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Prospectus, Jan. 26, 1998
Revised July 20, 1998
Stein Roe Advisor Young Investor [service mark] 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. The investment experience of Advisor Young
Investor Fund will correspond to Growth Investor Portfolio.
(See Master Fund/Feeder Fund: Structure and Risk Factors)
Advisor Young Investor Fund also has an educational objective.
It seeks to provide education and insight about mutual funds.
Advisor Young Investor Fund is a multi-class series of Stein
Roe Advisor Trust and SR&F Growth Investor Portfolio is a
series of SR&F Base Trust. Each Trust is an open-end
management investment company. This prospectus relates only
to Class A shares of Advisor Young Investor Fund. For
information on Class K shares, please call Retirement
Services at (800) 322-1130 or Advisor/Broker Services at
(800) 322-0593.
This prospectus contains information you should know before
investing in Advisor Young Investor Fund. Please read it
carefully and retain it for future reference. Please consult
your full-service financial adviser to determine how
investing in this mutual fund may suit your unique needs,
time horizon and risk tolerance.
A Statement of Additional Information dated Jan. 26, 1998,
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 and most recent
financial statements may be obtained without charge by
calling (800) 426-3750.
Class A shares are offered at net asset value. Class A
shares are subject to an annual distribution fee and a
contingent deferred sales charge on redemptions made within
three years after purchase. See How to Purchase Shares.
NOT FDIC INSURED MAY LOSE VALUE
NO BANK GUARANTEE
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
Summary................................2
Fee Table..............................3
The Fund...............................6
Investment Policies....................6
Performance Information................6
Risks and Investment Considerations ...7
Investment Restrictions ...............7
Portfolio Investments and Strategies...8
Net Asset Value ......................10
How to Purchase Shares................11
How to Sell (Redeem) Shares ..........13
Distributions and Income Taxes........15
Management ...........................15
Organization and Description of
Shares..............................17
Master Fund/Feeder Fund: Structure
and Risk Factors....................18
For More Information .................19
SUMMARY
Stein Roe Advisor Young Investor Fund ("Advisor Young
Investor Fund") is a series of Stein Roe Advisor Trust
("Advisor Trust"), an open-end 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 Objective 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 are believed to have above-
average growth prospects, many of which affect the lives of
young people.
In addition to the investment objective and policies, Advisor
Young Investor Fund also has an educational objective. It
seeks to provide education and insight about mutual funds,
basic economic principles, and personal finance through a
variety of educational materials prepared and paid for by
Advisor Young Investor Fund.
Advisor Young Investor Fund is designed to be appropriate for
growth-oriented investors of all ages. Its focus on
companies that affect the lives of young people and its
educational objective and materials may make it especially
appropriate for young people and investors for whom education
is an important objective.
For a more detailed discussion of the investment objective
and policies, please see Investment Policies and Portfolio
Investments and Strategies. There is, of course, no
guarantee that Advisor Young Investor Fund or 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 are believed
to have above-average growth prospects, many of which 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. Class A shares of Advisor Young
Investor Fund are available through your full-service
financial service firm ("FSF"). For information on
purchasing and redeeming Advisor Young Investor Fund shares,
please see How to Purchase Shares, How to Sell (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
Expenses are one of several factors to consider when
investing in Advisor Young Investor Fund. The following
tables summarize your maximum transaction costs and annual
expenses for an investment in each class of shares of Advisor
Young Investor Fund. See Management for more complete
descriptions of the various costs and expenses of Advisor
Young Investor Fund.
Shareholder Transaction Expenses1, 2
Class A
Maximum Initial Sales Charges
(as a % of offering price)........... ..None
Maximum Contingent Deferred Sales Charge
(as a % of offering price)3...............2.00%4
_________________
1. For accounts less than $1,000 an annual fee of $10 may be
deducted. See How to Purchase Shares.
2. Redemption proceeds exceeding $500 sent via federal funds
wire will be subject to a $7.50 charge per transaction.
3. Does not apply to reinvested dividends.
4. A 1.00% contingent deferred sales charge applies to
purchases of $1 million to $5 million redeemed within
approximately 18 months after purchase. See How to
Purchase Shares.
Estimated Annual Operating Expenses
Class A
Management and Administrative Fee .........0.80%
12b-1 Fees ................................0.30%
Other Expenses.............................0.55%
Total Operating Expenses ..................1.65%
Example.
You would pay the following expenses on a $1,000 investment
in Class A shares assuming 5% annual return.
Example 1 (assumes redemption at end of period):
Class A
Period:
1 Year $ 37
3 Years 72
5 Years 90
10 Years 195
Example 2 (assumes no redemption at end of period):
Class A
Period:
1 Year $ 17
3 Years 52
5 Years 90
10 Years 195
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 Class A
shares of 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 Estimated Annual Fund
Operating Expenses remain the same during each of the periods
and that all income dividends and capital gains distributions
are reinvested in additional shares.
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. The
trustees 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
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 charges permitted by the 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 multi-class series of Advisor Trust, which
is an open-end 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 other 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 Master Fund/Feeder Fund:
Structure and Risk Factors.) 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 a class of shares of
Advisor Young Investor Fund is measured by the distributions
received, plus or minus the change in the net asset value per
share for a given period, assuming reinvestment of all
distributions on Class A shares and the contingent deferred
sales charges applicable to the time period quoted. 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. When the Fund compares the total return of its shares
to those of other mutual funds or relevant indices, its total
return may be computed without reflecting any sales charges
so long as the sales charge is stated separately in
connection with the comparison.
Comparison of the class's total return with alternative
investments should consider differences between the class and
the alternative investments, the periods and methods used in
calculation of the return being compared including the
inclusion of initial or contingent deferred sales charges,
and the impact of taxes on alternative investments. Of
course, past performance is no guarantee of future results.
Share prices may vary, and your shares when redeemed may be
worth more or less than your original purchase price.
The performance of Class A may be compared to various
indices. Performance and quotations from various
publications may be included in sales literature and
advertisements.
Advisor Young Investor Fund invests all of its net investable
assets in Growth Investor Portfolio, which has the same
investment objective and substantially the same investment
policies as Advisor Young Investor Fund. Advisor Young
Investor Fund commenced operations on Feb. 14, 1997, but
until Jan. 26, 1998, offered only the shares that are now
designated Class K shares. The historical performance of
Class A shares of Advisor Young Investor Fund for all periods
are based on the performance of Growth Investor Portfolio,
restated to reflect the sales charges, 12b-1 fees and other
expenses applicable to the class as set forth in the Fee
Table, without giving effect to any fee reimbursements
described therein and assuming reinvestment of dividends and
capital gains. Historical performance as restated should not
be interpreted as indicative of Advisor Young Investor Fund's
future performance. Had Class A shares been outstanding, the
average annual returns for Class A shares as of Sept. 30,
1997 and Dec. 31, 1997 would have been as follows:
Sept. 30 Dec. 31
1 year 24.00% 23.91%
3 years 33.26 32.83
Inception (April
( 29, 1994) 29.81 28.85
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 are believed to have
above-average growth prospects, many of which 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 education and
insight about mutual funds, basic economic principles, and
personal finance through a variety of educational materials
prepared and paid for by Advisor Young Investor Fund.
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 nonresidents may apply,
including imposition of exchange controls and withholding
taxes on dividends, and seizure or nationalization of
investments owned by nonresidents. 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
Each of Advisor Young Investor Fund and Growth Investor
Portfolio is diversified as that term is defined in the
Investment Company Act of 1940.
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 the 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 (such as Growth
Investor Portfolio) 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.
While Advisor Young Investor Fund and Growth Investor
Portfolio may not make loans, each may (1) purchase
money market instruments and enter into repurchase
agreements; (2) acquire publicly distributed or privately
placed debt securities; (3) lend 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 nonleveraging, 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.
Growth Investor Portfolio may invest in repurchase
agreements, provided that it will not 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 second, third, and fourth
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 nonfundamental 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 security, 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 tend 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 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
Advisor Young Investor Fund determines the net asset value of
its shares as of the close of regular session trading on the New
York Stock Exchange ("NYSE") (currently 3:00 p.m., central time
or 4:00 p.m., eastern time) by dividing the difference between the
value of its assets and liabilities allocable to that class
by the number of shares of that class 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 or 4:00 p.m., eastern
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
Shares of each class of Advisor Young Investor Fund are
offered continuously. Orders for a class received in good
order prior to the time at which Advisor Young Investor Fund
values the shares of that class (or placed with a FSF before
such time and transmitted by the FSF before Advisor Young
Investor Fund processes that day's share transactions or at
such other times as agreed by the parties) will be processed
based on that day's closing net asset value for the class,
plus any applicable initial sales charge.
With respect to all accounts other than UGMA, UTMA and Education
IRA accounts, the initial purchase minimum per account is $1,000;
subsequent investments may be as small as $50. The minimum
initial investment for the Fundamatic program (as discussed
in the Statement of Additional Information) is $50, and the
minimum initial investment for a retirement account sponsored
by Liberty Funds Distributor, Inc. (the "Distributor"), an
affiliate of the Adviser, is $25. Advisor Young Investor Fund may
refuse any purchase order for its shares. See How to Sell (Redeem)
Shares and the Statement of Additional Information for more
information.
Class A Shares. Class A shares are offered at net asset
value. On purchases of less than $1 million, the Distributor pays
the FSF a commission of 2.00%. On purchases of $1 million or more,
the Distributor pays the FSF a cumulative commission as
follows:
Amount Purchased Commission
First $3,000,000 1.00%
Next $2,000,000 0.50
Over $5,000,000 0.251
_______________________
1. Paid over 12 months but only to the extent the shares
remain outstanding.
In determining the commission applicable to a new purchase
under the above schedule, the amount of the current purchase
is added to the current value of shares previously purchased
and still held by an investor. If a purchase results in an
account having a value from $1 million to $5 million, then
the shares purchased will be subject to a 1.00% contingent
deferred sales charge payable to the Distributor, if redeemed
within 18 months from the first day of the month following
the purchase. If the purchase results in an account having a
value in excess of $5 million, the contingent deferred sales
charge will not apply to the portion of the purchased shares
comprising such excess amount.
Purchases of $1 million to $5 million are subject to a 1.00%
contingent deferred sales charge payable to the Distributor
on redemptions within 18 months from the first day of the
month following the purchase. The contingent deferred sales
charge does not apply to the excess of any purchase over $5
million.
Purchases of less than $1 million are subject to a contingent
deferred sales charge of 2.00% if the shares are redeemed
within three years from the first day of the month following
the month in which the purchase was accepted.
General. All contingent deferred sales charges are deducted
from the amount redeemed, not the amount remaining in the
account, and are paid to the Distributor. Shares issued upon
distribution reinvestment and amounts representing
appreciation are not subject to a contingent deferred sales
charge. The contingent deferred sales charge is imposed on
redemptions which result in the account value falling below
its Base Amount (the total dollar value of purchase payments
(including initial sales charges, if any) in the account,
reduced by prior redemptions on which a contingent deferred
sales charge was paid and any exempt redemptions). When a
redemption subject to a contingent deferred sales charge is
made, generally older shares will be redeemed first. This may
mean that the shares redeemed will be those closest to being
outside the period in which the contingent deferred sales charge
is in effect. See the Statement of Additional Information for
more information.
FSFs may receive different compensation rates for selling
different classes of shares. The Distributor may pay
additional compensation for FSFs which have made or may make
significant sales. See the Statement of Additional
Information for more information.
Special Purchase Programs. Advisor Young Investor Fund
allows certain investors or groups of investors to purchase
shares with reduced or without initial or contingent deferred
sales charges. The programs are described in the Statement
of Additional Information under Purchases and Redemptions--
Special Purchase Programs/Investor Services.
Conditions of Purchase. Each purchase order for Advisor
Young Investor Fund must be accepted by an authorized officer
of the Distributor or its authorized agent and is not binding
until accepted and entered on the books of Advisor Young
Investor Fund. 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.
To reduce the volume of mail you receive, only one copy of certain
Materials, such as prospectuses and shareholder reports, will be
mailed to your household (same address). Please call 800-322-0593 if
you wish to receive additional copies free of charge.
Shareholder Services and Account Fees. A variety of
shareholder services are available. For more information
about these services or your account call (800) 345-6611.
Some services are described in the attached account
application. A Shareholder's Manual explaining all available
services will be provided upon request.
With respect to all accounts other than UGMA, UTMA and Education
IRA accounts, in June of any year, the Fund may deduct $10 (payable
to the Transfer Agent) from accounts valued at less than $1,000
unless the account value has dropped below $1,000 solely as a
result of share value depreciation. Shareholders will
receive 60 days' written notice to increase the account value
before the fee is deducted. The Fund may also deduct annual
maintenance and processing fees (payable to the Transfer
Agent) in connection with certain retirement plan accounts.
(See Purchases and Redemptions--Special Purchase
Programs/Investor Services in the Statement of Additional
Information.)
HOW TO SELL (REDEEM) SHARES
Selling Shares Directly to Advisor Young Investor Fund. You
may redeem all or a portion of your shares by submitting a
written request, in English, in good order. Send a signed letter of
instruction to the Transfer Agent. The sale price is the net
asset value (less any contingent deferred sales charge) next
determined after receipt of your redemption request in good
order. Signatures must be guaranteed by a bank, a member
firm of a national stock exchange or another eligible
guarantor institution. Additional documentation is required
for sales by corporations, agents, fiduciaries, surviving
joint owners and individual retirement account holders. For
details contact:
Colonial Investors Service Center, Inc.
P.O. Box 1722
Boston, MA 02105-1722
(800) 345-6611
Selling Shares through FSFs. FSFs must receive requests
prior to the time at which Advisor Young Investor Fund values
its shares to receive that day's price, are responsible for
furnishing all necessary documentation to the Transfer Agent,
and may charge for this service. Your FSF may be closed on
days when the NYSE is open. As a result, prices for shares
may be significantly affected on days when you have no access
to your FSF to sell shares. If you wish to sell shares
through your FSF, please contact it for instructions.
Exchange Privilege. For a period of 90 days following the
purchase of Class A shares of Advisor Young Investor Fund,
exchanges at net asset value may be made among Class A shares
of Colonial Municipal Money Market Fund or Colonial Government
Money Market Fund (or its successor). Thereafter, exchanges at
net asset value may be made among Class A shares of any other
fund that is a series of Advisor Trust or of most funds advised
by Colonial Management Associates, Inc. or distributed by the
Distributor, each an affiliate of the Adviser. A contingent
deferred sales charge, if any, continues to apply to the
exchanged shares. For more information on the Colonial Funds, see
your financial adviser or call (800) 426-3750. Not all Advisor
Trust Funds offer Class A shares. 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 fund, you should obtain the prospectus for the 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 (including the telephone exchange
privilege) or its use in any manner by any person or class.
Advisor Young Investor Fund will terminate the exchange
privilege as to a particular shareholder if the Adviser
determines, in its sole and absolute discretion, that the
shareholder's exchange activity is likely to adversely impact
the Adviser's ability to manage the investment portfolio in
accordance with the investment objective or otherwise harm
Advisor Young Investor Fund or its remaining shareholders.
Shares will continue to age without regard to the exchange
for the purpose of determining the contingent deferred sales
charge, if any, upon redemption.
An exchange from a money market fund into a non-money market
fund will be at the applicable offering price next determined
(including sales charge), except for amounts on which an
initial sales charge was paid. Non-money market fund shares
must be held for five months before qualifying for exchange
into a fund with a higher sales charge, after which an
exchange is made at the net asset value next determined.
Exchanges of Class A shares are not subject to the contingent
deferred sales charge. However, if shares received in the
exchange are redeemed within three years after the original
purchase, a contingent deferred sales charge will be assessed
using the schedule of the fund into which the original
investment was made.
Telephone Transactions. Shareholders and/or their financial
advisers are automatically eligible to exchange shares and
redeem shares up to $50,000 by calling (800) 422-3737 any
business day between 10:00 a.m., central time (or 9:00 a.m.,
eastern time) and the time as of which Advisor Young Investor
Fund values its shares. Telephone redemption privileges for
larger amounts may be elected on the account application.
Generally, other than as set forth herein, you will be
limited to four telephone exchange round-trips per year, and
Advisor Young Investor Fund may refuse requests for telephone
exchanges in excess of four round-trips.
Advisor Trust reserves the right to terminate at any time and
without prior notice the use of the telephone exchange by any
person or class of persons. Advisor Trust believes that use
of the telephone exchange by investors utilizing market-
timing strategies adversely affects the Advisor Trust Funds.
Therefore, regardless of the number of telephone exchange
round-trips made by an investor, Advisor Trust generally will
not honor requests for telephone exchanges by shareholders
identified by Advisor Trust as "market-timers" if the
officers of the Trust determine the order not to be in the
best interests of the Trust or its shareholders. Advisor
Trust generally identifies as a "market-timer" an investor
whose investment decisions appear to be based on actual or
anticipated near-term changes in the securities markets
rather than other investment considerations.
The Transfer Agent employs procedures reasonably designed to
confirm that instructions communicated by telephone are
genuine. If Advisor Young Investor Fund and/or the Transfer
Agent does not follow reasonable procedures for protecting
shareholders against loss on telephone transactions, it may
be liable for any losses due to unauthorized or fraudulent
instructions. Such procedures include restrictions on where
proceeds of telephone redemptions may be sent, limitations on
the ability to redeem by telephone shortly after an address
change, recording of telephone lines and requirements that
the redeeming shareholder and/or his/her financial adviser
provide certain identifying information. Shareholders and/or
their financial advisers wishing to redeem or exchange shares
by telephone may experience difficulty in reaching Advisor
Young Investor Fund at the toll free number during periods of
drastic economic or market changes. In that event,
shareholders and/or their financial advisers should follow
the procedures for redemption or exchange by mail as
described above under How to Sell (Redeem) Shares. The
Transfer Agent and Advisor Young Investor Fund reserve the
right to change, modify or terminate the telephone redemption
or exchange services at any time upon prior written notice to
shareholders. Shareholders and/or their financial advisers
are not obligated to transact by telephone.
General Redemption Policies. Shares of Advisor Young
Investor Fund may be sold on any day the NYSE is open, either
directly with Advisor Young Investor Fund or through your
FSF. Advisor Trust will pay redemption proceeds (less any
applicable contingent deferred sales charge) as soon as
practicable, generally within seven days after proper
instructions are received. However, for shares recently
purchased by check, Advisor Young Investor Fund will delay
sending proceeds for 15 days in order to protect the Fund
against financial losses and dilution in net asset value
caused by dishonored purchase payment checks. To avoid delay
in payment, investors are advised to purchase shares
unconditionally, such as by certified check or other
immediately available funds. 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 receipt of your
redemption request in good order by Advisor Young Investor
Fund. (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, may result in a realized capital gain or loss and may
be subject to a contingent deferred sales charge. The
contingent deferred sales charge may be waived under certain
circumstances. See the Statement of Additional Information
for more information.
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
12-month period ended Oct. 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 gains distributions on
shares of Advisor Young Investor Fund will be reinvested in
additional shares of the same class of Advisor Young Investor
Fund unless you elect to have distributions paid by check.
Reinvestment normally occurs on the payable date. Regardless
of your election, distributions of $10 or less will not be
paid by check to the shareholder, but will be reinvested in
additional shares of the same class of Advisor Young Investor
Fund at net asset value. If you have elected to receive
dividends and/or capital gains distributions in cash and the
postal or other delivery service selected by the Transfer
Agent is unable to deliver checks to your address of record,
your distribution option will automatically be converted to
having all dividend and other distributions reinvested in
additional shares. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
To change your election, call the Transfer Agent for
instructions.
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. Advisor
Young Investor Fund 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 gains that is distributed
to shareholders.
Generally distributions are taxable as ordinary income,
except that any distributions of net long-term capital gains
will be taxed as such. However, distributions 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.
The Taxpayer Relief Act of 1997 (the "Act") reduced from 28%
to 20% the maximum tax rate on long-term capital gains. This
reduced rate generally applies to securities held for more
than 18 months and sold after July 28, 1997, and securities
held for more than one year and sold between May 6, 1997 and
July 29, 1997.
If you buy shares shortly before a distribution is declared,
the distribution will be taxable although it is, in effect, a
partial return of the amount invested.
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 and its
predecessor have advised and managed mutual funds since 1949.
The Adviser is a wholly owned indirect 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 and David P. Brady
have been portfolio managers of Growth Investor Portfolio
since its inception in 1997 and had managed its predecessor
since Feb. 1995 and Mar. 1995, respectively. As of Sept. 30,
1997, Messrs. Gustafson and Brady were responsible for co-
managing $1.2 billion and $475 million in mutual fund net
assets, respectively. Mr. Gustafson is a senior vice
president 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).
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. For the fiscal year ended Sept. 30,
1997, Advisor Young Investor Fund's administrative fee, in
addition to the pro rata portion of Growth Investor
Portfolio's management fees, was 0.00% of average net assets,
after the fee waiver.
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. Colonial Investors
Service Center, Inc. ("Transfer Agent"), P.O. Box 1722,
Boston, MA 02105-1722, an indirect 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 FSFs that maintain nominee accounts with Advisor Young
Investor Fund for their clients who are Fund shareholders may
be paid a fee by the Transfer Agent 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 Funds Distributor, Inc.
The Distributor is a subsidiary of Colonial Management
Associates, Inc., which is an indirect subsidiary of Liberty
Financial. The business address of the Distributor is One
Financial Center, Boston, Massachusetts 02111-2621; however,
all Fund correspondence (including purchase and redemption
orders) should be mailed to Colonial Investors Service
Center, Inc., the Transfer Agent, at P.O. Box 1722, Boston,
Massachusetts 02105-1722.
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 personal service
and/or the maintenance of shareholder accounts, the
Distributor receives from Advisor Young Investor Fund a
service fee at an annual rate not to exceed 0.25% of the
Fund's net assets attributed to Class A shares. The Plan
also provides that, as compensation for expenses related to
the promotion and distribution of shares of Advisor Young
Investor Fund including its expenses related to the sale and
promotion of Advisor Young Investor Fund shares, the
Distributor receives from Advisor Young Investor Fund a
distribution fee at an annual rate not exceeding 0.10% of the
average net assets attributed to Class A shares. At this
time, the Distributor has voluntarily agreed to limit the
Class A distribution fee to 0.05% annually. The Distributor
may terminate this voluntary limitation without shareholder
approval. The Distributor generally pays this compensation
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 sales
charges paid.
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, ten
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 the 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 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 also is 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.
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.
MASTER FUND/FEEDER FUND: STRUCTURE AND RISK FACTORS
Advisor Young Investor Fund, an open-end management
investment company, seeks to achieve its objective by
investing all of its assets in 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 Investment
Policies, Portfolio Investments and Strategies, and
Investment Restrictions for a description of the investment
objective, 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 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.
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 Aug. 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 was 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 nonfundamental 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. Class A shareholders
may incur a contingent deferred sales charge if they redeem
shares in response to a change in investment objective.
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. 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 and might incur different administrative fees
and expenses than Advisor Young Investor Fund. 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 Feb. 1997
when Stein Roe Young Investor 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 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
(800) 345-6611.
