
person to act in accordance with such vote or (ii)
any determination or any action by the Board of
Trustees pursuant to its Agreement and Declaration of
Trust as described in such vote, and such vote may be
considered as in full force and effect until receipt
by Stein Roe of written notice to the contrary.
5. Compensation. The Trust shall reimburse Stein Roe from
the assets of the respective applicable Series of the Trust,
for any and all out-of-pocket expenses and charges in
performing services under this Agreement and such
compensation as is provided in Appendix II to this Agreement,
as amended from time to time. Stein Roe shall invoice the
Trust as soon as practicable after the end of each calendar
month, with allocation among the respective Series and full
detail, and the Trust shall promptly pay Stein Roe the
invoiced amount.
6. Confidentiality of Records. Stein Roe agrees not to
disclose any information received from the Trust to any other
client of Stein Roe or to any other person except its
employees and agents, and shall use its best efforts to
maintain such information as confidential. Upon termination
of this Agreement, Stein Roe shall return to the Trust all
records in the possession and control of Stein Roe related to
such Trust's activities, other than Stein Roe's own business
records, it being also understood and agreed that any
programs and systems used by Stein Roe to provide the
services rendered hereunder will not be given to any Trust.
7. Liability and Indemnification.
(a) Stein Roe shall not be liable to any Trust for any
action taken or thing done by it or its employees or
agents on behalf of the Trust in carrying out the
terms and provisions of this Agreement if done in
good faith and without negligence or misconduct on
the part of Stein Roe, its employees or agents.
(b) The Trust shall indemnify and hold Stein Roe, and its
controlling persons, if any, harmless from any and
all claims, actions, suits, losses, costs, damages,
and expenses, including reasonable expenses for
counsel, incurred by it in connection with its
acceptance of this Agreement, in connection with any
action or omission by it or its employees or agents
in the performance of its duties hereunder to the
Trust, or as a result of acting upon instructions
believed by it to have been executed by a duly
authorized agent of the Trust or as a result of
acting upon information provided by the Trust in form
and under policies agreed to by Stein Roe and the
Trust, provided that: (i) to the extent such claims,
actions, suits, losses, costs, damages, or expenses
relate solely to one or more Series, such
indemnification shall be only out of the assets of
that Series or group of Series; (ii) this
indemnification shall not apply to actions or
omissions constituting negligence or misconduct on
the part of Stein Roe or its employees or agents,
including but not limited to willful misfeasance, bad
faith, or gross negligence in the performance of
their duties, or reckless disregard of their
obligations and duties under this Agreement; and
(iii) Stein Roe shall give the Trust prompt notice
and reasonable opportunity to defend against any such
claim or action in its own name or in the name of
Stein Roe.
(c) Stein Roe shall indemnify and hold harmless the Trust
from and against any and all claims, demands,
expenses and liabilities which such Trust may sustain
or incur arising out of, or incurred because of, the
negligence or misconduct of Stein Roe or its agents
or contractors, or the breach by Stein Roe of its
obligations under this Agreement, provided that: (i)
this indemnification shall not apply to actions or
omissions constituting negligence or misconduct on
the part of such Trust or its other agents or
contractors and (ii) such Trust shall give Stein Roe
prompt notice and reasonable opportunity to defend
against any such claim or action in its own name or
in the name of such Trust.
8. Further Assurances. Each party agrees to perform such
further acts and execute such further documents as are
necessary to effectuate the purposes hereof.
9. Dual Interests. It is understood and agreed that some
person or persons may be trustees, officers, or shareholders
of both the Trusts and Stein Roe, and that the existence of
any such dual interest shall not affect the validity hereof
or of any transactions hereunder except as otherwise provided
by specific provision of applicable law.
10. Amendment and Termination. This Agreement may be
modified or amended from time to time, or terminated, by
mutual agreement between the parties hereto and may be
terminated by at least one hundred eighty (180) days' written
notice given by one party to the other. Upon termination
hereof, the Trust shall pay to Stein Roe such compensation as
may be due from it as of the date of such termination, and
shall reimburse Stein Roe for its costs, expenses, and
disbursements payable under this Agreement to such date. In
the event that, in connection with termination, a successor
to any of the duties or responsibilities of Stein Roe
hereunder is designated by a Trust by written notice to Stein
Roe, Stein Roe shall promptly upon such termination and at
the expense of such Trust, deliver to such successor all
relevant books, records, and data established or maintained
by Stein Roe under this Agreement and shall cooperate in the
transfer of such duties and responsibilities, including
provision, at the expense of such Trust, for assistance from
Stein Roe personnel in the establishment of books, records,
and other data by such successor.
11. Assignment. Any interest of Stein Roe under this
Agreement shall not be assigned or transferred either
voluntarily or involuntarily, by operation of law or
otherwise, without prior written notice to the Trust.
12. Notice. Any notice under this Agreement shall be in
writing, addressed and delivered or sent by registered mail,
postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices.
Until further notice to the other parties, it is agreed that
the address of the Trust and Stein Roe is One South Wacker
Drive, Chicago, Illinois 60606, Attention: Secretary.
13. Non-Liability of Trustees and Shareholders. Any
obligation of the Trust hereunder shall be binding only upon
the assets of that Trust (or the applicable Series thereof),
as provided in the Agreement and Declaration of Trust of that
Trust, and shall not be binding upon any Trustee, officer,
employee, agent or shareholder of the Trust or upon any other
Trust. Neither the authorization of any action by the
Trustees or the shareholders of the Trust, nor the execution
of this Agreement on behalf of the Trust shall impose any
liability upon any Trustee or any shareholder. Nothing in
this Agreement shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by
willful misfeasance, bad faith or gross negligence in the
performance of his duties, or reckless disregard of his
obligations and duties under this Agreement. In connection
with the discharge and satisfaction of any claim made by
Stein Roe against the Trust involving more than one Series,
the Trust shall have the exclusive right to determine the
appropriate allocations of liability for any such claim
between or among the Series.
14. References and Headings. In this Agreement and in any
such amendment, references to this Agreement and all
expressions such as "herein," "hereof," and "hereunder,"
shall be deemed to refer to this Agreement as amended or
affected by any such amendments. Headings are placed herein
for convenience of reference only and shall not be taken as
part hereof or control or affect the meaning, construction or
effect of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an
original.
15. Governing Law. This Agreement shall be governed by the
laws of the State of Illinois.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the day and year first above
written.
STEIN ROE ADVISOR TRUST
ATTEST: By: ____________________________
Timothy K. Armour
President
____________________________
Nicolette D. Parrish
Assistant Secretary
STEIN ROE & FARNHAM INCORPORATED.
ATTEST: By: ____________________________
Timothy K. Armour
President, Mutual Funds Division
____________________________
Nicolette D. Parrish,
Assistant Secretary
<PAGE>
STEIN ROE ADVISOR TRUST
ACCOUNTING & BOOKKEEPING AGREEMENT
APPENDIX I
The series of Stein Roe Advisor Trust currently subject to
this Agreement are as follows:
Series Effective Date
- -------------------------------------- -----------------
Stein Roe Advisor Growth & Income Fund February __, 1997
Stein Roe Advisor International Fund February __, 1997
Stein Roe Advisor Young Investor Fund February __, 1997
Stein Roe Advisor Special Venture Fund February __, 1997
Stein Roe Advisor Balanced Fund February __, 1997
Stein Roe Advisor Growth Stock Fund February __, 1997
Stein Roe Advisor Special Fund February __, 1997
Dated: February __, 1997
<PAGE>
STEIN ROE ADVISOR TRUST
ACCOUNTING & BOOKKEEPING AGREEMENT
APPENDIX II
For the services provided under the Accounting &
Bookkeeping Agreement (the "Agreement"), the Trust shall pay
Stein Roe an annual fee with respect to each series,
calculated and paid monthly, equal to $25,000 plus .0025
percent per annum of the average daily net assets of the
series in excess of $50 million. Such fee shall be paid
within thirty days after receipt of monthly invoice.
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
use of our report dated February 6, 1997, and to all
references to our firm included in or made a part of this
Registration Statement on Form N-1A of the Stein Roe Advisor
Trust (comprising the Stein Roe Advisor Balanced Fund, Stein
Roe Advisor Growth & Income Fund, Stein Roe Advisor Growth
Stock Fund, Stein Roe Advisor Special Fund, Stein Roe Advisor
Special Venture Fund, Stein Roe Advisor International Fund
and Stein Roe Advisor Young Investor Fund).
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 6, 1997
EXHIBIT 13
STEIN ROE ADVISOR TRUST
Stein Roe Advisor Growth & Income Fund
Subscription Agreement and Investment Letter
1. Share Subscription. The undersigned agrees to purchase
from Stein Roe Advisor Trust (the "Trust"), a Massachusetts
business trust, the number of shares of beneficial interest in
the Trust of the series designated Stein Roe Advisor Growth &
Income Fund (the "Shares") set forth below, on the terms and
conditions set forth herein, and hereby tenders the amount of
the price required to purchase these Shares at a price of $10.00
per Share.
The undersigned understands that the Trust has filed a
post-effective amendment to its registration statement with the
Securities and Exchange Commission (No. 333-17255) on Form N-1A
to register the Shares, which contains the Preliminary
Prospectus describing the Trust and the Shares. By its
execution hereof, the undersigned hereby acknowledges receipt of
a copy of the Preliminary Prospectus.
The undersigned recognizes that the Trust has not commenced
the public offering of the Shares. Accordingly, a number of
features of the Trust, with respect to the Shares described in
the Preliminary Prospectus including, without limitation, the
declaration and payment of dividends and redemption of the
Shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until
the Trust's post-effective amendment to its registration
statement, as amended, under the Securities Act of 1933, is made
effective.
2. Representations and Warranties. The undersigned hereby
represents and warrants as follows:
(a) It is aware that no federal or state agency has made any
findings or determination as to the fairness for investment
in, nor any recommendation nor endorsement of, the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the
information made available to it in connection with the
offering of the Shares, to evaluate the merits and risks of
the prospective investment, and to make an informed
investment decision;
(c) It recognizes that the issuance of the Shares has only
recently been authorized and, further, that investment in
the Shares involves certain risks, and it has taken full
cognizance of and understands all of the risks related to
the purchase of the Shares, and it acknowledges that it has
suitable financial resources and anticipated income to bear
the economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for
investment, and not with any intention of distribution or
resale of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933
or exemption therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Preliminary Prospectus and such material
documents relating to the Shares as it has requested and as
have been provided to it by the Trust;
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Trust concerning the Shares and
the terms of the offering. The undersigned certifies under
penalties of perjury that the number shown on this form is
its correct tax identification number and that it is not
subject to backup withholding as a result of a failure to
report all interest and dividend income to the Internal
Revenue Service.
3. Shareholder Liability. The undersigned recognizes that,
under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, it
is aware that the Agreement and Declaration of Trust of the
Trust disclaims liability of the shareholders, trustees, and
officers of the Trust for acts or obligations of the Trust,
which acts and obligations are binding only on the assets and
property of the Trust (or the applicable series thereof), and
requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. It is also aware that the Agreement
and Declaration of Trust provides for indemnification out of the
property of the Trust (or the applicable series thereof), for
all losses and expenses of any shareholder held personally
liable for the obligations of the Trust (or the applicable
series thereof).
4. Rejection of Subscription. The undersigned recognizes
that the Trust reserves the unrestricted right to reject or
limit any subscription and to close the offer at any time.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on February 3, 1997.
Number of Shares: 10,000 Shares.
Subscription price: $10.00 per Share.
LIBERTY FINANCIAL COMPANIES, INC.
By: LINDSAY COOK
Lindsay Cook, Senior Vice President
04-3260640
(Tax Identification Number)
<PAGE>
STEIN ROE ADVISOR TRUST
Stein Roe Advisor International Fund
Subscription Agreement and Investment Letter
1. Share Subscription. The undersigned agrees to purchase
from Stein Roe Advisor Trust (the "Trust"), a Massachusetts
business trust, the number of shares of beneficial interest in
the Trust of the series designated Stein Roe Advisor
International Fund (the "Shares") set forth below, on the terms
and conditions set forth herein, and hereby tenders the amount
of the price required to purchase these Shares at a price of
$10.00 per Share.
The undersigned understands that the Trust has filed a
post-effective amendment to its registration statement with the
Securities and Exchange Commission (No. 333-17255) on Form N-1A
to register the Shares, which contains the Preliminary
Prospectus describing the Trust and the Shares. By its
execution hereof, the undersigned hereby acknowledges receipt of
a copy of the Preliminary Prospectus.
The undersigned recognizes that the Trust has not commenced
the public offering of the Shares. Accordingly, a number of
features of the Trust, with respect to the Shares described in
the Preliminary Prospectus including, without limitation, the
declaration and payment of dividends and redemption of the
Shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until
the Trust's post-effective amendment to its registration
statement, as amended, under the Securities Act of 1933, is made
effective.
2. Representations and Warranties. The undersigned hereby
represents and warrants as follows:
(a) It is aware that no federal or state agency has made any
findings or determination as to the fairness for investment
in, nor any recommendation nor endorsement of, the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the
information made available to it in connection with the
offering of the Shares, to evaluate the merits and risks of
the prospective investment, and to make an informed
investment decision;
(c) It recognizes that the issuance of the Shares has only
recently been authorized and, further, that investment in
the Shares involves certain risks, and it has taken full
cognizance of and understands all of the risks related to
the purchase of the Shares, and it acknowledges that it has
suitable financial resources and anticipated income to bear
the economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for
investment, and not with any intention of distribution or
resale of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933
or exemption therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Preliminary Prospectus and such material
documents relating to the Shares as it has requested and as
have been provided to it by the Trust;
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Trust concerning the Shares and
the terms of the offering. The undersigned certifies under
penalties of perjury that the number shown on this form is
its correct tax identification number and that it is not
subject to backup withholding as a result of a failure to
report all interest and dividend income to the Internal
Revenue Service.
3. Shareholder Liability. The undersigned recognizes that,
under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, it
is aware that the Agreement and Declaration of Trust of the
Trust disclaims liability of the shareholders, trustees, and
officers of the Trust for acts or obligations of the Trust,
which acts and obligations are binding only on the assets and
property of the Trust (or the applicable series thereof), and
requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. It is also aware that the Agreement
and Declaration of Trust provides for indemnification out of the
property of the Trust (or the applicable series thereof), for
all losses and expenses of any shareholder held personally
liable for the obligations of the Trust (or the applicable
series thereof).
4. Rejection of Subscription. The undersigned recognizes
that the Trust reserves the unrestricted right to reject or
limit any subscription and to close the offer at any time.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on February 3, 1997.
Number of Shares: 10,000 Shares.
Subscription price: $10.00 per Share.
LIBERTY FINANCIAL COMPANIES, INC.
By: LINDSAY COOK
Lindsay Cook, Senior Vice President
04-3260640
(Tax Identification Number)
<PAGE>
STEIN ROE ADVISOR TRUST
Stein Roe Advisor Young Investor Fund
Subscription Agreement and Investment Letter
1. Share Subscription. The undersigned agrees to purchase
from Stein Roe Advisor Trust (the "Trust"), a Massachusetts
business trust, the number of shares of beneficial interest in
the Trust of the series designated Stein Roe Advisor Young
Investor Fund (the "Shares") set forth below, on the terms and
conditions set forth herein, and hereby tenders the amount of
the price required to purchase these Shares at a price of $10.00
per Share.
The undersigned understands that the Trust has filed a
post-effective amendment to its registration statement with the
Securities and Exchange Commission (No. 333-17255) on Form N-1A
to register the Shares, which contains the Preliminary
Prospectus describing the Trust and the Shares. By its
execution hereof, the undersigned hereby acknowledges receipt of
a copy of the Preliminary Prospectus.
The undersigned recognizes that the Trust has not commenced
the public offering of the Shares. Accordingly, a number of
features of the Trust, with respect to the Shares described in
the Preliminary Prospectus including, without limitation, the
declaration and payment of dividends and redemption of the
Shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until
the Trust's post-effective amendment to its registration
statement, as amended, under the Securities Act of 1933, is made
effective.
2. Representations and Warranties. The undersigned hereby
represents and warrants as follows:
(a) It is aware that no federal or state agency has made any
findings or determination as to the fairness for investment
in, nor any recommendation nor endorsement of, the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the
information made available to it in connection with the
offering of the Shares, to evaluate the merits and risks of
the prospective investment, and to make an informed
investment decision;
(c) It recognizes that the issuance of the Shares has only
recently been authorized and, further, that investment in
the Shares involves certain risks, and it has taken full
cognizance of and understands all of the risks related to
the purchase of the Shares, and it acknowledges that it has
suitable financial resources and anticipated income to bear
the economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for
investment, and not with any intention of distribution or
resale of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933
or exemption therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Preliminary Prospectus and such material
documents relating to the Shares as it has requested and as
have been provided to it by the Trust;
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Trust concerning the Shares and
the terms of the offering. The undersigned certifies under
penalties of perjury that the number shown on this form is
its correct tax identification number and that it is not
subject to backup withholding as a result of a failure to
report all interest and dividend income to the Internal
Revenue Service.
3. Shareholder Liability. The undersigned recognizes that,
under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, it
is aware that the Agreement and Declaration of Trust of the
Trust disclaims liability of the shareholders, trustees, and
officers of the Trust for acts or obligations of the Trust,
which acts and obligations are binding only on the assets and
property of the Trust (or the applicable series thereof), and
requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. It is also aware that the Agreement
and Declaration of Trust provides for indemnification out of the
property of the Trust (or the applicable series thereof), for
all losses and expenses of any shareholder held personally
liable for the obligations of the Trust (or the applicable
series thereof).
4. Rejection of Subscription. The undersigned recognizes
that the Trust reserves the unrestricted right to reject or
limit any subscription and to close the offer at any time.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on February 3, 1997.
Number of Shares: 10,000 Shares.
Subscription price: $10.00 per Share.
LIBERTY FINANCIAL COMPANIES, INC.
By: LINDSAY COOK
Lindsay Cook, Senior Vice President
04-3260640
(Tax Identification Number)
<PAGE>
STEIN ROE ADVISOR TRUST
Stein Roe Advisor Special Venture Fund
Subscription Agreement and Investment Letter
1. Share Subscription. The undersigned agrees to purchase
from Stein Roe Advisor Trust (the "Trust"), a Massachusetts
business trust, the number of shares of beneficial interest in
the Trust of the series designated Stein Roe Advisor Special
Venture Fund (the "Shares") set forth below, on the terms and
conditions set forth herein, and hereby tenders the amount of
the price required to purchase these Shares at a price of $10.00
per Share.
The undersigned understands that the Trust has filed a
post-effective amendment to its registration statement with the
Securities and Exchange Commission (No. 333-17255) on Form N-1A
to register the Shares, which contains the Preliminary
Prospectus describing the Trust and the Shares. By its
execution hereof, the undersigned hereby acknowledges receipt of
a copy of the Preliminary Prospectus.
The undersigned recognizes that the Trust has not commenced
the public offering of the Shares. Accordingly, a number of
features of the Trust, with respect to the Shares described in
the Preliminary Prospectus including, without limitation, the
declaration and payment of dividends and redemption of the
Shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until
the Trust's post-effective amendment to its registration
statement, as amended, under the Securities Act of 1933, is made
effective.
2. Representations and Warranties. The undersigned hereby
represents and warrants as follows:
(a) It is aware that no federal or state agency has made any
findings or determination as to the fairness for investment
in, nor any recommendation nor endorsement of, the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the
information made available to it in connection with the
offering of the Shares, to evaluate the merits and risks of
the prospective investment, and to make an informed
investment decision;
(c) It recognizes that the issuance of the Shares has only
recently been authorized and, further, that investment in
the Shares involves certain risks, and it has taken full
cognizance of and understands all of the risks related to
the purchase of the Shares, and it acknowledges that it has
suitable financial resources and anticipated income to bear
the economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for
investment, and not with any intention of distribution or
resale of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933
or exemption therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Preliminary Prospectus and such material
documents relating to the Shares as it has requested and as
have been provided to it by the Trust;
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Trust concerning the Shares and
the terms of the offering. The undersigned certifies under
penalties of perjury that the number shown on this form is
its correct tax identification number and that it is not
subject to backup withholding as a result of a failure to
report all interest and dividend income to the Internal
Revenue Service.
3. Shareholder Liability. The undersigned recognizes that,
under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, it
is aware that the Agreement and Declaration of Trust of the
Trust disclaims liability of the shareholders, trustees, and
officers of the Trust for acts or obligations of the Trust,
which acts and obligations are binding only on the assets and
property of the Trust (or the applicable series thereof), and
requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. It is also aware that the Agreement
and Declaration of Trust provides for indemnification out of the
property of the Trust (or the applicable series thereof), for
all losses and expenses of any shareholder held personally
liable for the obligations of the Trust (or the applicable
series thereof).
4. Rejection of Subscription. The undersigned recognizes
that the Trust reserves the unrestricted right to reject or
limit any subscription and to close the offer at any time.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on February 3, 1997.
Number of Shares: 10,000 Shares.
Subscription price: $10.00 per Share.
LIBERTY FINANCIAL COMPANIES, INC.
By: LINDSAY COOK
Lindsay Cook, Senior Vice President
04-3260640
(Tax Identification Number)
<PAGE>
STEIN ROE ADVISOR TRUST
Stein Roe Advisor Balanced Fund
Subscription Agreement and Investment Letter
1. Share Subscription. The undersigned agrees to purchase
from Stein Roe Advisor Trust (the "Trust"), a Massachusetts
business trust, the number of shares of beneficial interest in
the Trust of the series designated Stein Roe Advisor Balanced
Fund (the "Shares") set forth below, on the terms and conditions
set forth herein, and hereby tenders the amount of the price
required to purchase these Shares at a price of $10.00 per
Share.
The undersigned understands that the Trust has filed a
post-effective amendment to its registration statement with the
Securities and Exchange Commission (No. 333-17255) on Form N-1A
to register the Shares, which contains the Preliminary
Prospectus describing the Trust and the Shares. By its
execution hereof, the undersigned hereby acknowledges receipt of
a copy of the Preliminary Prospectus.
The undersigned recognizes that the Trust has not commenced
the public offering of the Shares. Accordingly, a number of
features of the Trust, with respect to the Shares described in
the Preliminary Prospectus including, without limitation, the
declaration and payment of dividends and redemption of the
Shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until
the Trust's post-effective amendment to its registration
statement, as amended, under the Securities Act of 1933, is made
effective.
2. Representations and Warranties. The undersigned hereby
represents and warrants as follows:
(a) It is aware that no federal or state agency has made any
findings or determination as to the fairness for investment
in, nor any recommendation nor endorsement of, the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the
information made available to it in connection with the
offering of the Shares, to evaluate the merits and risks of
the prospective investment, and to make an informed
investment decision;
(c) It recognizes that the issuance of the Shares has only
recently been authorized and, further, that investment in
the Shares involves certain risks, and it has taken full
cognizance of and understands all of the risks related to
the purchase of the Shares, and it acknowledges that it has
suitable financial resources and anticipated income to bear
the economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for
investment, and not with any intention of distribution or
resale of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933
or exemption therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Preliminary Prospectus and such material
documents relating to the Shares as it has requested and as
have been provided to it by the Trust;
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Trust concerning the Shares and
the terms of the offering. The undersigned certifies under
penalties of perjury that the number shown on this form is
its correct tax identification number and that it is not
subject to backup withholding as a result of a failure to
report all interest and dividend income to the Internal
Revenue Service.
3. Shareholder Liability. The undersigned recognizes that,
under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, it
is aware that the Agreement and Declaration of Trust of the
Trust disclaims liability of the shareholders, trustees, and
officers of the Trust for acts or obligations of the Trust,
which acts and obligations are binding only on the assets and
property of the Trust (or the applicable series thereof), and
requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. It is also aware that the Agreement
and Declaration of Trust provides for indemnification out of the
property of the Trust (or the applicable series thereof), for
all losses and expenses of any shareholder held personally
liable for the obligations of the Trust (or the applicable
series thereof).
4. Rejection of Subscription. The undersigned recognizes
that the Trust reserves the unrestricted right to reject or
limit any subscription and to close the offer at any time.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on February 3, 1997.
Number of Shares: 10,000 Shares.
Subscription price: $10.00 per Share.
LIBERTY FINANCIAL COMPANIES, INC.
By: LINDSAY COOK
Lindsay Cook, Senior Vice President
04-3260640
(Tax Identification Number)
<PAGE>
STEIN ROE ADVISOR TRUST
Stein Roe Advisor Growth Stock Fund
Subscription Agreement and Investment Letter
1. Share Subscription. The undersigned agrees to purchase
from Stein Roe Advisor Trust (the "Trust"), a Massachusetts
business trust, the number of shares of beneficial interest in
the Trust of the series designated Stein Roe Advisor Growth
Stock Fund (the "Shares") set forth below, on the terms and
conditions set forth herein, and hereby tenders the amount of
the price required to purchase these Shares at a price of $10.00
per Share.
The undersigned understands that the Trust has filed a
post-effective amendment to its registration statement with the
Securities and Exchange Commission (No. 333-17255) on Form N-1A
to register the Shares, which contains the Preliminary
Prospectus describing the Trust and the Shares. By its
execution hereof, the undersigned hereby acknowledges receipt of
a copy of the Preliminary Prospectus.
The undersigned recognizes that the Trust has not commenced
the public offering of the Shares. Accordingly, a number of
features of the Trust, with respect to the Shares described in
the Preliminary Prospectus including, without limitation, the
declaration and payment of dividends and redemption of the
Shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until
the Trust's post-effective amendment to its registration
statement, as amended, under the Securities Act of 1933, is made
effective.
2. Representations and Warranties. The undersigned hereby
represents and warrants as follows:
(a) It is aware that no federal or state agency has made any
findings or determination as to the fairness for investment
in, nor any recommendation nor endorsement of, the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the
information made available to it in connection with the
offering of the Shares, to evaluate the merits and risks of
the prospective investment, and to make an informed
investment decision;
(c) It recognizes that the issuance of the Shares has only
recently been authorized and, further, that investment in
the Shares involves certain risks, and it has taken full
cognizance of and understands all of the risks related to
the purchase of the Shares, and it acknowledges that it has
suitable financial resources and anticipated income to bear
the economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for
investment, and not with any intention of distribution or
resale of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933
or exemption therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Preliminary Prospectus and such material
documents relating to the Shares as it has requested and as
have been provided to it by the Trust;
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Trust concerning the Shares and
the terms of the offering. The undersigned certifies under
penalties of perjury that the number shown on this form is
its correct tax identification number and that it is not
subject to backup withholding as a result of a failure to
report all interest and dividend income to the Internal
Revenue Service.
3. Shareholder Liability. The undersigned recognizes that,
under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, it
is aware that the Agreement and Declaration of Trust of the
Trust disclaims liability of the shareholders, trustees, and
officers of the Trust for acts or obligations of the Trust,
which acts and obligations are binding only on the assets and
property of the Trust (or the applicable series thereof), and
requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. It is also aware that the Agreement
and Declaration of Trust provides for indemnification out of the
property of the Trust (or the applicable series thereof), for
all losses and expenses of any shareholder held personally
liable for the obligations of the Trust (or the applicable
series thereof).
4. Rejection of Subscription. The undersigned recognizes
that the Trust reserves the unrestricted right to reject or
limit any subscription and to close the offer at any time.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on February 3, 1997.
Number of Shares: 10,000 Shares.
Subscription price: $10.00 per Share.
LIBERTY FINANCIAL COMPANIES, INC.
By: LINDSAY COOK
Lindsay Cook, Senior Vice President
04-3260640
(Tax Identification Number)
<PAGE>
STEIN ROE ADVISOR TRUST
Stein Roe Advisor Special Fund
Subscription Agreement and Investment Letter
1. Share Subscription. The undersigned agrees to purchase
from Stein Roe Advisor Trust (the "Trust"), a Massachusetts
business trust, the number of shares of beneficial interest in
the Trust of the series designated Stein Roe Advisor Special
Fund (the "Shares") set forth below, on the terms and conditions
set forth herein, and hereby tenders the amount of the price
required to purchase these Shares at a price of $10.00 per
Share.
The undersigned understands that the Trust has filed a
post-effective amendment to its registration statement with the
Securities and Exchange Commission (No. 333-17255) on Form N-1A
to register the Shares, which contains the Preliminary
Prospectus describing the Trust and the Shares. By its
execution hereof, the undersigned hereby acknowledges receipt of
a copy of the Preliminary Prospectus.
The undersigned recognizes that the Trust has not commenced
the public offering of the Shares. Accordingly, a number of
features of the Trust, with respect to the Shares described in
the Preliminary Prospectus including, without limitation, the
declaration and payment of dividends and redemption of the
Shares upon request of shareholders, are not, in fact, in
existence at the present time and will not be instituted until
the Trust's post-effective amendment to its registration
statement, as amended, under the Securities Act of 1933, is made
effective.
2. Representations and Warranties. The undersigned hereby
represents and warrants as follows:
(a) It is aware that no federal or state agency has made any
findings or determination as to the fairness for investment
in, nor any recommendation nor endorsement of, the Shares;
(b) It has such knowledge and experience of financial and
business matters as will enable it to utilize the
information made available to it in connection with the
offering of the Shares, to evaluate the merits and risks of
the prospective investment, and to make an informed
investment decision;
(c) It recognizes that the issuance of the Shares has only
recently been authorized and, further, that investment in
the Shares involves certain risks, and it has taken full
cognizance of and understands all of the risks related to
the purchase of the Shares, and it acknowledges that it has
suitable financial resources and anticipated income to bear
the economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for
investment, and not with any intention of distribution or
resale of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933
or exemption therefrom;
(f) It has been furnished with, and has carefully read, this
Agreement and the Preliminary Prospectus and such material
documents relating to the Shares as it has requested and as
have been provided to it by the Trust;
(g) It has also had the opportunity to ask questions of, and
receive answers from, the Trust concerning the Shares and
the terms of the offering. The undersigned certifies under
penalties of perjury that the number shown on this form is
its correct tax identification number and that it is not
subject to backup withholding as a result of a failure to
report all interest and dividend income to the Internal
Revenue Service.
3. Shareholder Liability. The undersigned recognizes that,
under Massachusetts law, shareholders of a Massachusetts
business trust could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, it
is aware that the Agreement and Declaration of Trust of the
Trust disclaims liability of the shareholders, trustees, and
officers of the Trust for acts or obligations of the Trust,
which acts and obligations are binding only on the assets and
property of the Trust (or the applicable series thereof), and
requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. It is also aware that the Agreement
and Declaration of Trust provides for indemnification out of the
property of the Trust (or the applicable series thereof), for
all losses and expenses of any shareholder held personally
liable for the obligations of the Trust (or the applicable
series thereof).
4. Rejection of Subscription. The undersigned recognizes
that the Trust reserves the unrestricted right to reject or
limit any subscription and to close the offer at any time.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on February 3, 1997.
Number of Shares: 10,000 Shares.
Subscription price: $10.00 per Share.
LIBERTY FINANCIAL COMPANIES, INC.
By: LINDSAY COOK
Lindsay Cook, Senior Vice President
04-3260640
(Tax Identification Number)
EXHIBIT 15
STEIN ROE
RULE 12b-1 PLAN AND AGREEMENT
Pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the ("Act"), this Rule 12b-1
Plan and Agreement (the "Plan") is hereby adopted by Stein
Roe Advisor Trust (the "Trust") for each of the series (the
"Fund") identified in the attached Schedule A, by a majority
of the trustees of the Trust, including a majority of the
trustees who are not "interested persons" of the Trust (as
defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any
agreements related to the Plan (the "non-interested
trustees"). For each fund, this Plan shall become effective
on the date the registration statement of the applicable
Trust becomes effective for such Fund or such other date
indicated in Schedule A.
Section 1. Fee. Each Fund shall pay to Liberty
Securities Corporation (the "Distributor"), at the end of
each month, a fee equal to the average daily net assets of
the Fund multiplied by that portion of the percentage amount
specified in Schedule A which the number of days in the month
bears to 365. Such payment represents compensation for
expenses incurred by the Distributor for the promotion and
distribution of the shares of the Fund making the payment,
including, but not limited to the printing of prospectuses
and reports used for sales purposes, advertisements, expenses
of preparation and printing of sales literature and other
sales or promotional expense, including any compensation,
paid to any securities dealer or others person who has
incurred such expense pursuant to a Selling Agreement
executed by such party and the Distributor.
Section 2. No payments are to be made by the Trust or
any Fund to finance or promote sales of shares other than
pursuant to this Plan.
Section 3. The Distributor shall prepare written
reports to the Trust's board of trustees on a quarterly basis
showing all amounts paid under this Plan and the purposes for
which such payments were made, plus a summary of the expenses
incurred by the Distributor hereunder, together with such
other information as from time to time shall be reasonably
requested by the board of trustees of the Trust.
Section 4. For each Fund, the Plan shall remain in
effect until April, 1997 and shall continue in effect from
year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a
majority of the trustees of the Trust, including a majority
of the non-interested trustees of each Trust who have no
direct or indirect financial interest in the Plan or in any
agreements related to the Plan, cast in person at a meeting
called for such purpose.
Section 5. So long as the Plan is in effect, nominees
for election as non-interested trustees of each Trust listed
in Schedule A shall be selected by the non-interested
trustees as required by Rule 12b-1 under the Act.
Section 6. The Plan may be terminated as to a Fund,
without penalty, at any time by either a majority of the non-
interested trustees of the applicable Trust or by a vote of a
majority of the outstanding voting securities of that Fund,
and shall terminate automatically in the event of any act
that terminates the Underwriting Agreement with the
Distributor.
Section 7. As to any Fund, the Plan may not be amended
to increase materially the amount authorized by this Plan to
be spent for services described hereunder without approval by
a majority of that Fund's outstanding voting securities, and
all material amendments to the Plan shall be approved by a
vote of a majority of the trustees of the Trust, including a
majority of the non-interested trustees of the Trust who have
no direct or indirect financial interest in the Plan, cast in
person at a meeting called for such purpose.
Section 8. Any obligation of any Trust hereunder shall
be binding only upon the assets of the Trust (or the
applicable Fund) and shall not be binding upon any trustee,
officer, employee, agent, or shareholder of that Trust.
Neither the authorization of any action by the trustees or
shareholders of the Trust nor the execution of this Plan on
behalf of the Trust shall impose any liability upon any
trustee or any shareholder.
This Plan and the terms and provisions thereof are
hereby accepted and agreed to by the Trust and the
Distributor as evidenced by their execution hereof.
Dated as of September 13, 1996
STEIN ROE ADVISOR TRUST LIBERTY SECURITIES CORPORATION
_________________________ ____________________________
By: Timothy K. Armour, By:
President
<PAGE>
SCHEDULE A
12b-1 fee
---------
Stein Roe Advisor Growth Stock Fund 0.25%
Stein Roe Advisor Balanced Fund 0.25%
Stein Roe Advisor Growth & Income Fund 0.25%
Stein Roe Advisor Special Fund 0.25%
Stein Roe Advisor Special Venture Fund 0.25%
Stein Roe Advisor International Fund 0.25%
Stein Roe Advisor Young Investor Fund 0.25%
